<PAGE> 1
U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
[ ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended
-------------
[X] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from October 1, 1996 to October 31, 1996
--------------- ----------------
Commission File No. 33-2249-FW
MILLER PETROLEUM, INC.
----------------------
(Name of Small Business Issuer in its Charter)
TENNESSEE 75-2072206
--------- ----------
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
3651 Baker Highway
Huntsville, Tennessee 37756
----------------------------
(Address of Principal Executive Offices)
Issuer's Telephone Number: (423) 663-9457
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Sections 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.
(1) Yes X No (2) Yes X No
--- --- --- ---
<PAGE> 2
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the Issuer has filed all documents and reports required to be
filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a Plan confirmed by a court. Yes No X
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date:
May 6, 1997
6,055,000
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The Financial Statements of the Registrant required to be filed with
this 10-QSB Transition Report were prepared by management and commence on the
following page, together with related Notes. In the opinion of management,
the Financial Statements fairly present the financial condition of the
Registrant.
<TABLE>
MILLER PETROLEUM, INC.
Balance Sheet
<CAPTION>
ASSETS
October 31, April 30,
1996 1996
(Unaudited) (Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 10,575 $ 17,744
Accounts receivable 178,001 117,864
Inventory 232,752 232,752
Total Current Assets 421,328 368,360
PROPERTY AND EQUIPMENT
Property and equipment, less 873,646 841,965
Accumulated depreciation (430,575) (366,344)
Total Property and Equipment 443,071 475,621
OIL AND GAS PROPERTIES
Properties being amortized 394,751 394,751
Less accumulated amortization (180,616) (158,704)
Total Oil and Gas Properties 214,135 236,047
OTHER ASSETS
Bonds 40,500 40,500
Land 11,500 11,500
Investments 25,507 25,507
Note receivable 305,622 261,538
Total Other Assets 383,129 339,045
TOTAL ASSETS $ 1,461,663 $ 1,419,073
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 175,751 $ 107,180
Accrued expenses 9,478 9,640
Long-term debt current portion 349,982 335,616
Total Current Liabilities 535,211 452,436
LONG-TERM DEBT
Long-term debt 15,474 30,818
STOCKHOLDERS' EQUITY
Common stock, 50,000,000 shares
authorized at $0.0001 par,
6,000,000 shares issued and
outstanding 600 600
Additional paid-in-capital 491,744 491,744
Retained earnings 418,634 443,475
Total Stockholders' Equity 910,978 935,819
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 1,461,663 $ 1,419,073
</TABLE>
<TABLE>
MILLER PETROLEUM, INC.
Statements of Operations
(Unaudited)
<CAPTION>
For the Three Months For the Six Months
Ended October 31, Ended October 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
REVENUES
Service and drilling revenue $ 114,966 $ 259,581 $ 268,867 $ 519,162
Oil and gas revenue 53,612 58,550 113,196 117,101
Retail sales 52,271 133,075 79,069 266,149
Other revenue (29,287) 23,222 10,805 46,443
Total Revenue 191,562 474,428 471,937 948,855
COST AND EXPENSES
Well operating expense 36,411 115,781 60,243 231,562
Depreciation and amortization 22,026 30,444 86,143 60,888
General and administrative
expenses 176,845 301,762 343,083 603,522
Total Cost and Expenses 235,282 447,987 489,469 895,972
Net Income (loss) From
Operations (43,720) 26,441 (17,532) 52,883
OTHER INCOME (EXPENSE)
Interest income 5,921 446 10,621 891
Interest expense (9,084) (7,874) (17,930) (15,747)
Total Other Income (Expense) (3,163) (7,428) (7,309) (14,856)
Income Taxes - - - -
Net Income (Loss) $ (46,883) $ 19,013 $ (24,841) $ 38,027
Income (Loss) Per Share $ (0.01) $ 0.00 $(0.00) $ 0.00
Weighted Average Shares
Outstanding 6,000,000 6,000,000 6,000,000 6,000,000
</TABLE>
<TABLE>
MILLER PETROLEUM, INC.
