SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
December 20, 1996
Date of Report
(Date of Earliest Event Reported)
MILLER PETROLEUM, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 33-2249-FW 75-2072206
(State or other (Commission File No.) (IRS Employer I.D. No.)
Jurisdiction)
3651 Baker Highway
Huntsville, Tennessee 37756
(Address of Principal Executive Offices)
Registrant's Telephone Number
(423) 663-9457
Triple Chip Systems, Inc.
1787 East Ft. Union Blvd., #106
Salt Lake City, Utah 84121
(Former Name or Former Address if changed Since Last Report)
<PAGE>
Item 1. Changes in Control of Registrant.
(a) Pursuant to an Agreement and Plan of Reorganization dated
December 20, 1996 (the Plan ), between the Registrant; Miller Petroleum,
Inc., a Tennessee corporation ( 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. The Plan was treated as a
purchase for accounting purposes.
The Plan was adopted, ratified and approved by the Board of
Directors of the Registrant; stockholder approval was not required.
The former principal stockholders of the Registrant and their
percentage of ownership of the outstanding voting securities of the
Registrant prior to the completion of the Plan were:
Amount and Nature Percent
of Beneficial of
Name Title Ownership Class
Ronald M. Ames Stockholder 28,131 7%
Jenson Services, Inc.* Stockholder 250,000 60%
Harold T. Jenson* Former Secretary/ 1,250 .3%
Treasurer and
Director
Jeffrey D. Jenson* Former President 1,250 .3%
and Director
Richell V. Jenson* Former Vice President 1,250 .3%
and Director
Richard S. Pollack Stockholder 28,131 7%
Technology Exchange, Stockholder 55,806 13%
Inc.
* Jeffrey D. Jenson is the first cousin of Harold T.
Jenson; Richell V. Jenson is married to Harold T.
Jenson; and Jeffrey D. Jenson is employed by Jenson
Services, Inc., which is a financial consulting firm
wholly-owned by his father, Duane S. Jenson.
The source of the consideration used by the Miller Petroleum
Tennessee Stockholders to acquire their respective interests in the Registrant
was the exchange of 100% of the outstanding common stock of Miller Petroleum
Tennessee pursuant to the Plan.
The basis of the "control" by the Miller Petroleum Tennessee
Stockholders is stock ownership. See the table below under Paragraph (b) of
this Item.
Pursuant to the Plan, the Registrant was required:
1. To issue 5,000,000 unregistered and restricted shares of
its common stock, pro rata, to the stockholders of Miller Petroleum Tennessee,
in exchange for all of the outstanding shares of common stock of Miller
Petroleum Tennessee;
2. Following resignations, in seriatim, of the directors and
executive officers of the Registrant, the designation and election, in
seriatim, of Deloy Miller as the sole director of the Registrant, and Mr.
Miller and Lawrence LaRue as the President and Secretary/Treasurer,
respectively, of the Registrant, to serve until the next annual meetings of
stockholders and directors and until their respective successors are elected
and qualified or until their prior resignation or termination. These persons
served in these same capacities for Miller Petroleum Tennessee prior to the
completion of the Plan.
All stockholders of Miller Petroleum Tennessee adopted, ratified and
approved the Plan. Taking into account the shares issued to the Miller
Petroleum Tennessee Stockholders, there were 5,417,465 outstanding shares of
common stock of the Registrant on the completion of the Plan.
A copy of the Plan, including any material exhibits and related
instruments, accompanies this Report, which, by this reference, is
incorporated herein; the foregoing summary is modified in its entirety by such
reference. See Item 7.
(b) The following table contains information regarding
shareholdings of the Registrant's directors and executive officers and those
persons or entities who beneficially own more than 5% of the Registrant's
common stock, after taking into account the completion of the Plan:
Amount and Nature Percent
of Beneficial of
Name Title Ownership Class
Deloy Miller Chairman, President 4,926,475 91%
CEO and Director
Lawrence LaRue Secretary/Treasurer 73,525 1%
All officers and directors
as a group (2) 5,000,000 92%
Certain material events occurred prior and subsequent to the
completion of the Plan; these events are as follows, to-wit:
(i) The Board of Directors of the Registrant adopted a written
compensation agreement (the Consultant Compensation Agreement No.
