Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K/A
(Amendment
No. 1)
x
|
Annual
report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended December 31,
2008.
|
¨
|
Transition
report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the transition period
from to .
|
Commission
file number: 001-33859
United
States Gasoline Fund, LP
(Exact
name of registrant as specified in its charter)
Delaware
|
|
20-0431897
|
(State
or other jurisdiction of
incorporation
or organization)
|
|
(I.R.S.
Employer
Identification
No.)
|
1320
Harbor Bay Parkway, Suite 145
Alameda,
California 94502
(Address
of principal executive offices) (Zip code)
(510)
522-3336
(Registrant’s
telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Act:
Units
|
NYSE
Arca, Inc.
|
(Title
of each class)
|
(Name
of exchange on which registered)
|
Securities
registered pursuant to Section 12(g) of the Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. ¨
Yes x No
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. ¨
Yes x No
Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. x
Yes ¨ No
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). ¨
Yes ¨ No
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. x
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
Large
accelerated filer ¨
|
Accelerated
filer ¨
|
|
|
Non-accelerated
filer x
|
Smaller
reporting company ¨
|
(Do
not check if a smaller reporting company)
|
|
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). ¨
Yes x No
The
aggregate market value of the registrant’s units held by non-affiliates of the
registrant as of June 30, 2008 was: $32,830,000.
The
registrant had 2,700,000 outstanding units as of March 30, 2009.
DOCUMENTS
INCORPORATED BY REFERENCE:
None.
UNITED STATES
GASOLINE FUND,
LP
Table
of Contents
|
|
Page
|
Part
II.
|
|
|
|
|
|
Item
8. Financial Statements and Supplementary Data.
|
|
1
|
|
|
|
Part
IV.
|
|
|
|
|
|
Item
15. Exhibits and Financial Statement Schedules.
|
|
19
|
|
|
|
Signatures
|
|
20
|
Explanatory
Note
The
United States Gasoline Fund, LP (“UGA”) is filing this Amendment No. 1 to its
annual report on Form 10-K (“Form 10-K/A”) for the fiscal year ended December
31, 2008 that was filed with the Securities and Exchange Commission on March 31,
2009 (“Form 10-K”). This Form 10-K/A replaces pages 91 to 103 of Part
II, Item 8 of the Form 10-K filed on March 31, 2009. The purpose of
the Form 10-K/A is to restate the audited Consolidated Financial Statements of
United States Commodity Funds LLC, the general partner of UGA (the “General
Partner”), found in the Form 10-K to accurately reflect the accounting for
income taxes of the General Partner after its management concluded that there
were errors associated with the accounting for income taxes. Although
the General Partner was formed as a single-member limited liability company,
which is a disregarded entity for federal income tax purposes, it filed an
election with the Internal Revenue Service to be treated as an association
taxable as a corporation. As a result of the error in accounting for
income taxes as a single-member limited liability company rather than as a
corporation, certain items including the income tax payable, member
distributions, income tax provision (benefit) and due from and to the General
Partner’s parent have been restated for the years ending December 31, 2008, 2007
and 2006. There was no cumulative effect from the error on member’s
equity of the General Partner as of December 31, 2005. The
significant effects of the restatement are included in Note 8 to the General
Partner’s audited Consolidated Financial Statements.
Except as
set forth above, no other changes have been made to the Form 10-K, and the Form
10-K/A does not amend, update or change any other items or disclosure found in
the Form 10-K. Further, the Form 10-K/A does not reflect events that
occurred after the filing of the Form 10-K.
Part
II
Item 8. Financial Statements and
Supplementary Data.
UNITED
STATES COMMODITY FUNDS LLC AND SUBSIDIARIES
(formerly
Victoria Bay Asset Management, LLC)
|
Page
|
|
|
Report
of Independent Registered Public Accounting Firm
|
2
|
|
|
Consolidated
Statements of Financial Condition As Restated
|
3
|
|
|
Consolidated
Statements of Operations and Other Comprehensive Loss As
Restated
|
4
|
|
|
Consolidated
Statements of Changes in Member’s Equity (Deficit) As
Restated
|
5
|
|
|
Consolidated
Statements of Cash Flows As Restated
|
6
|
|
|
Notes
to Consolidated Financial Statements As Restated
|
7
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and Member of
United
States Commodity Funds LLC and Subsidiaries
We have
audited the accompanying consolidated statements of financial condition of
United States Commodity Funds LLC (formerly Victoria Bay Asset Management, LLC)
and Subsidiaries, (the “Company”) as of December 31, 2008, 2007 and 2006, and
the related consolidated statements of operations and other comprehensive loss,
changes in member’s equity (deficit) and cash flows for the years then ended.
These financial statements are the responsibility of the Company’s management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We
conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the consolidated financial position of United States
Commodity Funds LLC (formerly Victoria Bay Asset Management, LLC) and
Subsidiaries as of December 31, 2008, 2007 and 2006, and the consolidated
results of their operations and their cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.
As
discussed in Note 8, the accompanying consolidated financial statements have
been restated.
/s/
SPICER JEFFRIES LLP
Greenwood
Village, Colorado
March 15,
2009, except as to the fourth paragraph above and Note 8,
which
are as of August 14, 2009
UNITED
STATES COMMODITY FUNDS LLC AND SUBSIDIARIES
(formerly
Victoria Bay Asset Management, LLC)
CONSOLIDATED
STATEMENTS OF FINANCIAL CONDITION
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
As
Restated (Note 8)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$ |
125,815 |
|
|
$ |
53,910 |
|
|
$ |
88,345 |
|
Management
fees receivable
|
|
|
893,111 |
|
|
|
500,128 |
|
|
|
332,736 |
|
Investments
(Note 2)
|
|
|
34,579 |
|
|
|
123,398 |
|
|
|
- |
|
Deferred
offering costs (Note 3)
|
|
|
352,794 |
|
|
|
187,056 |
|
|
|
311,262 |
|
Due
from parent (Note 4)
|
|
|
- |
|
|
|
- |
|
|
|
295,754 |
|
Other
assets
|
|
|
1,960 |
|
|
|
2,940 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$ |
1,408,259 |
|
|
$ |
867,432 |
|
|
$ |
1,028,097 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND MEMBER'S EQUITY
(DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$ |
624,688 |
|
|
$ |
1,035,444 |
|
|
$ |
1,127,208 |
|
Due
to parent (Note 4)
|
|
|
- |
|
|
|
109,539 |
|
|
|
- |
|
Income
taxes payable
|
|
|
285,400 |
|
|
|
30,902 |
|
|
|
- |
|
Expense
waiver payable (Note 3)
|
|
|
311,038 |
|
|
|
- |
|
|
|
- |
|
Minority
interest: Limited Partner in United States
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural
Gas Fund, LP
|
|
|
- |
|
|
|
- |
|
|
|
980 |
|
Minority
interest: Limited Partner in United States
|
|
|
|
|
|
|
|
|
|
|
|
|
Heating
Oil Fund, LP
|
|
|
- |
|
|
|
980 |
|
|
|
- |
|
Minority
interest: Limited Partner in United States
|
|
|
|
|
|
|
|
|
|
|
|
|
Gasoline
Fund, LP
|
|
|
- |
|
|
|
980 |
|
|
|
- |
|
Minority
interest: Limited Partner in United States
|
|
|
|
|
|
|
|
|
|
|
|
|
12
Month Natural Gas Fund, LP
|
|
|
980 |
|
|
|
980 |
|
|
|
- |
|
Minority
interest: Limited Partner in United States
|
|
|
|
|
|
|
|
|
|
|
|
|
Short
Oil Fund, LP
|
|
|
980 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
1,223,086 |
|
|
|
1,178,825 |
|
|
|
1,128,188 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES
(Notes 5 and 7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MEMBER'S EQUITY
(DEFICIT) (Note 6)
|
|
|
185,173 |
|
|
|
(311,393 |
) |
|
|
(100,091 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and member's equity
|
|
$ |
1,408,259 |
|
|
$ |
867,432 |
|
|
$ |
1,028,097 |
|
The accompanying notes are an
integral part of these statements.
