-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Kh/BLliBm7OnYLjI+wvB2zzK4JzEnUfiPZS7eI/mXDWZT6PPEbAmZRNF5bopuS5Q mFrIe3Zx0+eLAX2ldgDYjQ== 0000865549-10-000008.txt : 20101115 0000865549-10-000008.hdr.sgml : 20101115 20101115171459 ACCESSION NUMBER: 0000865549-10-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20100930 FILED AS OF DATE: 20101115 DATE AS OF CHANGE: 20101115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATLAS FUTURES FUND LIMITED PARTNERSHIP CENTRAL INDEX KEY: 0000865549 STANDARD INDUSTRIAL CLASSIFICATION: [6221] IRS NUMBER: 510380494 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-53111 FILM NUMBER: 101193892 BUSINESS ADDRESS: STREET 1: 505 BROOKFIELD DRIVE CITY: DOVER STATE: DE ZIP: 19901 BUSINESS PHONE: 800-331-1532 MAIL ADDRESS: STREET 1: 505 BROOKFIELD DRIVE CITY: DOVER STATE: DE ZIP: 19901 10-Q 1 atlas10q0910.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2010 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 333-53111 Atlas Futures Fund, Limited Partnership (Exact name of registrant as specified in its charter) Delaware 51-0380494 (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification No.) 505 Brookfield Drive, Dover, DE 19901 (Address of principal executive offices, including zip code) (800) 331-1532 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) 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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [ ] Not Applicable. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X] Smaller Reporting Company [ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ] No [X] APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) f the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ] Not Applicable. APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Not Applicable. Part 1 - FINANCIAL INFORMATION Item 1. Financial Statements. The reviewed financial statements for the Registrant for the nine months ended September 30, 2010 are attached hereto at page F-1 and made a part hereof. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. General Information During the past quarter and in the future, Registrant, did and will, pursuant to the terms of the Limited Partnership Agreement, engage in the business of speculative and high risk trading of commodity futures and options markets through the services of one or more commodity trading advisors it selects. Description of Fund Business The Fund grants the commodity trading advisors a power of attorney that is terminable at the will of either party to trade the equity assigned by the Fund. Clarke Capital Management, Inc. was granted a power of attorney by the Fund and served as a trading advisor for the Fund since the Fund's inception. From February 1, 2005 through the end of September, 2007, the Fund also engaged NuWave Investment Corp as a trading advisor. Clarke traded approximately 80% of the Fund's equity made available for trading and NuWave traded the other 20%. During the last week of September, 2007, the General Partner advised NuWave that, effective October 1, 2007, it would terminate the Advisory Agreement and Power of Attorney and requested that NuWave liquidate all positions it had open on behalf of the Fund as of the last business day of September, 2007, or as soon as practical thereafter. The management and incentive fees paid to NuWave are, accordingly, no longer paid. Clarke Capital Management, Inc. remains the sole trading advisor to the Fund. The commodity trading advisors selected to trade for the Fund have discretion to select the trades and do not disclose the methods they use to make those determinations in their disclosure documents or to the Fund or general partner. There is no promise or expectation of a fixed return to the partners. The partners must look solely to trading profits for a return their investment as the interest income is expected to be less than the fixed expenses to operate the Fund. Assets The general partner has sole authority to determine the percentage of our assets that will be held on deposit with the futures commission merchant, used for other investments, and held in bank accounts to pay current obligations. As of the date of this Report, the partnership maintains approximately 44% of its assets in a Treasury Direct Account maintained with the United States Department of the Treasury, and 9% in a cash management fund that invests in U.S. Treasuries and has high liquidity. Funds maintained with the Department of Treasury and any cash management fund are held in the name of the partnership and not commingled with those of any other entity. The general partner maintains approximately 45% of our net assets with the futures commission merchant ("FCM") for margin for trading by the trading advisor. About 2% of the previous month's net assets are retained in our bank accounts to pay expenses and redemptions. The Fund assets at the FCM consist of cash used as margin to secure futures (formerly called commodity) trades entered on its behalf by the commodity trading advisors it selects. The Fund deposits its cash with one or more FCM's (brokers) that hold and allocate the cash to use as margin to secure the trades made. The futures held in the Fund accounts are valued at the market price on the close of business each day by the FCM that holds the Fund equity made available for trading. The Capital accounts of the Partners are immediately responsible for all profit and losses incurred by trading and payment and accrual of the expenses of offering partnership interests for sale and the operation of the partnership. During the periods of this Report, the fixed costs of operation of the Fund include continuing offering costs, fixed brokerage commissions of 11%, and accounting, legal and other operating fees that must be paid before the limited partners may earn a profit on their investment. The Fund has not in the past and does not intend in the future to borrow from third parties. Its trades are entered pursuant to a margin agreement with the futures commission merchant which obligates the fund to the actual loss, 2 if any, without reference or limit by the amount of cash posted to secure the trade. The limited partners are not personally liable for the debts of the Fund, including any trading losses. Upon effectiveness of an S-1 registration statement to be filed with the SEC in the near future, the Registrant will offer registered Units for sale to the public via its prospectus until the maximum in face amount of Units are sold. As of the date of this Report, $14,205,185 has been sold pursuant to a previous registration statement and, upon redemption by the holder, will not be resold. See the Subsequent Events footnote at the end of this section An Investment in the Fund Depends upon Redemption of Fund Units The Fund Units are not traded and they have no market value. Liquidity of an investment in the Fund depends upon the credit worthiness of the exchanges, brokers, and third parties of off exchange traded futures that hold Fund equity or have a lien against Fund assets for payment of debts incurred. Those parties must honor their obligations to the Fund for the Fund to be able to obtain the return of its cash from the futures commission merchant that holds the Fund account. The commodity trading advisors select the markets and the off exchange instruments to be traded. The General Partner selects the futures commission merchants to hold the Fund assets. Both the commodity trading advisors and the general partner believe all parties who hold Fund assets or are otherwise obligated to pay value to the Fund are credit worthy. Margin is an amount to secure the entry of a trade and is not a limit of the profit or loss to be gained from the trade. The general partner currently allocates nearly 100% of the Fund equity to be used as margin to enter trades. Although it is customary for the commodity trading advisors to use 40% or less of the equity available as margin, there is no limit imposed by the Fund upon the amount of equity the advisors may commit to margin. It is possible for the Fund to suffer losses in excess of the margin it posts to secure the trades made. To have the purchase price or appreciation, if any, of the Units paid to them, partners must use the redemption feature of the Partnership. Distributions, although possible in the sole discretion of the general partner, are not expected to be made. There is no current market for the Units sold, none is expected to develop and the limited partnership agreement limits the ability of a partner to transfer the Units. Results of Operations 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 trading advisor or advisors and to otherwise manage the operation of the Fund. The CTAs selected are responsible for the selection of trades. As evidenced by the increase in per unit value disclosed below, the Fund's CTAs have been successful overall. See the Registration Statement, incorporated by reference herein, for an explanation of the operation of the Fund. 