1" [the "Compensation Plan"]) pursuant to which nine individual
consultants, including one current and former directors, executive
officers or employees of the Registrant and one of its attorneys
(collectively, the Consultants), will be issued an aggregate total
of 300,000 shares of common stock of the Registrant for services
rendered at a price of $.01 per share. Immediately following the
the filing of this Report, the Registrant intends to file an S-8
Registration Statement covering these shares and a copy of the
Compensation Plan will be filed as an exhibit to this Registration
Statement. Such Registration Statement, on it filing, shall be
deemed to have been incorporated herein by reference;
(ii) The Board of Directors also resolved to issue 282,535
"unregistered" and "restricted" shares of its common stock to some
of these Consultants for additional consideration for services
rendered in connection with the completion of the Plan between the
Registrant and Miller Petroleum Tennessee; and
(iii) At a meeting held December 31, 1996, the stockholders of the
Registrant adopted, ratified and approved resolutions to change
the domicile of the Registrant by merging the Delaware parent into
the Tennessee subsidiary and to change the name of the Registrant
to Miller Petroleum, Inc. 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. On the effective date of
the merger between the Registrant and its wholly-owned subsidiary
(January 13, 1997), Miller Petroleum Tennessee became the successor
to the Registrant. The fiscal year end of Miller Petroleum
Tennessee, which is April 30 in each year, has been adopted by the
Registrant, and it is anticipated that a Transition Report for the
quarter ended October 31, 1996, will be filed with the Securities
and Exchange Commission directly.
Item 2. Acquisition or Disposition of Assets.
(a) See Item 1 of this Report. The consideration exchanged
under the Plan was negotiated at "arms length" between the directors and
executive officers of the Registrant and the Miller Petroleum Tennessee
Stockholders, and the Board of Directors of the Registrant used criteria used
in similar proposals involving the Registrant in the past, including the
relative value of the assets of Miller Petroleum Tenneessee; its present and
past business operations; future potential of Miller Petroleum Tennessee; its
management; and the potential benefit to the stockholders of the Registrant.
The members of the Board of Directors determined in their good faith that the
consideration for the exchange was reasonable, under these circumstances.
No director, executive officer or person who may be deemed to be
an affiliate of the Registrant had any direct or indirect interest in Miller
Petroleum Tennessee prior to the completion of the Plan.
(b) Effective for accounting purposes on April 30, 1996, Miller
Petroleum Tennessee was the surviving corporation in two mergers with Miller
Services, Inc., a Tennessee corporation ( Miller Services ), and Energy Cell,
Inc., a Tennessee corporation ( Energy Cell ). Primarily all of the
outstanding voting securities of Miller Services were owned by Deloy Miller,
who was then the sole director, sole stockholder and President of Miller
Petroleum Tennessee, and who is currently the sole director, President and CEO
of the Registrant; all of the outstanding voting securities of Energy Cell
were also owned by Mr. Miller. See Item 7.
Miller Petroleum Tennessee leases approximately ten acres and a
two-story building from Sharon Miller, the wife of Deloy Miller, on a month to
month lease at a cost of $806 per month. This property is situated at 3651
Baker Hwy., Huntsville, Tennessee. The two-story structure on the property
has approximately 2,000 square feet on the main floor and 1,000 square feet on
the second floor. Approximately $50,000 in improvements have been made to
this structure by Miller Petroleum Tennessee. These improvements are deemed
to be part of this structure, and are not separately owned by Miller Petroleum
Tennessee.
Management anticipates negotiating a long-term lease of these
premises with Ms. Miller in the near future.
Miller Petroleum Tennessee has also constructed a metal shop
building approximately 125 feet by 65 feet on this property. This structure
is not believed to be a fixture to the land leased from Ms. Miller.
For additional information regarding property, plant and equipment
owned by Miller Petroleum Tennessee and/or its two predecessors, Miller
Services and Energy Cell, as of April 30, 1996, see Exhibit 99.2, which is
attached hereto and incorporated herein by reference.
The Registrant, through its wholly-owned subsidiary, Miller
Petroleum Tennessee, intends to continue the business operations formerly
conducted by Miller Petroleum Tennessee, which included the acquisition of oil
and gas leases and the development and production of oil and gas reserves.
