<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
Commission file number 33-94050
CERES FUND, L. P.
(Name of small business issuer in its charter)
TENNESSEE 62-1154702
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
C/O RANDELL COMMODITY CORPORATION
889 RIDGE LAKE BOULEVARD
MEMPHIS, TENNESSEE 38120
(Address of principal executive offices and Zip Code)
Registrant's telephone number (901) 766-4590
Securities registered under Section 12(b) of the Exchange Act: NONE
Securities registered under Section 12(g) of the Exchange Act: NONE
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
--- ---
The registrant is a limited partnership and, accordingly, has no voting
stock held by non-affiliates or otherwise.
Incorporation by Reference: Registrant's Registration Statement
effective March 9, 1991 and the Prospectus contained therein into Part IV, Item
14 (a)(3) and Supplement No. 1 dated October 1, 1992, thereto, post effective
Amendment No. 1 dated April 26, 1991, effective April 30, 1991, post effective
Amendment No. 2 dated November 12, 1991, effective November 15, 1992, post
effective Amendment No. 3 dated March 31, 1992, effective April 7, 1992,
Supplement No. 3 dated June 30, 1992, Supplement No. 4 dated November 30, 1992,
post effective Amendment No. 4 dated April 30, 1993, effective May 19, 1993,
post effective Amendment No. 5 dated October 16, 1996, effective October 31,
1996, and post effective Amendment dated August 25, 1997, effective September 2,
1997.
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<PAGE> 2
PART I
ITEM 1.
(A) BUSINESS
Ceres Fund, L.P. (the "Partnership") is a limited partnership organized
on September 19, 1990, pursuant to a Limited Partnership Agreement (the "Limited
Partnership Agreement") under the Uniform Limited Partnership Act of the State
of Tennessee and funded through an offering of limited partnership units (the
"Units"). The Partnership engages in speculative trading of commodity futures
contracts, forward contracts, commodity options and other interests in
commodities including, without limitation futures contracts and options on
financial instruments, physical commodities and stock indices on organized
exchanges in the U.S. and abroad.
The initial offering to the public of 100,000 Units was closed on
November 29, 1991, and trading began December 1, 1991. Following the
commencement of trading, the Partnership continued the offering of Units,
issuing Units and fractions thereof at the Average Net Asset Value as of the
last business day of the month during which the purchaser's subscription was
received. As of the close of the initial offering on November 29, 1991,
13,471.6805 Units had been sold. As of December 31, 1993, a total of 38,234.7916
Units had been sold of which a total of 24,122.7011 were outstanding. As of
December 31, 1994, a total of 40,552.2246 Units had been sold of which a total
of 22,679.4144 were outstanding. As of December 31, 1995, a total of 43,256.2273
Units had been sold of which a total of 20,341.7718 were outstanding. As of
December 31, 1996, a total of 20,736.5005 had been sold of which a total of
17,938.6369 were outstanding. As of December 31, 1997, a total of 57,203.0471
units had been sold of which a total of 31,797.3173 were outstanding. The
Prospectus is regularly updated and Units continue to be offered to the public.
The offering was registered under the Securities Act of 1933, as
amended, and members of the National Association of Securities Dealers, Inc. act
as selling agents on a best efforts basis. The selling agents received a
commission of 5% of the issue price of each Unit sold during the initial
offering period with 1% being paid to the General Partner. Effective July 1,
1995, and continuing during the continuous offering period, the selling
commission was reduced to 4%, all of which is retained by the selling agent.
Randell Commodity Corporation, a Tennessee corporation, is the Managing
General Partner of the Partnership (the "Managing General Partner") and RanDelta
Capital Partners, L.P. is the Financial General Partner of the Partnership.
Pursuant to a Customer Agreement (the "Customer Agreement"), Refco, Inc.
("Refco") acts as the commodity broker for the Partnership and performs various
administrative services for it. Services performed for the Partnership by Refco
or the Managing General Partner under the terms of the Customer and the Limited
Partnership Agreements, include the following:
(1) Executing all trades on behalf of the Partnership in conjunction
with the Partnership's Advisor.
(2) Maintaining the Partnership books and records, which limited
partners or their duly authorized representatives may inspect during normal
business hours for any proper purpose upon reasonable written notice to the
Managing General Partner.
(3) Furnishing each limited partner with a monthly statement describing
the performance of the Partnership, which sets forth aggregate management fees,
incentive fees, brokerage commissions and other expenses incurred or accrued by
the Partnership during the month.
(4) Forwarding annual certified financial statements (including a
balance sheet and statement of income) to each limited partner.
(5) Providing each limited partner with tax information necessary for
the preparation of his annual federal income tax return and such other
information as the CFTC may by regulation require.
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<PAGE> 3
(6) Performing secretarial and other clerical responsibilities and
furnishing office space and equipment as may be necessary for supervising the
affairs of the Partnership.
(7) Administering the purchase, redemption and transfer of Units and
distribution of profits, if any.
The Customer Agreement under which Refco, Inc. acts as the futures
broker for the Partnership may be terminated by the Partnership or Refco upon 5
days' notice.
During 1993, and through June 1994, under the terms of the Customer
Agreement, the Partnership paid commodity brokerage commissions to Refco on a
round-turn basis in an amount equal to the lesser of 80% of Refco's published
rates for non-member speculative accounts or $45.50. This commission rate was
renegotiated by the General Partner and effective July 1, 1994, commissions
payable to Refco were reduced to $32.50 per round-turn. The Partnership's
current rate is $32.50. A round-turn is the opening and closing of a commodity
futures position consisting of one contract. Effective June 1, 1997, 1/2 of the
round-turn commission is charged on the opening of a position and 1/2 is charged
on the close. The Partnership assets earn interest from Refco on 100% of the
average daily equity maintained in cash in the Partnership's trading account at
a rate equal to 80% of the average yield on thirteen week U.S. Treasury Bills
issued during each month.
