Form 8-K United States Oil Fund, For: Mar 24

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

 

FORM 8-K

 

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): March 24, 2016

 

	UNITED STATES OIL FUND, LP
	(Exact name of registrant as specified in its charter)
Delaware	001-32834	20-2830691
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
	1999 Harrison Street, Suite 1530 Oakland, California 94612
(510) 522-9600	(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
	Not Applicable
	(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨	Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

8.01. Other Events.

 

Attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference are the audited Statements of Financial Condition of United States Commodity Funds LLC (“USCF”), the general partner of the United States Oil Fund, LP (the “Registrant”), as of December 31, 2015 and 2014.

 

Item 9.01. Financial Statements and Exhibits.

 

(d)

Exhibits.

 

Exhibit 23.1		Consent of Independent Registered Public Accounting Firm.
Exhibit 99.1		Audited Statements of Financial Condition of USCF as of December 31, 2015 and 2014.

 

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 hereunto duly authorized.

 

	UNITED STATES OIL FUND, LP
	By:	United States Commodity Funds LLC, its general partner
Date:  March 24, 2016	By:	/s/ Stuart Crumbaugh
	Name:	Stuart Crumbaugh
	Title:	Chief Financial Officer

 

 

 

Exhibit 23.1

 

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

We consent to the incorporation by reference in the Registration Statement on Form S-3 (File No. 333-209362) of our report dated March 24, 2016 relating to the statements of financial condition of United States Commodity Funds LLC as of December 31, 2015 and 2014 which appears in this Current Report on Form 8-K of United States Oil Fund, LP.

 

 

/s/ Burr Pilger Mayer, Inc.

San Francisco, California

March 24, 2016

 

 

 

Exhibit 99.1

 

United States Commodity Funds LLC

____________

 

Contents

 

	Page
Report of Independent Registered Public Accounting Firm	F - 1
Statements of Financial Condition	F - 2
Notes to Statements of Financial Condition	F - 3

 

 

Report of Independent Registered Public Accounting Firm

 

To the Board of Directors and Member of
United States Commodity Funds LLC

 

We have audited the accompanying statements of financial condition of United States Commodity Funds LLC (the “Company”) as of December 31, 2015 and 2014. The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the 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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included 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 financial position of United States Commodity Funds LLC as of December 31, 2015 and 2014 in conformity with accounting principles generally accepted in the United States of America.

 

As discussed in Note 8 to the statements of financial condition, the Company restated and corrected the statement of financial condition for certain errors resulting in an understatement of previously reported 2014 prepaid income taxes, deferred tax assets and accounts payable and accrued liabilities. Our opinion is not modified with respect to this matter.

 

/s/ Burr Pilger Mayer, Inc.

 

San Francisco, California

March 24, 2016

 

 

United States Commodity Funds LLC

 

Statements of Financial Condition

 

December 31, 2015 and 2014

____________

 

		2015				2014
							(As Restated)
ASSETS
Current assets:
Cash and cash equivalents		$	1,796,767			$	1,370,123
Short-term investments			966				1,190,630
Accounts receivable - related party			1,933,672				1,383,922
Prepaid income taxes			508,070				769,320
Other current assets			36,251				800
Total current assets			4,275,726				4,714,795
Deferred tax assets, net			1,162,919				1,251,776
Other assets			8,558				8,558
Total assets		$	5,447,203			$	5,975,129
LIABILITIES AND MEMBER'S EQUITY
Current liabilities:
Accounts payable and accrued liabilities		$	1,281,780			$	834,064
Expense waivers payable - related party			760,973				574,746
Total current liabilities			2,042,753				1,408,810
Commitments and contingencies (Note 5)
Member's equity			3,404,450				4,566,319
Total liabilities and member's equity		$	5,447,203			$	5,975,129

 

The accompanying notes are an integral
part of these statements of financial condition.

 

 

United States Commodity Funds LLC

 

Notes to Statements of Financial Condition

 

December 31, 2015 and 2014

____________

 

1.        Business

 

In May 2005, United States Commodity Funds, LLC (“USCF” or the “Company”), a wholly-owned subsidiary of Wainwright Holdings Inc. (“Wainwright”), was formed as a single member limited liability company in the State of Delaware. USCF is a registered commodity pool operator with the Commodity Futures Trading Commission (“CFTC”) and a member of the National Futures Association (“NFA”) and serves as the General Partner (“General Partner”) for various limited partnerships (“LP”) as noted below.

 

The Company’s operating activities consist primarily of providing management services to twelve public funds.