Statement of Cash Flows
(Unaudited)
<CAPTION>
For the For the
Three Months Six Months
Ended Ended
October 31, October 31,
1996 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (46,883) $ (24,841)
Adjustments to reconcile net income (loss)
to net cash provided (used) by operating
activities:
Depreciation and amortization 22,026 86,143
(Increase) decrease in accounts receivable (44,969) (60,137)
Increase (decrease) in accounts payable 21,407 68,571
Increase (decrease) in accrued expenses 5,708 (162)
Net Cash Provided(Used) by Operating Activities (42,711) 69,574
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of properly end equipment (26,626) (31,681)
Not Cash Used by Investing Activities (26,626) (31,681)
CASH FLOWS FROM FINANCING ACTIVITIES:
Loans to shareholder (8,932) (44,084)
Repayment of notes payable (12,095) (59,970)
Borrowing of notes payable 48,710 58,992
Net Cash Provided (Used) by Financing Activities 27,683 (45,062)
INCREASE (DECREASE) IN CASH (41,654) (7,169)
BALANCE BEGINNING OF PERIOD 52,229 17,744
BALANCE END OF PERIOD $ 10,575 $ 10,575
SUPPLEMENTAL CASH FLOWS INFORMATION:
Cash paid for
Interest $ 9,084 $ 17,930
Income taxes $ - $ -
</TABLE>
The accompanying notes are an integral part of these financial statements.
MILLER PETROLEUM, INC.
Notes to the Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The Company incorporated under the laws of the State of Tennessee on
January 24, 1978. The Company drills, services and operates oil and gas
wells.
b. Basis of Financial Statement Presentation
The Company prepares its financial statements on the accrual basis of
accounting. Under this method of accounting, revenue is recognized when
earned and expenses are recognized when goods or services are received,
whether paid or not.
c. Income (Loss) Per Share
Income (loss) per common share is based on the weighted average number of
common shares outstanding.
d. Cash Equivalents
The Company considers all investments with a maturity of three months or
less when purchased to be cash equivalents.
e. Income Taxes
Deferred income taxes, when applicable, arise from timing differences in
the recognition of certain income and expense items for tax purposes.
Such differences arise primarily from the use of different method of
accounting for depletion, depreciation, amortization and intangible
drilling costs.
f. Gas Balancing
The Company records gas revenue based on the entitlement method. Under
this method, recognition of revenue is based on the Company's prorate
share of each wells production. During such times as the Company's sales
of gas exceed its prorate ownership in a well, a liability is recorded,
and conversely, a receivable is recorded for wells in which the Company's
sales of gas are less than its prorata share.
9. Accounts Receivable
Accounts receivable is presented at net realizable value. All accounts
receivable are considered collectible.
h. Inventory
Inventory is stated at cost.
i. 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.
j. Interim Financial Statements
The accompanying financial statements include all of the adjustments which in
the opinion of the management are necessary for presentation in accordance
with generally accepted accounting principles. All such adjustments are of a
normal recurring nature.
NOTE 2 - OIL AND GAS PROPERTIES
Tho Company uses the successful efforts method of accounting for oil and
gas producing activities. Costs to acquire mineral interest in oil and gas
properties, to drill and equip exploratory wells that find proved
reserves, and to drill and equip development wells are capitalized. Costs to
drill exploratory wells that do not find proved reserves, geological and
geophysical costs, and costs of carrying and retaining unproved properties are
expensed.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the related
assets. Property and equipment consist of the following:
October 31,
1996
Machinery and equipment $ 455,778
Vehicles 217,221
Office equipment 27,272
Building improvements 173,375
873,646
Accumulated Depreciation (430,575)
Net $ 443,071
NOTE 4 - BONDS
All of the oil and gas bonds required for well operators by tho Tennessee
Oil and Gas Board are in the name of Deloy Miller. Consequently, Mr.
Miller is listed by the state as well operator for Miller Petroleum, Inc.
wells. Mr. Miller got the bonds before the Company was incorporated.
NOTE 5 - RELATED PARTY TRANSACTIONS
Tho Company has a note receivable from Deloy Miller (majority stockholder) for
$305,622 at October 31, 1996.
NOTE 6 - NOTES PAYABLE
Notes payable are as follows:
October 31,
1996
Note payable @ 9.85%, due December 28, 1998, secured by
operating equipment. $ 13,095
Line of credit note payable at 11.3%, due currently,
secured by real estate 50,687
Note payable at 9.25% interest due in monthly
installments of $386, secured by a 1995 Chevrolet
Pickup 15,977
Note payable at 10% interest due in monthly installments
of $619, secured by a 1994 Toyota Land Cruiser 28,277
Line of credit note payable at 9%, due currently secured
by pledged receivables 39,653
Line of credit note payable at 10.5%, due currently
secured by equipment and inventory 105,600
Notes payable at 10% interest, secured by working
interest in six natural gas wells 83,852
Note payable to Lawrence LaRue, unsecured 16,090
Note payable at 6%, secured by working interest in an
oil well 2,688
Note payable at 6%, secured by working interest in an
oil well 2,688
Notes payable at 10% interest, payable in monthly
installments of $146, secured by Dell computer 1,882
Note payable at 10% interest due in monthly installments
of $255, secured by DCZ355 Mita Copier 4,679
Note payable at 10% interest due in monthly installments of
$292, secured by a waste oil finance 288
Total Long Term Debt 365,456
Less: Current Portion (349,982)
Long Term Debt, excluding Current Portion $ 15,474
NOTE 7 - GENERAL AND ADMINISTRATIVE EXPENSES
Details of general and administrative expenses are as follows:
For the
Six Months
Ended
October 31,
1996
Direct labor $ 93,588
Fuel and oil 26,647
Parts and repairs 37,990
Subcontractors 18,976
Travel 659
Trucking and dozer 9,304
Well operating costs 27,098
Purchases-resale 14,517
Equipment rentals 8,766
Office expense 3,272
Insurance 38,632
Legal and professional 21,619
Telephone 11,147
Office rent 4,070
Taxes 12,179
Utilities 7,689
Miscellaneous 6,655
Donations 275
Total General and Administrative $ 343,083
NOTE 8 - INCOME TAXES
The Company has a net operating loss carryforward of approximately
$25,000 at October 31, 1996, which has been offset by a valuation
allowance for the full amount.