(B) REGULATION
Under the Commodity Exchange Act, as amended (the "Act"), commodity
exchanges and commodity futures trading are subject to regulation by the
Commodity Futures Trading Commission (the "CFTC"). The Act requires "commodity
pool operators," and "commodity trading advisors," to be registered and to
comply with various reporting and record keeping requirements. The CFTC may
suspend a commodity pool operator's or advisor's registration if it finds that
its trading practices tend to disrupt orderly market conditions or in certain
other situations. In the event that the registration of the Managing General
Partner as a commodity pool operator or as a commodity trading advisor is
terminated or suspended, the Managing General Partner would be unable to
continue to manage the business of the Partnership. Should the Managing General
Partner's registration be suspended, termination of the Partnership might
result. The act also requires Refco to be registered as a "futures commission
merchant."
In addition to such registration requirements, the CFTC and certain
commodity exchanges have established limits on the maximum net long or net short
position which any person may hold or control in particular commodities. The
CFTC has adopted a rule requiring all domestic commodity exchanges to submit for
approval speculative position limits for all futures contracts traded on such
exchanges. Most exchanges also limit the changes in commodity futures contract
prices that may occur during a single trading day. The Partnership will not
trade on any commodity exchanges which are not subject to regulation by any
United States government agency.
(C) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The Partnership's business constitutes only one segment, speculative
trading of commodity futures contracts, for financial reporting purposes. The
Partnership does not engage in sales of goods or services. The Partnership began
trading activities December 1, 1991, at which time Partnership capital was
$1,392,168.
(D) NARRATIVE DESCRIPTION OF BUSINESS
(1) See Items 1(a), (b) and (c) above.
(i) through (xii) - Not applicable.
(xiii) - the Partnership has no employees.
(E) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES
Not applicable because the Partnership does not engage in sales of
goods or services.
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<PAGE> 4
ITEM 2. PROPERTIES
The Partnership does not own or lease any properties. The Managing
General Partner operates out of facilities provided by its parent, Randell
Corporation.
ITEM 3. LEGAL PROCEEDINGS
The Managing General Partner is not aware of any pending legal
proceedings to which the Partnership is a party or to which any of its assets
are subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
N/A - No security holders.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
There is no trading market for the Units, and none is likely to
develop. Units are transferable only after written notice has been given to the
Managing General Partner. Units may be redeemed as of the last day of any
calendar quarter upon 10 days written notice to the Managing General Partner at
the Redemption Net Asset Value (as defined in the Limited Partnership
Agreement).
ITEM 6. SELECTED FINANCIAL DATA
The following is a summary of the total assets of the Partnership as of
December 31, 1997, 1996, 1995, 1994, 1993, and the results of operations for
each of the years in the 5-year period ended December 31, 1997.
Net increase (decrease) in components of Partnership capital from
operations are as follows:
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
----------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Realized & unrealized trading
gains(losses) net of brokerage
commission and clearing fees of
$838,772, 565,229, $333,677,
$438,742, and $633,579, respectively $ (514,269) $2,844,850 $1,710,300 $(1,022,795) $ 410,036
Income (Loss) from
Operations 619,010 3,597,285 2,156,798 (502,871) 1,150,491
Long term obligations -- -- -- -- --
Cash dividends per unit -- 13.61 14.18 -- --
Interest income 294,507 187,206 112,821 81,182 106,876
Management fee 223,279 151,969 85,331 76,157 122,672
Administrative expenses 58,403 82,026 44,869 39,830 57,796
Incentive fee 3,091 384,117 108,815 -- 44,542
Net Gain (Loss) per unit* (19.61) 115.23 77.87 (46.63) 12.10
Total Assets $6,647,645 $4,895,087 $3,205,072 $ 1,759,977 $3,420,825
</TABLE>
* Calculated as net earnings(loss) allocated to limited partners divided
by average units outstanding during the year.
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<PAGE> 6
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
(A) LIQUIDITY.
The Partnership does not engage in sales of goods or services. Its only
assets are its capital in its commodity futures trading account, consisting of
cash and net unrealized appreciation on open futures contracts, and interest
receivable. Because of the low margin deposits normally required in commodity
futures trading, relatively small price movements may result in substantial
losses to the Partnership. Such substantial losses could lead to a material
decrease in liquidity. To minimize this risk the Partnership follows certain
policies including:
(1) Partnership funds will be invested only in futures contracts which
are traded in sufficient volume to permit, in the opinion of the Advisor, ease
of taking and liquidating positions.
(2) The Partnership will diversify its positions among various
commodities. The Partnership will not initiate additional positions in a single
commodity if such additional positions would result in a net single long or
short position in such commodity requiring as margin more than 15% of the net
assets of the Partnership.
(3) The Partnership will not establish commodity positions if such
positions would result in required margins in excess of 80% of its net asset
value for all commodities combined.
(4) The Partnership may occasionally accept delivery of a commodity.
Unless such delivery is disposed of promptly by retendering the warehouse
receipt representing the delivery to the appropriate clearing house, the
Partnership's position in the physical commodity will be fully hedged.