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 results of the partial year 1999, the years 2000 through 2009, and the nine months ended September 30, 2010 reflect the absorption of these costs by the Fund. The Fund's realized and unrealized trading gains (losses) before commissions were $749,314 [$343.62 per Unit] and $(2,014,022) [$(513.61) Unit] for the nine months ended September 30, 2010 and September 30, 2009, respectively. The Fund's results after payment and accrual of expenses for the nine months ended September 30, 2010 and September 30, 2009 were (losses) of $(331,390) [$5.19 per Unit] and $(3,788,952) [$(957.25) Unit], respectively. The net asset value ("NAV") per Unit as of September 30, 2010, was $4,088.43, an decrease of 8.07% from the September 30, 2009 NAV per Unit of $4,447.51. The decrease includes the intervening quarters of 2009 and 2010. The above described performance was primarily due to the trading of Clarke Capital Management, currently the sole commodity trading advisor that trades for the Fund via its proprietary method, with the balance of the income from interest earned on deposits. If a large movement occurs in a sector that a trading advisor trades, such as agriculture, financials, metals or softs, it does not necessarily mean that the trading advisor will engage in trades that capture such moves. Accordingly, market movements and conditions are not necessarily correlated with Fund performance. Past performance is not necessarily indicative of future results. 3 Registrant's average net assets during the nine months ended September 30, 2010 were approximately $11,902,322, a decrease of 39.90% over average net assets during the nine months ended September 30, 2009 of $19,803,040 The decrease includes decreases made during the intervening quarters of 2010 and 2009. The decreases in average net assets during the comparative nine month periods were primarily due to the effects of investment returns generated by the commodity trading advisor. Net additions (withdrawals) for the nine months ended September 30, 2010 and September 30, 2009 were $(3,416,194) and $(2,305,533), respectively. Interest income is earned on the Fund's assets, through investment in short term cash instruments. Interest income to the Fund varies monthly according to interest rates, trading performance, subscriptions and redemptions. Interest income for the nine months ended September 30, 2010 was $8,287 a 60.35% decrease over the interest income for the nine months ended September 30, 2009 of $20,903. The decrease in interest income for the comparative nine month periods was primarily due to significantly reduced short term interest rates and reduced investments in Treasury bills. Brokerage commissions of 11% are calculated on the Fund's total trading equity as of the beginning of each month and therefore, vary according to monthly trading performance, subscriptions and redemptions. Commissions for the nine months ended September 30, 2010 were $993,401, a 40.47% decrease over the commissions for the nine months ended September 30, 2009 of $1,668,737. The decrease in commissions for the comparative nine month periods was primarily due to decreased average net asset levels. Pursuant to the Trading Advisory Agreement, the Fund pays a quarterly incentive fee to each trading advisor that has traded for the Fund. See Note 5 to the financial statements herein for the incentive fees. Trading advisor incentive fees during the nine months ended September 30, 2010 and September 30, 2009 were $ 0 and $0, respectively. The amounts are directly related to the trading performance of the trading advisors. Because CTA's earn their incentive fees independent of each other, during periods when there are multiple advisors, it is possible for one advisor to earn an incentive fee even if the other CTA or the Fund overall has negative performance. Operating expenses include accounting, audit, tax, and legal fees, as well as regulatory costs and printing and postage costs related to reports sent to limited partners. Operating expenses during the nine months ended September 30, 2010 and September 30, 2009 were $95,590 and $127,096, respectively. The decrease over the comparative nine month periods was primarily due to reduced professional fees from the prior period. Inflation has had no material impact on the operations or on the financial condition of the Fund from inception through September 30, 2010. Subsequent Events: On October 29, 2010, the Fund requested withdrawal of a previously filed post effective amendment and filed an S-1 registration statement to register additional $10,000,000 in Units. Upon effectiveness, the Units will be offered and sold pursuant to a prospectus under similar terms to the previous offering; however, there will be compensation to the affiliated selling agent, Futures Investment Company, of a 1% up front selling commission calculated on the gross subscription amount, in addition to $2,000 paid by the Fund for legal fees associated with the review of the offering by FINRA. Item 3. Quantitative and Qualitative Disclosures about Market Risk The business of the Fund is speculative and involves a high degree of risk of loss. See the Fund's Registration Statement and prospectus contained therein, incorporated herein, for a full description of the risks attendant to Fund business. 4 Item 4T. Controls and Procedures Disclosure 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. The General Partner of the Fund, under the actions of its sole principal, Michael Pacult, has 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 the end of the period covered by this Report. Based on their evaluation, Mr. Pacult has concluded that these disclosure controls and procedures are effective. Changes in Internal Control over Financial Reporting There were no changes in the General Partner's internal control over financial reporting during the quarter ended September 30, 2010 that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting applicable to the Fund. Part II - OTHER INFORMATION Item 1. Legal Proceedings 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. ("MFG"), (MFG was formerly known as Man Financial Inc. ("MFI") until the change of name to MFG was effected on July 19, 2007), has disclosed following described reportable events. Neither the Fund nor the General Partner is a party to any of these events and they are included in reliance upon a report supplied by MFG without verification by the General Partner. MFG has represented to the General Partner that that none of the events it has reported below will not now, or at any time in the future, interfere with its performance as the FCM for the Fund's account. MF Global Inc. ("MFG") is registered under the Commodity Exchange Act, as amended, as a futures commission merchant and a commodity pool operator, and is a member of the National Futures Association in such capacities. In addition, MFG is registered with the Financial Industry Regulatory Authority as a broker-dealer. MFG was formerly known as Man Financial Inc. ("MFI") until the change of name to MFG was effected on July 19, 2007. MFG is a member of all major U.S. futures exchanges and most major U.S. securities exchanges. MFG's main office is located at 717 Fifth Avenue, 9th Floor, New York, New York 10022-8101. MFG's telephone number at such location is (212) 589-6200. At any given time, MFG is involved in numerous legal actions and administrative proceedings, which in the aggregate, are not, as of the date of this report, expected to have a material effect upon its condition, financial or otherwise, or to the services it will render to the Fund. 