Also see the financial statements of the Registrant, Miller Petroleum
Tennessee and its predecessors, which accompany this Report, and which are
described in Item 7.
Item 3. Bankruptcy or Receivership.
None; not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
None; not applicable.
Item 5. Other Events.
See Item 1.
Item 6. Resignations of Directors and Executive Officers.
As a result of the completion of the Plan, effective December 20,
1996, Jeffrey D. Jenson resigned as President and Director; Richell V. Jenson
resigned as Vice President and Director; and Harold T. Jenson resigned as
Secretary/Treasurer and Director. Deloy Miller was elected President, CEO and
Director and Lawrence LaRue was elected Secretary/Treasurer. See Item 1(a).
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
Miller Petroleum, Inc. Unaudited Balance Sheet and
Statement of Operations for the Six Month Period
Ended October 31, 1996
Balance Sheet
Statement of Operations and Retained Earnings for
the Six Months ended October 31, 1996
Notes to Financial Statements
Miller Petroleum, Inc. Report on Audit of Financial
Statements for the Years ended April 30, 1996, and
April 30, 1995
Independent Auditor s Report
Balance Sheet, April 30, 1996
Statement of Operations, for the Years Ended
April 30, 1996, and April 30, 1995
Statement of Stockholders Equity, for the
Years Ended April 30, 1996 and April 30, 1995
Statement of Cash Flows, for the Years Ended
April 30, 1996 and April 30, 1995
Notes to Financial Statements
Energy Cell, Inc. Report on audit of Financial
Statements for the Years ended April 30, 1996, and
April 30, 1995
Independent Auditor s Report
Balance Sheet, April 30, 1996
Statement of Operations, for the Years Ended
April 30, 1996, and April 30, 1995
Statement of Stockholders Equity, for the
Years Ended April 30, 1996 and April 30, 1995
Statement of Cash Flows, for the Years Ended
April 30, 1996 and April 30, 1995
Notes to Financial Statements
Miller Services, Inc. Report on Audit of Financial
Statements for the Years Ended December 31, 1995 and
December 31, 1994
Independent Auditor s Report
Balance Sheet, December 31, 1995
Statement of Operations, for the Years Ended
December 31, 1995, and December 31, 1994
Statement of Stockholders Equity, for the
Years Ended December 31, 1995 and December 31,
1994
Statement of Cash Flows, for the Years Ended
December 31, 1995 and December 31, 1994
Notes to Financial Statements
(b) Pro Forma Financial Information.
Pro Forma Balance Sheet of Triple Chip Systems,
Inc., as of October 31, 1996, taking into
account the completion of the Plan
(c) Exhibits.
Exhibit
Description of Exhibit* Number
Agreement and Plan of Reorganization 2.1
with the following exhibits:
Exhibit A Stockholders of Miller Petroleum
Exhibit B Triple Chip Systems, Inc. Financial
Statements for the Years Ended
December 31, 1995 and 1994
Exhibit B-1 Triple Chip Systems, Inc. Balance
Sheet and Statements of Operations
For the Ten Months Ended October 31,
1996
Exhibit C Exceptions to Triple Chip Systems, Inc.
Financial Statements
Exhibit D Miller Petroleum, Inc. Unaudited Balance
Sheet and Statement of Operations for the
Six Month Period Ended October 31, 1996
(See subpararaph (a) of this Item above)
Exhibit E Exceptions to Miller Petroleum Unaudited
Balance Sheet
Exhibit F Investment Letters
Exhibit G Triple Chip Systems Compliance Certificate
Exhibit H Miller Petroleum Compliance Certificate
Notice of Special Meeting of Stockholders 20.1
to be held December 31, 1996
News Release 20.2
Certificate of Ownership and Merger and 99.1
Articles of Merger
Exhibit A - Consent of Majority Stockholders under
the Delaware General Corporation Law
Information regarding Property, Plant and Equipment 99.2
Owned by Miller Petroleum Tennesee and/or its two
predecessors
Documents Incorporated by Reference*
S-8 Registration Statement to be filed immediately following
the filing of this Report.
* Summaries of any exhibit are modified in their
entirety by this reference to each exhibit.
