AMENDMENT No. 2 to FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the year ended 12-31-2006
OR
[ ] 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 333-119635
PROVIDENCE SELECT FUND, LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Delaware 20-0069251
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
505 Brookfield Drive, Dover, DE 19901
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (800) 331-1532
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Units
(Title of class)
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 [ ] No [X]
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. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Sec 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. [ ]
Indicate by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one): Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [X]
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Act). Yes [ ] No [X]
State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was last sold, or the average bid and asked price of such common
equity, as of the last business day of the registrant's most recently
completed second fiscal quarter.: None.
There is no market for the Units of partnership interests and none is expected
to develop. The Registrant is a commodity pool. The Units are registered to
permit the initial sale of Units at month end net asset value.
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EXPLANATORY NOTE
The Registrant is filing this Amendment No. 2 to Form 10-K (the "Amendment")
to its annual report on Form 10-K for the year ended 2006, originally filed
April 2, 2007, as amended July 3, 2007 (the "Annual Report"), to restate the
Annual Report in its entirety. On August 2, 2007, Michael Pacult, as sole
officer and director of the corporate general partner and as the sole
individual general partner of the Registrant, concluded that the quarterly
financial statements of the Registrant issued as of March 31, 2007 and prior
to that date and all annual financial statements issued prior to that date
should no longer be relied upon because of a change in the date expenses are
charged, which has resulted in substantial changes to the net loss reported
for prior reporting periods. Accordingly, the 2006 and prior years financial
statements are being restated in this Amendment, and the quarterly financial
statements as of March 31, 2007 are being restated in an amendment to the 2007
First Quarter 10-Q, to be filed separately from this Amendment.
These restatements reflect (1) the American Institute of Certified Public
Accountants' Statement of Position number 98-5 ("SOP 98-5") that prefers for
issuers, such as the Registrant, to expense reimbursable organizational costs
as incurred and (2) the Securities and Exchange Commission's ("SEC") Staff
Accounting Bulletin ("SAB") Topics 5A and 5D that reflect the SEC's
interpretation of the Federal securities laws for public issuers, such as the
Registrant, that offering costs be expensed as a reduction to partnership
capital as of the initial effective date of the offering and, thereafter, to
expense offering costs as incurred. As a result, for financial reporting
purposes in conformity with General Accepted Accounting Principles, all
organizational costs are expensed as incurred and, on the Fund's initial
effective date, September 12, 2005, the Fund deducted the total initial
offering costs as of that date from Partners' capital and began expensing all
offering costs as of that date. For all other purposes, including determining
the Net Asset Value per Unit for subscription and redemption purposes, the
Fund will not reimburse the offering and organizational costs until after the
twelfth month following the commencement of business as provided in its
Prospectus. Accordingly, the amount of cash available for the commodity
trading advisor to trade during the first twelve months of operation of the
Fund remains the same as before this accounting adjustment was made.
The Registrant previously amended its Annual Report to reflect changes in its
financial statements and to report an update to its financial controls and
procedures. This Amendment replaces the Annual Report for the year ended
December 31, 2006, as previously amended, in its entirety, including exhibits;
however, it does not update the disclosures as of a date later than the report
period, unless otherwise noted.
Documents Incorporated by Reference
Registration Statement on Form S-1 and all amendments thereto filed with the
United States Securities and Exchange Commission at Registration No. 333-
119635 are incorporated by reference to Parts I, II, III, and IV.
PART I
Item 1. Business
On September 12, 2005, the registration statement filed by Providence Select
Fund, Limited Partnership, (the "Fund") with the Securities and Exchange
Commission (the "SEC"), which incorporated the disclosure document filed with
the Commodity Futures Trading Commission (the "CFTC"), was declared effective.
The Fund sells the Units of partnership interests at the initial price of
$1,000 per Unit and, after the commencement of business, at the net asset
value per Unit as of the then current month end, until the face amount of
$50,000,000 that it has registered has been sold. The $1,000 per Unit value
is for initial subscription and redemption purposes only, and a separate per
Unit value is calculated for financial reporting purposes and on the close of
the last business day of the month. As of December 31, 2006, the Fund had not
sold the minimum of $1,030,000 required to commence business; however, it
subsequently sold the minimum on March 2, 2007. See Subsequent Events in this
section, below. Pursuant to the terms of the Limited Partnership Agreement,
the Fund is engaged in the business of speculative and high risk trade of
commodity futures and options selected by of one or more commodity trading
advisors ("CTA") as that term is defined in the Commodity Exchange Act. The
General Partner, in its sole discretion it selects the CTA and the amount of
equity assigned to the CTAs, from time to time.
The Fund filed a post effective amendment to its registration statement on
July 28, 2006, which became effective August 14, 2006, to update its
financials and other information. The Fund filed post effective amendments to
its registration statement on November 22, 2006 and December 5, 2006, which
became effective January 3, 2007 to provide disclosure of: (1) a change
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in the management fee to NuWave from 2% annually to a percentage based on the
rate of trading assigned by NuWave and approved by the General Partner of up
to 2.5% annually, See Subsequent Events below for fee changes. (2) the
assumption of the obligation to pay foreign brokerage commissions by White
Oak, the corporate general partner; (3) the change of location of the
Registrant's books and records from the offices of Michael Liccar & Co to c/o
Investor Services, 500 Park Avenue #114, Lake Villa, IL 60046, (4) the change
of bookkeeping from Michael Liccar & Co, certified public accountants, 200
West Adams Street, Suite 2211, Chicago, IL 60606-5208 to Shoup Accounting
Services, certified public accountants, 306 S. West Street, Angola, IN 46703,
and (5) the change of auditor of the Registrant from Frank L. Sassetti & Co.
6611 W. North Avenue, Oak Park, Illinois 60302-1043, to the CPA firm of
Jordan, Patke & Associates, Ltd., 300 Village Green Drive Ste 210,
Lincolnshire, IL 60069. The change in auditor was also disclosed in a report
on Form 8-K filed October 26, 2006, as amended November 2, 2006, which is
incorporated herein by reference. There were no adverse events that motivated
the change in bookkeepers or auditors.
The trades for the Fund are selected and placed with the futures commission
merchant ("FCM"), i.e., clearing broker, for the account of the Fund by the
currently selected sole commodity trading advisor ("CTA"), NuWave Investment
Corp., 1099 Mt Kemble Ave, Morristown NJ 07960. The books and records of the
trades placed by the CTA in the Fund's trading account are kept and available
for inspection by the Limited Partners at the office of Investor Services, 500
Park Avenue #114, Lake Villa, IL 60046. NuWave is paid a management fee of up
to 2.5% of the equity assigned to it to trade plus an incentive fee of twenty
percent (20%) of New Net Profit earned from the trades on the equity, payable
quarterly. See Subsequent Events below for fee changes. The Fund Limited
Partnership Agreement is included as Exhibit A to the Prospectus delivered to
the prospective investors and filed as part of the Registration Statement.
The Limited Partnership Agreement defines the terms of operation of the Fund
and is incorporated herein by reference.
None of the purchasers of Limited Partnership Units has a voice in the
management of the Fund. Reports of the Net Asset Value of the Fund are sent
to all Partners at the end of each month.
White Oak Financial Services, Inc., the corporate General Partner and
commodity pool operator, provides all clearing costs, including pit brokerage
fees, which include floor brokerage, NFA and exchange fees for trades for a
one half percent (1/2%) of the total value of the funds available for trading
in the Fund's accounts at the FCM per month [six percent (6%) per year].
White Oak also receives an incentive fee of up to three percent (3%) of New
Net Profit as that term is defined in the prospectus on equity assigned to the
CTA. See Subsequent Events below for fee changes. The independent FCM is
selected by the General Partner to hold the Fund's trading equity and place
the trades as directed by the CTA pursuant to a power of attorney and advisory
agreement granted by the Fund. The CTA agreements are terminable at the will
of the parties. The Selling Agents receive a three percent (3%) continuing
service fee of the initial investment the first year. Each month thereafter,
for so long as the investment remains in the Fund, the Fund pays this fee at
one quarter percent (1/4%) based on the net asset value of the investment.