UNITED
STATES COMMODITY FUNDS LLC AND SUBSIDIARIES
(formerly
Victoria Bay Asset Management, LLC)
CONSOLIDATED
STATEMENTS OF OPERATIONS
AND
OTHER COMPREHENSIVE LOSS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
As
Restated (Note 8)
|
|
REVENUE:
|
|
|
|
|
|
|
|
|
|
Management
fees
|
|
$ |
8,631,883 |
|
|
$ |
4,871,265 |
|
|
$ |
1,460,448 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
fees
|
|
|
1,026,625 |
|
|
|
650,829 |
|
|
|
325,320 |
|
Administration
fees
|
|
|
665,696 |
|
|
|
434,905 |
|
|
|
163,029 |
|
Transfer
agent fees
|
|
|
208,274 |
|
|
|
134,758 |
|
|
|
65,191 |
|
Custodial
fees
|
|
|
118,453 |
|
|
|
80,184 |
|
|
|
61,460 |
|
Professional
fees
|
|
|
1,159,643 |
|
|
|
1,337,170 |
|
|
|
1,128,367 |
|
Salaries,
wages and benefits
|
|
|
1,389,888 |
|
|
|
690,488 |
|
|
|
208,228 |
|
Expense
waiver expense
|
|
|
311,038 |
|
|
|
- |
|
|
|
- |
|
Advertising
and promotion
|
|
|
79,202 |
|
|
|
49,370 |
|
|
|
38,337 |
|
General
and administrative
|
|
|
488,477 |
|
|
|
356,460 |
|
|
|
329,305 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
expenses
|
|
|
5,447,296 |
|
|
|
3,734,164 |
|
|
|
2,319,237 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
INCOME:
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend
income
|
|
|
14 |
|
|
|
425 |
|
|
|
- |
|
Realized
gains on investments
|
|
|
- |
|
|
|
85,415 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
other income
|
|
|
14 |
|
|
|
85,840 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCOME (LOSS) BEFORE INCOME TAXES
|
|
|
3,184,601 |
|
|
|
1,222,941 |
|
|
|
(858,789 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION
FOR INCOME TAXES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
tax expense (benefit) (Note 4)
|
|
|
1,260,622 |
|
|
|
436,195 |
|
|
|
(295,754 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCOME (LOSS)
|
|
|
1,923,979 |
|
|
|
786,746 |
|
|
|
(563,035 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
COMPREHENSIVE LOSS:
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
loss on investments, net of income taxes (Note 2)
|
|
|
(88,820 |
) |
|
|
(433,189 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE
INCOME (LOSS)
|
|
$ |
1,835,159 |
|
|
$ |
353,557 |
|
|
$ |
(563,035 |
) |
The accompanying notes are an
integral part of these statements.
UNITED
STATES COMMODITY FUNDS LLC AND SUBSIDIARIES
(formerly
Victoria Bay Asset Management, LLC)
CONSOLIDATED
STATEMENTS OF CHANGES IN MEMBER’S EQUITY (DEFICIT)
BALANCE, December 31,
2005
|
|
$ |
388,924 |
|
|
|
|
|
|
Adjustment
to opening members' equity (Note 8)
|
|
|
- |
|
|
|
|
|
|
BALANCE, December 31,
2005, as restated
|
|
|
388,924 |
|
|
|
|
|
|
Contributions
|
|
|
74,020 |
|
|
|
|
|
|
Net
loss
|
|
|
(563,035 |
) |
|
|
|
|
|
BALANCE, December 31,
2006, as restated
|
|
|
(100,091 |
) |
|
|
|
|
|
Contributions
(Note 3)
|
|
|
1,280,906 |
|
|
|
|
|
|
Distributions
|
|
|
(343,769 |
) |
|
|
|
|
|
Other
comprehensive loss (Note 6)
|
|
|
(433,189 |
) |
|
|
|
|
|
Offering
costs (Note 2)
|
|
|
(1,501,996 |
) |
|
|
|
|
|
Net
income
|
|
|
786,746 |
|
|
|
|
|
|
BALANCE, December 31,
2007, as restated
|
|
|
(311,393 |
) |
|
|
|
|
|
Other
comprehensive loss (Note 6)
|
|
|
(88,820 |
) |
|
|
|
|
|
Offering
costs (Note 2)
|
|
|
(553,756 |
) |
|
|
|
|
|
Distributions
|
|
|
(784,837 |
) |
|
|
|
|
|
Net
income
|
|
|
1,923,979 |
|
|
|
|
|
|
BALANCE, December 31,
2008, as restated
|
|
$ |
185,173 |
|
The accompanying notes are an
integral part of these statements.