(5) The Partnership will not employ the trading technique commonly
known as "pyramiding", in which the speculator uses unrealized profits on
existing positions as margin for the purchase or sale of additional positions in
the same or related commodities.
(6) The Partnership may from time to time employ trading strategies
such as spreads or straddles on behalf of the Partnership. The term "spread"
describes a commodity futures trading strategy involving the simultaneous buying
and selling of futures contracts on the same commodity but involving different
delivery dates or markets and in which the trader expects to earn a profit from
a widening or narrowing of the difference between the prices of the two
contracts.
Other than the risks inherent in commodity futures trading, the
Partnership knows of no trends, demands, commitments, events or uncertainties
which will result in or which are reasonably likely to result in the
Partnership's liquidity increasing or decreasing in any material way. The
Limited Partnership Agreement requires dissolution of the Partnership under
certain circumstances as defined in the Limited Partnership Agreement including
a decrease in the net asset value of a Unit at the close of business on any
business day to less than 50% of the highest average net asset value at which
Units have been sold.
In order to limit credit risks, the Partnership does not enter into
counterparty transactions such as currency or other swaps and it limits its
trading activities to futures and options traded on U.S. commodity exchanges.
(B) CAPITAL RESOURCES
The Partnership does not intend to raise any additional capital through
borrowing. Due to the nature of the Partnership's business, it will make no
significant capital expenditures, and substantially all its assets are and will
be represented by cash, United States Treasury securities and commodity futures
investments.
The Partnership's capital consists of the capital contributions of the
partners as increased or decreased by gains or losses on commodity futures
trading and by expenses, interest income, redemptions of Units and distributions
of profits, if any. Gains or losses on commodity futures trading cannot be
predicted. Market moves in commodities
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<PAGE> 7
are dependent upon fundamental and technical factors which the Partnership may
or may not be able to identify. Partnership expenses consist of, among other
things, commissions, management fees and incentive fees. The level of these
expenses is dependent upon the level of trading and the ability of the Advisors
to identify and take advantage of price movements in the commodity markets, in
addition to the level of net assets maintained. Furthermore, interest income is
dependent upon interest rates over which the Partnership has no control. A
forecast cannot be made as to the level of redemptions in any given period.
(C) RESULTS OF OPERATIONS
Trading results were unprofitable for the fiscal year ended December
31, 1997. Trading during the fiscal year resulted in a decrease in net asset
value per Unit from $245.41 to $192.66 a decrease of 21.49% attributable
primarily to losses in grains and livestock.
Trading results were profitable for the fiscal year ended December 31,
1996. Trading during the fiscal year resulted in an increase in net asset value
per Unit from $125 (after payment of distributions of $288,507) to $245.41 an
increase of 96.3% attributable primarily to gains in grain contracts.
Trading results were profitable for the fiscal year ended December 31,
1995. Trading during the fiscal year resulted in a increase in net asset value
per Unit from $70.88 to $139.18 an increase of 96.4% attributable to gains in
grains and livestock.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial statements meeting the requirements of Regulation S-X are
indexed and included beginning on page F-1 of this report.
The supplementary financial information specified by Item 302 of
Regulation S-K is not applicable.
ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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<PAGE> 8
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership has no directors or executive officers. The Partnership
is managed by its Managing General Partner. Trading decisions for the
Partnership are made by the Managing General Partner.
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no directors or officers. The Managing General
Partner and Refco perform the services described in "Item 1. Business" herein.
For the fiscal year ended December 31, 1997, incentive fees expensed
totaled $3,091. Management fees expensed totaled $223,279. A total of $797,000
in brokerage commissions were paid to Refco.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(A) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
None.
(B) SECURITY OWNERSHIP OF MANAGEMENT
Under the terms of the Limited Partnership Agreement, the Partnership's
affairs are managed by the Managing General Partner and it has discretionary
authority over the Partnership's investments. As of December 31, 1997, the
General Partners' investment in the Partnership was $357,891.
(C) CHANGES IN CONTROL
None.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(A) ACCOUNTS OF AFFILIATES OF THE COMMODITY BROKER
The officers, directors and employees and associated persons of Refco
trade in commodity futures contracts for their own accounts. In addition, Refco
is a registered futures commission merchant and executes transactions in
commodity futures contracts for its customers. Thus, it is possible that Refco
could execute transactions for the Partnership in which the other parties to the
transactions are its officers, directors, employees or customers. Such persons
might also compete with the Partnership in making purchases or sales of
contracts without knowing that the Partnership is also bidding on such
contracts.
(B) OTHER ACTIVITIES AND ACCOUNTS OF THE GENERAL PARTNER
The Managing General Partner trades in commodity futures contracts for
its own accounts and for the accounts of other customers. It is possible that
the Managing General Partner may engage in transactions on its own behalf or on
behalf of others having an effect on transactions involving the Partnership.
(C) OTHER RELATIONSHIPS
The sole shareholder of the parent of the Managing General Partner is a
partner in the law firm which is counsel to the Partnership, the Managing
General Partner and the Memphis branch of Refco.
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<PAGE> 9
PART IV
ITEM 14. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES AND REPORTS
(A)(1) FINANCIAL STATEMENTS
See Index to Financial Statements; infra.
(A)(2) FINANCIAL STATEMENT SCHEDULES
Schedules are omitted for the reason that they are not required or are
not applicable or that equivalent information has been included in the financial
statements or the notes thereto.