The sale of Units is regulated by Securities Act of 1933 and the Commodity
Exchange Act. Once the Units are issued, the operation of the Fund is subject
to regulation pursuant to the Securities and Exchange Act of 1934 and the
Commodity Exchange Act. The U.S. Securities and Exchange Commission and the
Securities Commissions and securities acts of the several States where its
Units are offered and sold have jurisdiction over the operation of the Fund.
The National Futures Association has jurisdiction over the operation of the
General Partner and the Commodity Trading Advisors. This regulatory structure
is not intended, nor does it, protect investors from the risks inherent in the
trading of futures and options.
Subsequent Events
The Fund commenced business on March 2, 2007 after admission of 46 Limited
Partners, with total subscriptions of $1,088,370. It will continue to offer
its Units for sale to the public via its fully amended and restated prospectus
dated January 3, 2007 (the "Prospectus"), as it may be amended in the future,
until it has sold the total of $50,000,000 in registered securities or the
offering terminates as permitted or required by the terms of the Limited
Partnership Agreement.
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Effective September 1, 2007, the management fee to NuWave Investment Corp.
will be increased from up to 2.5% annually to up to 3.25% annually. The fee
will continue to be based on the rate of trading assigned by NuWave and
approved by the General Partner. Correspondingly, the corporate General
Partner will lower its incentive fee from 3.0% to 0.5%. This change will
allow the commodity trading advisor increased flexibility in trading on behalf
of the Fund.
Item 1A. Risk Factors
The trading of futures, options on futures and other commodities related
investments is highly speculative and risky. You should make an investment in
the Fund only after consulting with independent, qualified sources of
investment and tax advice and only if your financial condition will permit you
to bear the risk of a total loss of your investment. You should consider an
investment in the Units only as a long-term investment. Moreover, to evaluate
the risks of this investment properly, you must familiarize yourself with the
relevant terms and concepts relating to commodities trading and the regulation
of commodities trading, which are discussed in the Risk Factors section of the
Prospectus, which is incorporated herein by reference.
You should carefully consider all the information we have included or
incorporated by reference in this Amendment and our subsequent periodic
filings with the SEC. In particular, you should carefully consider the risk
factors described above and read the risks and uncertainties as set forth in
the "Management's Discussion and Analysis of Financial Condition and Results
of Operations" Section of this Amendment. Any of the heretofore mentioned
risks and uncertainties could materially adversely affect the Fund, its
trading activities, operating results, financial condition and Net Asset Value
and therefore could negatively impact the value of your investment. You should
not invest in the Units unless you can afford to lose all of your investment.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Registrant maintains up to 3% of its assets at a commercial bank and the
balance is on deposit and available as margin to secure trading in futures and
other commodities related products in a Fund account at Man Financial Inc.,
the FCM selected by the General Partner. Any FCM selected by the General
Partner must be registered with the National Futures Association pursuant to
the Federal Commodity Exchange Act as a commodity FCM. The trading of
futures, options on futures and other commodities is highly speculative and
the Fund has an unlimited risk of loss, including the pledge of all of its
assets to the FCM to secure the losses on the trades made on its behalf by the
CTA in the commodity markets.
Item 3. Legal Proceedings
The following disclosures have been updated to be current as of the date of
this Amendment:
There have been no legal proceedings against the Fund, its General Partner,
the CTA, the IB or any of their Affiliates, directors or officers. The FCM,
MF Global Inc., has had the following described reportable events, none of
which, in the opinion of the FCM, is material to the performance of the FCM on
behalf of the Fund's account:
At any given time, MF Global Inc. ("MFG"), formerly known as Man Financial,
Inc. ("MFI"), is involved in numerous legal
actions and administrative proceedings, which in the aggregate, are not, as of
the date of this prospectus, expected to have a material effect upon its
condition, financial or otherwise, or to the services it will render to the
partnership. There have been no administrative, civil or criminal proceedings
pending, on appeal or concluded against MFG or its principals within the five
years preceding the date of this prospectus that MFG would deem material for
purposes of Part 4 of the Regulations of the Commodity Futures Trading
Commission, except as follows:
MFI has been sued by the Receiver for Philadelphia Alternate Asset Fund
("PAAF") and associated entities for common law negligence, common law fraud,
violations of the Commodity Exchange Act and RICO violations (the
"Litigation"). The Receiver's claims for damages are not quantified in the
Complaint, but are believed to be substantial. MFI has informed the general
4
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partner that in acting as executing and clearing broker for PAAF it was not
responsible for its losses, that it has denied the material allegations of the
complaint, that it has brought in third party defendants (one of which has
been made a primary defendant), that it will move for summary judgment and
will otherwise vigorously defend the litigation. Further, the outcome of the
Litigation should not materially affect MFI or its ability to perform as a
clearing broker. The Commodity Futures Trading Commission ("CFTC") is also
investigating the events involving PAAF's losses and MFI's relationship to
PAAF. To date, the CFTC has not brought any action against the MFI.
On February 20, 2007, MFI settled a CFTC administrative proceeding (In the
Matter of Steven M. Camp and Man Financial Inc, CFTC Docket No. 07-04) in
which MFI was alleged to have failed to supervise one of its former associated
persons (AP) who was charged with fraudulently soliciting customers to open
accounts at MFI. The CFTC alleged that the former AP misrepresented the
profitability of a web-based trading system and of a purported trading system
to be traded by a commodity trading advisor. Without admitting or denying the
allegation, MFI agreed to pay restitution to customers amounting to
$196,900.44 and a civil monetary penalty of $120,000. MFI also agreed to a
cease and desist order and to strengthen its supervisory system for overseeing
sales solicitations by employees in connection with accounts to be traded
under letters of direction in favor of third party system providers.
As mentioned above, the FCM has assured the Fund that neither of the above
events will interfere with the ability of the FCM to perform its duties on
behalf of the Fund.
Item 4. Submission of Matters to a Vote of Security Holders
The General Partner makes all day to day decisions regarding the operation of
the Fund. The Limited Partners have not exercised any right to vote their
Units and there have been no matters which would cause the Fund to conduct a
vote of the Limited Partners. The Limited Partners, (sic the Security
Holders), have no right to participate in the management of the Fund. All of
their voting rights, as defined in the Limited Partnership Agreement, are
limited to the selection of the General Partner, amendments to the Limited
Partnership Agreement, and other similar decisions.
PART II
Item 5. Market for Registrant's Limited Partnership Units, Related
Stockholder Matters and Issuer Purchases of Equity Securities
The Fund desires to be taxed as a partnership and not as a corporation. In
furtherance of this objective, the Limited Partnership Agreement, subject to
certain exceptions upon the death of a Limited Partner, requires a Limited
Partner to obtain the approval of the General Partner prior to the transfer of
any Units. Accordingly, there is no trading market for the Fund Units and
none is likely to develop. The Limited Partners must rely upon the right of
Redemption provided in the Limited Partnership Agreement to liquidate their
interest.
The Fund has fewer than 300 holders of its securities. Limited Partners are
required to represent to the issuer that they are able to understand and
accept the risks of investment in a commodity pool for which no market will
develop and the right of redemption will be the sole expected method of
withdrawal of equity from the Fund. The General Partner has sole discretion
in determining what distributions, if any, the Fund will make to the Limited
Partners. The Fund has not made any distributions as of the date hereof. The
Fund has no securities authorized for issuance under equity compensation
plans. See the Limited Partnership Agreement attached as Exhibit A to the
Registration Statement, incorporated herein by reference, for a complete
explanation of the right of redemption provided to Limited Partners.
Item 6. Selected Financial Data
The Fund is not required to pay dividends or otherwise make distributions and
none are expected. The Limited Partners must rely upon their right of
redemption to obtain their return of equity after consideration of profits, if
any, and losses from the Fund. See the Registration Statement, incorporated
herein by reference, for a complete explanation of the allocation of profits
and losses to a Limited Partner's capital account.
In its Annual Report, the Registrant previously did not present summary
financial information in this section because, as of December 31, 2006, it had
not yet commenced operations and was considered a development stage
enterprise. Subsequently, the Registrant has changed its accounting method
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for financial reporting purposes as described in the Explanatory Note at the
beginning of this Amendment. Accordingly, following is a summary of certain
financial information for the Registrant for the period from inception to
December 31, 2006, presented with the caveat that the Registrant had not yet
commenced its business of trading futures in any of the periods presented.