UNITED
STATES COMMODITY FUNDS LLC AND SUBSIDIARIES
(formerly
Victoria Bay Asset Management, LLC)
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
As
Restated (Note 8)
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$ |
1,923,979 |
|
|
$ |
786,746 |
|
|
$ |
(563,035 |
) |
Adjustments
to reconcile net income to net cash used
in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized
gain from sales of securities
|
|
|
- |
|
|
|
(85,415 |
) |
|
|
- |
|
Increase
in management fees receivable
|
|
|
(392,983 |
) |
|
|
(167,392 |
) |
|
|
(332,736 |
) |
Increase
in deferred offering costs
|
|
|
(719,495 |
) |
|
|
(897,197 |
) |
|
|
(311,262 |
) |
(Increase)
decrease in due from parent
|
|
|
- |
|
|
|
295,754 |
|
|
|
(295,754 |
) |
(Increase)
decrease in other assets
|
|
|
980 |
|
|
|
(2,940 |
) |
|
|
- |
|
Increase
(decrease) in due to parent
|
|
|
(109,539 |
) |
|
|
109,539 |
|
|
|
- |
|
Increase
in income taxes payable
|
|
|
254,498 |
|
|
|
30,902 |
|
|
|
- |
|
Increase
in expense waiver payable
|
|
|
311,038 |
|
|
|
- |
|
|
|
- |
|
Increase
(decrease) in accounts payable
|
|
|
(410,756 |
) |
|
|
(572,357 |
) |
|
|
1,124,296 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by (used in) operating activities
|
|
|
857,722 |
|
|
|
(502,360 |
) |
|
|
(378,491 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from sales of securities
|
|
|
- |
|
|
|
464,985 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
contributions
|
|
|
- |
|
|
|
- |
|
|
|
74,020 |
|
Distributions
|
|
|
(784,837 |
) |
|
|
- |
|
|
|
- |
|
Increase
(decrease):
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority
interest in United States Oil Fund, LP
|
|
|
- |
|
|
|
- |
|
|
|
(980 |
) |
Minority
interest in United States Natural Gas Fund, LP
|
|
|
- |
|
|
|
- |
|
|
|
980 |
|
Minority
interest in United States Heating Oil Fund, LP
|
|
|
(980 |
) |
|
|
980 |
|
|
|
- |
|
Minority
interest in United States Gasoline Fund, LP
|
|
|
(980 |
) |
|
|
980 |
|
|
|
- |
|
Minority
interest in United States Short Oil Fund, LP
|
|
|
980 |
|
|
|
- |
|
|
|
- |
|
Minority
interest in United States 12 Month Natural
Gas Fund, LP
|
|
|
- |
|
|
|
980 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by (used in) financing activities
|
|
|
(785,817 |
) |
|
|
2,940 |
|
|
|
74,020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCREASE (DECREASE) IN CASH
|
|
|
71,905 |
|
|
|
(34,435 |
) |
|
|
(304,471 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH, beginning of
year
|
|
|
53,910 |
|
|
|
88,345 |
|
|
|
392,816 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH, end of
year
|
|
$ |
125,815 |
|
|
$ |
53,910 |
|
|
$ |
88,345 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF NON-CASH
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING
AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
and offering costs contributed by member, net of liabilities assumed
(Note 3)
|
|
$ |
- |
|
|
$ |
800,313 |
|
|
$ |
- |
|
Distribution
of investments to parent
|
|
$ |
- |
|
|
$ |
343,769 |
|
|
$ |
- |
|
The accompanying notes are an
integral part of these statements.
UNITED
STATES COMMODITY FUNDS LLC AND SUBSIDIARIES
(formerly
Victoria Bay Asset Management, LLC)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS AS RESTATED
NOTE 1 -
ORGANIZATION AND
OPERATION
Victoria
Bay Asset Management, LLC was formed as a single-member limited liability
company in the State of Delaware on May 10, 2005. On June 13, 2008,
Victoria Bay Asset Management, LLC changed its name to United States Commodity
Funds LLC (the “Company”). The Company is the General Partner (the
“General Partner”) of United States Oil Fund, LP (“USOF”), United States Natural
Gas Fund, LP (“USNG”), United States Heating Oil Fund, LP (“USHO”), United
States Gasoline Fund, LP (“USG”), United States 12 Month Oil Fund, LP
(“US12OF”), United States 12 Month Natural Gas Fund, LP (“US12NG”) and United
States Short Oil Fund, LP (“USSO”). The Company is registered as a
commodity pool operator with the Commodity Futures Trading Commission (“CFTC”)
and is a member of the National Futures Association (“NFA”). USOF, USNG, USHO,
USG and US12OF (collectively, the “Funds”) are commodity pools registered with
the CFTC and members of the NFA that issue units that may be purchased and sold
on the NYSE Arca, Inc. (“NYSE Arca”) under the ticker symbols “USO”, “UNG”,
“UHN”, “UGA” and “USL”.
USOF
began trading on April 10, 2006 by purchasing futures contracts for light, sweet
crude oil that are traded on the New York Mercantile Exchange (the
“Exchange”). The investment objective of USOF is for the changes in
percentage terms of its units’ net asset value to reflect the changes in
percentage terms of the spot price of light, sweet crude oil delivered to
Cushing, Oklahoma, as measured by the changes in the price of the futures
contract on light sweet crude oil traded on the Exchange, that is the near month
contract to expire, except when the near month contract is within two weeks of
expiration, in which case it will be measured by the futures contract that is
the next month contract to expire, less USOF’s expenses. USOF seeks
to accomplish its objective through investments in futures contracts for light,
sweet crude oil, other types of crude oil, heating oil, gasoline, natural gas
and other petroleum-based fuels that are traded on the Exchange and other U.S.
and foreign exchanges and other oil interests such as cash-settled options on
listed oil futures contracts, forward contracts for crude oil, and
over-the-counter transactions that are based on the price of crude oil, heating
oil, gasoline, natural gas and other petroleum-based fuels.
USNG
began trading on April 18, 2007 by purchasing futures contracts for natural gas
that are traded on the Exchange. The investment objective of USNG is
for the changes in percentage terms of its units’ net asset value to reflect the
changes in percentage terms of the price of natural gas delivered to the Henry
Hub, Louisiana as measured by the changes in the price of the futures contract
on natural gas traded on the Exchange that is the near month contract to expire,
except when the near month contract is within two weeks of expiration, in which
case it will be measured by the futures contract that is the next month contract
to expire, less USNG’s expenses. USNG seeks to accomplish its
objective through investments in listed natural gas futures contracts and other
natural gas interests such as cash-settled options on futures contracts, forward
contracts for natural gas, and over-the-counter transactions that are based on
the price of natural gas, crude oil, heating oil, gasoline and other
petroleum-based fuels.
US12OF
began trading on December 6, 2007 by purchasing futures contracts for light,
sweet crude oil that are traded on the Exchange. The investment
objective of US12OF is for the changes in percentage terms of its units’ net
asset value to reflect the changes in percentage terms of the price of light,
sweet crude oil delivered to Cushing, Oklahoma, as measured by the changes in
the average of the prices of 12 futures contracts on crude oil traded on the
Exchange, consisting of the near month contract to expire and the contracts for
the following eleven months, for a total of 12 consecutive months’ contracts,
except when the near month contract is within two weeks of expiration, in which
case it will be measured by the futures contracts that are the next month
contract to expire and the contracts for the following eleven consecutive
months, less US12OF’s expenses. When calculating the daily movement of the
average price of the 12 contracts each contract month will be equally
weighted.
UNITED
STATES COMMODITY FUNDS LLC AND SUBSIDIARIES
(formerly
Victoria Bay Asset Management, LLC)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS AS RESTATED
NOTE 1 - ORGANIZATION AND OPERATION
(concluded)
US12OF
seeks to accomplish its objective through investments in futures contracts and
other oil interests such as cash-settled options on listed oil futures
contracts, forward contracts for crude oil, and over-the-counter transactions
that are based on the price of crude oil, heating oil, gasoline, natural gas and
other petroleum-based fuels.