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 report that MFI would deem material for purposes of Part 4 of the Regulations of the Commodity Futures Trading Commission, except as follows: In May 2006, MFI was 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"). In December 2007, without admitting any liability of any party to the Litigation to any other party to the Litigation, the Litigation was settled with MFI agreeing to pay $69 million, plus $6 million of legal expenses, to the Receiver, in exchange for releases from all applicable parties and the dismissal of the Litigation with prejudice. In a related action, MFI settled a CFTC administrative proceeding (In the Matter of MF Global, f/k/a Man Financial Inc., and Thomas Gilmartin) brought by the CFTC against MFI and one of its employees for failure to supervise and recordkeeping violations. Without admitting or denying the allegations, MFI agreed to pay a civil monetary penalty of $2 million and accept a cease and desist order. 5 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. On March 6, 2008, and thereafter, 5 virtually identical proposed class action securities suits were filed against MFG's parent, MF Global Ltd. ("MF Global"), certain of its officers and directors, and Man Group plc. These suits have now been consolidated into a single action. The complaints seek to hold defendants liable under Secs. 11, 12 and 15 of the Securities Act of 1933 by alleging that the registration statement and prospectus issued in connection with MF Global's initial public offering in July 2007 were materially false and misleading to the extent that representations were made regarding MF Global's risk management policies, procedures and systems. The allegations are based upon MF Global's disclosure of $141.5 million in trading losses incurred in a single day by an AP in his personal trading account ("Trading Incident"), which losses MFG was responsible to pay as an exchange clearing member. The consolidated cases have been dismissed on a motion to dismiss by defendants. Plaintiffs have appealed. On December 17, 2009, MFG settled a CFTC administrative proceeding in connection with the Trading Incident and three other matters without admitting or denying any allegations and accepting a charge of failing to supervise (In the Matter of MF Global Inc. CFTC Docket No. 10-03). The three additional matters that were settled involved allegations that MF Global failed to implement procedures to ensure proper transmissions of price information for certain options that were sent to a customer, specifically that the price indications reflected a consensus taken on [a particular] time and date and were derived from different sources in the market place; failed to diligently supervise the proper and accurate preparation of trading cards and failed to maintain appropriate written authorization to conduct trades for a certain customer. Under the Commission's order, MFG agreed to pay an aggregate civil monetary penalty of $10 million (which it had previously accrued) and agreed to a cease and desist order. In addition, MFG agreed to specific undertakings related to its supervisory practices and procedures and MFG agreed that it would engage an independent outside firm to review and assess the implementation of the undertakings and certain recommendations that MFG previously accepted. At the same time, MFG, without admitting or denying the allegations made by the CME, settled a CME disciplinary action relating to the Trading Incident by paying a fine of $495,000. On August 28, 2009, Bank of Montreal ("BMO") instituted suit against MFG and its former broker, Joseph Saab ("Saab") (as well as a firm named Optionable, Inc. and five of its principals or employees), in the United States District Court for the Southern District of New York. In its complaint, BMO asserts various claims against all defendants for their alleged misrepresentation of price quotes to BMO's Market Risk Department ("MRD") as independent quotes when defendants knew, or should have known, that David Lee ("Lee"), BMO's trader, created the quotes which, in circular fashion, were passed on to BMO through MFG's broker, thereby enabling Lee substantially to overvalue his book at BMO. BMO further alleges that MFG and Saab knew that Lee was fraudulently misrepresenting prices in his options natural gas book and aided and abetted his ability to do so by MFG's actions in sending price indications to the BMO MRD, and substantially assisted Lee's breach of his fiduciary duties to BMO as its employee. The Complaint seeks to hold all defendants jointly and severally liable and, although it does not specify an exact damage claim, it claims CAD 680.0 million (approximately $635.9 million) as a pre-tax loss for BMO in its natural gas trading, claims that it would not have paid brokerage commissions to MFG (and Optionable), would not have continued Lee and his supervisor as employees at substantial salaries and bonuses, and would not have incurred substantial legal costs and expenses to deal with the Lee mispricing. MFG has made a motion to dismiss, which is pending. 6 In or about October 2003, MFI uncovered an apparent fraudulent scheme conducted by third parties unrelated to MFI that may have victimized a number of its clients. CCPM, a German Introducing Broker, introduced to MFI all the clients that may have been victimized. An agent of CCPM, Michael Woertche (and his associates), apparently engaged in a Ponzi scheme in which allegedly unauthorized transfers from and trading in accounts maintained at MFI were utilized to siphon money out of these accounts, on some occasions shortly after they were established. MFI was involved in two arbitration proceedings relating to these CCPM introduced accounts. The first arbitration involved claims made by two claimants before a NFA panel. The second arbitration involves claims made by four claimants before a FINRA panel. The claims in both arbitrations are based on allegations that MFI and an employee assisted CCPM in engaging in, or recklessly or negligently failed to prevent, unauthorized transfers from, and trading in, accounts maintained by MFI. Damages sought in the NFA arbitration proceeding were approximately $1,700,000 in compensatory damages, unspecified punitive damages and attorney's fees in addition to the rescission of certain deposit agreements. The NFA arbitration was settled for $200,000 as to one claimant and a net of $240,000 as to the second claimant during fiscal 2008. Damages sought in the FINRA proceeding were approximately $6,000,000 in compensatory damages and $12,000,000 in punitive damages. During the year ended March 31, 2009, the FINRA arbitration was settled for an aggregate of $800,000. MFI was named as a co-defendant in an action filed in Florida State Court by Eagletech Communications Inc. ("Eagletech") and three of its alleged shareholders against 21 defendants, including banks, broker-dealers and clearing brokers, as well as "100 John Doe defendants or their nominee entities". The complaint alleges that the defendants engaged in a criminal conspiracy designed to manipulate the publicly traded share price of Eagletech stock. Plaintiffs seek unspecified compensatory and special damages, alleging that "Man Group PLC d/b/a Man Financial Inc" participated in the conspiracy by acting as a clearing broker for a broker-dealer that traded in Eagletech stock. The complaint asserts claims under RICO, the Florida Securities and Investor Protection Act, the Florida Civil Remedies for Criminal Practices Act and a related negligence claim. On May 9, 2007, defendants filed a notice removing the State Court action to the United States District Court for the Southern District of Florida pursuant to 28 U.S.C. Sec. 1441(a). On October 2, 2007, Plaintiffs filed a first amended complaint in the Federal Court action asserting additional claims against MFG under Florida common law, including civil conspiracy, conversion and trespass to chattels. On February 26, 2008, the financial institution defendants, including MF Global Inc., filed a motion to dismiss seeking dismissal of all claims asserted in the