(A)(3) EXHIBITS
(3) Articles of Incorporation and By-Laws
i) Limited Partnership Agreement dated as of September 19, 1990.*
ii) Certificate of Limited Partnership of the Partnership as filed with the
Shelby County Recorder of Deeds on September 19, 1990.*
(a)(3)(2) Material Contracts
i) Form of Selling Agreement among the Partnership and National Association of
Securities Dealers, Inc. member.*
ii) Form of Customer Agreement between the Partnership and Refco, Inc.*
iii) Form of Subscription Agreement to be executed by each purchaser of Units.*
iv) Form of Escrow of Funds Agreement among the Partnership and National Bank of
Commerce.*
(27) Financial Data Schedule (For SEC use only).
- -----------
*Incorporated herein by reference to the Partnership's Registration Statement on
Form S-1, Commission File No. 33-37802.
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<PAGE> 10
CERES FUND, L.P.
INDEX TO FINANCIAL STATEMENTS
--------------------------
<TABLE>
<CAPTION>
Page(s)
-------
<S> <C>
Independent Auditors' Report.................................................................................F-1
Financial Statements:
Statements of Financial Condition as of December 31, 1997 and 1996.........................................F-2
Statements of operations for the years ended December 31, 1997, 1996 and 1995..............................F-3
Statements of Changes in Partners' Capital for the years ended December 31, 1997,
1996 and 1995.......................................................................................F-4
Statements of Cash Flows for the years ended December 31, 1997,
1996 and 1995 ......................................................................................F-5
Summary of Net Asset Values at December 31, 1997, 1996 and 1995 ...........................................F-6
Notes to Financial Statements .............................................................................F-8
Schedule of Investments at December 31, 1997..............................................................F-13
Affirmation...............................................................................................F-14
</TABLE>
<PAGE> 11
INDEPENDENT AUDITORS REPORT
The Partners
Ceres Fund, L.P.:
We have audited the accompanying statements of financial condition of Ceres
Fund, L.P. (a Tennessee Limited Partnership) as of December 31, 1997 and 1996
and summary of net asset values as of December 31, 1997, 1996 and 1995, and the
related statements of operations, changes in partners capital and cash flows for
each of the years in the three-year period ended December 31, 1997. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ceres Fund, L.P. (a Tennessee
Limited Partnership) as of December 31, 1997 and 1996, and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 1997, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information included in
Schedule 1 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
Memphis, Tennessee KPMG Peat Marwick LLP
February 20, 1998
F-1
<PAGE> 12
CERES FUND, L.P.
(A TENNESSEE LIMITED PARTNERSHIP)
STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
ASSETS 1997 1996
------ ---------- ---------
<S> <C> <C>
Cash $ 155,155 108,554
Equity in commodity futures trading account:
U.S. government obligations at fair value (cost of
$6,269,786 and $3,050,931 at December 31, 1997
and 1996, respectively) 6,308,524 3,077,250
Cash 141,589 1,514,594
Unrealized gains on open futures contracts 27,202 186,032
Open option contracts, at market 10,780 --
Interest receivable 4,395 8,657
---------- ---------
TOTAL ASSETS $6,647,645 4,895,087
========== =========
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
LIABILITIES:
Accrued management fees $ 20,855 10,033
Accrued incentive fees 1,662 32,849
Other accrued expenses 60,387 42,544
Redemptions payable 80,700 32,572
---------- ---------
TOTAL LIABILITIES 163,604 117,998
---------- ---------
PARTNERS CAPITAL:
General partners 357,891 374,741
Limited partners 6,126,150 4,402,348
---------- ---------
TOTAL PARTNERS' CAPITAL 6,484,041 4,777,089
---------- ---------
$6,647,645 4,895,087
========== =========
</TABLE>
See accompanying notes to financial statements.
F-2
<PAGE> 13
CERES FUND, L.P.
(A TENNESSEE LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------- ---------- ---------
<S> <C> <C> <C>
Net gains (losses) on trading of commodity futures and options contracts:
Realized gains on closed positions $ 472,553 3,457,913 1,877,265
Change in unrealized gains (losses) on open
futures contracts (158,830) (45,994) 164,872
Change in unrealized gains (losses)
on open options contracts 10,780 (1,840) 1,840
----------- ---------- ---------
NET GAINS ON INVESTMENTS 324,503 3,410,079 2,043,977
Investment income - interest (note 3) 294,507 187,206 112,821
----------- ---------- ---------
INCOME FROM OPERATIONS 619,010 3,597,285 2,156,798
----------- ---------- ---------
Brokerage commissions (note 3) 797,000 541,907 320,062
Exchange, clearing fees and NFA charges 41,772 23,322 13,615
Management fee allocations (note 2) 223,279 151,969 85,331
Incentive fee allocations (note 2) 3,091 384,117 108,815
Professional and administrative expenses 58,403 82,026 44,869
----------- ---------- ---------
1,123,545 1,183,341 572,692
----------- ---------- ---------
NET EARNINGS (LOSS) $ (504,535) 2,413,944 1,584,106
=========== ========== =========
NET EARNINGS (LOSS) ALLOCATED TO
GENERAL PARTNER $ (16,850) 208,349 87,697
=========== ========== =========
NET EARNINGS (LOSS) ALLOCATED TO
LIMITED PARTNERS $ (487,685) 2,205,595 1,496,409
=========== ========== =========
AVERAGE NET EARNINGS (LOSS) PER UNIT $ (19.61) 115.23 69.57
=========== ========== =========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE> 14
CERES FUND, L.P.