USG began
trading on the American Stock Exchange on February 26, 2008 by purchasing
futures contracts on gasoline that are traded on the Exchange. The
investment objective of USG is for the changes in percentage terms of its units’
net asset value to reflect the changes in percentage terms of the price of
unleaded gasoline, as measured by the changes in the price of the futures
contract on gasoline traded on the Exchange that is the near month contract to
expire, except when the near month contract is within two weeks of expiration,
in which case it will be measured by the futures contract that is the next month
contact to expire, less USG’s expenses. USG seeks to accomplish its objective
through investments in listed gasoline futures contracts and other gasoline
interests such as cash-settled options on futures contracts, forward contracts
for gasoline and over-the-counter transactions that are based on the price of
gasoline, heating oil, natural gas, crude oil, and other petroleum-based
fuels.
USHO
began trading on the American Stock Exchange on April 9, 2008 by purchasing
futures contracts on heating oil that are traded on the Exchange. The
investment objective of USHO is for the changes in percentage terms of its
units’ net asset value to reflect the changes in percentage terms of the price
of heating oil, as measured by the changes in the price of the futures contract
on heating oil traded on the Exchange that is the near month contract to expire,
except when the near month contract is within two weeks of expiration, in which
case it will be measured by the futures contract that is the next month contact
to expire, less USHO’s expenses. USHO seeks to accomplish its objective through
investments in listed heating oil futures contracts and other heating oil
interests such as cash-settled options on futures contracts, forward contracts
for heating oil and over-the-counter transactions that are based on the price of
heating oil, natural gas, crude oil, gasoline and other petroleum-based
fuels.
As of
December 31, 2008, US12NG and USSO had not formally begun
operations. US12NG and USSO each have filed a registration statement
on Form S-1 with the Securities and Exchange Commission (the “SEC”) and the
Company is in the process of filings amendments to Form S-1 for
USSO.
The
Company is a wholly owned subsidiary of Wainwright Holdings, Inc.
(“Wainwright”), a Delaware corporation. Wainwright is a holding
company that is controlled by the president of the Company and serves as the
initial limited partner of the Funds.
As the
General Partner of the Funds, the Company is required to evaluate the credit
risk of the Funds to their futures commission merchant, oversee the purchases
and sales of the Funds’ units by certain “authorized purchasers,” review the
daily positions and margin requirements of the Funds, and manage the Funds’
investments. The Company also pays continuing service fees to the marketing
agent for communicating with the authorized purchasers.
UNITED
STATES COMMODITY FUNDS LLC AND SUBSIDIARIES
(formerly
Victoria Bay Asset Management, LLC)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS AS RESTATED
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Principles of
consolidation
The
Company as General Partner of the Funds has included the accounts of the Funds
since their inception in the consolidated financial statements. The Company has
recorded a minority interest for the amount directly owned by the limited
partner (representing the limited partner interest owned by
Wainwright). Subsequent to the Funds going effective with the SEC,
the Company and Wainwright redeemed their partnership interests. Therefore, as
of December 31, 2008, the accounts of each of the Funds were no longer included
in the accompanying consolidated statement of financial
condition. All intercompany accounts and balances have been
eliminated in consolidation.
Revenue
recognition
The
Company recognizes revenue in the period earned under the terms of its
management agreements with the Funds. These agreements provide for fees based
upon a percentage of the daily average net asset value of the
Funds. In connection with the Funds’ trading activities, commodity
futures contracts, forward contracts, physical commodities, and related options
are recorded on the trade-date basis. All such transactions are recorded on the
identified cost basis and marked to market daily. Unrealized gains and losses on
open contracts are reflected in the statement of financial condition and
represent the difference between original contract amount and market value (as
determined by exchange settlement prices for futures contracts and related
options and cash dealer prices at a predetermined time for forward contracts,
physical commodities, and their related options) as of the last business day of
the year or as of the last date of the financial statements. Changes in the
unrealized gains or losses between periods are reflected in the statement of
operations.
The
Company earns interest on its assets on deposit at the broker at the 90-day
Treasury bill rate for deposits denominated in U.S. dollars. In
addition, the Funds earn interest on funds held with their custodian at
prevailing market rates earned on such investments.
General Partner management
fee
Under the
Funds’ respective Limited Partnership Agreements, the Company is responsible for
investing the assets of the Funds in accordance with the objectives and policies
of the Funds. In addition, the Company has arranged for one or more
third parties to provide administrative, custody, accounting, transfer agency
and other necessary services to the Funds. For these services, the
Funds are contractually obligated to pay the Company a management fee, which is
paid monthly, based on the average daily net assets of the
Funds. Through December 31, 2008 USOF paid a fee equal to 0.50% per
annum on average daily net assets of $1,000,000,000 or less and 0.20% of average
daily net assets that are greater than $1,000,000,000. Effective
January 1, 2009, USOF pays a management fee of 0.45% per annum on its average
daily net assets. USNG pays a fee equal to 0.60% per annum on average
daily net assets of $1,000,000,000 or less and 0.50% of average daily net assets
that are greater than $1,000,000,000. US12OF, USHO and USG each pay a
fee of 0.60% per annum on their average daily net assets.
The Funds
pay for all brokerage fees, taxes and other expenses, including licensing fees
for the use of intellectual property, registration or other fees paid to the
SEC, the Financial Industry Regulatory Authority (“FINRA”) formerly the National
Association of Securities Dealers, or any other regulatory agency in connection
with the offer and sale of subsequent units after their initial registration and
all legal, accounting, printing and other expenses associated therewith. The
Funds also pay the fees and expenses of the independent
directors.
UNITED
STATES COMMODITY FUNDS LLC AND SUBSIDIARIES
(formerly
Victoria Bay Asset Management, LLC)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS AS RESTATED
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
The
Company’s investments in common stock are classified as
available-for-sale-securities and are considered to be held for an indefinite
period. Securities investments not classified as either
held-to-maturity or trading securities are classified as available-for-sale
securities. Available-for-sale-securities are recorded at fair value
on the statement of financial condition, with the change in fair value excluded
from earnings and recorded as a component of other comprehensive income included
in member’s equity. Unrealized holding losses on such securities,
which were subtracted from member’s equity were $(88,820) and $(443,189) for the
years ended December 31, 2008 and 2007, respectively (Note
5).
Realized
gains or losses are recorded upon disposition of investments calculated based
upon the difference between the proceeds and the cost basis determined using the
specific identification method.
Brokerage
commissions
Brokerage
commissions on all open commodity futures contracts are accrued on a full-turn
basis.
Additions and
redemptions
Authorized
purchasers may purchase creation baskets consisting of 100,000 units from the
Funds as of the beginning of each business day based upon the prior day’s net
asset value. Authorized purchasers may redeem units from the Funds
only in blocks of 100,000 units called “Redemption Baskets.” The
amount of the redemption proceeds for a Redemption Basket will be equal to the
net asset value of the Funds’ units in the Redemption Basket as of the end of
each business day.
The Funds
receive or pay the proceeds from units sold or redeemed one business day after
the trade-date of the purchase or redemption. The amounts due from
authorized purchasers are reflected in the Funds’ statement of financial
condition as receivables for units sold, and amounts payable to authorized
purchasers upon redemption are reflected as payable for units
redeemed.