amended complaint on the ground that the claims are barred by the Private Securities Litigation Reform Act ("PSLRA") and preempted by the federal securities laws. On June 27, 2008, the Court partially granted the motion, holding that the federal RICO claims are barred by the PSLRA and dismissing the RICO claims with prejudice. The Court declined to exercise supplemental jurisdiction over the state law claims and remanded those claims to the Florida State Court. On July 25, 2008, plaintiffs filed a notice of appeal of the Court's June 27, 2008 decision to the United States Court of Appeals for the Eleventh Circuit but subsequently withdrew its appeal. In December 2007, MFG, along with four other futures commission merchants ("FCMs"), were named as defendants in an action filed in the United States District Court in Corpus Christi, Texas by 47 individuals who were investors in a commodity pool (RAM I LLC) operated by Renaissance Asset Management LLC. The complaint alleges that MFG and the other defendants violated the Commodity Exchange Act and alleges claims of negligence, common law fraud, violation of a Texas statute relating to securities fraud and breach of fiduciary duty for allegedly failing to conduct due diligence on the commodity pool operator and commodity trading advisor, having accepted executed trades directed by the commodity trading advisor, which was engaged in a fraudulent scheme with respect to the commodity pool, and having permitted the improper allocation of trades among accounts. The plaintiffs claim damages of $32.0 million, plus exemplary damages, from all defendants. All of the FCM defendants moved to dismiss the complaint for failure to state a claim upon which relief may be granted. Following an initial pre-trial conference, the court granted plaintiffs leave to file an amended complaint. On May 9, 2008, plaintiffs filed an amended complaint in which plaintiffs abandoned all claims except a claim alleging that the FCM defendants aided and abetted violations of the Commodity Exchange Act. Plaintiffs now seek $17.0 million in claimed damages plus exemplary damages from all defendants. MFG filed a motion to dismiss the amended complaint which was granted by the court and appealed by the plaintiffs. The Liquidation Trustee ("Trustee") for Sentinel Management Group, Inc. ("Sentinel") sued MFG in June 2009 on the theory that MFG's withdrawal of $50.2 million within 90 days of the filing of Sentinel's bankruptcy petition on August 17, 2007 is a voidable preference under Section 547 of the Bankruptcy Code and, therefore, recoverable by the Trustee, along with interest and costs. 7 In May 2009, investors in a venture set up by Nicholas Cosmo ("Cosmo") sued Bank of America and MFG, among others, in the United States District Court for the Eastern District of New York, alleging that MFG, among others, aided and abetted Cosmo and related entities in a Ponzi scheme in which investors lost $400 million. MFG has made a motion to dismiss which is currently pending before the court. In the late spring of 2009, MFG was sued in Oklahoma State Court by customers who were substantial investors with Mark Trimble ("Trimble") and/or Phidippides Capital Management ("Phidippides"). Trimble and Phidippides may have been engaged in a Ponzi scheme. Plaintiffs allege that MFG "materially aided and abetted" Trimble's and Phidippides' violations of the anti-fraud provisions of the Oklahoma securities laws and they are seeking damages "in excess of" $10,000 each. MFG made a motion to dismiss which was granted by the court. Plaintiffs have appealed. MFG and an affiliate, MF Global Market Services LLC ("Market Services"), are currently involved in litigation with a former customer of Market Services, Morgan Fuel & Heating Co., Inc. ("Morgan Fuel") and its principals, Anthony Bottini, Jr., Brian Bottini and Mark Bottini (the "Bottinis"). The litigations arise out of trading losses incurred by Morgan Fuel in over-the-counter derivative swap transactions, which were unconditionally guaranteed by the Bottinis. On October 6, 2008, Market Services commenced an arbitration against the Bottinis to recover $8.3 million, which is the amount of the debt owed to Market Services by Morgan Fuel after the liquidation of the swap transactions. MF Global Market Services LLC v. Anthony Bottini, Jr., Brian Bottini and Mark Bottini, FINRA No. 08-03673. Each of the Bottinis executed a guaranty in favor of Market Services personally and unconditionally guaranteeing payment of the obligations of Morgan Fuel upon written demand by Market Services. Market Services asserted a claim of breach of contract based upon the Bottinis' failure to honor the guarantees. On October 21, 2008, Morgan Fuel commenced a separate arbitration proceeding before FINRA against MFG and Market Services. Morgan Fuel claims that MFG and Market Services caused Morgan Fuel to incur approximately $14.2 million in trading losses. Morgan Fuel v. MFG and Market Services, FINRA No. 08-03879. Morgan Fuel seeks recovery of $5.9 million in margin payments that it allegedly made to Market Services and a declaration that it has no responsibility to pay Market Services for the remaining $8.3 million in trading losses because Market Services should not have allowed Morgan Fuel to enter into, or maintain, the swap transactions. The Bottinis also asserted a third-party claim against Morgan Fuel, which in turn asserted a fourth-party claim against MFG, Market Services and Steven Bellino (an MFG employee) in the arbitration proceeding commenced by Market Services. On December 12, 2008, MFG settled three CME Group disciplinary actions involving allegations that on a number of occasions in 2006 and 2007, MFG employees engaged in impermissible pre-execution communications in connection with trades executed on the e-cbot electronic trading platform, withheld customer orders that were executable in the market for the purpose of soliciting, and brokering contra-orders and crossed orders on the e-cbot trading platform without allowing for the minimum required exposure period between the entry of the orders. MFG was also charged with failing to properly supervise its employees in connection with these trades. Without admitting or denying any wrongdoing, MFG consented to an order of a CME Business Conduct Committee Panel which found that MFG violated legacy CBOT Rule 504.00 and Regulations 480.10 and 9B.13 and 9B.13(c) and ordered MFG to pay a $400,000 fine, cease and desist from similar conduct and, in consultation with CME Market regulation Staff, enhance its training practices and supervisory procedures regarding electronic trading practices. MFG acts only as clearing broker for the Fund's futures accounts and as such is paid commissions for executing and clearing trades. MFG has not passed upon the adequacy or accuracy of the Fund's prospectus or this report and will not act in any supervisory capacity with respect to the CPO or the CTA, as the case may be, nor participate in the management of the CPO or of the Fund or of the CTA. Therefore, investors should not rely on MFG in deciding whether or not to participate in the Fund. 8 The Fund is not aware of any threatened or potential claims or legal proceedings to which the Fund is a party or to which any of its assets are subject. MFG has represented to the General Partner that that none of the events it has reported will not now, or at any time in the future, interfere with its performance as the FCM for the Fund's account. Item 1A. Risk Factors There have been no material changes from risk factors as previously disclosed in the Fund's 2009 Form 10-K. The risks of the Fund are (1) described fully in its prospectus filed with its registration statement on Form S-1, which is incorporated herein by reference (2) described in summary in Part I of this Form 10-Q, which is incorporated herein by reference. