This report on Form 10-Q (the "Report") for the quarter ending
You should not place undue reliance on any forward-looking statements. Except as expressly required by the Federal securities laws, the managing member undertakes no obligation to publicly update or revise any forward-looking statements or the risks, uncertainties or other factors described in this Report, as a result of new information, future events or changed circumstances or for any other reason after the date of this Report.
The Registrant's Objectives
The Registrant's objectives are:
• Significant profits over time; • Performance volatility commensurate with profit potential; • Controlled risk of loss; and • Diversification within a traditional portfolio, typically consisting entirely of "long" equity and debt positions and reduced dependence on a single nation's economy, by accessing global financial, commodity and other non-financial futures markets.
The Registrant's potential for aggressive capital growth arises from the profit possibilities offered by the global futures, forward and options markets and the skills of the professional trading organization(s) selected to manage the assets of the Registrant. The fact that the Registrant can profit from both rising and falling markets adds an element of profit potential that is not present in long-only strategies. However, the Registrant can also incur losses from both rising and falling markets that adds to the risk of loss. In addition to its profit potential and risk of loss, the Registrant also could help reduce the overall volatility, or risk, of a portfolio. By investing in markets that operate independently from U.S. stock and bond markets (and therefore, may be considered as non-correlated), the Registrant may provide positive returns even when U.S. stock and bond markets are experiencing flat to negative performance and may provide negative returns even when U.S. stock and bond markets are experiencing flat to positive performance. Non-correlation should not be confused with negative correlation, where the performance would be exactly opposite between the Registrant and U.S. stock and bond markets.
The managing member makes no guarantee that the investment objectives for the Registrant will be achieved.
Past performance is not necessarily indicative of future results.
Managing Member and its Affiliates
The Managing Member's predecessor and affiliates have been sponsoring and managing single and multi-advisor funds for over two decades. Effective
The Managing Member has substantial experience in selecting and monitoring trading advisors, asset allocation and overall portfolio design using quantitative and qualitative methods.
The Managing Member monitors the trading activity and performance of the trading advisors and adjusts the overall leverage at which the Registrant trades. The commitment of the Registrant to the trading advisors may exceed 100% of the Registrant's total equity if the Managing Member decides to strategically allocate notional equity to such trading advisors. This may result in increased profits or larger losses than would otherwise result. There likely will be periods in the markets during which it is unlikely that the trading advisors will be profitable. By having the ability to deleverage the Registrant's market commitment to below its actual equity during such periods, the Managing Member could help preserve capital while awaiting more favorable market cycles.
The Managing Member also performs ongoing due diligence with respect to the trading advisors. If the Managing Member determines that the trading advisors have departed from its program or stated trading methodology or has exceeded its stated risk parameters, the Managing Member, on behalf of the Registrant, will take such actions as it deems appropriate, which may include terminating the trading advisors. Similarly, if the Managing Member's ongoing due diligence leads the Managing Member to determine that it is in the best interests of the Registrant to add an additional trading advisor; it will do so in its sole discretion. If the Managing Member concludes, based upon its perception of market or economic conditions, that it is appropriate to allocate assets of the Registrant to a different trading program run by the trading advisors, it will do so. The Managing Member may select a replacement if any of the trading advisors resign or are terminated, or may select additional trading advisors at its discretion.
The Trading Advisors
The Registrant allocates its net assets ("Allocated Assets") to commodity trading advisors (each, a "Trading Advisor" and collectively, the "Trading Advisors"). Each Trading Advisor manages the portion of the assets of the Registrant allocated to such Trading Advisor and makes the trading decisions in respect of the assets allocated to such Trading Advisor. The Managing Member may terminate any current Trading Advisor or select new trading advisors from time to time in its sole discretion. In the future, the Managing Member may determine to access certain
In general, the Registrant expects to access the
• CTA Choice WTN, managed by
Winton Capital Management Limited("Winton"), pursuant to its Diversified Program, which is a systematic, technical diversified program; and • CTA Choice EGLG, managed by Eagle Trading Systems Inc.("Eagle"), pursuant to its Global Program, which is a systematic, technical long term diversified program. 21
Winton's Diversified Program employs a computer-based system to engage in the speculative trading of approximately 120 international futures, options and forwards markets, government securities such as bonds, as well as certain over the counter ("OTC") instruments, which may include foreign exchange and interest rate forward contracts and swaps. Winton seeks to combine highly liquid financial instruments offering positive but low Sharpe ratios (meaning that profits have been achieved with a certain level of risk) and generally low correlation over the long term to other markets such as equities and fixed income.