Partnership capital and
allocation of partnership income and losses
Profit or
loss shall be allocated among the partners of the Funds in proportion to the
number of units each partner holds as of the close of each month. The
General Partner may revise, alter or otherwise modify this method of allocation
as described in the Limited Partnership Agreements.
Calculation of net asset
value
The Funds
calculate their net asset value on each trading day by taking the current market
value of their total assets, subtracting any liabilities and dividing the amount
by the total number of units issued and outstanding. The Funds use
the Exchange closing price on that day for contracts traded on the
Exchange.
Cash
equivalents are highly liquid investments with original maturity dates of three
months or less.
UNITED
STATES COMMODITY FUNDS LLC AND SUBSIDIARIES
(formerly
Victoria Bay Asset Management, LLC)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS AS RESTATED
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Accounting
estimates
The
preparation of the financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements. Actual results could differ
from those estimates.
The
Company has filed an election with the Internal Revenue Service to be treated as
an association taxable as a corporation. The Company files a
consolidated federal income tax return with Wainwright and provides for income
taxes as if the Company filed separately. The Company, however, does
not file consolidated for state income tax purposes. The Company
accounts for income taxes in accordance with Statement of Financial Accounting
Standards No. 109, “Accounting for Income Taxes.” Under the asset and
liability method of Statement 109, deferred tax assets and liabilities are
recognized for the estimated future tax consequences or benefits attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax basis. Deferred tax assets
and liabilities are measured using the enacted tax rates in effect for the year
in which those temporary differences are expected to be recovered or
settled.
The
Company capitalizes all initial offering costs associated with the registration
of the Funds until such time as the registration process with the SEC is
complete. At this time, the Company charges the capitalized costs to
member’s equity. Deferred offering costs includes, but is not limited
to, legal fees pertaining to the Funds’ units offered for sale, SEC and state
registration fees, initial fees paid to be listed on an exchange and
underwriting and other similar costs.
Recent accounting
pronouncements
Effective
January 1, 2008, the Company adopted FASB Interpretation No. 48 (“FIN 48”),
“Accounting for Uncertainty in Income Taxes”, which establishes that a tax
position taken or expected to be taken in a tax return is to be recognized in
the consolidated financial statements when it is more likely than not, based on
the technical merits, that the position will be sustained upon examination. FIN
48 is effective for private companies for fiscal years beginning after December
15, 2008. The adoption of FIN 48 did not materially impact the Company’s
financial statements.
Effective
January 1, 2008, the Company adopted FAS 157 - Fair Value Measurements (“FAS
157” or the “Statement”). FAS 157 defines fair value, establishes a framework
for measuring fair value in generally accepted accounting principles (“GAAP”),
and expands disclosures about fair value measurement. The changes to current
practice resulting from the application of the Statement relate to the
definition of fair value, the methods used to measure fair value, and the
expanded disclosures about fair value measurement. The Statement establishes a
fair value hierarchy that distinguishes between (1) market participant
assumptions developed based on market data obtained from sources independent of
each of the funds (observable inputs) and (2) the Company’s own assumptions
about market participant assumptions developed based on the best information
available under the circumstances (unobservable inputs). The three levels
defined by the FAS 157 hierarchy are as follows:
UNITED
STATES COMMODITY FUNDS LLC AND SUBSIDIARIES
(formerly
Victoria Bay Asset Management, LLC)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS AS RESTATED
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (concluded)
Recent accounting
pronouncements (concluded)
Level I -
Quoted prices (unadjusted) in active markets for identical assets or
liabilities that the reporting entity has the ability to access at the
measurement date.
Level II
- Inputs other than quoted prices included within Level 1 that are observable
for the asset or liability, either directly or indirectly. Level II assets
include the following: quoted prices for similar assets or liabilities
in active markets, quoted prices for identical or similar assets or liabilities
in markets that are not active, inputs other than
quoted prices that are observable for the asset or liability, and inputs that
are derived principally from or corroborated by observable market data by
correlation or other means (market-corroborated inputs).
Level III
- Unobservable pricing input at the measurement date for the asset or liability.
Unobservable inputs shall be used to measure fair value to the extent that
observable inputs are not available.
In some
instances, the inputs used to measure fair value might fall in different levels
of the fair value hierarchy. The level in the fair value hierarchy within which
the fair value measurement in its entirety falls shall be determined based on
the lowest input level that is significant to the fair value measurement in its
entirety.
The
following table summarizes the valuation of the Company’s investments at
December 31, 2008 and December 31, 2007 using the fair value
hierarchy:
At December 31, 2008:
|
|
Total
|
|
|
Level I
|
|
|
Level II
|
|
|
Level III
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
$ |
34,579 |
|
|
$ |
34,579 |
|
|
$ |
- |
|
|
$ |
- |
|
At December 31, 2007:
|
|
Total
|
|
|
Level I
|
|
|
Level II
|
|
|
Level III
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
$ |
123,398 |
|
|
$ |
123,398 |
|
|
$ |
- |
|
|
$ |
- |
|
NOTE 3 - CAPITALIZATION AND RELATED PARTY
TRANSACTIONS
During
the year ended December 31, 2008, the Company paid $784,837 in distributions to
its member. During the year ended December 31, 2007, Wainwright contributed
$1,280,906 in marketable securities in connection with its interest in the
Company. In addition, the Company and USOF have incurred offering and
organizational costs in the amount of $2,023,991 which are not included in the
accompanying consolidated financial statements at December 31,
2008. Wainwright has provided funding for these costs, but is under
no obligation to do so or continue funding these costs. The Company
and USOF are not required to reimburse Wainwright or its affiliates for any such
costs incurred. On June 1, 2007, accounts payable of $480,593
relating to USOF’s offering costs incurred but unpaid by Wainwright were assumed
by the Company in connection with Wainwright’s equity infusion of marketable
securities as mentioned above. The effect of this transaction
increased investments by $1,280,906, offering costs by $480,593, accounts
payable by $480,593 and equity by $1,280,906. Included in deferred
offering costs at December 31, 2008 (for US12NG and USSO) and December 31, 2007
(for US12NG, USG and USHO) is $352,794 and $187,056 respectively, of initial
offering and organizational costs incurred by the Funds. These
initial offering and organization costs incurred by the Funds will be borne by
the Company and not be charged to the Funds.
UNITED
STATES COMMODITY FUNDS LLC AND SUBSIDIARIES
(formerly
Victoria Bay Asset Management, LLC)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS AS RESTATED
NOTE 3 - CAPITALIZATION AND RELATED PARTY TRANSACTIONS
(concluded)
The Funds
were each capitalized with $1,000, of which the Company contributed $20 and
Wainwright contributed $980. The Company paid its parent distributions of
$784,837 for the year ended December 31, 2008 and $343,769 for the year ended
December 31, 2007.