 

The Company is currently the General Partner in the following Securities Act of 1933 LP commodity based index funds and Sponsor (“Sponsor”) for the fund series within the United States Commodity Index Funds Trust (“USCIF Trust”):

 

USCF as General Partner for the following Funds
United States Oil Fund, LP (“USO”)	Organized as a Delaware limited partnership in May 2005
United States Natural Gas Fund, LP (“UNG”)	Organized as a Delaware limited partnership in November 2006
United States Gasoline Fund, LP (“UGA”)	Organized as a Delaware limited partnership in April 2007
United States Diesel Heating Oil Fund, LP (“UHN”)	Organized as a Delaware limited partnership in April 2007
United States 12 Month Oil Fund, LP (“USL”)	Organized as a Delaware limited partnership in June 2007
United States 12 Month Natural Gas Fund, LP (“UNL”)	Organized as a Delaware limited partnership in June 2007
United States Short Oil Fund, LP (“DNO”)	Organized as a Delaware limited partnership in June 2008
United States Brent Oil Fund, LP (“BNO”)	Organized as a Delaware limited partnership in September 2009
USCF as fund Sponsor - each a series within the USCIF Trust
United States Commodity Index Funds Trust (“USCI Trust”)	A series trust formed in Delaware December 2009
United States Commodity Index Fund (“USCI”)	A commodity pool formed in April 2010 and made public August 2010
United States Copper Index Fund (“CPER”)	A commodity pool formed in November 2010 and made public November 2011
United States Agriculture Index Fund (“USAG”)	A commodity pool formed in November 2010 and made public April 2012
United States Metal Index Fund (“USMI”)	A commodity pool formed in November 2010, and made public June 2012, ceased trading and liquidated March 2015

 

All USCF funds are collectively referred to as the “Funds” hereafter. 

 

2.

Summary of Significant Accounting Policies

 

Basis of Presentation and Consolidation

 

The accompanying statements of financial condition of the Company have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

 

Continued

 

 

United States Commodity Funds LLC

 

Notes to Statements of Financial Condition

 

December 31, 2015 and 2014

____________

 

2.

Summary of Significant Accounting Policies, continued

 

Use of Estimates

 

The preparation of 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, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

Revenue Recognition

 

The Company recognizes revenue under the Funds’ respective Limited Partnership Agreements, as amended from time to time (the “Limited Partnership Agreements”) and the Trust Agreement, as amended from time to time (the “Trust Agreement”). These Agreements provide for fees based upon a percentage of the daily average net asset value of the Funds. The Company is responsible for investing the assets of the Funds in accordance with the objectives and policies of the respective 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 and is contractually obligated to pay 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.

 

USO pays a management fee of 0.45% (45 basis points) per annum on its average daily net assets. UNG pays a fee equal to 0.60% (60 basis points) per annum on average daily net assets of $1,000,000,000 or less and 0.50% (50 basis points) of average daily net assets that are greater than $1,000,000,000. USL, UGA, UHN, and DNO each pay a fee of 0.60% (60 basis points) per annum on their average daily net assets. From inception through April 30, 2010, the Company has been charging UNL a management fee at a reduced rate of 0.60% (60 basis points) per annum of average daily net assets. Effective May 1, 2010, the Company resumed charging UNL its standard rate of 0.75% (75 basis points) per annum of average daily net assets. The difference of 0.15% (15 basis points) per annum of average daily net assets since inception through April 30, 2010 has been waived by the Company and will not be recouped from UNL. BNO pays a management fee of 0.75% (75 basis points) per annum on its average daily net assets.

 

Effective May 1, 2014 and continuing through December 31, 2015, the Company has contractually agreed to lower the management fee for USCI to 0.80% (80 basis points), 0.65% (65 basis points) for CPER and 0.65% (65 basis points) for USAG, per annum on its average daily net assets.

 

Management fees are recognized in the period earned in accordance with the terms of their respective agreements.

 

Expense Waivers

 

The Company has voluntarily agreed to pay certain expenses normally borne by UGA, UHN, DNO, UNL, BNO, CPER and USAG to the extent such expenses exceed 0.15% (15 basis points) of the respective fund’s average daily net assets, on an annualized basis. The Company has no obligation to continue such payments into subsequent periods. These expenses totaled $760,973 and $854,085 for the years ended December 31, 2015 and 2014, respectively, and are included in general and administrative expense. Expense waivers payable totaled $760,973 and $574,746 as of December 31, 2015 and 2014, respectively.