For a reconciliation of the below amounts with those presented in prior
financials, please see page F-12 of the attached financials, Note 10,
"Restatement and Correction of Error."
<table>
<s> <c> <c> <c> <c>
Restated
--------------------------------------------------------------
Period From
May 16, 2003
(Inception) to
Year ended December 31,
2006 2005 2004 2006
Performance per unit
Net unit value, beginning of the year $(61,995.00) $(6,454.00) $(424.00) $1,000.00
Net realized and unrealized gains and losses
on commodity transactions - - - -
Investment and other income - - - -
Expenses (1) (69,764.00) (15,603.00) (6,030.00) (1,424.00)
Syndication costs transferred to capital - (39,938.00)
Net increase for the year (69,764.00) (55,541.00) (6,030.00) (1,424.00)
Net unit value at the end of the year $(131,759.00) $(61,995.00) $(6,454.00) $(424.00)
Net assets at the end of the year ($000) $(264) $(124) $(13) $(1)
Total return 78.79% 57.08% 175.34% -494.44%
Ratio to average net assets
Investment and other income 0.00% 0.00% 0.00% 0.00%
Expenses 78.79% 57.08% 175.34% -494.44%
</table>
(1) Investment and other income and expenses are calculated using the
average number of units outstanding during the year. Net realized and
unrealized gains and losses on commodity transactions is a balancing amount
necessary to reconcile the change in net unit value.
The following summarized quarterly financial information presents the results
of operations for the quarterly periods during the years ended December 31,
2006 and 2005, and reconciles the amounts given with those previously reported
in the financial statements of the Registrant.
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<table>
<s> <c> <c> <c> <c> <c> <c>
Quarters Ended
-------------------------------------------------------------------------------------------
March 31, 2006 June 30, 2006
As previously As previously
reported Adjustments Restated reported Adjustments Restated
Total Investment Gain $- $- $- $- $- $-
Net Income (Loss) - (9,532) (9,532) - (37,426) (37,426)
Net Income (Loss) per partnership unit - (4,766.00) (4,766.00) - (18,713.00) (18,713.00)
Capitalized Syndication Costs - - - - - -
Net asset value per partnership unit
at the end of period $1,000.00 $(67,761.00) $(66,761.00) $1,000.00 $(86,474.00) $(85,474.00)
Quarters Ended
-------------------------------------------------------------------------------------------
September 30, 2006 December 31, 2006
As previously As previously
reported Adjustments Restated reported Adjustments Restated
Total Investment Gain $- $- $- $- $- $-
Net Income (Loss) - (22,558) (22,558) - (70,012) (70,012)
Net Income (Loss) per partnership unit - (11,279.00) (11,279.00) - (35,006.00) (35,006.00)
Capitalized Syndication Costs - - - - - -
Net asset value per partnership unit
at the end of period $1,000.00 $(97,753.00) $(96,753.00) $2,000.00 $(133,759.00) $(131,759.00)
Quarters Ended
-------------------------------------------------------------------------------------------
March 31, 2005 June 30, 2005
As previously As previously
reported Adjustments Restated reported Adjustments Restated
Total Investment Gain $- $- $- $- $- $-
Net Income (Loss) - (4,550) (4,550) - (922) (922)
Net Income (Loss) per partnership unit - (2,275.00) (2,275.00) - (461.00) (461.00)
Capitalized Syndication Costs - - - - - -
Net asset value per partnership unit
at the end of period $1,000.00 $- $(8,729.00) $1,000.00 $- $(9,190.00)
</table>
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<table>
<s> <c> <c> <c> <c> <c> <c>
Quarters Ended
-------------------------------------------------------------------------------------------
September 30, 2005 December 31, 2005
As previously As previously
reported Adjustments Restated reported Adjustments Restated
Total Investment Gain $- $- $- $- $- $-
Net Income (Loss) - (2,375) (2,375) - (23,359) (23,359)
Net Income (Loss) per partnership unit - (1,187.50) (1,187.50) - (11,679.50) (11,679.50)
Capitalized Syndication Costs - (79,876) (79,876) - - -
Net asset value per partnership unit
at the end of period $1,000.00 $- $(50,315.50) $1,000.00 $- $(61,995.00)
</table>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operation.
Critical Accounting Policies and Estimates
The Fund records all investments at market value in its financial statements,
with changes in market value reported as a component of realized and change in
unrealized trading gain (loss) in the Statements of Operations. In certain
circumstances, estimates are involved in determining market value in the
absence of an active market closing price (e.g. swap and forward contracts
which are traded in the inter-bank market).
Capital Resources
The Fund will raise additional capital only through the sale of Units offered
pursuant to the continuing offering, and does not intend to raise any capital
through resale of Units once issued or borrowing. Due to the nature of the
Fund's business, it will make no capital expenditures and will have no capital
assets which are not operating capital or assets.
Liquidity
Most United States commodity exchanges limit fluctuations in commodity futures
contracts prices during a single day by regulations referred to as "daily
price fluctuation limits" or "daily limits". During a single trading day, no
trades may be executed at prices beyond the daily limit. Once the price of a
futures contract has reached the daily limit for that day, positions in that
contract can neither be taken nor liquidated. Commodity futures prices have
occasionally moved to the daily limit for several consecutive days with little
or no trading. Similar occurrences could prevent the Fund from promptly
liquidating unfavorable positions and subject the Fund to substantial losses
which could exceed the margin initially committed to such trades. In addition,
even if commodity futures prices have not moved the daily limit, the Fund may
not be able to execute futures trades at favorable prices, if little trading
in such contracts is taking place. Other than these limitations on liquidity,
which are inherent in the Fund's commodity futures trading operations, the
Fund's assets are expected to be highly liquid.
The entire offering proceeds will be credited to the Fund's bank and brokerage
accounts to engage in trading activities and as reserves for that trading. The
Fund meets its margin requirements by depositing U.S. government securities or
cash or both with the futures broker and the over-the-counter counterparties.
In this way, substantially all (i.e., 97% or more) of the Fund's assets,
whether used as margin for trading purposes or as reserves for such trading,
can be invested in U.S. government securities and time deposits with U.S.
banks. Investors should note that maintenance of the Fund's assets in U.S.
government securities and banks does not reduce the risk of loss from trading
futures, forward and swap contracts. The Fund receives all interest earned on
its assets. No other person shall receive any interest or other economic
benefits from the deposit of Fund assets.
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Approximately 10% to 40% of the Fund's assets normally are committed as
required margin for futures contracts and held by the futures broker, although
the amount committed may vary significantly. Such assets are maintained in the
form of cash or U.S. Treasury bills in segregated accounts with the futures
broker pursuant to the Commodity Exchange Act and regulations thereunder. When
combined with the previously described assets committed to margin, a total of
up to approximately 40% of the Fund's assets may be deposited with over-the-
counter counterparties in order to initiate and maintain forward and swap
contracts. Such assets are not held in segregation or otherwise regulated
under the Commodity Exchange Act, unless such over-the-counter counterparty is
registered as a futures commission merchant. These assets are held either in
U.S. government securities or short-term time deposits with U.S.-regulated
bank affiliates of the over-the-counter counterparties. The remaining 60% to
90% of the Fund's assets are normally invested in cash equivalents, such as
U.S. Treasury bills, and held by the futures broker or the over-the-counter
counterparties.
The Fund's assets are not and will not be, directly or indirectly, commingled
with the property of any other person in violation of law or invested with or
loaned to the Fund, the General Partner or any affiliated entities.
Results of Operations
The initial start-up costs attendant to the sale of Units by use of a
Prospectus which has been filed with the Securities and Exchange Commission
are substantial. The Fund's restated results after payment and accrual of
expenses for the year 2006, for financial reporting purposes, was a loss of
$139,528 ($69,764 per Unit), and for all other purposes, including
subscriptions and redemptions, was a loss of $0 ($0 per Unit). The Fund's
restated results after payment and accrual of expenses for the year 2005, for
financial reporting purposes, was a profit (loss) of $31,206 ($15,603 per
Unit), and for all other purposes, including subscriptions and redemptions,
was a loss of $0 ($0 per Unit). In its Annual Report, the Fund had deferred
its offering and organizational costs and reported that it had no results
(i.e., no profit or loss) for the years 2006 and 2005. Losses are now
reported for these periods because offering and organizational costs have been
expensed. Subsequent to the commencement of business, the Fund is subject to
ongoing offering and operating expenses; however, profits or losses are
primarily generated by the commodity trading advisor by methods that are
proprietary to it. These results are not to be construed as an expectation of
similar profits in the future.