In
addition, the General Partner, through no obligation to do so, has agreed to pay
certain expenses, including those relating to audit expenses and tax accounting
and reporting requirements normally borne by USHO, USG and US12OF to
the extent that such expenses exceed 0.15% (15 basis points) of their
NAV, on an annualized basis, through December 31, 2008. The General Partner has
no obligation to continue such payments in subsequent years. The total amount of
these costs to be paid by the General Partner, USHO, USG and US12OF is estimated
to be $360,000 for the year ended December 31, 2008.
NOTE
4
- INCOME
TAXES
The
Company has filed an election with the Internal Revenue Service to be treated as
an association taxable as a corporation. The Company files a
consolidated federal income tax return with Wainwright and provides for income
taxes as if the Company filed separately. The Company, however, does
not file on a consolidated basis for state income tax purposes. In
connection with filing a consolidated federal income tax return, the Company has
recorded federal income tax expense (benefit) and has recorded a corresponding
due from parent and due to parent for its federal tax liability
(benefit). The Company had a receivable from Wainwright of $295,754
as of December 31, 2006 and a payable to Wainwright of $109,539 as of December
31, 2007 in connection with its federal tax liability (benefit).
Deferred
tax assets and liabilities reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant
components of the Company’s deferred tax liabilities and assets as of December
31, 2008, 2007 and 2006 are as follows:
|
|
December
31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
tax liabilities
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
tax assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
losses on investments
|
|
$ |
224,000 |
|
|
$ |
186,000 |
|
|
$ |
- |
|
Valuation
allowance for deferred tax asset
|
|
|
(224,000 |
) |
|
|
(186,000 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
The
valuation allowance increased by $38,000 and $186,000 for the years ended
December 31, 2008 and 2007.
The
deferred tax asset shown above relates to the unrealized losses on investments
is accounted for as other comprehensive loss (see Note 6).
UNITED
STATES COMMODITY FUNDS LLC AND SUBSIDIARIES
(formerly
Victoria Bay Asset Management, LLC)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS AS RESTATED
NOTE
5
- CONTRACTS
AND AGREEMENTS
The
Company, together with each of the Funds, is a party to marketing agent
agreements with ALPS Distributors, Inc. (“ALPS”), a Colorado corporation,
whereby ALPS provides certain marketing services for the Funds as outlined in
their respective agreements. Under the agreement dated as of March 13, 2006, as
amended, whereby ALPS provides certain marketing services for USOF, the Company
pays ALPS a marketing fee of $425,000 per annum plus the
following incentive fee: 0.00% on USOF’s assets from $0 — $500 million; 0.04% on
USOF’s assets from $500 million — $4 billion; and 0.03% on USOF’s assets in
excess of $4 billion. Under the agreement dated as of April 17, 2007, whereby
ALPS provides certain marketing services for USNG, and the agreement dated as of
November 13, 2007, whereby ALPS provides certain marketing services for US12OF,
the Company pays ALPS fees equal to 0.06% on each of USNG’s and US12OF’s assets
up to $3 billion and 0.04% on each of USNG’s and US12OF’s assets in excess of $3
billion. Under the agreement dated as of February 15, 2008, whereby
ALPS provides certain marketing services for USG, and the agreement dated March
10, 2008 whereby ALPS provides certain marketing services for USHO, the Company
pays ALPS fees equal to fees equal to 0.06% on each of USG’s and USHO’s assets
up to $3 billion and 0.04% on each of USG’s and USHO’s assets in excess of $3
billion.
The above
fees do not include the following expenses, which are also borne by the Company,
the cost of placing advertisements in various periodicals, web construction and
development, and the printing and production of various marketing
materials.
The
Company, with each of the Funds are also parties to custodian agreements with
Brown Brothers Harriman & Co. (“Brown Brothers”), whereby Brown Brothers
holds investments on behalf of the Funds. The Company pays the fees of the
custodian, which shall be determined by the parties from time to time. In
addition, the Company, with each of the Funds, are parties to administrative
agency agreements with Brown Brothers, whereby Brown Brothers acts as the
administrative agent, transfer agent and registrar for each of the Funds. The
Company also pays the fees of Brown Brothers for its services under these
agreements and such fees will be determined by the parties from time to
time.
Currently,
the Company pays Brown Brothers for its services, in the foregoing capacities,
the greater of a minimum amount of $75,000 annually or an asset-based charge of
(a) 0.06% for the first $500 million of combined net assets, (b) 0.0465% for
combined net assets greater than $500 million but less than $1 billion, and (c)
0.035% of combined net assets in excess of $1 billion. The Company also pays a
$20,000 annual fee for transfer agency services and transaction fees ranging
from $7.00 to $15.00 per transaction.
Each of
the Funds have entered into brokerage agreements with UBS Securities LLC as the
Futures Commission Merchant (the “FCM”). The agreements provide that the FCM
will charge commissions of approximately $7 to $8 per round-turn trade plus
applicable exchange and NFA fees for futures contracts and options on futures
contracts.
Each of
the Funds have invested primarily in futures contracts traded on the Exchange
since the commencement of their operations. On May 30, 2007, USOF and USNG
entered into a license agreement with the Exchange whereby the Funds were
granted a non-exclusive license to use certain of the Exchange’s settlement
prices and service marks. The agreement has an effective date of April 10, 2006.
Under the license agreement, the Funds pay the Exchange an asset-based fee for
the license. Pursuant to the agreement, the Funds pay a licensing fee that is
equal to 0.04% for the first $1,000,000,000 of combined assets of the Funds and
0.02% for combined assets above $1,000,000,000. US12OF, USG and USHO entered
into the above license agreement on the same terms with an effective date of
December 4, 2007. Other funds managed by the Company will also be granted a
similar non-exclusive license on the same terms.
UNITED
STATES COMMODITY FUNDS LLC AND SUBSIDIARIES
(formerly
Victoria Bay Asset Management, LLC)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS AS RESTATED
NOTE 5
- CONTRACTS AND AGREEMENTS
(concluded)
The Funds
expressly disclaim any association with the Exchange or endorsement of the Funds
by the Exchange and acknowledge that “NYMEX” and “New York Mercantile Exchange”
are registered trademarks of such Exchange.
The
Company has contracted an accounting firm to prepare each of the Funds’ yearly
income tax filings with the Internal Revenue Service. The yearly cost to the
Company for these services is estimated to be approximately $525,000. The cost
associated with any registered new fund is expected to be
comparable.
NOTE
6
- ACCUMULATED
COMPREHENSIVE LOSS
Changes
in accumulated other comprehensive loss as of December 31, 2008, 2007 and 2006
are as follows:
Balance, December 31,
2006
|
|
$ |
- |
|
|
|
|
|
|
Unrealized
holding losses on investments
|
|
|
(433,189 |
) |
|
|
|
|
|
Balance, December 31,
2007
|
|
|
(433,189 |
) |
|
|
|
|
|
Unrealized
holding losses on investments
|
|
|
(88,820 |
) |
|
|
|
|
|
Balance, December 31,
2008
|
|
$ |
(522,009 |
) |
The
Company records its other comprehensive loss net of income tax expense
(benefit). As of December 31, 2008, the Company has not recorded an
income tax expense or benefit associated with its other comprehensive loss (see
Note 4).