 

Continued

 

 

United States Commodity Funds LLC

 

Notes to Statements of Financial Condition

 

December 31, 2015 and 2014

____________

 

2.

Summary of Significant Accounting Policies, continued

 

Fund Startup Expenses

 

The Company expenses all startup expenses associated with the registration of each fund and the expense is charged to general and administrative expense. Fund startup expenses include costs relating to the initial registration of shares and include, but are not limited to, legal fees pertaining to the initial registration of shares, SEC and FINRA registration fees, initial fees to be listed on an exchange, and other similar costs.

 

The Funds pay for all brokerage fees, taxes and other expenses, including 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 shares after their initial registration and all legal, accounting, printing and other expenses associated therewith.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. The Company places its cash with various high credit quality institutions. At times, the Company maintains cash deposits in excess of the United States Federal Deposit Corporation coverage of $250,000, but the Company does not expect any losses.

 

Accounts Receivable – Related Party

 

Accounts receivable consists of management fees receivable. Management fees receivable generally consist of one month of management fees which are collected in the month after they are earned.

 

Management closely monitors receivables and records an allowance for any balances that are determined to be uncollectible. As of December 31, 2015 and 2014, the Company considered all remaining accounts receivable to be fully collectible.

 

Investments

 

Management determines the appropriate classification of investments at the time of purchase based upon management’s intent with respect to such investments. Short-term investments consist of equities and money market funds. Short-term investments are classified as available-for-sale securities. The Company measures the investments at estimated fair value at period end with any changes in estimated fair value reflected as unrealized gains (losses) in the accumulated other comprehensive income (loss).

 

Continued

 

 

United States Commodity Funds LLC

 

Notes to Statements of Financial Condition

 

December 31, 2015 and 2014

____________

 

2.

Summary of Significant Accounting Policies, continued

 

Comprehensive Income (Loss)

 

The Company reports all changes in equity during the year, except those resulting from investment by its member and distributions to its member, in the year in which they are recognized. Comprehensive income is the total of net income (loss) and other comprehensive income (loss). For the years ended December 31, 2015 and 2014, other comprehensive loss consists of unrealized losses on investments.

 

Fair Value Measurements

 

The Company’s short-term investments are carried at estimated fair value. In determining fair value, the Company follows the guidance of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurement (“ASC 820”). Under ASC 820, the fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date.

 

ASC 820 establishes a fair value hierarchy based on the lowest level input that is significant to the fair value measurement in its entirety:

 

Level 1 – Quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities, without adjustment.

 

Level 2 – Quoted prices in markets that are not considered to be active for identical or similar assets or liabilities, quoted prices in active markets of similar assets or liabilities, and inputs other than quoted prices that are observable or can be corroborated by observable market data.

 

Level 3 – Pricing inputs are unobservable and include situations where there is little, if any, market activity for the investment.

 

Unrealized gains and losses on investments resulting from market fluctuations are recorded in the accumulated other comprehensive income (loss) account. Realized gains or losses on sales of investments determined on a specific identification basis.

 

All short-term investments, which include money market funds and equities, are classified as Level 1 investments at December 31, 2015 and 2014. The Company has no Level 2 and 3 investments. There were no transfers between levels during the years ended December 31, 2015 and 2014.

 

Short-term investments are valued at the closing price reported on the active market on which the individual securities are traded.

 

Continued

 

 

United States Commodity Funds LLC

 

Notes to Statements of Financial Condition

 

December 31, 2015 and 2014

____________

 

2.

Summary of Significant Accounting Policies, continued

 

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 federal consolidated income tax return with entities not included on these financials. In connection with filing a consolidated federal income tax return, the tax benefit of utilizing tax losses generated by the consolidated group is not reflected on USCF’s statements of financial condition. The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases, valuation of net operating losses and tax credit carryforwards, if any. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. If necessary, a valuation allowance is recorded to reduce the carrying amounts of deferred tax assets until it is more likely than not that such assets will be realized.

 

The Company provides for uncertain tax positions using guidance which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It provides that a tax benefit from an uncertain tax position may be recognized when it is more-likely-than-not recognition threshold at the effective date to be recognized upon the adoption of the accounting standard and in subsequent periods. In addition, the accounting standard provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.