The Limited Partnership Agreement grants solely to the General Partner the
right to select the CTA and to otherwise manage the operation of the Fund.
See the Registration Statement, incorporated by reference herein, for an
explanation of the operation of the Fund.
Off-Balance Sheet Risk
The term "off-balance sheet risk" refers to an unrecorded potential liability
that, even though it does not appear on the balance sheet, may result in
future obligation or loss. The Fund trades in futures, forward and swap
contracts and is therefore a party to financial instruments with elements of
off-balance sheet market and credit risk. In entering into these contracts
there exists a risk to the Fund, market risk, that such contracts may be
significantly influenced by market conditions, such as interest rate
volatility, resulting in such contracts being less valuable. If the markets
should move against all of the futures interests positions of the Fund at the
same time, and if the Fund's trading advisor was unable to offset futures
interests positions of the Fund, the Fund could lose all of its assets and the
Limited Partners would realize a 100% loss. The Fund, the General Partner and
the CTAs minimize market risk through real-time monitoring of open positions,
diversification of the portfolio and maintenance of a margin-to-equity ratio
that rarely exceeds 40%.
In addition to market risk, in entering into futures, forward and swap
contracts there is a credit risk that a counterparty will not be able to meet
its obligations to the Fund. The counterparty for futures contracts traded in
the United States and on most foreign exchanges is the clearinghouse
associated with such exchange. In general, clearinghouses are backed by the
corporate members of the clearinghouse who are required to share any financial
burden resulting from the non-performance by one of their members and, as
such, should significantly reduce this credit risk. In cases where the
clearinghouse is not backed by the clearing members, like some foreign
exchanges, it is normally backed by a consortium of banks or other financial
institutions.
9
<page>
In the case of forward and swap contracts, which are traded on the interbank
market rather than on exchanges, the counterparty is generally a single bank
or other financial institution, rather than a group of financial institutions;
thus there may be a greater counterparty credit risk. The CTAs trade for the
Fund only with those counterparties which they believe to be creditworthy. All
positions of the Fund are valued each day on a mark-to-market basis. There can
be no assurance that any clearing member, clearinghouse or other counterparty
will be able to meet its obligations to the Fund.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The securities of the Fund are not traded and no market for the Fund
securities is expected to develop. The Fund is engaged in the speculative
trading of futures and options on futures. The risks are fully explained in
the Fund prospectus delivered to each prospective Limited Partner prior to
their investment.
Item 8. Financial Statements and Supplementary Data.
The Fund financial statements as of December 31, 2006, were audited by Jordan,
Patke & Associates, Ltd., 300 Village Green Drive Ste 210, Lincolnshire, IL
60069 and are provided in this Amendment beginning on page F-1. The
supplementary financial information specified by Item 302 of Regulation S-K is
included in Item 6. Selected Financial Data.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
Item 9A. Controls and Procedures.
The Registrant has adopted procedures in connection with the operation of its
business including, but not limited to, the review of account statements sent
to the general partner before the open of business each day that disclose the
positions held overnight in the Fund accounts, the margin to hold those
positions, and the amount of profit or loss on each position, and the net
balance of equity available in each account. The Fund brokerage account
statements and financial books and records accounts are prepared by an
independent CPA Firm and then are reviewed each quarter and audited each year
by a different independent CPA firm.
In the Fund's previously-filed Annual Report on Form 10-K for the year ended
December 31, 2006 (the "Annual Report"), the General Partner of the Fund,
under the actions of its sole principal, Michael Pacult, evaluated the
effectiveness of the design and operation of its disclosure controls and
procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e)
or 15d-15(e)) with respect to the Fund as of December 31, 2006 and found them
adequate. In May, 2007, management was informed by the SEC that its
financials did not conform to SEC requirements because (1) the financials
contained only two, and not three, years of financial information and
inception to date for the statements of operations, changes in net assets, and
cash flows, and (2) the audit opinion did not cover all financial periods
stated. Because of these omissions, management has re-evaluated its prior
conclusion regarding the effectiveness of the design and operation of its
disclosure controls and procedures as of December 31, 2006 with respect to the
Fund. Based upon Mr. Pacult's re-evaluation, conducted under Exchange Act
Rule 13a-15 or 15d-15(e), he concluded that the omissions were caused by a
personnel problem, were the result of obvious human error and lack of
attention to detail, and that the Fund's disclosure controls and procedures
were accordingly not effective as of December 31, 2006. To remediate the
situation, Mr. Pacult has severely reprimanded those persons who prepared and
reviewed the financial statements included in the Annual Report. Mr. Pacult
accepts total responsibility for the financial statements of the Fund and
filings made with the SEC, including the Annual Report and this Amendment.
Internal Control over Financial Reporting
Each month, the general partner reviews the profit and loss statements for the
month and once approved each partner is sent a statement to disclose total
Fund performance and the amount in the partner's capital account. Checks are
paid for expenses only upon approval of invoices submitted to the general
partner or pursuant to standing authorizations for periodic fixed expenses.
Payment of redemption is only upon receipt of a request form signed by the
person with authority over the limited partner's account. The general partner
balances the daily account information with the monthly
10
<page>
compilation and financial statements prepared by the independent CPA. There
have been no changes in the General Partner's internal control over financial
reporting applicable to the Fund identified in connection with the evaluation
required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred
during the fourth quarter of fiscal year 2006 and through the date of this
Amendment that have materially affected, or are reasonably likely to
materially affect, internal control over financial reporting applicable to the
Fund.
Item 9B. Other Information.
None
Part III
Item 10. Directors and Executive Officers of the Registrant
The Fund is a Delaware Limited Partnership which acts through its corporate
General Partner. Accordingly, the Registrant has no Directors or Executive
Officers.
The General Partners of the Registrant during the year 2006 were White Oak
Financial Services, Incorporated, a Delaware corporation, and Michael P.
Pacult. The General Partners are both registered with the National Futures
Association as commodity pool operators pursuant to the Commodity Exchange
Act, and Mr. Michael Pacult, age 62, is the sole shareholder, director,
registered principal and executive officer of the corporate General Partner.
The background and qualifications of Mr. Pacult are disclosed in the
Registration Statement, incorporated herein by reference. Mr. Pacult is also
a registered representative with Futures Investment Company, the affiliated
broker dealer which conducts the "best efforts" offering of the Units.
There has never been a material administrative, civil or criminal action
brought against the Fund, the General Partner or any of its directors,
executive officers, promoters or control persons.
No Forms 3, 4, or 5 have been furnished to the Registrant since inception. To
the best of the Fund's knowledge, no such forms have been or are required to
be filed.
Audit Committee Financial Expert
Mr. Pacult, in his capacity as the sole principal for the General Partner of
the Fund, has determined that he qualifies as an "audit committee financial
expert" in accordance with the applicable rules and regulations of the
Securities and Exchange Commission. He is not independent of management.
Code of Ethics
The Fund General Partner is registered with the National Futures Association
as a Commodity Pool Operator and its President, Michael P. Pacult is
registered as its principal. Both the Fund and the General Partner are
subject to Federal Commodity Exchange Act and audit for compliance and the
rules of good practice of the Commodity Futures Trading Commission and the
industry self regulatory organization, the National Futures Association.
Having said that, neither the Commodity Futures Trading Commission nor the
National Futures Association are responsible for the quality of the Fund
disclosures or its operation, those functions are exclusively the
responsibility of the Fund and its General Partner.
Item 11. Executive Compensation.