(A TENNESSEE LIMITED PARTNERSHIP)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
--------- ---------- ----------
<S> <C> <C> <C>
Partners' capital at December 31, 1994 $ 78,695 1,607,410 1,686,105
Capital contributions (2,704 units) -- 191,647 191,647
Redemption of units (5,042 units) -- (464,238) (464,238)
Net earnings for the year 87,697 1,496,409 1,584,106
--------- ---------- ----------
Partners capital at December 31, 1995 166,392 2,831,228 2,997,620
Capital contributions (395 units) -- 96,154 96,154
Redemption of units (2,798 units) -- (442,122) (442,122)
Distributions -- (288,507) (288,507)
Net earnings for the year 208,349 2,205,595 2,413,944
--------- ---------- ----------
Partners capital at December 31, 1996 374,741 4,402,348 4,777,089
Capital contributions (13,552 units) -- 2,755,044 2,755,044
Redemption of units (1,555 units) -- (299,329) (299,329)
Distributions (1,862 units) -- (244,228) (244,228)
Net loss for the year (16,850) (487,685) (504,535)
--------- ---------- ----------
Partners capital at December 31, 1997 $ 357,891 6,126,150 6,484,041
========= ========== ==========
Average net asset value per limited partnership unit at:
December 31, 1995; 20,341.7718 units outstanding $ 139.18
==========
December 31, 1996; 17,938.6369 units outstanding $ 245.41
==========
December 31, 1997; 31,797.3173 units outstanding $ 192.66
==========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE> 15
CERES FUND, L.P.
(A TENNESSEE LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------- ---------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ (504,535) 2,413,944 1,584,106
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities:
Net unrealized (gains) losses on open contracts 148,050 47,834 (166,712)
(Increase) decrease in operating assets:
Investments in commodities futures
trading account (1,858,269) (1,641,232) (1,278,932)
Interest receivable 4,262 (3,601) (1,977)
Increase (decrease) in operating liabilities:
Accrued management fees 10,822 (44) 4,531
Accrued incentive fees (31,187) (65,111) 97,960
Other accrued expenses 17,843 27,055 (1,922)
----------- ---------- ----------
TOTAL ADJUSTMENTS (1,708,479) (1,635,099) (1,347,052)
----------- ---------- ----------
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES (2,213,014) 778,845 237,054
----------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from sale of limited partnership units 2,755,044 96,154 191,647
Redemptions of limited partnership units (251,201) (493,476) (431,227)
Distributions to limited partners (244,228) (288,507) --
----------- ---------- ----------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 2,259,615 (685,829) (239,580)
----------- ---------- ----------
Net increase (decrease) in cash 46,601 93,016 (2,526)
Cash at beginning of year 108,554 15,538 18,064
----------- ---------- ----------
Cash at end of year $ 155,155 108,554 15,538
=========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE> 16
CERES FUND, L.P.
(A TENNESSEE LIMITED PARTNERSHIP)
SUMMARY OF NET ASSET VALUES
AT DECEMBER 31, 1997
<TABLE>
<CAPTION>
NUMBER NUMBER NUMBER NUMBER NET ASSET TOTAL LIMITED
SUBSCRIBER OF UNITS OF UNITS OF UNITS OF UNITS VALUE PARTNER NET
ADMISSION DATE SUBSCRIBED WITHDRAWN DISTRIBUTED OUTSTANDING PER UNIT ASSET VALUE
-------------- ---------- --------- ----------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
January 1, 1996 20,341.7718 (4,288.1422) 1,793.0394 17,846.6690 $192.7624 3,440,167
November 1, 1996 239.4689 (65.0721) 41.3760 215.7728 192.7624 41,593
December 1, 1996 155.2598 - 27.5246 182.7844 192.7624 35,234
January 1, 1997 708.7734 - - 708.7734 192.7624 136,625
February 1, 1997 1,555.9517 - - 1,555.9517 192.7623 299,929
March 1, 1997 2,630.9876 - - 2,630.9876 192.7625 507,155
April 1, 1997 3,704.4494 - - 3,704.4494 192.7624 714,078
May 1, 1997 1,381.6388 - - 1,381.6388 192.7624 266,328
June 1, 1997 988.1934 - - 988.1934 192.7624 190,486
July 1, 1997 826.3808 - - 826.3808 190.5557 157,472
August 1, 1997 493.4459 - - 493.4459 191.8761 94,680
September 1, 1997 209.0262 - - 209.0262 191.4386 40,016
October 1, 1997 496.1560 - - 496.1560 192.0056 95,265
November 1, 1997 229.6653 - - 229.6653 192.0699 44,112
December 1, 1997 327.4226 - - 327.4226 192.4436 63,010
----------- ---------- ----------- ----------- --------- ---------
34,288.5916 (4,353.2143) 1,861.9400 31,797.3173 $192.6625 6,126,150
=========== ========== ========== =========== ======== =========
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE> 17
CERES FUND, L.P.
(A TENNESSEE LIMITED PARTNERSHIP)
SUMMARY OF NET ASSET VALUES
AT DECEMBER 31, 1996
<TABLE>
<CAPTION>
TOTAL
LIMITED
NUMBER NUMBER NUMBER NET ASSET PARTNER
SUBSCRIBER OF UNITS OF UNITS OF UNITS VALUE NET ASSET
ADMISSION DATE SUBSCRIBED WITHDRAWN OUTSTANDING PER UNIT VALUE
-------------- ----------- ----------- ------------ -------- ---------
<S> <C> <C> <C> <C> <C>
January 1, 1996 20,341.7718 (2,797.8636) 17,543.9082 $245.38 4,304,987
November 1, 1996 239.4689 -- 239.4689 246.28 58,977
December 1, 1996 155.2598 -- 155.2598 247.23 38,384
----------- ----------- ------------ ------- ---------
20,736.5005 (2,797.8636) 17,938.6369 $245.41 4,402,348
=========== =========== ============ ======= =========
</TABLE>
See accompanying notes to financial statements.