Item 8. Change in Fiscal Year.
The Registrant, with the merger into its wholly-owned subsidiary,
Miller Petroleum Tennessee, has resolved to adopt April 30, the fiscal year
end of Miller Petroleum Tenenessee, and will file a Transition Report for the
quarter ended October 31, 1996.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned hereunto duly authorized.
TRIPLE CHIP SYSTEMS, INC.
Date: 1/10/97. By /s/ Deloy Miller
President and Director
Date: 1/10/97. By /s/ Lawrence LaRue
Secretary/Treasurer
<TABLE>
<CAPTION>
MILLER PETROLEUM, INC.
BALANCE SHEET
October 31, 1996
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash $10,576
Accounts receivable $178,001
Inventory $232,752
Total Current Assets $421,328
OIL AND GAS PROPERTIES
Properties being amortized $394,751
Less: Accumulated amortization ($180,616)
Total Oil and Gas Properties $214,135
OTHER ASSETS
Property & Equipment, less
Accum. Depr. $443,071
Bonds $40,500
Land $11,500
Investments $25,507
Note Receivable $305,622
Total Other Assets $826,200
TOTAL ASSETS $1,461,663
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable $175,751
Accrued expenses $9,478
Long-Term debt-current $349,982
Total Current Liabilities $535,211
LONG-TERM DEBT
Long-Term Debt $15,474
$15,474
STOCKHOLDERS' EQUITY
Common stock, 1,156 shares,
issued and outstanding $297,044
Paid-in-capital $195,300
Retained Earnings $418,634
Total Stockholders Equity $910,978
TOTAL LIABILITIES AND EQUITY $1,461,663
</TABLE>
<TABLE>
<CAPTION>
MILLER PETROLEUM, INC.
Statement of Operations and Retained Earnings
For the six months ended October 31, 1996
(Unaudited)
<S> <C>
Revenues
Service and Drilling Revenue $268,867
Oil and Gas Revenue $113,196
Retail Sales $79,069
Other Revenue $67,887
Total Revenue $529,019
Cost and Expenses
Drilling/Operating Expense $117,325
Depreciation and Amortization $52,835
Interest Expense $17,930
General and Administrative Expenses $376,391
Total Cost and Expenses $564,481
Net loss from Continuing Operations ($35,462)
Other Income
Interest income $10,621
loss before Provision for Income Taxes ($24,841)
Current $0
Deferred $0
Total Income Taxes $0
Net Income ($24,841)
Income Per Share ($21)
Weighted Average Shares Outstanding 1156
RETAINED EARNINGS MAY 1, 1996 $443,475
RETAINED EARNINGS OCTOBER 31, 1996 $418,634
</TABLE>
MILLER PETROLEUM, INC.
NOTES TO 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 Per share
Income 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 methods 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 prorate share.
G. Accounts Receivable
Accounts receivable is presented at net realizable value. All accounts
receivable are considered collectible.
H. Inventory
Inventory is stated at cost.
Note 2: Oil and Gas Properties
The Company uses the successful efforts method of accounting for oil and
producing activities. Costs to acquire mineral interests in oil and gas prop
to drill and equip exploratory wells that find proved reserves, and to drill a
equip development wells are capitalized. Costs to drill exploratory wells th
find proved reserves, geological and geophysical costs, and costs of carr
and retaining unproved properties are expensed.
Note 3: Property and Equipment
Property and equipment are stated at cost. Depreciation is computed usin
straight-line method over the estimated useful lives of the related assets.
Property and equipment consist of the following;
Machinery and Equipment $455,778
Vehicles $217,221
Office Equipment $27,272
Building Improvements $173,375
$873,646
Accum. Depreciation ($430,575)
Net $443,071
Note 4: Bonds
All the oil and gas bonds required for well operators by the Tennessee Oil
Gas Board are in the name of Deloy Miller. Consequently, Deloy is listed
state as well operator for Miller Petroleum, Inc. wells. Deloy got the bond
the Company was incorporated.