Eagle's Global Program is a technical, trend-following system developed, based on Eagle's extensive experience in observing and trading the global markets, to capture a well-structured trading philosophy. The trading philosophy incorporates trend following elements, money management principles, predetermined risk parameters and volatility adjustment features. The system is designed to trade in a wide range of global futures markets - currencies, fixed income, energies, commodities and stock indices - that exhibit orderly intermediate and long-term trends, and adjust to changes in market environment with no predetermined allocation to any one sector. Eagle analyzes typical behavior and volatility patterns of various markets. The system seeks markets with potentially good risk/reward profiles while attempting to avoid markets characterized by excessive volatility and sharp price corrections. An attempt is made to participate in markets which exhibit favorable "signal to noise" characteristics. Money management and risk control disciplines serve to attempt to limit downside risk.
The Administrator performs or supervises the performance of services necessary for the operation and administration of the Registrant (other than making investment decisions), including administrative and accounting services. The Administrator also calculates the Registrant's Net Asset Value. In addition, the Administrator maintains certain books and records of the Registrant, including certain books and records required by CFTC Rule 4.23(a).
Fees and Expenses Management Fee
The Registrant pays to the Managing Member in advance a monthly management fee equal to 1/12th of 6.00% (6.00% per annum) of the Net Asset Value (defined below) of the Registrant as of the beginning of the month, See Note 4 of the Registrant's financial statements included in its annual report for the year ended
"Net Asset Value" is the total assets of the Registrant less total liabilities of the Registrant, each determined on the basis of accounting principles generally accepted in
The Registrant, through its investment in Affiliated Investment Funds, indirectly pays a monthly administrative services fee in the amount of 1/12 of 0.25% (0.25% annually) of the respective
Trading Advisors' Fees
The Registrant indirectly pays Winton and Eagle monthly management fees at an annual rate of 1.5% and 2%, respectively, as defined in their respective Trading Advisory Agreements.
The Registrant indirectly pays Winton and Eagle an incentive fee accrued monthly and paid quarterly of 20% and 25%, respectively, for achieving "New High Net Trading Profits" as defined below.
New High Net Trading Profits (for purposes of calculating an Trading Advisor's incentive fees) and paid as of the close of business of the last day of each calendar quarter (the "Incentive Measurement Date") and will include such profits (as outlined below) since the immediately preceding Incentive Measurement Date (or, with respect to the first Incentive Measurement Date, since commencement of operations of the Registrant or the date the Trading Advisor commenced trading activities for the Registrant), or each an Incentive Measurement Period. New High Net Trading Profits for any Incentive Measurement Period will be the net profits, if any, from the Trading Advisor's trading during such period (including (i) realized trading profit (loss) plus or minus (ii) the change in unrealized trading profit (loss) on open positions), and will be calculated after the determination of certain transaction costs attributable to the Trading Advisor's trading activities and the Trading Advisor's management fee, but before deduction of any incentive fees payable during the Incentive Measurement Period. New High Net Trading Profits will not include interest earned or credited on the assets allocated to the Trading Advisor.
New High Net Trading Profits will be generated only to the extent that the cumulative New High Net Trading Profits achieved by the Trading Advisor exceed the highest level of cumulative New High Net Trading Profits achieved by such Trading Advisor as of a previous Incentive Measurement Date. Except as set forth below, net losses from prior quarters must be recouped before New High Net Trading Profits can again be generated.