NOTE
7
- OFF-BALANCE
SHEET RISKS AND CONTINGENCIES
The Funds
engage in the trading of U.S. futures contracts and options on U.S. contracts
(collectively “derivatives”). The Funds are exposed to both market
risk, the risk arising from changes in the market value of the contracts; and
credit risk, the risk of failure by another party to perform according to the
terms of a contract.
All of
the contracts currently traded by the Funds are exchange-traded. The
risks associated with exchange-traded contracts are generally perceived to be
less than those associated with over-the-counter transactions since, in
over-the-counter transactions; the Funds must rely solely on the credit of their
respective individual counterparties. However, in the future, if the
Funds were to enter into non-exchange traded contracts, they would be subject to
the credit risk associated with counterparty non-performance. The
credit risk from counterparty non-performance associated with such instruments
is the net unrealized gain, if any. The Funds also have credit risk
since the sole counterparty to all domestic futures contracts is the exchange
clearing corporation. In addition, the Funds bear the risk of
financial failure by the clearing broker.
UNITED
STATES COMMODITY FUNDS LLC AND SUBSIDIARIES
(formerly
Victoria Bay Asset Management, LLC)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS AS RESTATED
NOTE 7
- OFF-BALANCE SHEET RISKS AND
CONTINGENCIES (concluded)
The
purchase and sale of futures and options on futures contracts require margin
deposits with an FCM. Additional deposits may be necessary for any loss on
contract value. The Commodity Exchange Act requires an FCM to segregate all
customer transactions and assets from the FCM’s proprietary
activities.
A
customer’s cash and other property, such as U.S. Treasury Bills, deposited with
an FCM are considered commingled with all other customer funds subject to the
FCM’s segregation requirements. In the event of an FCM’s insolvency, recovery
may be limited to a pro rata share of segregated funds available. It is possible
that the recovered amount could be less than the total of cash and other
property deposited.
For
derivatives, risks arise from changes in the market value of the contracts.
Theoretically, the Funds are exposed to market risk equal to the value of
futures and forward contracts purchased and unlimited liability on such
contracts sold short. As both buyers and sellers of options, the Funds pay or
receive a premium at the outset and then bear the risk of unfavorable changes in
the price of the contract underlying the option.
The
Company’s policy is to continuously monitor its exposure to market and
counterparty risk through the use of a variety of financial, position and credit
exposure reporting and control procedures. In addition, the Company
has a policy of reviewing the credit standing of each clearing broker or
counter-party with which it conducts business.
The
financial instruments held by the Company are reported in the statement of
financial condition at market or fair value, or at carrying amounts that
approximate fair value, because of their highly liquid nature and short-term
maturities.
The
Company has securities for its own account and may incur losses if the market
value of the securities decreases subsequent to December 31, 2008.
NOTE
8
- RESTATEMENT
OF CONSOLIDATED FINANCIAL STATEMENTS
The
Company’s management concluded that there were errors associated with the
Company’s accounting for income taxes. The Company was formed as a
single-member limited liability company which is a disregarded entity for
federal income tax purposes. However, the Company filed an election
with the Internal Revenue Service to treat the Company as an association taxable
as a corporation. As a result of the error in accounting for income
taxes, the income tax payable, member distributions, income tax provision
(benefit) and due from and to parent have been restated for the years ending
December 31, 2008, 2007 and 2006.
There was
no cumulative effect from the error on member’s equity as of December 31,
2005. The following is a summary of the significant effects of the
restatements on the Company’s consolidated statements of financial condition as
of December 31, 2008, 2007 and 2006 and its consolidated statements of
operations and cash flows for the years then ended.
UNITED
STATES COMMODITY FUNDS LLC AND SUBSIDIARIES
(formerly
Victoria Bay Asset Management, LLC)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS AS RESTATED
NOTE 8
- RESTATEMENT OF CONSOLIDATED FINANCIAL
STATEMENTS (continued)
|
|
December 31, 2008
|
|
|
December 31, 2007
|
|
|
December 31, 2006
|
|
|
|
As
|
|
|
|
|
|
|
|
|
As
|
|
|
|
|
|
|
|
|
As
|
|
|
|
|
|
|
|
|
|
Previously
|
|
|
|
|
|
|
|
|
Previously
|
|
|
|
|
|
|
|
|
Previously
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
|
Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
|
Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Consolidated
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$ |
125,815 |
|
|
$ |
- |
|
|
$ |
125,815 |
|
|
$ |
53,910 |
|
|
$ |
- |
|
|
$ |
53,910 |
|
|
$ |
88,345 |
|
|
$ |
- |
|
|
$ |
88,345 |
|
Receivables
|
|
|
893,111 |
|
|
|
- |
|
|
|
893,111 |
|
|
|
500,128 |
|
|
|
- |
|
|
|
500,128 |
|
|
|
332,736 |
|
|
|
- |
|
|
|
332,736 |
|
Investments
|
|
|
34,579 |
|
|
|
- |
|
|
|
34,579 |
|
|
|
123,398 |
|
|
|
- |
|
|
|
123,398 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Deferred
offering costs
|
|
|
352,794 |
|
|
|
- |
|
|
|
352,794 |
|
|
|
187,056 |
|
|
|
- |
|
|
|
187,056 |
|
|
|
311,262 |
|
|
|
- |
|
|
|
311,262 |
|
Due
from parent
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
295,754 |
|
|
|
295,754 |
|
Other
assets
|
|
|
1,960 |
|
|
|
- |
|
|
|
1,960 |
|
|
|
2,940 |
|
|
|
- |
|
|
|
2,940 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
$ |
1,408,259 |
|
|
|
|
|
|
$ |
1,408,259 |
|
|
$ |
867,432 |
|
|
|
|
|
|
$ |
867,432 |
|
|
$ |
732,343 |