Note 5: Related Party Transactions
The Company has a note receivable from Deloy Miller (majority stockholder
for $296,690. at July 31, 1996
Note 6: Notes payable
Notes payable are as follows:
Note payable @ 10% interest due in monthly installments
of $292, secured by a waste oil furnace $288
Note payable @ 9.85%, due 12/28/96, secured by
operating equipment $13,095
Line of credit note payable @ 11.3%, due currently,
secured by real estate $50,687
Note payable @ 9.25% interest due in monthly installments
of $386, secured by a 1995 Chevrolet Pickup $15,977
Note payable @ 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 @ 10% interest, secured by working
interest in six natural gas wells. $83,852
Note payable to Lawrence LaRue $16,090
Note payable @ 6%, secured by working interest
in an oil well. $2,688
Note payable @ 6%, secured by working interest
in an oil well. $2,688
Notes payable @ 10% interest, payable in monthly
installments of $146, secured by Dell computer $1,882
Note payable @ 10% interest due in monthly installments
of $255, secured by a DCZ355 Mita Copier $4,679
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:
Direct Labor $146,896
Fuel & Oil $26,647
Parts and Repairs $37,990
Subcontractors $18,976
Travel $659
Trucking & Dozer $9,304
Well Operating Costs $27,098
Purchases-Resale $14,517
Equipment Rentals $8,766
Office Expense $3,272
Insurance $18,632
Legal & Professional $21,619
Telephone $11,147
Office Rent $4,070
Payroll Taxes $12,179
Utilities $7,689
Miscellaneous $6,655
Donations $275
Total General and Administrative $376,391
Note 8: Income Taxes
The Company has a tax basis net operating loss carryforward at October 31,
1996, by which it may effect future taxable income.
Note 9: Current Events
Miller Services, Inc. and Energy Cell, Inc. were merged into Miller Petroleum,
Inc. effective May 1, 1996.
MILLER PETROLEUM, INC.
REPORT ON AUDIT OF
FINANCIAL STATEMENTS
FOR THE YEARS ENDED APRIL 30,1996
AND APRIL 30,1995
CHARLES M. STIVERS
(Letterhead)
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Miller Petroleum, Inc.
Huntsville, Tennessee
We have audited the accompanying balance sheet of Miller Petroleum, Inc.,
as of and for the year ended April 30, 1996, and the related statement of
operations. stockholder's equity and cash flows for the years ended April
30, 1996 and April 30, 1995. These financial statements are the
responsibility of Miller Petroleum, Inc. management. Our responsibility
is to express an opinion on those financial statements based on our
audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are
free of material misstatements. 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
provides a reasonable basis for our opinion.
In our opinion, the April 30, 1996 and April 30, 1995 financial
statements referred to above present fairly, in all material respects,
the financial position of Miller Petroleum, Inc., as of April 30, 1996
and April 30, 1995, and the results of its operations and its cash flows
for the years then ended, in conformity with generally accepted
accounting principles.
Charles M. Stivers
Certified Public Accountant
Manchester, Kentucky
September 30, 1996
<TABLE>
<CAPTION>
MILLER PETROLEUM, INC.
BALANCE SHEET
APRIL 30, 1996
ASSETS
<S> <C> <C>
Current Assets
Cash $ 8,214
Production Receivable 13,159
Accounts Receivable 27,026
Note Receivable (Note 4) 368,295
Total Current Assets $ 416,694
Oil and Gas Properties using Full Cost
Accounting (Note 2)
Properties being Amortized 279,552
Less: Accumulated Amortization (107,244)
Total Oil and Gas Properties 172,308
Other Assets
Property and Equipment, less
Accum. Depr. $146,577 (Note 3) 100,848
Investments 9,131
Total Other Assets 109,979
Total Assets $ 698,981
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Accounts Payable $ 41,401
Notes Payable (Note 5) 13,095
Total Current Liabilities $ 54,496
Stockholder's Equity
Common Stock, $364 par value,
725 shares issued and outstanding 263,933
Retained Earnings 380,552
Total Stockholder's Equity 644,485
Total Liabilities and Stockholder's Equity $ 698,981
</TABLE>
<TABLE>
<CAPTION>
MILLER PETROLEUM, INC.