If a withdrawal or distribution occurs or if a Trading Advisor's advisory agreement with the relevant
Brokerage Commissions and Fees
The Registrant indirectly pays to the clearing brokers all brokerage commissions, including applicable exchange fees, NFA fees, give-up fees, pit brokerage fees and other transaction related fees and expenses charged in connection with the Registrant's trading activities. These activities are charged indirectly through the Registrant's Affiliated Investment Funds and are reflected within the respective net asset values of each of the Affiliated Investment Funds. On average, total charges paid to the clearing brokers are expected to be less than
Routine Operational, Administrative and Other Ordinary Expenses
The Registrant pays directly or indirectly all of its routine operational, administrative and other ordinary expenses, including, but not limited to, (i) legal, bookkeeping, accounting, custodial, administration (including, without limitation, the costs and expenses of the Administrator), auditing, tax preparation charges and related charges of the Registrant (including reimbursement of the Managing Member on a reasonable time-spent basis, for certain legal, accounting, administrative and registrar and transfer agent work performed by certain of the Managing Member's personnel for and on behalf of the Registrant), as well as printing and other related expenses, (ii) investment related expenses, including, but not limited to brokerage commissions, "bid-ask" spreads, mark-ups, margin interest and other transactional charges and clearing fees, as well as banking, sales and purchase commissions and charges and exchange fees, fees and charges of other custodians and clearing agencies, interest and commitment fees on loans and debit balances, income taxes, withholding taxes, transfer taxes and other governmental charges and duties, and other transactional charges and clearing fees incurred by the Trading Advisor on behalf of the Registrant, the Registrant's pro rata share of the expenses of any
Extraordinary Fees and Expenses
The Registrant pays all its extraordinary fees and expenses, if any, and its allocable portion of all extraordinary fees and expenses of the Registrant generally, if any, as determined by the Managing Member. Extraordinary fees and expenses are fees and expenses that are non-recurring and unusual in nature, such as legal claims and liabilities and litigation costs and any permitted indemnification payments related thereto. Extraordinary fees and expenses shall also include material expenses that are not currently anticipated obligations of the Registrant or of managed futures funds in general, such as the payment of partnership taxes or governmental fees associated with payment of such taxes. Routine operational, administrative and other ordinary expenses will not be deemed extraordinary expenses. Any fees and expenses imposed on the Registrant due to the status of an individual shall be paid by such individual or the Registrant, not the Managing Member.
23 Expense Cap
Routine operational, administrative and other ordinary expenses, other than the Managing Member's management fee, the fees to be paid to the Registrant's Trading Advisor(s), Brokerage Commissions and extraordinary fees and expenses, are limited to 1.50% of average Net Asset Value per annum, See Note 3 of the Registrant's 2013 Annual Report, which is filed as an exhibit to the Registrant's Form 10-K for the fiscal year ended
There is no redemption charge in respect of interests.
The Registrant competes with other private and publicly offered commodity pools, as well as other alternative investments such as REITs and oil and gas limited partnerships and hedge funds. The Registrant operates in a competitive environment in which it faces several forms of competition, including, without limitation:
• The Registrant competes with other commodity pools and other investment vehicles for Members. • The Trading Advisor may compete with other traders in the markets in establishing or liquidating positions on behalf of the Registrant. Employees
The Registrant has no employees. Management and administrative services for the Registrant are performed by the Managing Member or third parties pursuant to the LLC Operating Agreement, as further discussed in Notes 3 and 4 of the Registrant's 2013 Annual Report, which is filed as an exhibit to the Registrant's Form 10-K for the fiscal year ended
Financial Information about Segments
The Registrant's business constitutes only one segment for financial reporting purposes. The Registrant does not engage in the production or sale of any goods or services. The objective of the Registrant's business is appreciation of its assets through speculative trading in such commodity interests. Financial information about the Registrant's business, as of
Financial Information about Geographic Areas
Although the Registrant has indirect exposure to the global futures, forward and option markets, it does not have operations outside of
Effective with the Form 10 filed on
Critical Accounting Policies General 24
Preparation of the condensed financial statements and related disclosures in compliance with accounting principles generally accepted in
The Managing Member has evaluated the Registrant's condensed financial statements and related disclosures and has determined that the policies discussed below are critical accounting policies because they involve estimates, judgments and assumptions that are particularly complex, subjective or uncertain. For further discussion of the Registrant's significant accounting policies, see Note 2 of the Registrant's 2013 Annual Report, which is filed as an exhibit to the Registrant's Form 10-K for the fiscal year ended
The Registrant records all investments at fair value in its condensed financial statements, with changes in fair value reported on the condensed statements of operations. Generally, fair values are based on quoted market prices; however, in certain circumstances, significant judgments and estimates are involved in determining fair value in the absence of an active market closing price. The Registrant considers its investments in publicly-traded mutual funds, to be based on quoted prices in active markets for identical assets (Level 1). Level 3 inputs reflect the Registrant's assumptions that it believes market participants would use in pricing the asset or liability. The Registrant develops Level 3 inputs based on the best information available in the circumstances, which may include indirect correlation to a market value, combinations of market values or the Registrant's proprietary data. Level 3 inputs generally include information derived through extrapolation or interpolation of observable market data. The Registrant does not currently have any investments valued using Level 3 inputs.
