<PAGE> 1
U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended January 31, 1997
----------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
--------------- ----------------
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
January 31, April 30,
1997 1996
(Unaudited) (Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ - $ 17,744
Accounts receivable 188,054 117,864
Inventory 226,566 232,752
Total Current Assets 414,620 368,360
PROPERTY AND EQUIPMENT
Property and equipment, less 875,847 841,965
Accumulated depreciation (446,037) (366,344)
Total Property and Equipment 429,810 475,621
OIL AND GAS PROPERTIES
Properties being amortized 394,751 394,751
Less: accumulated amortization (191,572) (158,704)
Total Oil and Gas Properties 203,179 236,047
OTHER ASSETS
Bonds 40,500 40,500
Land 11,500 11,500
Investments 25,507 25,507
Note receivable 298,238 261,538
Total Other Assets 375,745 339,045
TOTAL ASSETS $ 1,423,354 $ 1,419,073
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Cash overdraft $ 2,337 $ -
Accounts payable 125,427 107,180
Accrued expenses 20,195 9,640
Long-term debt-current portion 367,467 335,616
Total Current Liabilities 515,426 452,436
LONG-TERM DEBT
Long-term debt 72,502 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 343,082 443,475
Total Stockholders' Equity 835,426 935,819
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $1,423,354 $ 1,419,073
</TABLE>
<TABLE>
MILLER PETROLEUM, INC.
Statements of Operations
(Unaudited)
<CAPTION>
For the Three Months For the Nine Months
Ended January 31, Ended January 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
REVENUES
Service and drilling revenue $ 186,489 $ 206,057 $ 455,356 $ 725,219
Oil and gas revenue 48,912 61,287 162,108 178,388
Retail sales 66,053 97,858 145,122 364,007
Other revenue 28,541 24,833 39,346 71,276
Total Revenue 329,995 390,035 801,932 1,338,890
COST AND EXPENSES
Well operating expense 66,795 86,913 184,120 318,475
Depreciation and amortization 26,418 28,676 112,561 89,564
General and administrative expenses 308,744 267,287 594,745 870,809
Total Cost and Expenses 401,957 382,876 891,426 1,278,848
Net Income (Loss) From Operations (71,962) 7,159 (89,494) 60,042
OTHER INCOME (EXPENSE)
Interest income 6,118 384 16,739 1,275
Interest expense (9,708) (8,758) (27,638) (24,505)
Total Other Income - (Expense) (3,590) (8,374) (10,899) (23,230)
Income Taxes - - - -
Net Income (Loss) $ (75,552) $ (1,215) $ (100,393) $ 36,812
Income (Loss) Per Share $ (0.01 ) $ (0.00) $ (0.02) $ 0.00
Weighted Average Shares
Outstanding 6,000,000 6,000,000 6,000,000 6,000,000
</TABLE>
<TABLE>
MILLER PETROLEUM, INC.
Statements of Cash Flows
(Unaudited)
<CAPTION>
For the For the
Three Months Six Months
Ended Ended
January 31, January 31,
1996 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (75,552) $ (100,393)
Adjustments to reconcile net income (loss)
to net cash used by operating activities:
Depreciation and amortization 26,418 112,561
(Increase) decrease in accounts receivable (10,053) (70,190)
(Increase) decrease in inventory 6,186 6,186
Increase (decrease) in accounts payable (50,324) 18,247
Increase (decrease) in accrued expenses 10,717 10,555
Net Cash Used by Operating Activities (92,608) (23,034)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (2,201) (33,882)
Net Cash Used by Investing Activities (2,201) (33,882)
CASH FLOWS FROM FINANCING ACTIVITIES:
Loans to shareholder - (44,084)
Repayment of notes payable (14,223) (74,193)
Borrowing of notes payable 88,736 147,728
Repayment of shareholder loans 7,384 7,384
Net Cash Provided by Financing Activities 81,897 36,835
INCREASE (DECREASE) IN CASH (12,912) (20,081)
BALANCE BEGINNING OF PERIOD 10,575 17,744
BALANCE END OF PERIOD $ (2,337) $ (2,337)
SUPPLEMENTAL CASH FLOWS INFORMATION:
Cash paid for
Interest $ 9,708 $ 27,638
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 prorata share of each
wells production. During such times as the Company's sales of gas exceed its
prorata ownership in a well, a liability is recorded, and conversely, a
receivable is recorded for wells in which tho 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 principals. All such adjustments are of a
normal recurring nature.