Although there are no executives in the Fund, the corporate General Partner
and certain persons Affiliated with the General Partners are paid compensation
that the Fund has elected to disclose on this Amendment. As described
previously, upon opening of the Fund, the General Partner will be paid fixed
brokerage commissions of six percent (6%) per year, payable monthly, to cover
the cost of the trades entered by the CTA. The corporate General Partner
retains the difference, if any, between the cost to enter the trades and the
six percent (6%). It is also paid an incentive fee of up to three percent
(3%) on New Net Profits.
11
<page>
Subsequent Event
As of September 1, 2007, the General Partner will receive up to one half
percent (1/2%) on New Net Profits.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
(a) The following Limited Partners owned more than five percent (5%) of the
total equity of the Fund on December 31, 2006:
Name Percent Ownership
Michael Pacult 50.0%
Michael Pacult invested personally as a limited partner to comply with the
legal requirement that a Limited Partnership must be formed by two or more
people. Mr. Pacult redeemed his Limited Partner interest on March 2, 2007.
(b) As of December 31, 2006, the corporate General Partner owned 1.00 Unit of
Limited Partnership Interest, which constituted the other 50.0% ownership.
(c) The Limited Partnership Agreement governs the terms upon which control of
the Fund may change. No change in ownership of the Units will, alone,
determine the location of control. The Limited Partners must have 120 days
advance notice and the opportunity to redeem prior to any change in the
control from the General Partner to another general partner. Control of the
management of the Partnership may never vest in one or more Limited Partners.
Item 13. Certain Relationships and Related Transactions.
See Item 11, Executive Compensation and Item 12, Security Ownership of Certain
Beneficial Owners and Management. The General Partner has sole discretion over
the selection of trading advisors. White Oak Financial Services, Inc., the
corporate General Partner, is paid a fixed commission for trades and,
therefore, the General Partner has a potential conflict in the selection of a
CTA that makes few trades rather than produces profits for the Fund. This
conflict and others are fully disclosed in the Registration Statement, which
is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services.
(1) Audit Fees
The fees and costs paid to Frank L. Sassetti & Co. for the audit of the Fund's
annual financial statements, for review of financial statements included in
the Fund's Forms 10-Q and other services normally provided in connection with
regulatory filing or engagements (i.e., consents related to SEC registration
statements) for the years ended December 31, 2006 and 2005 were $9,845 and
$6,547, respectively. Similar fees paid to Jordan, Patke and Associates, Ltd.
for the same time periods were $1,490, and $0, respectively.
(2) Audit Related Fees
None
(3) Tax Fees
The aggregate fees paid to Frank L. Sassetti & Co. for tax compliance services
for the years ended December 31, 2006 and 2005 were $0 and $350, respectively.
Similar fees paid to Jordan, Patke and Associates, Ltd. for the same time
periods were $0, and $0, respectively.
(4) All Other Fees
None
12
<page>
(5) The Board of Directors of White Oak Financial Services, Inc., General
Partner of the Fund, approved all of the services described above. The Board
of Directors has determined that the payments made to its independent
certified public accountants for these services are compatible with
maintaining such auditors' independence. The Board of Directors explicitly
pre-approves all audit and non-audit services and all engagement fees and
terms.
(6) Close to 100% of the hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most recent
fiscal year were attributed to work performed by persons other than the
principal accountant's full-time permanent employees. However, all work
performed was supervised by a full-time permanent employee.
Part IV
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The following documents are filed as part of this report:
1. All Financial Statements
The Financial Statements begin on page F-1 of this Amendment.
2. Financial Statement Schedules required to be filed by Item 8 on this
form, and by paragraph (b) below.
Not applicable, not required, or included in the Financial Statements.
3. List of those Exhibits required by Item 601 of Regulation S-K (Sec
229.601 of this chapter) and by paragraph (b) below.
Incorporated by reference from the Fund's Registration Statement on
Form S-1, and all amendments at file No. 333-119635 previously filed
with the Securities and Exchange Commission.
31.1 Certification of CEO and CFO pursuant to Section 302
32.2 Certification of CEO and CFO pursuant to Section 906
(b) Exhibits required by Item 601 of Regulation S-K (Sec 229.601 of this
chapter).
See response to 15(a)(3), above.
(c) Financial statements required by Regulation S-X (17 CFR 210) which are
excluded from the annual report to shareholders by Rule 14a-3(b) including (1)
separate financial statements of subsidiaries not consolidated and fifty
percent or less owned persons; (2) separate financial statements of affiliates
whose securities are pledged as collateral; and (3) schedules.
None.
13
<page>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment No. 2 to
Form 10-K for the period ended December 31, 2006, to be signed on its behalf
by the undersigned, thereunto duly authorized.
Registrant: Providence Select Fund, Limited Partnership
By White Oak Financial Services, Inc.
Its General Partner
Date: August 23, 2007 By: /s/ Michael Pacult
Mr. Michael P. Pacult
Sole Director, Sole Shareholder
President and Treasurer
14
<page>
Providence Select Fund, Limited Partnership
(A Development Stage Enterprise)
Index to the Financial Statements
Page
Report of Independent Registered Public Accounting Firm F-2
Financial Statements
Statements of Assets and Liabilities F-3
Statements of Operations F-4
Statements of Changes in Net Assets F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7 - F-13
Affirmation of Commodity Pool Operator F-14
F-1
<page>
Jordan, Patke & Associates, Ltd.
Certified Public Accountants
Report of Independent Registered Public Accounting Firm
To the Partners of
Providence Select Fund, Limited Partnership
Dover, Delaware
We have audited the accompanying statements of assets and liabilities of
Providence Select Fund, Limited Partnership (a development stage enterprise)
as of December 31, 2006 and 2005, and the related statements of operations,
changes in net assets and cash flows for the years ended December 31, 2006,
2005 and 2004, and the cumulative period from May 16, 2003 (date of inception)
through December 31, 2006. These financial statements are the responsibility
of the Fund's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. Providence Select
Fund, Limited Partnership is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. Our audit
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
Providence Select Fund, Limited Partnership internal control over financial
reporting. Accordingly, we express no such opinion. An audit 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 audit provides 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 Providence Select Fund,
Limited Partnership as of December 31, 2006 and 2005, and the results of its
operations, its changes in net assets and its cash flows for the years ended
December 31, 2006, 2005 and 2004, and the cumulative period from May 16, 2003
through December 31, 2006 are in conformity with accounting principles
generally accepted in the United States of America.
As discussed in Note 9 to the financial statements, the 2006, 2005, 2004 and
the cumulative period from May 16, 2003 through December 31, 2006 financial
statements have been restated to correct a misstatement.
/s/ Jordan, Patke & Associates, Ltd.
Jordan, Patke & Associates, Ltd.