The investment in Affiliated Investment Funds is reported in the Registrant's condensed statements of financial condition and is considered a Level 2 investment. In determining the level, the Registrant considers the length of time until the investment is redeemable, including notice and lock-up periods or any other restriction on the disposition of the investment. The Registrant also considers the nature of the portfolios of the underlying Affiliated Investment Funds and their ability to liquidate their underlying investments. The Registrant has the ability to redeem its investments at the reported net asset valuation as of the measurement date (see Note 7 of the Registrant's 2013 Annual Report, which is filed as an exhibit to the Registrant's Form 10-K for the fiscal year ended
Of the Registrant's investments at
The Registrant invests a portion of the excess cash balances not required for margin through certain investment funds which invest in (i) U.S. government securities (which include any security issued or guaranteed as to principal or interest by
Liquidity and Capital Resources
The Registrant commenced operations on
Subscriptions and Redemptions
Second Quarter 2014
Subscriptions of interests for the Second Quarter 2014 were
Second Quarter 2013
Subscriptions of interests for the Second Quarter 2013 were
A portion of the Registrant's net assets is held in cash, which is used as margin for its indirect trading in commodities through its investment in Affiliated Investment Funds.
Commodity contracts exposed to indirectly through the Registrant's investment in CTA Choice may be subject to periods of illiquidity because of market conditions, regulatory considerations and other reasons. For example, commodity exchanges limit fluctuations in certain commodity futures contract prices during a single day by regulations referred to as "daily limits." During a single day, no trades may be executed at prices beyond the daily limit. Once the price of a futures contract for a particular commodity has increased or decreased by an amount equal to the daily limit, positions in the commodity can neither be taken nor liquidated unless traders are willing to effect trades at or within the limit. Commodity futures prices have occasionally moved the daily limit for several consecutive days with little or no trading. Such market conditions could prevent the Registrant from promptly liquidating its indirect exposure through its investments in CTA Choice, to commodity futures positions.
Since the Registrant's business is to trade futures, forward and options contracts through its investment in Affiliated Investment Funds, its capital is at risk due to changes in the value of these contracts (market risk) or the inability of counterparties to perform under the terms of the contracts (credit risk). The Registrant's exposure to market risk is influenced by a number of factors including the volatility of interest rates and foreign currency exchange rates, the liquidity of the markets in which the contracts are traded and the relationships among the contracts held. The inherent uncertainty of the Registrant's speculative trading as well as the development of drastic market occurrences could result in losses considerably beyond the Registrant's experience to date and could ultimately lead to a loss of all or substantially all of investors' capital. The Managing Member attempts to minimize these risks by requiring the Registrant and the Trading Advisor to abide by various trading limitations and policies, which include limiting margin amounts, trading only in liquid markets and permitting the use of stop loss provisions. See Note 10 of the Registrant's 2013 Annual Report for a further discussion on the credit and market risks associated with the Registrant's futures, forwards and option contracts held indirectly through its investment in Affiliated Investment Funds.
There are no known material trends, demands, commitments, events or uncertainties at the present time that are reasonably likely to result in the Registrant's liquidity increasing or decreasing in a material way.
The Registrant does not intend to raise additional capital through the sale of interests offered or through any borrowing. Due to the nature of the Registrant's business, the Registrant does not contemplate making capital expenditures. The Registrant does not have, nor does it expect to have, any capital assets. Redemptions, exchanges, and sales of interests in the future will affect the amount of funds available for investments in futures interests in subsequent periods. It is not possible to estimate the amount, and therefore the impact, of future inflows and outflows of interests. There are no known material trends, favorable or unfavorable, that would affect, nor any expected material changes to, the Registrant's capital resource arrangements at the present time.
26 Market Overview
Following is a market overview for the Second Quarter 2014 and the Second Quarter 2013:
Second Quarter 2014
The global capital markets are slowly moving towards a more divergent monetary policy environment, which has begun to create trading opportunities for certain CTAs in the second quarter.