STATEMENT OF OPERATIONS
For the Year For the Year
Ended April 30, Ended April 30,
1996 1995
<S> <C> <C>
Revenues
Pumping/Operating Wells Revenue $ 94,895 $ 4,981
Oil & Gas Revenue 95,777 113,507
Service Drilling Revenue 21,104 165,596
Other Revenue 21,154 270,326
Total Revenues 232,930 554,410
Cost and Expenses
Well Operating Expense 20,759 78,522
Depr. and Amortization 49,001 47,028
Interest Expense 3,725 16,292
General & Administrative Costs 59,563 121,534
Total Costs and Expenses 133,048 263,376
Net Income from Continuing Operations 99,882 291,034
Other Income
Interest Income 35 161
Income before Provision for Income Taxes 99,917 291,195
Current 0 0
Deferred 0 0
Total Income Taxes 0 0
Net Income $ 99,917 $ 291,195
Income Per Share $ 138 $ 402
Weighted Average Shares Outstanding 725 725
</TABLE>
<TABLE>
<CAPTION>
MILLER PETROLEUM, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
Common Common Additional Net
Stock Stock Paid - In Retained Stockholders'
#Shares Amount Capital Earnings Equity
<S> <C> <C> <C> <C> <C>
BALANCE,
April 30, 1994 725 $263,933 $ 0 $ (10,560) $ 253,373
Net Income (loss)
for the year
ended April 30, 1995 291,195 291,195
BALANCE,
April 30, 1995 725 263,933 0 280,635 544,568
Net Income (loss)
for the year
ended April 30, 1996 99,917 99,917
BALANCE,
April 30, 1996 725 $263,933 $ 0 $ 380,552 $ 644,485
</TABLE>
<TABLE>
<CAPTION>
MILLER PETROLEUM, INC.
STATEMENT OF CASH FLOWS
For the Year For the Year
Ended April 30, Ended April 30,
1996 1995
<S> <C> <C>
Cash Flows Provided by/(Used for)
Operating Activities:
Net Income $ 99,917 $ 291,195
Depreciation & Amortization 49,001 47,028
Changes in Assets and Liabilities:
Accounts Receivable (79,342) (162,639)
Inventory 1,179 0
Accounts Payable (63,466) (103,482)
Net Cash Provided by/(Used for)
Operating Activities 7,289 72,102
Cash Flows Used for Investing Activities:
Investments (350) 50
Equipment 0 (53,382)
Net Cash Used for Investing Activities (350) (53,332)
Cash Flows Provided by/(Used for) Financing
Activities:
Notes Payable (747) (27,340)
Net Cash Provided by/(Used for) financing
Activities (747) (27,340)
Net Increase(Decrease) in Cash 6,192 (8,570)
Beginning Cash 2,022 10,592
Ending Cash $ 8,214 $ 2,022
Supplemental Disclosure of Cash Flow Information
Cash Paid for Income Taxes $ 0 $ 0
</TABLE>
MILLER PETROLEUM, INC.
NOTES TO 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, for the purpose of acquiring oil and gas drilling
contracts.
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 Per Share
Income 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 methods of
accounting for depletion, depreciation and 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 that its prorate share
G. Accounts Receivable
Accounts receivable is presented at net realizable value. All accounts
receivable are considered collectible.
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 interests 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 consists of the following:
Machine and Equipment $ 191,530
Vehicles 49,750
Office Equipment 6,145
247,425
Accum. Depreciation (146,577)
Net $ 100,848
Note 4 Related Party Transactions
The Company had a notes receivable from Miller Services, Inc. for
$328,425 and Energy Cell, Inc. for $39,870 both (related companies) at
April 30, 1996.
Note 5 Note Payable
The note payable consisted of one note due at the First National Bank of
Oneida at 9.85% interest, due 12-28-96, secured by operating equipment.
Note 6 General and Administrative Expenses
Details of general and administrative expenses are as follows:
For the Year For the Year
Ended April 30, Ended April 30,
1996 1995
Direct Labor $ 24,343 $ 79,494
Sub-Contract Labor 100 0
Fuel and Oil 2,361 3,412
Parts and Repairs 372 3,801
Sub-Contract Services 200 8,965
Trucking and Dozer 175 1,495
Operating Expense 10,291 0
Office Expense 2,736 2,174
Insurance 2,231 2,565
Professional 6,511 3,814
Bad Debt Expense 4,424 0
Tax & License 2,945 526
Payroll Taxes 1,874 8,222
Miscellaneous 1,000 7,066
Total General & Administrative $ 59,563 $ 121,534
Note 7 Income Taxes
The Company has a tax basis net operating loss carryforward at April 30,
1996, by which it may effect future taxable income.