NOTE 2 - OIL AND GAS PROPERTIES
The 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:
January 31,
1997
Machinery and equipment $ 455,778
Vehicles 219,422
Office equipment 27,272
Building improvements 173,375
875,847
Accumulated Depreciation (446,037)
Net $ 429,810
NOTE 4 - BONDS
All the oil and gas bonds required for well operators by the 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
The Company has a note receivable from Deloy Miller (majority stockholder) for
$298,238 at January 31, 1997.
NOTE 6 - NOTES PAYABLE
Notes payable are as follows:
January 31,
1997
Note payable at 9.85%, due December 28, 1996, secured by
operating equipment. $ 12,000
Line of credit note payable at 11.3%, due currently,
secured by real estate 42,130
Note payable at 9.25% interest due in monthly installments
of $386, secured by a 1995 Chevrolet Pickup 15,182
Note payable at 10% interest due in monthly installments
of $619, secured by a 1994 Toyota Land Cruiser 27,514
Line of credit note payable at 9%, due currently secured
by pledged receivables 36,222
Line of credit note payable at 10.5%, due currently secured
by equipment and inventory 132,668
Notes payable at 10% interest, secured by working interest
in six natural gas wells 69,191
Note payable to Lawrence LaRue, unsecured 16,090
Note payable at 6%, secured by working interest in an oil well 1,849
Note payable at 6%, secured by working interest in an oil well 1,849
Notes payable at 10% interest, payable in monthly installments
of $146, secured by Dell computer 1,548
Note payable at 10% interest due in monthly installments of
$255, secured by DCZ355 Mita Copier 4,026
Notes payable at 10% interest, secured by working interest
in oil wells 75,000
Note payable at 9.5% interest due in monthly installments
of $356, secured by a GMC Truck 4,700
Total Long-Term Debt 439,969
Less: Current Portion (367,467)
Long-Term Debt, excluding Current Portion $ 72,502
NOTE 7 - GENERAL AND ADMINISTRATIVE EXPENSES
Details of general and administrative expenses are as follows:
For the
Nine Months
Ended
January 31,
1997
Direct labor $ 212,048
Fuel and oil 44,709
Parts and repairs 83,033
Subcontractors 34,814
Travel 909
Trucking and dozer 10,697
Well operating costs 20,540
Purchases-resale 42,858
Equipment rentals 11,714
Office expense 6,115
Insurance 35,437
Legal and professional 24,952
Telephone 12,114
Office rent 6,488
Taxes 26,264
Utilities 12,747
Miscellaneous 9,031
Donations 275
Total General and Administrative $ 594,745
NOTE 8 - INCOME TAXES
The Company has a net operating loss carryforward of approximately $100,000
at January 31, 1997, 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
- -----------------
Except as indicated in Item 5 below, the Company did not engage in
any material operations during the quarterly 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 January 31, 1997, Miller
Petroleum, Inc., a Tennessee corporation ( Miller Petroleum Tennessee ), which
may be deemed to be the Registrant s predecessor, received total revenues of
$329,995, including service and drilling revenue of $186,489 and oil and gas
revenue of $48,912. Total cost and expenses during this period were $401,957,
and Miller Petroleum Tennessee had a net loss from operations of $71,962. Net
loss during the quarterly period ended January 31, 1997, was $75,552, 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> JAN-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 188054
<ALLOWANCES> 0
<INVENTORY> 226566
<CURRENT-ASSETS> 414620
<PP&E> 875847
<DEPRECIATION> 446037
<TOTAL-ASSETS> 1423354
<CURRENT-LIABILITIES> 515426
<BONDS> 0
0
0
<COMMON> 600
<OTHER-SE> 834826
<TOTAL-LIABILITY-AND-EQUITY> 1423354
<SALES> 66053
<TOTAL-REVENUES> 329995
<CGS> 66795
<TOTAL-COSTS> 401957
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9708
<INCOME-PRETAX> (75552)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (75552)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