F-7
<PAGE> 18
CERES FUND, L.P.
(A TENNESSEE LIMITED PARTNERSHIP)
SUMMARY OF NET ASSET VALUES
AT DECEMBER 31, 1995
<TABLE>
<CAPTION>
TOTAL
LIMITED
NUMBER NUMBER NUMBER NET ASSET PARTNER
SUBSCRIBER OF UNITS OF UNITS OF UNITS VALUE NET ASSET
ADMISSION DATE SUBSCRIBED WITHDRAWN OUTSTANDING PER UNIT VALUE
-------------- ---------- --------- ----------- -------- -----
<S> <C> <C> <C> <C> <C>
December 1, 1991 13,471.6805 (9,382.9291) 4,088.7514 $139.71 571,255
January 1, 1992 1,868.7042 (308.5313) 1,560.1729 138.96 216,808
February 1, 1992 1,708.8416 (735.5574) 973.2842 140.16 136,412
March 1, 1992 2,122.9736 (1,387.6491) 735.3245 139.44 102,537
April 1, 1992 584.4999 (434.8956) 149.6043 140.20 20,975
May 1, 1992 918.3502 (329.6641) 588.6861 138.94 81,792
June 1, 1992 1,678.3638 (503.3093) 1,175.0545 139.86 164,344
July 1, 1992 2,002.6730 (306.3825) 1,696.2905 138.98 235,755
August 1, 1992 1,132.8673 (514.0451) 618.8222 139.33 86,223
September 1, 1992 1,820.2180 (788.3632) 1,031.8548 139.50 143,944
October 1, 1992 1,979.2928 (1,286.1599) 693.1329 140.02 97,054
November 1, 1992 543.6780 (392.5141) 151.1639 139.72 21,120
December 1, 1992 1,179.6235 (466.6253) 712.9982 139.18 99,237
January 1, 1993 2,314.5105 (1,258.8993) 1,055.6112 139.06 146,798
February 1, 1993 466.9657 (26.7688) 440.1969 139.81 61,543
March 1, 1993 2,393.2721 (1,049.9125) 1,343.3596 139.21 187,011
April 1, 1993 679.3648 (258.6136) 420.7512 139.00 58,483
May 1, 1993 243.4826 (32.4874) 210.9952 139.05 29,338
July 1, 1993 157.6181 (69.9852) 87.6329 140.68 12,328
August 1, 1993 328.7689 (113.4646) 215.3043 140.10 30,165
September 1, 1993 392.3815 (371.8211) 20.5604 143.61 2,953
October 1, 1993 246.6610 -- 246.6610 139.15 34,322
February 1, 1994 1,550.2812 -- 1,550.2812 137.11 212,552
March 1, 1994 693.0397 (191.8743) 501.1654 136.16 68,239
April 1, 1994 74.1121 -- 74.1121 135.47 10,040
January 1, 1995 2,704.0027 (2,704.0027) -- -- --
----------- ------------ ----------- ------- ---------
Total 43,256.2273 (22,914.4555) 20,341.7718 $139.18 2,831,228
=========== ============ =========== ======= =========
</TABLE>
See accompanying notes to financial statements.
F-8
<PAGE> 19
CERES FUND, L.P.
(A TENNESSEE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Ceres Fund, L.P. (the Partnership) is a Tennessee limited
partnership organized on September 19, 1990 to engage in the
speculative trading of commodities futures contracts and other
commodity interests. Randell Commodity Corporation (Randell) and
RanDelta Capital Partners, L.P. (RanDelta) are the general partners.
Randell serves as the managing general partner and RanDelta serves as
the financial general partner. Randell acts as commodity trading
advisor with respect to the Partnership.
The Partnership solicited subscriptions for a maximum of
100,000 units of limited partnership interest at $105 per unit ($100
net of commission). During the initial offering period 13,471.6805
units were sold and the Partnership commenced trading commodity futures
contracts on December 1, 1991. The Partnership continues to sell units
as of the end of each month at the then average net asset value per
unit plus a selling commission of 4% in accordance with the terms of
the Limited Partnership Agreement, and can continue selling units until
the maximum number of units offered have been sold.
Income and expenses of the Partnership (excluding the
Management Allocation and Incentive Allocation) are allocated pro rata
among the partners based on their respective capital accounts as of the
beginning of the month in which the items of income and expense accrue,
except that limited partners have no liability for partnership
obligations in excess of his or her capital account, including
earnings. The Management Allocation and Incentive Allocation are
allocated to the Limited Partners only in accordance with the terms of
the Limited Partnership Agreement.
Units may not be redeemed during the first six months after
they are purchased. Thereafter, limited partners may redeem their units
at the redemption net asset value per unit as of the end of any
calendar quarter upon ten days written notice to the managing general
partner. The redemption charge will be based on the redemption net
asset value on all units redeemed as more fully described in the
offering prospectus.
Under the terms of the partnership agreement, the Partnership
will terminate on the earlier of December 31, 2020, or the occurrence
of certain events as more fully described in the Limited Partnership
Agreement.