In the U.S., many investors still believe that Fed tightening is off in the distance because inflation remains low and growth mixed. This belief supported equity and bond markets during the second quarter. Safe haven buying also served to put a floor under bond prices. However, in the background, the Fed is gradually removing quantitative easing and indeed Fed bond buying is scheduled to end by the fall. At that time, a more divergent market environment could develop here.
Conversely, in the Euro-Zone sluggish growth and low inflation paved the way for expectations that the ECB will continue to provide monetary stimulus. As such, German bund prices rose as inflationary readings fell and the DAX ended higher. It seems likely that monetary stimulus will be the longest lasting here compared to other developed markets.
In currency markets, volatility fell to multi-year lows as investors tried to find direction. In major currencies, the Japanese yen stayed within a relatively tight trading range. The British pound trended sharply higher as a string of strong economic readings sparked speculation that the BOE would be the first major central bank to raise the benchmark interest rates. The Australian dollar also rallied during the quarter as improving manufacturing in
In the energies, crude oil was supported as global tensions rose. However, a jump in crude prices in response to crises in
Second Quarter 2013
Investors were caught off guard following Federal Reserve ("Fed") Chairman
Concern about the end of QE gave new life to investors' "bad news is good news" response to economic data. For example, the
In the bond market, yields of U.S. Treasuries drifted lower in April but then climbed sharply higher in May and June, particularly after Chairman Bernanke's comments about tapering QE. The yield of the 10-year Treasury note soared to 2.52% on
Commodity prices faced a challenging second quarter overall. Widely divergent trends emerged, as copper traded sharply lower, crude oil was virtually unchanged and grains prices were mixed. While the U.S. economy maintained a sluggish but ongoing recovery,
The precious metals sub-sector was the weakest, with gold prices dropping almost 23% in the second quarter on the possibility of the Fed's shift in monetary policy, record highs in the U.S. equity market, minimal inflation and higher real rates. The base metals sub-sector, dominated by copper, was hurt during the quarter by greater inventory levels and concerns about demand in the face of
The energy sub-sector saw more modest declines overall and more mixed results. West Texas Intermediate crude oil prices were virtually flat, declining just 0.7% during the quarter to end June at
The agriculture sub-sector was strongest during the quarter, though still generated mixed results. Grains prices were dominated by movements in futures curves. Last year's draught limited current supplies and put upward pressure on front-month grain contracts, while the potential for record large crops hurt deferred pricing.
Due to the nature of the Registrant's indirect trading activities, a period-to-period comparison of its indirect trading results is not meaningful. However, set forth below are the following:
(a) the major sectors to which the Registrant's assets were indirectly allocated as of the Second Quarter 2014 and the Second Quarter 2013, measured as a percentage of the "gross speculator margin" (i.e., the minimum amount of cash or marginable securities a speculator must post when buying or selling futures assets); and
(b) a discussion of the Registrant's indirect trading results for the major sectors in which the Registrant traded for the Second Quarter 2014 and the Second Quarter 2013.
28 Second Quarter 2014
Sector Allocation Currencies 37.35 % Energies 9.07 % Grains 5.78 % Indices 21.20 % Interest Rates 12.60 % Meats 0.17 % Metals 13.42 % Tropicals 0.41 % TOTAL 100.00 %
Trading results for the major sectors in which the Registrant traded indirectly for the Second Quarter 2014 were as follows:
Currencies: (+) Registrant experienced a majority of its gains in the British Pound, Brazilian real and Canadian dollar. The majority of its losses were incurred in the Japanese yen, euro and Swiss franc.
Interest Rates: (+) Registrant experienced a majority of its gains in European, Pacific rim and U.S. rates. There were no losses.
Indices: (+) Registrant experienced gains in U.S. European and
Energies: (-) Registrant experienced a majority of its gains in crude oil. The majority of its losses were incurred in heating oil.
Metals: (-) Registrant experienced a majority of its gains in nickel. The majority of its losses were incurred in copper, gold and silver.
Grains: (-) Registrant experienced no gains. The majority of its losses were incurred in soybeans.
Tropicals: (-)Registrant experienced a majority of its gains in cocoa. The majority of its losses were incurred in sugar.
Meats: (+) Registrant experienced a majority of its gains in live cattle. The majority of its losses were incurred in live hogs.