 

Concentration of Credit Risk

 

Concentrations of accounts receivable as of December 31, 2015 and 2014 are as follows:

 

		December 31, 2015
Fund		Accounts Receivable
USO		$	1,179,092				61	%
USCI			359,544				19	%
UNG			249,953				13	%
All Others			145,083				7	%
Total		$	1,933,672				100	%

 

		December 31, 2014
Fund		Accounts Receivable
USCI		$	531,781				38	%
USO			403,300				29	%
UNG			364,245				26	%
All Others			84,596				7	%
Total		$	1,383,922				100	%

 

Continued

 

 

United States Commodity Funds LLC

 

Notes to Statements of Financial Condition

 

December 31, 2015 and 2014

____________

 

2.

Summary of Significant Accounting Policies, continued

 

Recent Accounting Pronouncements

 

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The standard is effective for the Company for annual reporting periods beginning after December 15, 2016, including interim periods. In April 2015, the FASB has voted on a one year deferral of the effective date.

 

In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, to eliminate the requirement to classify deferred income tax assets and liabilities between current and noncurrent. The ASU simply requires that all deferred income tax assets and liabilities be classified as noncurrent. The ASU is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. Adoption of the ASU is either retrospective to each prior period presented or prospective. As of December 31, 2015, the Company early adopted the ASU. The adoption of the ASU had no material effect to the financial statements.

 

In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, to mainly change the accounting for investments in equity securities and financial liabilities carried at fair value as well as to modify the presentation and disclosure requirements for financial instruments. The ASU is effective for annual periods beginning after December 15, 2018, with early adoption permitted. Adoption of the ASU is retrospective with a cumulative adjustment to retained earnings or accumulated deficit as of the adoption date. The Company does not anticipate that the adoption of the ASU will have a material impact on its financial statements.

 

Continued

 

 

United States Commodity Funds LLC

 

Notes to Statements of Financial Condition

 

December 31, 2015 and 2014

____________

 

3.

Investments and Fair Value Measurements

 

Investments measured at estimated fair value consist of the following as of December 31, 2015 and 2014:

 

		December 31, 2015
						Gross				Gross
						Unrealized				Unrealized				Estimated
		Cost				Gains				Losses				Fair Value
Money market funds		$	96			$	-			$	-			$	96
Equities			1,577				-				(707	)			870
Total short-term investments		$	1,673			$	-			$	(707	)		$	966

 

		December 31, 2014
						Gross				Gross
						Unrealized				Unrealized				Estimated
		Cost				Gains				Losses				Fair Value
Money market funds		$	1,189,417			$	-			$	-			$	1,189,417
Equities			1,213				-				-				1,213
Total short-term investments		$	1,190,630			$	-			$	-			$	1,190,630

 

As of December 31, 2015 and 2014, the Company did not have any investments with gross unrealized losses greater than 12 months on a continuous basis.

 

Continued

 

 

United States Commodity Funds LLC

 

Notes to Statements of Financial Condition

 

December 31, 2015 and 2014

____________

 

4.

Accumulated Other Comprehensive Income (Loss)

 

Accumulated other comprehensive income (loss) is included in member’s equity on the statements of financial condition. Changes in accumulated other comprehensive income (loss) are as follows:

 

Balance, January 1, 2014						$	6,820
Other comprehensive income before reclassifications			-
Amounts reclassified from accumulated other comprehensive
income to earnings			(6,820	)
Other comprehensive (loss)							(6,820	)
Balance, December 31, 2014							-
Other comprehensive (loss) before reclassifications			(707	)
Amounts reclassified from accumulated other comprehensive
income (loss) to earnings			-
Other comprehensive (loss)							(707	)
Balance, December 31, 2015						$	(707	)

 

5.

Commitments and Contingencies

 

Operating Leases

 

The Company leases office space in Oakland, California under an operating lease, which expires in October 2018. Rent expense was $108,350 and $98,014 for the years ended December 31, 2015 and 2014, respectively.

 

Future minimum rental payments required under the operating lease, which has remaining non-cancellable lease terms in excess of one year, are as follows:

 

For the year ending December 31:
2016		$	128,801
2017			132,665
2018			113,304
		$	374,770

 

Contingencies

 

From time to time, the Company is involved in legal proceedings arising mainly from the ordinary course of its business. In management’s opinion, the legal proceedings are not expected to have a material effect on the Company’s financial position or results of operations.

 

Continued

 

 

United States Commodity Funds LLC

 

Notes to Statements of Financial Condition

 

December 31, 2015 and 2014

____________

 

6.

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 federal consolidated income tax return with entities not included on these financials. In connection with filing a consolidated federal income tax return, the tax benefit of utilizing tax losses generated by the consolidated group is not reflected on USCF’s statements of financial condition. In connection with filing a consolidated federal income tax return, the Company has recorded federal income tax expense at the legal entity level.