EQUITY IN COMMODITY FUTURES TRADING ACCOUNT
U.S. government obligations represent investments in U.S.
Treasury Bills with a maturity of 90 days or less and are carried at
fair market value and any unrealized gains and losses are reflected in
income. Cash represents deposits at brokers and funds temporarily held
in interest bearing accounts.
FUTURES CONTRACTS AND OPTIONS CONTRACTS
Futures contracts are required to be made on a commodity
exchange and call for the future delivery of various agricultural and
nonagricultural commodities, currencies or financial instruments at a
specified time and place. These contractual obligations, depending on
whether one is a buyer or a seller, may be satisfied either by taking
or making physical delivery of an approved grade of the particular
commodity (or, in the case of some contracts, by cash settlement) or by
making an offsetting sale or purchase of an equivalent commodity
futures contract on
F-9
<PAGE> 20
CERES FUND, L.P.
(A TENNESSEE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
the same (or a linked) exchange prior to the designated date of
delivery. In market terminology, a trader who purchases a futures
contract is "long" in the futures market, and a trader who sells a
futures contract is "short" in the futures market. Outstanding futures
contracts (those that have not been closed out by an offsetting
purchase or sale or by delivery) are known as "open trades" or "open
positions."
Among the agricultural commodities for which there are futures
contracts are corn, oats, wheat, soybeans, soybean oil, soybean meal,
live cattle, live hogs, pork bellies, coffee, sugar, cocoa and cotton.
Nonagricultural commodities for which there are futures contracts
include copper, silver, gold, platinum, lumber, currency, Treasury
bonds and bills, mortgage-backed securities, Eurodollar deposits,
certain petroleum products and stock, inflation and interest rate
related indices.
An option on a futures contract gives the purchaser of the option the
right (but not the obligation) to take a position at a specified price
(the "striking", "strike" or "exercise" price) in the underlying
futures contract. Options have limited life spans, usually tied to the
delivery or settlement date of the underlying futures contract. Some
options, however, expire significantly in advance of such date. The
value of an option at any given point in time is a function of market
volatility and the price level of the underlying futures contract.
Open futures contracts are valued at the settlement price on the date
of valuation as determined by the exchange on which the contract was
traded. Changes in the market value of open futures contracts, entered
into for speculative investing, are recorded as unrealized gains or
losses in the accompanying statement of operations. Realized gains and
losses (excluding commissions and other exchange related fees) are
recognized when such contracts are closed.
INCOME TAXES
No provision for income taxes has been made in the accompanying
financial statements since, as a partnership, income and losses for tax
purposes are allocated to the partners for inclusion in their
respective tax returns.
MANAGEMENT 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 the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
RECLASSIFICATIONS
Certain 1996 and 1995 amounts have been reclassified to conform to
their 1997 presentation.
AVERAGE NET EARNINGS (LOSS) PER UNIT
The average net earnings (loss) per unit as reported on the statement
of operations was calculated as earnings (loss) allocated to the
limited partners divided by average outstanding units during the year.
F-10
<PAGE> 21
CERES FUND, L.P.
(A TENNESSEE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(2) MANAGEMENT AGREEMENT
The Partnership has entered into a Management Agreement in
consideration of and as compensation for the services to be rendered by
the General Partners and trading advisors. The Partnership pays a
monthly Management Allocation equal to 1/3 of 1% (4% per annum) of the
Adjusted Net Asset Value of units at month end, plus a quarterly
Incentive Allocation of 15% of any net new appreciation in the adjusted
net asset value of units for the quarter. Such fees were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- -------
<S> <C> <C> <C>
Management fees $223,279 151,969 85,331
Incentive fees 3,091 384,117 108,815
</TABLE>
(3) CUSTOMER AGREEMENT WITH REFCO, INC.
The Partnership entered into a customer agreement with Refco, Inc.
(Refco), pursuant to which the Partnership deposits its assets in a
commodity trading account with Refco who executes trades on behalf of
the Partnership. The Partnership agrees to pay such brokerage and
commission charges and fees as Refco may establish and charge from time
to time. Refco charges the Partnership commissions on commodity trades
at the rate of $32.50 per round-turn. Total commissions charged to the
Partnership by Refco in 1997, 1996 and 1995 were $797,000, $541,907 and
$320,062, respectively. The Partnership earns interest on Treasury
Bills held in its account, on interest-bearing accounts and on 80% of
the average daily equity maintained as cash in the Partnership's
trading account at a rate that approximated the average yield on
13-week United States Treasury Bills. Total interest earned by the
Partnership in 1997, 1996 and 1995 was $294,507, $187,206 and $112,821,
respectively.
(4) RELATED PARTIES
The sole shareholder of the parent of the managing General Partner is
an active partner in the law firm which is the counsel to the
Partnership, the General Partners and the Memphis branch of Refco, the
Partnership's commodity broker.
(5) DISTRIBUTION TO LIMITED PARTNERS
On January 16, 1997, the General Partner declared a distribution to the
limited partners equal to the difference between the December 31, 1996
net asset value per unit and $210 per unit. This distribution, totaling
$244,228 in cash (approximately $13.61 per unit) and 1,861.94 in units,
resulted in each unit holder having a net asset value of $210 per unit
on January 1, 1997.
On January 15, 1996, the General Partner declared a distribution to the
limited partners equal to the difference between the December 31, 1995
net asset value per unit and $125 per unit. This distribution, totaling
$288,507 (approximately $14.18 per unit) resulted in each unit holder
having a net asset value of $125 per unit on January 1, 1996.