Second Quarter 2013
Sector Allocation Currencies 21.18 % Energies 5.50 % Grains 7.29 % Indices 15.06 % Interest Rates 5.76 % Meats 0.49 % Metals 43.52 % Tropicals 1.20 % TOTAL 100.00 %
Trading results for the major sectors in which the Registrant traded indirectly for the Second Quarter 2013 were as follows:
Currencies: (-)The Registrant experienced a majority of its gains in the Japanese yen. The majority of its losses were incurred in the Euro.
Energies: (-) The Registrant experienced a majority of its gains in gas oil. The majority of its losses were incurred in crude oil.
Grains: (+) The Registrant experienced a majority of its gains in soybeans. The majority of its losses were incurred in corn.
Indices: (+) The Registrant experienced a majority of its gains in the
Interest Rates: (-) The Registrant experienced a majority of its gains in Euro-BTP futures. The majority of its losses were incurred in the German bobl.
Meats: (+) The Registrant experienced a majority of its gains in live hogs. There were no losses incurred.
Metals: (+) The Registrant experienced a majority of its gains in gold. The majority of its losses were incurred in aluminum.
Tropicals: (+) The Registrant experienced a majority of its gains in sugar. The majority of its losses were incurred in cocoa.
Results of Operations Year-To-Date 2014
The Net Asset Value of the Registrant as of
The Registrant's performance for the Year-To-Date 2014 was (11.28)%. Performance includes the percentage change in the Registrant's Net Asset Value excluding the effect of any subscriptions and redemptions and includes the percentage impact of investment gains/(losses) less any commissions and related fees and expenses. Past performance is not necessarily indicative of future results.
The Registrant's total gain from its investment in securities for the Year-To-Date 2014 was approximately
The Registrant's total loss from its investment in Affiliated Investment Funds for the Year-To-Date 2014 was approximately
Dividend income for the Year-To-Date 2014 was approximately
Brokerage commissions and other transaction fees, which are paid indirectly through the Affiliated Investment Funds and are reflected within the respective net asset values of each of the Affiliated Investment Funds, for the Year-To-Date 2014 were approximately
Management fees to the
Management fees to the Managing Member for the Year-To-Date 2014 were approximately
Trading Advisor incentive fees are based on the New High Net Trading Profits generated by the
An administrative services fee, which is indirectly paid to ClariTy for risk management and related services with respect to monitoring the
Service fees for the Year-To-Date 2014 were approximately
Managing Member interest earned on Certain Investment Funds for the Year-To-Date 2014 was approximately
Operating expenses include accounting, audit, tax, and legal fees. Operating expenses for the Year-To-Date 2014 were approximately
The Net Asset Value of the Registrant as of
The Registrant's performance for the Year-To-Date 2013 was (6.02)%. Performance includes the percentage change in the Registrant's Net Asset Value excluding the effect of any subscriptions and redemptions and includes the percentage impact of investment gains/(losses) less any commissions and related fees and expenses. Past performance is not necessarily indicative of future results.
The Registrant's total loss from its investment in securities for the Year-To-Date 2013 was approximately
The Registrant's total loss from its investment in Affiliated Investment Funds for the Year-To-Date 2013 was approximately
Dividend income for the Year-To-Date 2013 was approximately
Brokerage Commissions and other transaction fees, which are paid indirectly through the Affiliated Investment Funds and are reflected within the respective net asset values of each of the Affiliated Investment Funds, for the Year-To-Date 2013 were approximately
Management fees to the
Management fees to the Managing Member for the Year-To-Date 2013 were approximately
Incentive fees are based on the New High Net Trading Profits generated by the
ClariTy Managed Account fees, which are paid indirectly through the Affiliated Investment Funds and are reflected within the respective net asset values of each of the Affiliated Investment Funds, for the Year-To-Date 2013 were approximately
Service fees for the Year-To-Date 2013 were approximately
Managing Member interest earned on investment funds for the Year-To-Date 2013 was approximately
Operating expenses include accounting, audit, tax, and legal fees. Operating expenses for the Year-To-Date 2013 were approximately
Inflation has had no material impact on the operations or on the financial condition of the Registrant from inception through
Off-Balance Sheet Arrangements and Contractual Obligations
The Registrant does not have any off-balance-sheet arrangements (as defined in Regulation S-K 303(a)(4)(ii)) that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to Members.
The Registrant's contractual obligations are with the Managing Member, the