 

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 assets as of December 31, 2015 and 2014 are as follows:

 

		2015				2014
							(As Restated)
Deferred tax assets:
Intangible assets		$	1,162,919			$	1,251,776
Capital loss carryover			20,213				20,213
Gross deferred tax assets			1,183,132				1,271,989
Less valuation allowance			(20,213	)			(20,213	)
Total deferred tax assets, net		$	1,162,919			$	1,251,776

 

The majority of the deferred tax assets relate to startup costs associated with the organization and registration of the Funds for which the Company is a general partner. The Funds have no obligation to reimburse the Company nor will the Company seek reimbursement for these costs.

 

Realization of the deferred tax assets is dependent upon future taxable income, if any, the amount and timing of which is uncertain. Based upon available objective evidence, management believes it is more likely than not that the net deferred tax assets will not be fully realizable for capital loss carryover. Accordingly, management has established a valuation allowance related to this deferred tax asset.

 

The Company is subject to income taxes in the U.S. federal jurisdiction and California. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. The material jurisdictions where the Company is subject to examination after 2010 include federal and California. As of December 31, 2015, there were no active taxing authority examinations.

 

The Company had unrecognized tax benefits (“UTBs”) of approximately $15,000 and $11,000 as of December 31, 2015 and 2014, respectively, which would affect the effective tax rate if recognized before consideration of the valuation allowance. The Company will recognize interest and penalties, when they occur, related to uncertain tax provisions as a component of tax expense. There is no interest or penalties to be recognized for the years ended December 31, 2015 and 2014. The Company does not expect its UTBs to change significantly over the next 12 months.

 

Continued

 

 

United States Commodity Funds LLC

 

Notes to Statements of Financial Condition

 

December 31, 2015 and 2014

____________

 

7.

Related Party Transactions

 

The Funds are deemed by management to be related parties. The Company’s revenues, totaling $21,716,866 and $14,602,559 for the years ended December 31, 2015 and 2014, respectively, were earned from these related parties. Accounts receivable, totaling $1,933,672 and $1,383,922 as of December 31, 2015 and 2014, respectively, were owed from these relate parties. Expense waivers, totaling $760,973 and $854,085 for the years ended December 31, 2015 and 2014, respectively, were incurred on behalf of these related parties. Waivers payable, totaling $760,973 and $574,746 as of December 31, 2015 and 2014, respectively, were owed to these related parties.

 

During the years ended December 31, 2015 and 2014, the Company paid $5,576,099 and $2,128,113, respectively, in distributions to its member Wainwright.

 

On January 14, 2015, Wainwright entered into a stock repurchase agreement as part of an employment separation agreement with one of its shareholders. The agreement called for Wainwright to purchase the shareholder’s stock for $4,389,066. The payments were made from funds from the Company’s distribution payments to its member parent company, Wainwright. The total repurchase amount was paid by July 15, 2015.

 

The Company files a federal consolidated income tax return with entities not included on these financials. In connection with filing a consolidated federal income tax return, the tax benefit of utilizing tax losses generated by the consolidated group is not reflected on USCF’s statements of financial condition. See Note 6.

 

8.

Prior Period Adjustment and Restatement of 2014 Statement of Financial Condition

 

As a result of an internal review of the Company’s income taxes and accounts payable and accrued liabilities during 2015, the Company discovered an error had occurred in accounting for income taxes and that prepaid income taxes and deferred tax assets, net, and member’s equity had been understated as well as accounts payable and accrued liabilities reported in the prior year. Corrective and preventive actions have been taken. Accordingly, the Company restated its 2014 statement of financial condition to correct this error. The effect of the restatement on the 2014 statement of financial condition is as follows:

 

		As Previously Reported				As Restated
Prepaid income taxes		$	-			$	769,320
Deferred tax assets, net			-				1,251,776
Accounts payable and accrued liabilities			689,662				834,064
Member's equity			2,737,892				4,566,319

 

9.

Subsequent Events

 

The Company evaluated subsequent events for recognition and disclosure through the date the statements of financial condition were issued or filed. Nothing has occurred outside normal operations since that required recognition or disclosure in these statements of financial condition other than the items noted below.

 

Effective January 1, 2016, USCF permanently lowered the management fee to 0.80% (80 basis points) per annum of average daily total net assets for USCI and 0.65% (65 basis points) per annum of average daily total net assets for both CPER and USAG.

 

 

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