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. None Item 3. Defaults Upon Senior Securities None Item 4. (Removed and Reserved) Not Applicable Item 5. Other Information (a) None (b) None Item 6. Exhibits 31.1 Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Form 10-Q for the period ended September 30, 2010, to be signed on its behalf by the undersigned, thereunto duly authorized. Registrant: Atlas Futures Fund, Limited Partnership By Ashley Capital Management, Incorporated Its General Partner By: /s/ Michael Pacult Mr. Michael Pacult Sole Director, Sole Shareholder, President, and Treasurer of the General Partner Date: November 15, 2010 9 ATLAS FUTURES FUND, LIMITED PARTNERSHIP (A Delaware Limited Partnership) QUARTERLY REPORT September 30, 2010 GENERAL PARTNER: Ashley Capital Management, Inc. % Corporate Systems, Inc. 505 Brookfield Drive Dover, Kent County, Delaware 19901 Index to the Financial Statements Page Report of Independent Registered Public Accounting Firm F-2 Statements of Assets and Liabilities F-3 Schedule of Investments - Cash and Securities - September 30, 2010 F-4 Schedule of Investments - Futures Contracts - September 30, 2010 F-5 Schedule of Investments - Cash and Securities - December 31, 2009 F-6 Statements of Operations F-7 Statements of Changes in Net Assets F-8 Statements of Cash Flows F-9 Notes to the Financial Statements F-10 - F-16 Affirmation of the Commodity Pool Operator F-17 F-1 Patke & Associates, Ltd. Certified Public Accountants Report of Independent Registered Public Accounting Firm To the Partners of Atlas Futures Fund, Limited Partnership Dover, Delaware We have reviewed the accompanying statements of assets and liabilities of Atlas Futures Fund, Limited Partnership, as of September 30, 2010 and the related statements of operations for the three and nine months ended September 30, 2010 and 2009, and the statements of changes in net assets and cash flows for the nine months ended September 30, 2010 and 2009. These financial statements are the responsibility of the Partnership's management. We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to such interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America. We have previously audited, in accordance with the auditing standards of the Public Accounting Oversight Board (United States), the statement of assets and liabilities of Atlas Futures Fund, Limited Partnership as of December 31, 2009 and the related statements of operations, changes in net assets and cash flows for the year then ended (not presented herein) and in our report dated March 15, 2010, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying statement of assets and liabilities as of December 31, 2009 is fairly stated, in all material respects, in relation to the statement of assets and liabilities from which it has been derived. /s/ Patke & Associates, Ltd. Patke & Associates, Ltd. Lincolnshire, Illinois November 10, 2010 300 Village Green Drive, Suite 210 * Lincolnshire, Illinois 60069 *(847)913-5400 F-2 Atlas Futures Fund, Limited Partnership (A Delaware Limited Partnership) Statements of Assets and Liabilities September 30, December 31, 2010 2009 (A Review) Assets Investments Equity in broker trading accounts Cash and cash equivalents at broker $3,564,115 $4,359,494 Net unrealized gain on open futures contracts 1,345,381 - - Total equity in broker trading accounts 4,909,496 4,359,494 U.S. Treasury Bills (cost $4,998,104 and $9,997,725) 4,999,726 9,998,497 Cash 1,236,919 120,240 Money market fund 1,041 501,014 Prepaid expenses 2,849 11,395 Total assets 11,150,031 14,990,640 Liabilities Partner redemptions payable 127,600 168,311 Accrued commissions payable to related parties 39,124 86,485 Other accrued liabilities 19,413 24,366 Total liabilities 186,137 279,162 Net assets $10,963,894 $14,711,478 Analysis of net assets Limited partners $10,963,894 $14,711,478 General partners - - Net assets (equivalent to $4,088.43 and $4,083.24 per unit) $10,963,894 $14,711,478 Partnership units outstanding Limited partners units outstanding 2,681.69 3,602.89 General partners units outstanding - - Total partnership units outstanding 2,681.69 3,602.89
The accompanying notes are an integral part of the financial statements. F-3 Atlas Futures Fund, Limited Partnership (A Delaware Limited Partnership) Schedule of Investments - Cash and Securities September 30, 2010 (A Review) Fair Value Percent Description Maturity Date Cost Face Value Local Currency U.S. Dollars of Net Assets United States Treasury Bills: United States Treasury Bill October 14, 2010 $4,998,104 $5,000,000 4,998,104 $4,998,104 Total United States Treasury Bills $4,998,104 $5,000,000 $4,998,104 45.59% Cash in trading accounts: United States Markets 3,534,724 $3,534,724 Total cash in trading accounts denominated in U.S. Dollars 3,534,724 32.24% Cash denominated in foreign currency: Euro Dollar Markets - EUR 24,043 32,778 British Pound Markets - GBP 910 1,430 Australian Dollar Markets (4,981) (4,817) Total cash denominated in foreign currency 29,391 0.27% Total cash in trading accounts $3,564,115 32.51% Total cash denominated in U.S. Dollars 3,564,115 32.51% Money market fund (1,040.55 shares at $1 per share) 1,041 $1,041 0.01%
The accompanying notes are an integral part of the financial statements. F-4 Atlas Futures Fund, Limited Partnership (A Delaware Limited Partnership) Schedule of Investments - Futures Contracts September 30, 2010 (A Review) Fair Value Percent of Description Expiration Date Contracts Local Currency U.S. Dollars Net Assets Net unrealized gain (loss) on open futures contracts United States commodity futures contracts held long: CBOT CORN December 2010 36 (11,700) $(11,700) CBOT SOYBEANS November 2010 36 126,450 126,450 CBOT SOYBEANS November 2010 3 8,662 8,662 CBOT SOYBEANS November 2010 6 17,250 17,250 CBOT SOYBEANS November 2010 9 22,837 22,837 CBOT SOYBEANS November 2010 9 24,187 24,187 CBOT SOYBEANS November 2010 9 5,962 5,962 CBT BEAN OIL December 2010 45 9,990 9,990 CBT BEAN OIL December 2010 36 4,536 4,536 CBT TNOTE 10Y December 2010 9 4,641 4,641 CBT TNOTE 10Y December 2010 9 5,203 5,203 CBT TNOTE 10Y December 2010 45 36,563 36,563 CBT TNOTE 10Y December 2010 9 1,266 1,266 CBT TNOTE 5Y December 2010 9 5,063 5,063 CBT TNOTE 5Y December 2010 9 3,656 3,656 CBT TNOTE 5Y December 2010 45 21,445 21,445 CMX GOLD December 2010 9 43,110 43,110 CMX GOLD December 2010 9 36,450 36,450 CMX GOLD December 2010 36 145,080 145,080 ICEUS SUGAR11 March 2011 27 64,411 64,411 ICEUS SUGAR11 March 2011 9 (16,128) (16,128) NYC COTTON December 2010 18 163,980 163,980 NYC COTTON December 2010 9 83,295 83,295 IMM AUST DLR December 2010 36 160,920 160,920 IMM AUST DLR December 2010 36 169,200 169,200 IMM EURO FX December 2010 45 194,063 194,063 IMM EURO FX December 2010 9 36,563 36,563 Total United States commodity futures contracts held long 1,366,955 12.47% United States commodity futures contracts held short: NY NATURAL GAS November 2010 9 4,770 4,770 Total United States commodity futures contracts held short 4,770 0.04% Euro commodity futures contracts held long: EURX EUROBOBL December 2010 9 (5,760) (7,853) EURO E-SCHATZ December 2010 36 (15,120) (20,613) Total Euro commodity futures contracts held long (28,466) (0.26%) British Pounds commodity futures contracts held long: LIF 3M STG IR March 2011 9 225 354 LIF 3M STG IR March 2011 9 - - LIF 3M STG IR March 2011 45 1,125 1,768 LIF 3M STG IR March 2011 9 - - Total British Pounds commodity futures contracts held long 2,122 0.02% Net unrealized gain on open futures contracts $1,345,381 12.27%
The accompanying notes are an integral part of the financial statements. F-5 Atlas Futures Fund, Limited Partnership (A Delaware Limited Partnership) Schedule of Investments - Cash and Securities December 31, 2009 Fair Value Percent Description Maturity Date Cost Face Value Local Currency U.S. Dollars of Net Assets United States Treasury Bills: United States Treasury Bill January 14, 2010 $4,999,115 $5,000,000 4,999,872 $4,999,872 United States Treasury Bill April 1, 2010 4,998,610 5,000,000 4,998,625 4,998,625 Total United States Treasury Bills $9,997,725 $10,000,000 $9,998,497 67.96% Cash in trading accounts: United States Markets 4,149,299 $4,149,299 Total cash in trading accounts denominated in U.S. Dollars 4,149,299 28.20% Cash denominated in foreign currency: Euro Dollar Markets - EUR 128,214 183,622 British Pound Markets - GBP 16,451 26,573 210,195 1.43% Total cash denominated in foreign currency Total cash in trading accounts $4,359,494 29.63% Money market fund (501,013.80 shares at $1 per share) 501,014 $501,014 3.41%