|
|
|
|
|
|
$ |
1,028,097 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
$ |
935,726 |
|
|
$ |
- |
|
|
$ |
935,726 |
|
|
$ |
1,035,444 |
|
|
$ |
- |
|
|
$ |
1,035,444 |
|
|
$ |
1,127,208 |
|
|
$ |
- |
|
|
$ |
1,127,208 |
|
Due
to parent
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
109,539 |
|
|
|
109,539 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Income
taxes payable
|
|
|
- |
|
|
|
285,400 |
|
|
|
285,400 |
|
|
|
- |
|
|
|
30,902 |
|
|
|
30,902 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Minority
interest
|
|
|
1,960 |
|
|
|
- |
|
|
|
1,960 |
|
|
|
2,940 |
|
|
|
- |
|
|
|
2,940 |
|
|
|
980 |
|
|
|
- |
|
|
|
980 |
|
|
|
|
937,686 |
|
|
|
|
|
|
|
1,223,086 |
|
|
|
1,038,384 |
|
|
|
|
|
|
|
1,178,825 |
|
|
|
1,128,188 |
|
|
|
|
|
|
|
1,128,188 |
|
Member's
equity (deficit)
|
|
|
470,573 |
|
|
|
(285,400 |
) |
|
|
185,173 |
|
|
|
(170,952 |
) |
|
|
(140,441 |
) |
|
|
(311,393 |
) |
|
|
(395,845 |
) |
|
|
295,754 |
|
|
|
(100,091 |
) |
|
|
$ |
1,408,259 |
|
|
|
|
|
|
$ |
1,408,259 |
|
|
$ |
867,432 |
|
|
|
|
|
|
$ |
867,432 |
|
|
$ |
732,343 |
|
|
|
|
|
|
$ |
1,028,097 |
|
UNITED
STATES COMMODITY FUNDS LLC AND SUBSIDIARIES
(formerly
Victoria Bay Asset Management, LLC)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS AS RESTATED
NOTE 8
- RESTATEMENT OF CONSOLIDATED FINANCIAL
STATEMENTS (concluded)
|
|
Year
Ended December 31, 2008
|
|
|
Year
Ended December 31, 2007
|
|
|
Year
Ended December 31, 2006
|
|
|
|
As
|
|
|
|
|
|
|
|
|
As
|
|
|
|
|
|
|
|
|
As
|
|
|
|
|
|
|
|
|
|
Previously
|
|
|
|
|
|
|
|
|
Previously
|
|
|
|
|
|
|
|
|
Previously
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
Adjustment
|
|
|
As
Restated
|
|
|
Reported
|
|
|
Adjustment
|
|
|
As
Restated
|
|
|
Reported
|
|
|
Adjustment
|
|
|
As
Restated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Statement of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
8,631,883 |
|
|
$ |
- |
|
|
$ |
8,631,883 |
|
|
$ |
4,871,265 |
|
|
$ |
- |
|
|
$ |
4,871,265 |
|
|
$ |
1,460,448 |
|
|
$ |
- |
|
|
$ |
1,460,448 |
|
Operating
expenses
|
|
|
(5,478,198 |
) |
|
|
30,902 |
|
|
|
(5,447,296 |
) |
|
|
(3,734,164 |
) |
|
|
- |
|
|
|
(3,734,164 |
) |
|
|
(2,319,237 |
) |
|
|
- |
|
|
|
(2,319,237 |
) |
Other
income
|
|
|
14 |
|
|
|
- |
|
|
|
14 |
|
|
|
85,840 |
|
|
|
- |
|
|
|
85,840 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Provision
for income taxes
|
|
|
- |
|
|
|
(1,260,622 |
) |
|
|
(1,260,622 |
) |
|
|
- |
|
|
|
(436,195 |
) |
|
|
(436,195 |
) |
|
|
- |
|
|
|
295,754 |
|
|
|
295,754 |
|
Net
income (loss)
|
|
|
3,153,699 |
|
|
|
|
|
|
|
1,923,979 |
|
|
|
1,222,941 |
|
|
|
|
|
|
|
786,746 |
|
|
|
(858,789 |
) |
|
|
|
|
|
|
(563,035 |
) |
Other
comprehensive loss
|
|
|
(88,820 |
) |
|
|
- |
|
|
|
(88,820 |
) |
|
|
(433,189 |
) |
|
|
- |
|
|
|
(433,189 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Comprehensive
income (loss)
|
|
$ |
3,064,879 |
|
|
|
|
|
|
$ |
1,835,159 |
|
|
$ |
789,752 |
|
|
|
|
|
|
$ |
353,557 |
|
|
$ |
(858,789 |
)
|
|
|
|
|
|
$ |
(563,035 |
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Statement of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$ |
3,153,699 |
|
|
$ |
(1,229,720 |
) |
|
$ |
1,923,979 |
|
|
$ |
789,752 |
|
|
$ |
(436,195 |
)
|
|
$ |
353,557 |
|
|
$ |
(858,789 |
)
|
|
$ |
295,754 |
|
|
$ |
(563,035 |
)
|
Non-cash
adjustments
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(85,415 |
) |
|
|
85,415 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Changes
in operating accounts
|
|
|
(1,211,216 |
) |
|
|
144,959 |
|
|
|
(1,066,257 |
) |
|
|
(1,206,697 |
) |
|
|
1,206,697 |
|
|
|
- |
|
|
|
480,298 |
|
|
|
(295,754 |
) |
|
|
184,544 |
|
|
|
|
1,942,483 |
|
|
|
|
|
|
|
857,722 |
|
|
|
(502,360 |
) |
|
|
|
|
|
|
353,557 |
|
|
|
(378,491 |
) |
|
|
|
|
|
|
(378,491 |
) |
Cash
flows from investing activities
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
464,985 |
|
|
|
(464,985 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
contributions
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
74,020 |
|
|
|
- |
|
|
|
74,020 |
|
Distributions
|
|
|
(1,869,598 |
) |
|
|
1,084,761 |
|
|
|
(784,837 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Minority
interests
|
|
|
(980 |
) |
|
|
- |
|
|
|
(980 |
) |
|
|
2,940 |
|
|
|
(2,940 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
(1,870,578 |
) |
|
|
|
|
|
|
(785,817 |
) |
|
|
2,940 |
|
|
|
|
|
|
|
- |
|
|
|
74,020 |
|
|
|
|
|
|
|
74,020 |
|
Net increase (decrease in cash)
|
|
|
71,905 |
|
|
|
|
|
|
|
71,905 |
|
|
|
(34,435 |
) |
|
|
|
|
|
|
353,557 |
|
|
|
(304,471 |
) |
|
|
|
|
|
|
(304,471 |
) |
Cash, beginning of year
|
|
|
53,910 |
|
|
|
|
|
|
|
53,910 |
|
|
|
88,345 |
|
|
|
|
|
|
|
88,345 |
|
|
|
392,816 |
|
|
|
|
|
|
|
392,816 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, end of year
|
|
$ |
125,815 |
|
|
|
|
|
|
$ |
125,815 |
|
|
$ |
53,910 |
|
|
|
|
|
|
$ |
441,902 |
|
|
$ |
88,345 |
|
|
|
|
|
|
$ |
88,345 |
|
Part
IV
Item
15. Exhibits and Financial Statement Schedules.
Listed
below are the exhibits which are filed as part of this Form 10-K/A (according to
the number assigned to them in Item 601 of Regulation S-K):
Exhibit
|
|
|
Number
|
|
Description of Document
|
23.1*
|
|
Consent
of Independent Registered Public Accounting Firm.
|
31.1*
|
|
Certification
by Principal Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
31.2*
|
|
Certification
by Principal Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
32.1*
|
|
Certification
by Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
32.2*
|
|
Certification
by Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
* Filed
herewith
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
United
States Gasoline Fund, LP (Registrant)
By:
United States Commodity Funds LLC, its general partner
By:
|
/s/
Nicholas D. Gerber
|
Nicholas
D. Gerber
|
Chief
Executive
Officer
|
Date: August
18, 2009
By:
|
/s/
Howard Mah
|
Howard
Mah
|
Chief
Financial
Officer
|
Date: August
18, 2009