Lincolnshire, Illinois
August 20, 2007
300 Village Green Drive, Suite 210 * Lincolnshire, Illinois 60069
Phone: (847) 913-5400 * Fax: (847) 913-5435
F-2
<page>
Providence Select Fund, Limited Partnership
(A Development Stage Enterprise)
Statements of Assets and Liabilities
<table>
<s> <c> <c>
Restated
--------------------------------
December 31,
2006 2005
Assets
Cash $304 $381
Total assets 304 381
Liabilities
Accrued expenses 7,076 -
Advances due to related parties 256,746 124,371
Total Liabilities 263,822 124,371
Net assets $(263,518) $(123,990)
Analysis of Net Assets
Limited partners $(131,759) $(61,995)
General partner $(131,759) $(61,995)
Net assets (equivalent to
$(131,758.00) and $(61,994.00)
per unit $(263,518) $(123,990)
Partnership units outstanding
Limited partners units outstanding 1.00 1.00
General partner units outstanding 1.00 1.00
Total partnership units outstanding 2.00 2.00
</table>
The accompanying notes are an integral part of the financial statements
F-3
<page>
Providence Select Fund, Limited Partnership
(A Development Stage Enterprise)
Statements of Operations
For the Years Ended December 31, 2006, 2005 and 2004, and the Cumulative
Period from May 16, 2003 (Date of Inception) to December 31, 2006
<table>
<s> <c> <c> <c> <c>
Restated
--------------------------------------------------------------
Period From
May 16, 2003
(Inception) to
Year ended December 31, December 31,
2006 2005 2004 2006
Investment income
Total investment income $- $- $- $-
Expenses
Professional accounting and legal fees 135,992 30,772 11,955 181,544
Other operating and administrative expenses 3,536 434 105 4,098
Total expenses 139,528 31,206 12,060 185,642
Net investment loss (139,528) (31,206) (12,060) (185,642)
Realized and unrealized gain (loss) from
investments and foreign currency
Net gain on investments and foreign currency - - - -
Net decrease in net assets resulting from
operations $(139,528) $(31,206) $(12,060) $(185,642)
Net income per unit
Limited partnership unit $(69,764.00) $(15,603.00) $(6,030.00) $(92,821.00)
General partnership unit $(69,764.00) $(15,603.00) $(6,030.00) $(92,821.00)
</table>
The accompanying notes are an integral part of the financial statements
F-4
<page>
Providence Select Fund, Limited Partnership
(A Development Stage Enterprise)
Statement of Changes in Net Assets
For the Years Ended December 31, 2006, 2005 and 2004, and the Cumulative
Period from May 16, 2003 (Date of Inception) to December 31, 2006
<table>
<s> <c> <c> <c> <c>
Restated
--------------------------------------------------------------
Period From
May 16, 2003
(Inception) to
Year ended December 31, December 31,
2006 2005 2004 2006
Increase (decrease) in net assets from
operations:
Net investment loss $(139,528) $(31,206) $(12,060) $(185,642)
Net realized gains (losses) from investments
and foreign currency transactions - - - -
Net increase (decrease) in unrealized
appreciation from investments and
translation of assets and liabilities
in foreign currencies - - - -
Net decrease in net assets resulting
from operations (139,528) (31,206) (12,060) (185,642)
Capital share subscriptions - - - 2,000
Capital share redemptions - - - -
Initial offering Costs - (79,876) - (79,876)
Total decrease in net assets (139,528) (111,082) (12,060) (263,518)
Net assets at the beginning of the year (123,990) (12,908) (848) -
Net assets at the end of the year $(263,518) $(123,990) $(12,908) $(263,518)
</table>
The accompanying notes are an integral part of the financial statements
F-5
<page>
Providence Select Fund, Limited Partnership
(A Development Stage Enterprise)
Statements of Cash Flows
For the Years Ended December 31, 2006, 2005 and 2004, and the Cumulative
Period from May 16, 2003 (Date of Inception) to December 31, 2006
<table>
<s> <c> <c> <c> <c>
Restated
--------------------------------------------------------------
Period From
May 16, 2003
(Inception) to
Year ended December 31, December 31,
2006 2005 2004 2006
Cash Flows from Operating Activities
Net increase (decrease) in net assets
resulting from operations $(139,528) $(31,206) $(12,060) $(185,642)
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Changes in operating assets and liabilities:
Expenses financed by related parties 20,831 31,206 12,060 66,945
Cash paid towards initial offering costs - (2,711) (105) (3,234)
Increase (decrease) in accrued expenses 7,076 - - 7,076
Net cash provided by (used in)
operating activities (111,621) (2,711) (105) (114,855)
Cash Flows from Financing Activities
Increase in cash advances from related
parties 111,544 1,220 - 113,159
Initial partner contribution - - - 2,000
Net cash provided by financing activities 111,544 1,220 - 115,159
Net increase (decrease) in cash and
cash equivalents (77) (1,491) (105) 304
Cash at the beginning of the period 381 1,872 1,977 -
Cash at the end of the period $304 $381 $1,872 $304
Non-Cash Financing Activities
Costs paid by and owed to related parties $20,831 $42,685 $15,900 $143,587
</table>
The accompanying notes are an integral part of the financial statements
F-6
<page>
Providence Select Fund, Limited Partnership
(A Development Stage Enterprise)
For the Years Ended December 31, 2006, 2005 and 2004
1. Nature of the Business
Providence Select Fund, Limited Partnership (the Fund) was formed on May 16,
2003 under the laws of the State of Delaware. The Fund expects to engage in
high risk, speculative and hedge trading of futures and forward contracts,
options on futures and forward contracts, and other instruments selected by
registered commodity trading advisors (CTA's). However, the Fund will not
commence business until at least $1,030,000 worth of partnership interests are
sold. The maximum offering is $50,000,000. White Oak Financial Services, Inc.
(White Oak) and Michael Pacult are the General Partners and commodity pool
operators (CPO's) of the Fund. The initial CTA is expected to be NuWave
Investment Corp., which will have the authority to trade as much of the Fund's
equity as is allocated to it by the General Partner. The selling agent is
Futures Investment Company (FIC), which is controlled by Michael Pacult and
his wife.
The Partnership is in the development stage and its efforts through December
31, 2006 have been principally devoted to organizational activities.
2. Significant Accounting Polices
Regulation - The Fund is a registrant (effective September 12, 2005) with the
Securities and Exchange Commission (SEC) pursuant to the Securities and
Exchange Act of 1934 (the Act). The Fund is subject to the regulations of the
SEC and the reporting requirements of the Act. The Fund will also be subject
to the regulations of the Commodities Futures Trading Commission (CFTC), an
agency of the U.S. government which regulates most aspects of the commodity
futures industry, the rules of the National Futures Association and the
requirements of various commodity exchanges where the Fund executes
transactions. Additionally, the Fund will be subject to the requirements of
futures commission merchants and interbank market makers through which the
Fund trades.
Offering Expenses and Organizational Costs - Providence has incurred $225,566
and $101,210 in offering costs through December 31, 2006 and 2005,
respectively. The Fund has agreed to reimburse White Oak and other affiliated
entities for all offering expenses incurred up to the commencement of business
after the twelfth month following the commencement of business. These
reimbursement amounts are $256,746 and $124,371 as of December 31, 2006 and
2005, respectively. The commencement of business is contingent upon the sale
of at least $1,030,000 of partnership interests. Organizational costs are
expensed as incurred and reimbursed. All costs after the commencement of
business are expensed as incurred by the Fund. For financial reporting
purposes in conformity with U.S. GAAP, on the Fund's initial effective date,
September 12, 2005, the Fund deducted the total initial offering costs as of
that date from Partner's capital and began expensing all offering costs. For
all other purposes, including determining the Net Asset Value per Unit for
subscription and redemption purposes, the Fund will not reflect these costs in
capital until after the twelfth month following the commencement of business.
Consequently, as of December 31, 2006 and 2005, the Net Asset Value and Net
Asset Value per Unit for financial reporting purposes and for all other
purposes are as follows:
December 31,
2006 2005
Net Asset Value
Financial Reporting $(263,518) $(123,990)
All Other Purposes $2,000 $2,000
Number of Units 2.00 2.00
Net Asset Value per Unit
Financial Reporting $(131,759.00) $(61,995.00)
All Other Purposes $1,000.00 $1,000.00
Registration Costs - Costs incurred for the initial filings with Securities
and Exchange Commission, National Association of Securities Dealers, Inc. and
the states where the offering is expected to be made are included in the
offering expenses and, accordingly, are accounted for as described above under
"Offering Expenses and Organizational Costs".
F-7
<page>
Providence Select Fund, Limited Partnership
(A Development Stage Enterprise)
For the Years Ended December 31, 2006, 2005 and 2004
2. Significant Accounting Polices, Continued
Revenue Recognition - Forward contracts, futures and other investments are
recorded on the trade date and will be reflected in the statement of
operations at the difference between the original contract amount and the
market value on the last business day of the reporting period.
Market value of forward contracts, futures and other investments is based upon
exchange or other applicable closing quotations related to the specific
positions.
Interest income is recognized when it is earned.
Use of Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these
estimates.
Income Taxes - The Fund is not required to provide a provision for income
taxes. Income tax attributes that arise from its operations are passed
directly to the individual partners. The Fund may be subject to state and
local taxes in jurisdictions in which it operates.
Statement of Cash Flows - For purposes of the Statement of Cash Flows, the
Fund will consider only money market funds to be cash equivalents. Net cash
provided by operating activities includes no cash payments for interest or
income taxes for the years ending December 31, 2006, 2005 and 2004. There
were no cash equivalents as of December 31, 2006, 2005 and 2004.
Foreign Currency - Investment securities and other assets and liabilities
denominated in foreign currencies are translated into U.S. dollar amounts at
the date of valuation. Purchases and sales of investment securities and
income and expense items denominated in foreign currencies are translated into
U.S. dollar amounts on the respective dates of such transactions.