The accompanying notes are an integral part of the financial statements. F-6 Atlas Futures Fund, Limited Partnership (A Delaware Limited Partnership) Statements of Operations (A Review) Three Months Ended September 30, Nine Months Ended September 30, 2010 2009 2010 2009 Investment income Interest income $2,788 $7,126 $8,287 $20,903 Total investment income 2,788 7,126 8,287 20,903 Expenses Commission expense 283,461 495,197 993,401 1,668,737 Professional fees 29,450 39,300 81,300 115,500 Other operating expenses 5,156 1,596 14,290 11,596 Total expenses 318,067 536,093 1,088,991 1,795,833 Net investment (loss) (315,279) (528,967) (1,080,704) (1,774,930) Realized and unrealized gain (loss) from investments and foreign currency Net realized gain (loss) from: Investments 329,011 (1,328,936) (594,045) (2,296,616) Foreign currency transactions 8,336 2,629 (2,022) 32,118 Net realized gain (loss) from investments and foreign currency transactions 337,347 (1,326,307) (596,067) (2,264,498) Net unrealized appreciation on investments 1,284,630 190,187 1,345,381 250,476 Net realized and unrealized gain (loss) from investments and foreign currency 1,621,977 (1,136,120) 749,314 (2,014,022) Net increase (decrease) in net assets resulting from operations $1,306,698 $(1,665,087) $(331,390) $(3,788,952) Net income (loss) per unit (for a single unit outstanding during the entire period) Limited partnership unit $476.83 $(437.54) $5.19 $(957.25) General partnership unit $- $- $- $-
The accompanying notes are an integral part of the financial statements. F-7 Atlas Futures Fund, Limited Partnership (A Delaware Limited Partnership) Statements of Changes in Net Assets (A Review) Nine Months Ended September 30, 2010 2009 Units Net Assets Units Net Assets Increase (decrease) in net assets from operations Net investment (loss) $(1,080,704) $(1,774,930) Net realized (loss) from investments and foreign currency transactions (596,067) (2,264,498) Net unrealized appreciation on investments 1,345,381 250,476 Net (decrease) in net assets resulting from operations (331,390) (3,788,952) Capital contributions from limited partners 10.44 40,361 65.08 345,345 Redemptions by limited partners (931.64) (3,456,555) (531.78) (2,650,878) Total (decrease) in net assets (921.20) (3,747,584) (466.70) (6,094,485) Net assets at the beginning of the period 3,602.89 14,711,478 4,198.35 22,691,035 Net assets at the end of the period 2,681.69 $10,963,894 3,731.65 $16,596,550
The accompanying notes are an integral part of the financial statements. F-8 Atlas Futures Fund, Limited Partnership (A Delaware Limited Partnership) Statements of Cash Flows (A Review) Nine Months Ended September 30, 2010 2009 Cash Flows from Operating Activities Net increase (decrease) in net assets resulting from operations $(331,390) $(3,788,952) Adjustments to reconcile net increase (decrease) in net assets from operations to net cash provided by (used in) operating activities: Changes in operating assets and liabilities: Unrealized (appreciation) on investments (1,345,381) (250,476) (Increase) decrease in prepaid expenses 8,546 (11,395) Decrease in interest receivable - 203 (Decrease) in accrued commissions payable to related parties (47,361) (50,377) (Decrease) in incentive fees payable - (57,490) Increase (decrease) in other accrued liabilities (4,953) 17,586 Net cash (used in) operating activities (1,720,539) (4,140,901) Cash Flows from Financing Activities Proceeds from sale of units 40,361 345,345 Partner redemptions (3,497,266) (2,548,945) Net cash (used in) financing activities (3,456,905) (2,203,600) Net (decrease) in cash and cash equivalents (5,177,444) (6,344,501) Cash and cash equivalents, beginning of period 14,979,245 22,925,186 Cash and cash equivalents, end of period $9,801,801 $16,580,685 End of period cash and cash equivalents consist of: Cash and cash equivalents at broker $3,564,115 $1,351,085 Treasury Bills 4,999,726 14,998,405 Cash 1,236,919 230,186 Money market fund 1,041 1,009 Total cash and cash equivalents $9,801,801 $16,580,685
The accompanying notes are an integral part of the financial statements. F-9 Atlas Futures Fund, Limited Partnership (A Delaware Limited Partnership) Notes to the Financial Statements September 30, 2010 (A Review) 1. Nature of the Business Atlas Futures Fund, Limited Partnership (the "Fund") was formed January 12, 1998 under the laws of the state of Delaware. The Fund is engaged in the speculative trading of futures contracts in commodities, which commenced in October, 1999. Ashley Capital Management, Inc. (the "Corporate General Partner") and Michael Pacult (the "Individual General Partner" and collectively the "General Partner") are the General Partners and the commodity pool operators ("CPO's") of the Fund. The sole registered commodity trading advisor ("CTA") of the fund is Clarke Capital Management, Inc. ("Clarke"). Effective July, 2004 the Fund began to sell issuer direct on a best efforts basis with no sales commissions. The Fund is a registrant with the Securities and Exchange Commission ("SEC") pursuant to the Securities Act of 1933 ("the Act"). The Fund is subject to the regulations of the SEC and the reporting requirements of the Securities and Exchange Act of 1934. The Fund is also 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 is subject to the requirements of futures commission merchants ("FCM's") and interbank market makers through which the Fund trades and regulated by commodity exchanges and by exchange markets that may be traded by the advisor. 2. Significant Accounting Policies Registration Costs - Costs incurred for the initial filings with the SEC, Financial Industry Regulatory Authority and the states where the offering was made were accumulated, deferred and charged against the gross proceeds of offering at the initial closing as part of the offering expense. The Fund remains open to new partners, and incurs costs required to retain the ability to issue new units. Such costs, in addition to the costs of recurring annual and quarterly filings with regulatory agencies are expensed as incurred. Revenue Recognition - Commodity futures contracts are recorded on the trade date and are reflected in the balance sheet at the difference between the original contract amount and the market value on the last business day of the reporting period. Market value of commodity futures contracts is based upon exchange or other applicable market best available closing quotations. Interest income is recognized when it is earned. Use of Accounting Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amount 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. F-10 Atlas Futures Fund, Limited Partnership (A Delaware Limited Partnership) Notes to the Financial Statements September 30, 2010 (A Review) 2. Significant Accounting Policies - Continued Foreign Currency - The accounting records of the Fund are denominated in U.S. dollars. Assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Commodity futures contract transactions are translated into U.S. dollars at the exchange rates on the dates of such transactions. On the accompanying financial statements, effects of changes in exchange rates from all transactions denominated in currencies other than U.S. dollars are disclosed separately. Fair Value Measurement and Disclosures - Accounting Standards Codification ("ASC") 820 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for an asset or liability, including the Fund's own assumptions used in determining the fair value of investments. Unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. As of and for the period ended September 30, 2010 and year ended December 31, 2009, the Fund did not have any Level 3 assets or liabilities. The following table sets forth by level within the fair value hierarchy the Fund's investments accounted for at fair value on a recurring basis as of September 30, 2010 and December 31, 2009. Fair Value at September 30, 2010 Description Level 1 Level 2 Level 3 Total Money Market Accounts $1,041 $- $- $1,041 U.S. Treasury Bills - 4,999,726 - 4,999,726 Exchange Traded - Futures Contracts 1,345,381 - - 1,345,381 Total $1,346,422 $4,999,726 $- $6,346,148 Fair Value at December 31, 2009 Description Level 1 Level 2 Level 3 Total Money Market Accounts $501,014 $- $- $501,014 U.S. Treasury Bills - 9,998,497 - 9,998,497 Total $501,014 $9,998,497 $- $10,499,511