F-11
<PAGE> 22
CERES FUND, L.P.
(A TENNESSEE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(6) OFF-BALANCE-SHEET RISK
In the normal course of business, the Partnership enters into
transactions in financial instruments with off-balance-sheet risk.
These financial instruments include financial futures contracts and
option contracts. Futures contracts provide for the delayed delivery of
commodities, which the seller agrees to make delivery at a specified
future date, at a specified price. Futures contracts and options on
such contracts are held for trading and arbitrage purposes. The
notional value of these contracts reflect the extent of involvement the
Partnership has in particular types of contracts. Risk arises from
movements in commodities' values. At December 31, 1997, the underlying
notional value of open contract commitments were long $14,147,983 and
short $(8,270,190).
The Partnership trades in a variety of futures and options
financial instruments, and all open positions are reported at fair
value. Trading revenue, including realized and unrealized gains and
losses, from financial futures contracts and options transactions for
the year ended December 31, 1997 was $324,503. The average market value
of open commodity financial instruments, and the year-end market value
of open commodities are as follows:
<TABLE>
<CAPTION>
AVERAGE MARKET MARKET VALUE
VALUE OF OPEN OF OPEN POSITIONS AT
POSITIONS DURING 1997 DECEMBER 31, 1997
--------------------- -----------------
<S> <C> <C>
Assets (Long Positions) $(203) (266,834)
Liabilities (Short Positions) (284,382) 304,816
</TABLE>
(7) FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107,
Disclosure About Fair Value of Financial Instruments, extends existing
fair value disclosure practices for some instruments by requiring all
entities to disclose the fair value of financial instruments, both
assets and liabilities recognized and not recognized in the statement
of financial condition, for which it is practicable to estimate fair
value. If estimating fair value is not practicable, this Statement
requires disclosures of descriptive information pertinent to estimating
the value of a financial instrument. At December 31, 1997,
substantially all of the Partnership's financial instruments, as
defined in the Statement, are carried at fair value.
F-12
<PAGE> 23
Schedule 1
CERES FUND, L.P.
(A TENNESSEE LIMITED PARTNERSHIP)
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PAR OR
NUMBER OF FAIR
DESCRIPTION CONTRACTS VALUE
----------- --------- -----
<S> <C> <C>
United States Treasury Bill due January 29, 1998 3,700,000 $3,685,482
United States Treasury Bill due February 12, 1998 400,000 397,563
United States Treasury Bill due March 19, 1998 2,250,000 2,225,479
----------
6,308,524
----------
Net cash balances from futures trading 141,589
----------
Open options contracts in futures trading accounts:
February 8 Live Cattle (6,000)
April 8 Live Cattle (1,220)
June 8 Live Cattle (24,600)
March 8 Feeders (25,500)
April 8 Feeders (8,625)
May 8 Feeders (4,500)
March 8 NY Cotton 296
March 8 US Treasury Bond Future 1,406
March 8 NY Coffee (7,969)
March 8 Dollar Index 600
March 8 Corn 156,000
December 8 Corn (86,000)
March 8 Soybeans 2,250
March 8 Soybean Meal 3,600
March 8 Soybean Oil 2,640
May 8 Soybean Oil 25,824
May 8 Wheat 87,500
July 8 Wheat (88,500)
March 8 Corn Option 17,500
March 8 Soybean Option 7,200
March 8 Soybean Option (3,120)
March 8 Soybean Option (10,800)
----------
37,982
----------
Total equity in futures trading accounts 179,571
----------
Total investments $6,488,095
==========
</TABLE>
F-13
<PAGE> 24
AFFIRMATION
STATE OF TENNESSEE )
)
CITY OF MEMPHIS )
I, FRANK L. WATSON, JR. being duly sworn, deposes and says:
1. I am President of Randell Commodity Corporation, the commodity pool
operator and the managing general partner of Ceres Fund, L.P., as named in the
attached Annual Report and am duly authorized to execute this Affirmation.
2. To the best of my knowledge and belief, the information contained in
the attached Annual Report is accurate and complete.
Frank L. Watson, Jr., President
Randell Commodity Corporation
SWORN TO AND SUBSCRIBED before me this 25th day of March, 1998.
Marty Morgan
NOTARY PUBLIC
Commission Expires: January 31, 2001
F-14
<PAGE> 25
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Memphis, and State of Tennessee on the 25th day of March 1998.
CERES FUND, L.P.
By: RANDELL COMMODITY CORPORATION
-------------------------------
Managing General Partner
By: Frank L. Watson, Jr.
-------------------------------
Chairman
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person on behalf of the Managing
General Partner of the Registrant in the capacities and on the date indicated.
RANDELL COMMODITY CORPORATION
Managing General Partner of the Registrant
By: Frank L. Watson, Jr., Principal
-------------------------------
March 25, 1998
Executive Officer & Sole Director
<PAGE> 26
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.
None.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CERES FUND LP FOR THE YEAR ENDED DECEMBER 31, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 155,155
<SECURITIES> 6,488,095
<RECEIVABLES> 4,395
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,647,645
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,647,645
<CURRENT-LIABILITIES> 163,604
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 6,484,041
<TOTAL-LIABILITY-AND-EQUITY> 6,647,645
<SALES> 619,010
<TOTAL-REVENUES> 619,010
<CGS> 1,123,545
<TOTAL-COSTS> 1,123,545
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (504,535)
<INCOME-TAX> 0
<INCOME-CONTINUING> (504,535)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (504,535)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