The Company does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
Reported net realized foreign exchange gains or losses arise from sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
fund's books and the U.S. dollar equivalent of the amounts actually received
or paid. Net unrealized foreign exchange gains and losses arise from changes
in the fair values of assets and liabilities, other than investments in
securities at fiscal period end, resulting from changes in exchange rates.
3. General Partner Duties
The responsibilities of the General Partner, in addition to directing the
trading and investment activity of the Fund, including suspending all trading,
includes executing and filing all necessary legal documents, statements and
certificates of the Fund, retaining independent public accountants to audit
the Fund, employing attorneys to represent the Fund, reviewing the brokerage
commission rates to determine reasonableness, maintaining the tax status of
the Fund as a limited partnership, maintaining a current list of the names,
addresses and numbers of units owned by each Limited Partner and taking such
other actions as deemed necessary or desirable to manage the business of the
Partnership.
The Corporate General Partner has contributed $1,000 in cash for deposit to
the capital of the Fund for a General Partnership interest in the Partnership.
F-8
<page>
Providence Select Fund, Limited Partnership
(A Development Stage Enterprise)
For the Years Ended December 31, 2006, 2005 and 2004
3. General Partner Duties, Continued
If the net unit value of the partnership falls to less than 50% of the greater
of the original $1,000 selling price, less commissions and other charges or
such higher value earned through trading, then the General Partner will
immediately suspend all trading, provide all limited partners with notice of
the reduction in net unit value and give all limited partners the opportunity,
for fifteen days after such notice, to redeem partnership interests. No
trading shall commence until after the lapse of such fifteen day period.
4. The Limited Partnership Agreement
The Limited Partnership Agreement provides, among other things, that-
Capital Account - A capital account shall be established for each partner.
The initial balance of each partner's capital account shall be the amount of
the initial contributions to the partnership.
Monthly Allocations - Any increase or decrease in the Partnership's net asset
value as of the end of a month shall be credited or charged to the capital
account of each Partner in the ratio that the balance of each account bears to
the total balance of all accounts.
Any distribution from profits or partners' capital will be made solely at the
discretion of the General Partner.
Federal Income Tax Allocations - As of the end of each fiscal year, the
Partnership's realized capital gain or loss and ordinary income or loss shall
be allocated among the Partners, after having given effect to the fees and
expenses of the Fund.
Subscriptions - Investors must submit subscription agreements and funds at
least five business days prior to month end. Subscriptions must be accepted or
rejected by the general partner within five business days. The investor also
has five business days to withdraw his subscription. Funds are deposited into
an interest bearing subscription account and will be transferred to the Fund's
account after the minimum to commence business has been raised and,
thereafter, on the first business day of the month after the subscription is
accepted. Interest earned on the subscription funds will accrue to the
account of the investor.
Redemptions - A limited partner may request any or all of his investment be
redeemed at the net asset value as of the end of a month. Unless this
requirement is waived, the written request must be received by the general
partner no less than ten days prior to a month end. Redemptions will
generally be paid within twenty days of the effective month end. However, in
various circumstances due to liquidity, etc. the general partner may be unable
to comply with the request on a timely basis. There will be a redemption fee
commencing from the date of purchase of units of 3% during the first four
months, 2% during the second four months, 1% during the third four months and
no redemption fee after the twelfth month.
F-9
<page>
Providence Select Fund, Limited Partnership
(A Development Stage Enterprise)
For the Years Ended December 31, 2006, 2005 and 2004
5. Fees
The Fund will be charged the following fees on a monthly basis as of the
commencement of trading.
A monthly management fee will be paid to the CTA based on the rate of trading
assigned by the CTA and approved by the General Partner of up to 2.5% (annual
rate) of the Fund's net assets allocated to the CTA to trade will be paid to
the CTA.
The Fund will pay the Corporate General Partner a fixed brokerage commission
of 6%, from which the Corporate General Partner will pay the round turn
commissions to the futures commission merchant.
A quarterly incentive fee of 20% of "new trading profits" will be paid to each
CTA and up to a 3% quarterly incentive fee will be paid to the Corporate
General Partner. "New trading profits" includes all income earned by a CTA
and expense allocated to his activity. In the event that trading produces a
loss for a CTA, no incentive fees will be paid and all losses will be carried
over to the following months until profits from trading exceed the loss. It
is possible for one CTA to be paid an incentive fee during a quarter or a year
when the Fund experienced a loss.
After the Fund commences trading, the Fund will pay the selling agents a 3%
continuing service fee based on the initial investment the first year. Each
year thereafter, for so long as the investment remains in the Fund, the Fund
will pay this fee at 1/4% monthly based on the net asset value of the
investment.
The General Partner has reserved the right to change the management fee and
the incentive fee at its sole discretion. The total incentive fees may be
increased to 27% if the management fee is eliminated. The Fund may also
increase the management fees paid to the CTA's and general partner to 6% of
total net assets if the total incentive fees are decreased to 15%.
6. Related Party Transactions
Michael Pacult, the sole shareholder of White Oak has made an initial limited
partner capital contribution in the Fund of $1,000. He is also the sole
shareholder of Ashley Capital Management, Inc. (the general partner of another
commodity fund), which along with the shareholder and other affiliates, has
temporarily funded the syndication costs incurred by the Fund to date. In
Accordance with Financial Accounting Standards Board Interpretation No. 46(R),
Consolidation of Variable Interest Entities, a variable interest entity
relationship exists between White Oak and the Fund.
Financial Accounting Standards Board Interpretation No. 45, Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others, identifies certain disclosures to be
made by a guarantor in its financial statements about its obligations under
certain guarantees that it has issued. In the normal course of business, the
Fund has provided general indemnifications to the General Partner, its CTA and
others when they act, in good faith, in the best interests of the Fund. The
Fund is unable to develop an estimate for future payments resulting from
hypothetical claims, but expects the risk of having to make any payments under
these indemnifications to be remote.
F-10
<page>
Providence Select Fund, Limited Partnership
(A Development Stage Enterprise)
For the Years Ended December 31, 2006, 2005 and 2004
6. Related Party Transactions, Continued
The Fund has received advances from four related parties: White Oak Financial
Services, Inc., general partner of Providence Select Fund, LP, Ashley Capital
Management, Inc., Futures Investment Company, the introducing broker and
Michael Pacult, president of Futures Investment Company, White Oak Financial
Services, Inc. and Ashley Capital Management, Inc. The Fund has the following
advances due to related parties at December 31, 2006 and 2005:
December 31,
2006 2005
Futures Investment Company $64,105 $833
Ashley Capital Management, Inc. 62,355 20,450
Michael Pacult 46,650 19,650
White Oak Financial Services, Inc. 83,636 83,438
Total advances due to related parties $256,746 $124,371
These advances are to help pay for various costs, including operating and
start-up costs, and are recorded as due to related party. The balance will be
reimbursed after the twelfth month of operation. These amounts bear no
interest or due dates and are unsecured.
7. Partnership Unit Transactions
As of December 31, 2006, 2005 and 2004 partnership units were $(131,759.00),
$(61,995.00) and $(6,454.00) per unit respectively for
financial reporting purposes.
Transactions in partnership units were as follows:
<table>
<s> <c> <c> <c> <c> <c> <c>
(Restated)
------------------------------------------
Units Amount
2006 2005 2004 2006 2005 2004
Limited Partner Units
Subscriptions - - - $- $- $-
Redemptions - - - - - -
Net income for the year ended 12/31 - - - (69,764) (15,603) (6,030)
Offering costs - - - - (39,938) -
Total - - - (69,764) (55,541) (6,030.00)
General Partner Units
Subscriptions - - - - - -
Redemptions - - - - - -
Net income for the year ended 12/31 - - - (69,764) (15,603) (6,030)
Offering costs - - - - (39,938) -
Total - - - (69,764) (55,541) (6,030)
Total Units
Subscriptions - - - - - -
Redemptions - - - - - -
Net income for the year ended 12/31 - - - (139,528) (31,206) (12,060)
Offering costs - - - - (79,876) -
Total - - - $(139,528) $(111,082) $(12,060)
</table>
8. Concentrations
The Fund will maintain all of its initial subscription deposits with a
commercial financial institution. In the event of the financial institution's
insolvency, recovery of Fund deposits may be limited to account insurance or
other protection afforded deposits by the institution.