Note 8 Subsequent Events
Miller Services, Inc. and Energy Cell, Inc. were merged into Miller
Petroleum, Inc. effective May 1,1996.
ENERGY CELL, INC.
REPORT ON AUDIT OF
FINANCIAL STATEMENTS
FOR THE YEARS ENDED APRIL 30, 1996
AND APRIL 30, 1995
CHARLES M. STIVERS
(Letterhead)
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Energy Cell, Inc.
Huntsville, Tennessee
We have audited the accompanying balance sheet of Energy Cell, Inc., as
of and for the year ended April 30, 1996, and the related statements of
operations, stockholders' equity, and cash flows for the years ended
April 30, 1996 and April 30, 1995. These financial statements are the
responsibility of Energy Cell, Inc. management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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
provides a reasonable basis for our opinion.
In our opinion, the April 30, 1996 and April 30, 1995 financial
statements referred to above present fairly, in all material respects,
the financial position of Energy Cell, Inc., as of April 30, 1996 and
April 30, 1995, and the results of its operations and its cash flows for
the years then ended, in conformity with generally accepted accounting
principles.
Charles M. Stivers
Certified Public Accountant
Manchester, Kentucky
September 30, 1996
<TABLE>
ENERGY CELL, INC.
BALANCE SHEET
APRIL 30, 1996
<CAPTION>
ASSETS
<S> <C> <C>
Current Assets
Cash $ 89
Production Receivable 5,864
Notes Receivable (Note 3) 16,050
Total Current Assets $ 22,003
Property and Equipment (Note 2)
Well Equipment 117,425
Accum. Depr.-Well Equip. (65,431)
Total Property and Equipment 51,994
Total Assets $ 73,997
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Accounts Payable (Note 3) $ 39,940
Total Current Liabilities $ 39,940
Total Liabilities 39,940
Stockholder's Equity
Common Stock, $ 10.00 par value
2,000 shares authorized; 100
shares issued and outstanding 1,000
Retained Earnings 33,057
Total Stockholder's Equity 34,057
Total Liabilities & Stockholder's Equity $ 73,997
</TABLE>
<TABLE>
ENERGY CELL, INC.
STATEMENT OF OPERATIONS
<CAPTION>
For the Year For the Year
Ended April 30, Ended April 30,
1996 1995
<S> <C> <C>
Revenues
Oil & Gas Sales $ 53,681 $ 51,853
Total Revenues 53,681 51,853
Cost and Expenses
Well Operating Expense 21,557 30,019
Taxes & Licenses 90 137
Depreciation 11,793 22,164
Interest Expense 34 3,739
General and Administrative 45 76
Total Cost and Expenses 33,519 56,135
Net Income (Loss) $ 20,162 $ (4,282)
Income (Loss) per Share $ 201 $ (43)
Weighted Average Shares Outstanding 100 100
</TABLE>
<TABLE>
ENERGY CELL, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
<CAPTION>
Common Common Additional Net
Stock Stock Paid - In Retained Stockholders'
#Shares Amount Capital Earnings Equity
<S> <C> <C> <C> <C> <C>
BALANCE,
April 30, 1994 100 $ 1,000 $ 0 $ 17,177 $ 18,177
Net income (loss) for
the year ended
April 30, 1995 (4,282) (4,282)
BALANCE,
April 30, 1995 100 1,000 0 12,895 13,895
Net income (loss) for
the year ended
April 30, 1996 20,162 20,162
BALANCE,
April 30,1996 100 $ 1,000 $ 0 $ 33,057 $ 34,057
</TABLE>
<TABLE>
ENERGY CELL, INC.