Income Taxes - The Fund prepares calendar year U.S. Federal and applicable state information tax returns and reports to the partners their allocable shares of the Fund's income, expenses and trading gains or losses. No provision for income taxes has been made in the accompanying financial statements as each partner is individually responsible for reporting income or loss based on such partner's respective share of the Fund's income and expenses as reported for income tax purposes. Management has continued to evaluate the application of ASC 740-10-25, "Income Taxes-Overall-Recognition" to the Fund, and has determined that ASC 740-10-25 does not have a material impact on the Fund's financial statements. The Fund files federal and state tax returns. The 2006 through 2009 tax years generally remain subject to examination by the U.S. federal and most state tax authorities. Statement of Cash Flows - For purposes of the Statement of Cash Flows, the Fund considers cash at broker, cash, money market funds and U.S. Treasury Bills to be cash equivalents. Net cash provided by operating activities includes no cash payments for interest or income taxes for the nine months ended September 30, 2010 or September 30, 2009. Reclassifications - Certain prior year amounts were reclassified to conform to current year presentation. F-11 Atlas Futures Fund, Limited Partnership (A Delaware Limited Partnership) Notes to the Financial Statements September 30, 2010 (A Review) 3. General Partner Duties The responsibilities of the General Partner, in addition to directing the trading and investment activity of the Fund, include 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 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 Fund. If the daily net unit value of the Fund falls to less than 50% of the highest value earned through trading at the close of any month, then the General Partner will immediately suspend all trading, provide all limited partners with notice of the reduction and give all limited partners the opportunity, for fifteen days after such notice, to redeem partnership interests. No trading will commence until after the lapse of the fifteen day period. 4. 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 Fund. Monthly Allocations - Any increase or decrease in the Fund'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 Fund'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 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 - After holding the investment for a minimum of twelve months, 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. 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. 5. Fees The Fund charged the following fees: The Corporate General Partner is entitled to a fixed annual brokerage commission of 11% of assets on deposit with the FCM for domestic trades plus actual commissions charged by the FCM for trades made on foreign exchanges and forward markets, if any. It receives 4% of the commissions and the Fund pays the introducing broker the remaining 7%. A quarterly incentive fee of 25% of "new net profits" is paid to Clarke. There were no incentive fees for the nine months ended September 30, 2010 and 2009. The General Partner reserves the right to change the fee structure at its sole discretion. F-12 Atlas Futures Fund, Limited Partnership (A Delaware Limited Partnership) Notes to the Financial Statements September 30, 2010 (A Review) 6. Related Party Transactions The Fund pays commissions to the Corporate General Partner and Futures Investment Company, the introducing broker. These related parties are 100% and 50%, respectively, owned by Michael Pacult. Related party commissions were as follows: Commissions included in expense: For The Nine Months Ended September 30, 2010 2009 Corporate General Partner $362,064 $606,225 Futures Investment Company 607,025 984,038 Total related party expenses $969,089 $1,590,263 Commissions included in accrued expenses: September 30, December 31, 2010 2009 Corporate General Partner $23,746 $51,924 Futures Investment Company 15,378 34,561 Total accrued commissions payable to related parties $39,124 $86,485
ASC 460, Guarantees, 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-13 Atlas Futures Fund, Limited Partnership (A Delaware Limited Partnership) Notes to the Financial Statements September 30, 2010 (A Review) 7. Trading Activities and Related Risks The Fund is engaged in speculative trading of U.S. and foreign futures contracts in commodities. The Fund is exposed to both market risk, the risk arising from changes in market value of the contracts, and credit risk, the risk of failure by another party to perform according to the terms of a contract. A certain portion of cash in trading accounts are pledged as collateral for commodities trading on margin. Additional deposits may be necessary for any loss on contract value. The Commodity Exchange Act requires a broker to segregate all customer transactions and assets from such broker's proprietary activities. Each U.S. commodity exchange with the approval of the CFTC establishes minimum margin requirements for each traded contract. The FCM may increase the margin requirements above these minimums for any or all contracts. The Fund maintains cash and cash equivalents to satisfy these margin requirements. Cash and cash equivalents at September 30, 2010 and December 31, 2009 were $9,801,801 and $14,979,245, respectively. Based upon the types and amounts of contracts traded and the amount of liquid assets of the Fund, the General Partner believes there is minimal risk of not being able to meet its margin requirement. Trading in futures contracts involves entering into contractual commitments to purchase or sell a particular commodity at a specified date and price. The gross or face amount of the contract, which is typically many times that of the Fund's net assets being traded, significantly exceeds the Fund's future cash requirements since the Fund intends to close out its open positions prior to settlement. As a result, the Fund is generally subject only to the risk of loss arising from the change in the value of the contracts. The market risk is limited to the gross or face amount of the contracts held of approximately $68,780,207 and $0 on long positions at September 30, 2010 and December 31, 2009, respectively. However, when the Fund enters into a contractual commitment to sell commodities, it must make delivery of the underlying commodity at the contract price and then repurchase the contract at prevailing market prices or settle in cash. Since the repurchase price to which a commodity can rise is unlimited, entering into commitments to sell commodities exposes the Fund to unlimited potential risk. Market risk is influenced by a wide variety of factors including government programs and policies, political and economic events, the level and volatility of interest rates, foreign currency exchange rates, the diversification effects among the derivative instruments the Fund holds and the liquidity and inherent volatility of the markets in which the Fund trades. The net unrealized gains on open commodity futures contracts at September 30, 2010 and December 31, 2009 were $1,345,381 and $0 respectively. Open contracts generally mature within three months of September 30, 2010. The latest maturity for open futures contracts is in March 2011. However the Fund intends to close all contracts prior to maturity. F-14 Atlas Futures Fund, Limited Partnership (A Delaware Limited Partnership) Notes to the Financial Statements September 30, 2010 (A Review) 7. Trading Activities and Related Risks - Continued The following tables disclose the fair values of derivative and hedging activities in the Statement of Assets and Liabilities and the Statement of Operations. Derivative Instruments Statement of Assets and Liabilities Asset Derivatives Liability Derivatives at September 30, 2010 at September 30, 2010 Statement of Assets and Liabilities Location Fair Value Fair Value Net Derivatives not designated as hedge Commodity contracts Net unrealized gain (loss) on open futures instruments under ASC 815 contracts $1,401,675 $(56,294) $1,345,381 Asset Derivatives Liability Derivatives at December 31, at December 31, Statement of Assets and Liabilities Location 2009 Fair Value 2009 Fair Value Net Derivatives not designated as hedge Commodity contracts Net unrealized gain (loss) on open $- $- $- instruments under ASC 815 futures contracts Derivative Instruments Statement of Operations Three Nine months ended months ended Line Item in the Statement of Operations September 30, 2010 September 30, 2010 Derivatives not designated as hedge Commodity contracts Net realized (loss) from investments instruments under ASC 815 and foreign currency transactions $337,347 $(596,067) Derivatives not designated as hedge instruments under ASC 815 Commodity contracts Net unrealized appreciation from investments $1,284,630 $1,345,381