F-11
<page>
Providence Select Fund, Limited Partnership
(A Development Stage Enterprise)
For the Years Ended December 31, 2006, 2005 and 2004
9. Restatement and Correction of an Error
We have restated the Fund's financial statements and other financial
information contained in our Annual Report on Form 10-K, as amended, for the
years ended December 31, 2006, 2005 and 2004 and the period from inception to
year-end 2006 to correct our accounting for the treatment of offering and
organizational costs. The accompanying financial statements were restated
only to reflect the adjustments described below and do not reflect events
occurring after December 31, 2006, the date of the information contained in
our original Form 10-K, nor modify or update those disclosures that have been
affected by subsequent events. Accordingly, these financials should be read
in conjunction with our filings made with the SEC.
The SEC has requested revision of the Registrant's financial statements to
expense reimbursable organizational costs in accordance with SOP 98-5 and
reflect reimbursable offering costs as a reduction to partnership capital as
of the initial effective date of the offering, September 12, 2005, and expense
them thereafter. Upon completion of our investigation and analysis of this
request, on August 2, 2007, our management concluded that we would amend our
previously filed Annual Report on Form 10-K for the year ended December 31,
2006 and our previously filed Quarterly Report on Form 10-Q for the quarter
ended March 31, 2007 to comply with the request of the SEC. The Audit
Committee of our Board of Directors, composed of the sole director, owner and
principal of the corporate general partner, Mr. Michael Pacult, who is also
the individual general partner, ratified the decision to amend our previously
filed reports on August 2, 2007. These changes are for financial reporting
purposes only. For all other purposes, including determining the Net Asset
Value per Unit for subscription and redemption purposes, the Fund will not
reimburse the offering costs until after the twelfth month following the
commencement of business. Accordingly, we do not believe the change is
material to the limited partners of the Fund.
We are restating our previously issued financial statements in accordance with
the guidance provided in SFAS 154, Accounting Changes and Error Corrections.
The following table sets forth the effects of the restatement on certain line
items within our previously reported financial statements:
<table>
<s> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c>
Period From May 16, 2003
Year Ended Dec 31, 2006 Year Ended Dec 31, 2005 Year Ended Dec 31, 2004 Inception to Dec 31, 2006
As previously As previously As previously As previously
reported Adustments Restated reported Adustments Restated reported Adustments Restated reported Adustments Restated
Statement of Assets and
Liabilities
Reimbursable syndication
costs $261,561 $(261,561) $- $125,426 $(125,426) $-
Prepaid operating costs
and other 3,956 (3,956) - 562 (562) -
Total Assets 265,821 (265,517) 304 126,369 (125,988) 381
Limited partners 1,000 (132,759) (131,759) 1,000 (62,995) (61,995)
General partners 1,000 (132,759) (131,759) 1,000 (62,995) (61,995)
Net Assets 2,000 (265,518) (263,518) 2,000 (125,990) (123,990)
NAV Per Unit 1,000.00 (132,759.00) (131,759.00) 1,000.00 (62,995.00) (61,995.00)
Statement of Operations
Professional accounting and
legal fees - 135,992 135,992 - 30,772 30,772 $- $11,955 $11,955 $- $181,544 $181,544
Other operating and
administrative expenses - 3,536 3,536 - 434 434 - 105 105 - 4,098 4,098
Expenses - 139,528 139,528 - 31,206 31,206 - 12,060 12,060 - 185,642 185,642
Net Investment (loss) - (139,528) (139,528) - (31,206) (31,206) - (12,060) (12,060) - (185,642) (185,642)
Net income per unit - (69,764.00) (69,764.00) - (15,603.00) (15,603.00) - (6,030.00) (6,030.00) - (92,821.00) (92,821.00)
Statement of Changes in
Net Assets
Net Investment gain (loss) - (139,528) (139,528) - (31,206) (31,206) - (12,060) (12,060) - (185,642) (185,642)
Increases (decreases) in net
assets from operations - (139,528) (139,528) - (31,206) (31,206) - (12,060) (12,060) - (185,642) (185,642)
Initial offering costs - - - - (79,876) (79,876) - - -
Total decrease in net assets - (139,528) (139,528) - (111,082) (111,082) - (12,060) (12,060) - (263,518) (263,518)
Net assets at the beginning
of the year 2,000 (125,990) (123,990) 2,000 (14,908) (12,908) 2,000 (2,848) (848) 2,000 (2,000) -
Net assets at the end of
the year 2,000 (265,518) (263,518) 2,000 (125,990) (123,990) 2,000 (14,908) (12,908) 2,000 (265,518) (263,518)
Statement of Cash Flows
Net decrease in net assets
resulting from operations - (139,528) (139,528) - (31,206) (31,206) - (12,060) (12,060) - (185,642) (185,642)
(Increase) in reimbursable
syndication costs (114,760) 114,760 - (20,707) 17,996 (2,711) (105) - (105) (115,817) 112,583 (3,234)
(Increase) in prepaid
operating expenses (3,394) 3,394 - (434) 434 - - - - (3,956) 3,956 -
Increase in accrued expenses 7,076 - 7,076 - - - - - - 7,076 - 7,076
Net cash (used in)
operating activities (111,078) (543) (111,621) (21,141) 18,430 (2,711) (105) - (105) (112,697) (2,158) (114,855)
Increase in cash advances
from related parties 111,001 543 111,544 19,650 (18,430) 1,220 - - - 111,001 2,158 113,159
Initial partner contributions - - - - - - - - - 2,000 - 2,000
Net increase in cash from
financing activities 111,001 543 111,544 19,650 (18,430) 1,220 - - - 113,001 2,158 115,159
Cash at the beginning of
the period 381 - 381 1,872 - 1,872 1,977 - 1,977 - - -
Cash at the end of the period 304 - 304 381 - 381 1,872 - 1,872 304 - 304
Costs paid by and owed
to related parties $21,375 $(544) $20,831 $24,253 $18,432 $42,685 $15,899 $1 $15,900 $126,094 $17,493 $143,587
</table>
F-12
<page>
Providence Select Fund, Limited Partnership
(A Development Stage Enterprise)
For the Years Ended December 31, 2006, 2005 and 2004
10. Financial Highlights
<table>
<s> <c> <c> <c> <c>
Restated
--------------------------------------------------------------
Period From
May 16, 2003
(Inception) to
Year ended December 31,
2006 2005 2004 2006
Performance per unit
Net unit value, beginning of the year $(61,995.00) $(6,454.00) $(424.00) $1,000.00
Net realized and unrealized gains and losses
on commodity transactions - - - -
Investment and other income - - - -
Expenses (1) (69,764.00) (15,603.00) (6,030.00) (1,424.00)
Syndication costs transferred to capital - (39,938.00)
Net increase for the year (69,764.00) (55,541.00) (6,030.00) (1,424.00)
Net unit value at the end of the year $(131,759.00) $(61,995.00) $(6,454.00) $(424.00)
Net assets at the end of the year ($000) $(264) $(124) $(13) $(1)
Total return 78.79% 57.08% 175.34% -494.44%
Ratio to average net assets
Investment and other income 0.00% 0.00% 0.00% 0.00%
Expenses 78.79% 57.08% 175.34% -494.44%
</table>
(1) Investment and other income and expenses are calculated using the
average number of units outstanding during the year. Net realized and
unrealized gains and losses on commodity transactions is a balancing amount
necessary to reconcile the change in net unit value.
F-13
<page>
Providence Select Fund, Limited Partnership
Affirmation of the Commodity Pool Operator
For the Years Ended December 31, 2006, 2005 and 2004, and the Cumulative
Period from May 16, 2003 (Date of Inception) to December 31, 2006
*****************************************************************************
To the best of the knowledge and belief of the undersigned, the information
contained in this report is accurate and complete.
/s/ Michael Pacult August 23, 2007
Michael Pacult Date
President, White Oak Financial Services, Inc.
General Partner
Providence Select Fund, Limited Partnership
F-14
<page>