NOTE 9 - REORGANIZATION
Miller Services, Inc. and Energy Cell, Inc. were merged into Miller
Petroleum, Inc. effective May 1, 1996.
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
Plan of Operation
- -----------------
The Company did not engage in any material operations during the
transition period covered by this Report. Following the completion of the
reorganization described in Item 5 of this Report, the Registrant became
engaged in the operation of gas and oil wells, the acquisition and development
of gas and oil leases, the rebuilding and sales of oil field equipment and the
organization of joint venture drilling programs with industry partners.
Results of Operations
- ---------------------
During the quarterly period ended October 31, 1996, Miller
Petroleum, Inc., a Tennessee corporation ( Miller Petroleum Tennessee ), which
may be deemed to be the Registrant s predecessor, received total revenues of
$191,562, including service and drilling revenue of $114,966 and oil and gas
revenue of $53,612. Total cost and expenses during this period were $235,282,
and Miller Petroleum Tennessee had a net loss from operations of $43,720. Net
loss during the quarterly period ended October 31, 1996, was $46,883, or $0.01
per share.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None; not applicable.
Item 2. Changes in Securities.
None; not applicable.
Item 3. Defaults Upon Senior Securities.
None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Except as indicated in Item 5 below, no matter was submitted to a
vote of security holders of the Company during the period covered by this
Report, whether through the solicitation of proxies or otherwise.
Item 5. Other Information.
Pursuant to an Agreement and Plan of Reorganization dated
December 20, 1996 (the Plan ), between the Registrant; Miller Petroleum
Tennessee; and the stockholders of Miller Petroleum Tennessee (sometimes
collectively called the Miller Petroleum Tennessee Stockholders ), the Miller
Petroleum Tennessee Stockholders became the controlling stockholders of the
Registrant in a transaction viewed as a reverse acquisition, and Miller
Petroleum Tennessee became a wholly-owned subsidiary of the Registrant.
At a meeting held December 31, 1996, the stockholders of the
Registrant adopted, ratified and approved resolutions to change the
Registrant s domicile by merging the Delaware parent into the Tennessee
subsidiary and to change the name of the Registrant to Miller Petroleum,
Inc. A total of 5,417,465 shares were authorized to vote; 5,000,000 shares
voted for the adoption of the resolutions, with none against and none
abstaining. In addition, the Registrant has adopted the fiscal year end of
Miller Petroleum Tennessee, which is April 30.
Each of these events was disclosed in a Current Report on Form 8-K
dated December 20, 1996, filed with the Securities and Exchange Commission on
January 15, 1997, and which is incorporated herein by reference. See Item 6
of this Report.
Item 6. Exhibits and Reports on Form 8-K.*
(a) Exhibits.
None.
(b) Reports on Form 8-K.
Current Report on Form 8-K, dated December 20, 1996.
* A summary of any Exhibit is modified in its entirety by reference to the
actual Exhibit.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
MILLER PETROLEUM, INC.
Date: 5/7/97 By:/s/Deloy Miller
President and Director
Date: 5/7/97 By:/s/Lawrence LaRue
Secretary/Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-END> OCT-31-1996
<CASH> 10575
<SECURITIES> 0
<RECEIVABLES> 178001
<ALLOWANCES> 0
<INVENTORY> 232752
<CURRENT-ASSETS> 421328
<PP&E> 873646
<DEPRECIATION> 430575
<TOTAL-ASSETS> 1461663
<CURRENT-LIABILITIES> 535211
<BONDS> 0
0
0
<COMMON> 600
<OTHER-SE> 910378
<TOTAL-LIABILITY-AND-EQUITY> 1461663
<SALES> 52271
<TOTAL-REVENUES> 191562
<CGS> 36411
<TOTAL-COSTS> 235282
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9084
<INCOME-PRETAX> (46883)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (46883)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