Credit risk is the possibility that a loss may occur due to the failure of a counter party to perform according to the terms of a contract. The Fund has a substantial portion of its assets on deposit with financial institutions. In the event of a financial institution's insolvency, recovery of Fund deposits may be limited to account insurance or other protection afforded deposits. The Fund has established procedures to actively monitor market risk and minimize credit risk although there can be no assurance that it will succeed. The basic market risk control procedures consist of continuously monitoring open positions, diversification of the portfolio and maintenance of a desirable margin-to-equity ratio. The Fund seeks to minimize credit risk primarily by depositing and maintaining its assets at financial institutions and brokers which it believes to be creditworthy. 8. Financial Instruments with Off-Balance Sheet Credit and Market Risk All financial instruments are subject to market risk, the risk that future changes in market conditions may make an instrument less valuable or more onerous. As the instruments are recognized at fair market value, those changes directly affect reported income. Included in the definition of financial instruments are securities, restricted securities and derivative financial instruments. Theoretically, the investments owned by the Fund directly are exposed to a market risk (loss) equal to the notional value of the financial instruments purchased and substantial liability on certain financial instruments purchased short. Generally, financial instruments can be closed. However, if the market is not liquid, it could prevent the timely close-out of any unfavorable positions or require the Fund to hold those positions to maturity, regardless of the changes in their value or the trading advisor's investment strategies. Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed to perform as contracted. Concentrations of credit risk (whether on or off balance sheet) that arise from financial instruments exist for groups of counterparties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. 9. Derivative Financial Instruments and Fair Value of Financial Instruments A derivative financial instrument is a financial agreement whose value is linked to, or derived from, the performance of an underlying asset. The underlying asset can be currencies, commodities, interest rates, stocks, or any combination. Changes in the underlying asset indirectly affect the value of the derivative. As the instruments are recognized at fair value, those changes directly affect reported income. All investment holdings are recorded in the statement of assets and liabilities at their net asset value (fair value) at the reporting date. Financial instruments (including derivatives) used for trading purposes are recorded in the statement of assets and liabilities at fair value at the reporting date. Realized and unrealized changes in fair values are recognized in net investment gain (loss) in the period in which the changes occur. Interest income arising from trading instruments is included in the statement of operations as part of interest income. Notional amounts are equivalent to the aggregate face value of the derivative financial instruments. Notional amounts do not represent the amounts exchanged by the parties to derivatives and do not measure the Fund's exposure to credit or market risks. The amounts exchanged are based on the notional amounts and other terms of the derivatives. F-15 Atlas Futures Fund, Limited Partnership (A Delaware Limited Partnership) Notes to the Financial Statements September 30, 2010 (A Review) 10. Indemnifications In the normal course of business, the Fund enters into contracts and agreements that contain a variety of representations and warranties and which provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred. The Fund expects the risk of any future obligation under these indemnifications to be remote. 11. Subsequent Events On October 29, 2010, the Fund filed an S-1 registration statement to register additional $10,000,000 in Units. Upon effectiveness, the Units will be offered and sold pursuant to a prospectus under similar terms to the previous offering; however, there will be compensation to the affiliated selling agent, Futures Investment Company, of an up front selling commission calculated on the gross subscription amount in addition to $2,000 paid by the Fund for legal fees associated with the review of the offering by FINRA. 12. Financial Highlights Three Months Ended September 30, Nine Months Ended September 30, 2010 2009 2010 2009 Performance per unit (1) Net unit value, beginning of the period $3,611.60 $4,885.05 $4,083.24 $5,404.76 Net realized and unrealized (loss) on commodity transactions 588.71 (298.13) 343.62 (513.61) Investment and other income 0.98 1.88 2.64 5.25 Expenses (112.86) (141.29) (341.07) (448.89) Net (decrease) for the period 476.83 (437.54) 5.19 (957.25) Net unit value at the end of the period $4,088.43 $4,447.51 $4,088.43 $4,447.51 Net assets at the end of the period ($000) $10,964 $16,597 $10,964 $16,597 Total return (2) 13.20% (8.96%) 0.13% (17.71%) Number of units outstanding at the end of the period 2,681.69 3,731.65 2,681.69 3,731.65 Supplemental Data: Ratio to average net assets Investment and other income (3) 0.12% 0.16% 0.09% 0.14 % Expenses (3) (12.16%) (12.16%) (12.20%) (12.09%)
Total return is calculated based on the change in value of a unit during the period. An individual partner's total return and ratios may vary from the above total returns and ratios based on the timing of additions and redemptions. (1) Investments and other income and expenses and net realized and unrealized gains and losses on commodity transactions are calculated based on a single unit outstanding during the period. (2) Not annualized (3) Annualized F-16 Atlas Futures Fund, Limited Partnership Affirmation of the Commodity Pool Operator For the Nine Months Ended September 30, 2010 and 2009 ***************************************************************************** To the best of the knowledge and belief of the undersigned, the information contained in this report is accurate and complete. /s/ Michael Pacult Michael Pacult President, Ashley Capital Management, Inc. General Partner Atlas Futures Fund, Limited Partnership F-17 EX-31 2 atlas10q0910ex31.txt Exhibit 31.01 CERTIFICATION I, Michael Pacult do hereby certify that: 1. I have reviewed this quarterly report on Form 10-Q of Atlas Futures Fund, Limited Partnership; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonable likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. By: /s/ Michael Pacult Michael Pacult President of Ashley Capital Management, Inc. General Partner of the Registrant Date: November 15, 2010 EX-32 3 atlas10q0910ex32.txt EXHIBIT 32.01 CERTIFICATION BY CHIEF EXECUTIVE OFFICER & CHIEF FINANCIAL OFFICER I, Michael Pacult, the Chief Executive Officer and Chief Financial Officer of Ashley Capital Management, Inc. as general partner of Atlas Futures Fund, L.P., certify that (i) the Form 10-Q for the period ended September 30, 2010 of Atlas Futures Fund, L.P. fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Form 10-Q for the period ended September 30, 2010 fairly presents, in all material respects, the financial condition and results of operations of Atlas Futures Fund, L.P. ATLAS FUTURES FUND, LIMITED PARTNERSHIP By: Ashley Capital Management, Inc., General Partner By: /s/ Michael Pacult Michael Pacult Chief Executive Officer & Chief Financial Officer Date: November 15, 2010 -----END PRIVACY-ENHANCED MESSAGE-----