STATEMENT OF CASH FLOWS
<CAPTION>
For the Year For the Year
Ended April 30, Ended April 30,
1996 1995
<S> <C> <C>
Cash Flows Provided by/(Used for)
Operating Activities:
Net Income (Loss) $ 20,162 $ (4,282)
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Depreciation 11,793 22,164
Changes in assets and liabilities:
Production Receivable (5,864) 10,885
Notes Receivable 33,981 (38,905)
Accounts Payable (60,315) 48,896
Net Cash Provided by/(Used for)
Operating Activities (243) 38,758
Cash Flows Used for Investing Activities
Decrease Equipment 0 4,956
Net Cash Used for Investing Activities 0 4,956
Cash Flows Provided by/(Used for)
Financing Activities
Notes Payable 0 (43,477)
Net Cash Provided by/(Used for)
Financing Activities 0 (43,477)
Net Increase/(Decrease) in Cash (243) 237
Beginning Cash 332 95
Ending Cash $ 89 $ 332
Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes $ 0 $ 0
</TABLE>
ENERGY CELL, INC.
NOTES TO FINANCIAL STATEMENTS
Note 1 Summary of Significant Accounting Policies
A. Organization
The Company incorporated under the laws of the State of Tennessee on
October 20, 1987, for the purpose of searching out and acquiring or
participating in a business or business opportunity.
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 Per Share
Income 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 methods of
accounting for depletion, depreciation and amortization and intangible
drilling costs.
Note 2 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.
Note 3 Related Party Transactions
The Company had a notes receivable from Miller Services, Inc. for $16,050
and an accounts payable to Miller Petroleum, Inc. for $39,781, both at
April 30, 1996. The majority stockholder for these two companies also
owns the majority of Energy Cell, Inc. stock.
Note 4 Subsequent Events
Energy Cell, Inc. was merged into Miller Petroleum, Inc. at May 1, 1996.
MILLER SERVICES, INC.
REPORT ON AUDIT OF
FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995
AND DECEMBER 31,1994
CHARLES M. STIVERS
(Letterhead)
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Miller Services, Inc.
Huntsville, Tennessee
We have audited the accompanying balance sheet of Miller Services, Inc.
as of and for the year ended December 31, 1995, and the related
statements of operations, stockholders' equity and cash flows for the
years ended December 31, 1995 and December 31, 1994. These financial
statements are the responsibility of Miller Services, Inc. management.
Our responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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
provides a reasonable basis for our opinion.
In our opinion' the December 31, 1995 and December 31, 1994 financial
statements referred to above present fairly, in all material respects.
the financial position of Miller Services, Inc. as of December 31' 1995
and December 31, 1994, and the results of its operations and its cash
flows for the years then ended, in conformity with generally accepted
accounting principles.
Charles M. Stivers
Certified Public Accountant
Manchester, Kentucky
September 30, 1996
<TABLE>
MILLER SERVICES, INC.
BALANCE SHEET
DECEMBER 31, 1995
<CAPTION>
ASSETS
<S> <C> <C>
Current Assets
Cash $ 22,982
Accounts Receivable 124,471
Inventory 227,752
Total Current Assets $ 375,205
Oil and Gas Properties using
Full Cost Accounting (Note 2)
Properties being Amortized 115,199
Less: Accum. Amortization (48,492)
Total Oil and Gas Properties 66,707
Other Assets
Property & Equipment, less
Accum. Depr. $270,501
(Note 3) 388,567
Bonds (Note 4) 37,500
Land 11,500
Note Receivable (Note 5) 318,460
Total Other Assets 756,027
Total Assets $ 1,197,939
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Accounts Payable $ 102,841
Accrued Expenses 11,852
Long-Term Debt-Current (Note 6) 720,553
Total Current Liabilities $ 835,246
Long-Term Debt
Long-Term Debt (Note 6) 15,714
Total Long-Term Debt 15,714
Total Liabilities 850,960
Stockholder's Equity
Common Stock, $331 par value
100 issued outstanding 33,110
Additional Paid-ln-Capital 195,300
Retained Earnings 118,569
Total Stockholder's Equity 346,979
Total Liabilities and Stockholder's Equity $ 1,197,939
</TABLE>
<TABLE>
MILLER SERVICES, INC.
STATEMENT OF OPERATIONS
<CAPTION>
For the Year For the Year
Ended December 31, Ended December 31,
1995 1994
<S> <C> <C>
Revenues
Service & Drilling Revenue $ 922,324 $ 1,337,003
Oil & Gas Revenue 84,744 62,846
Retail Sales 532,297 94,014
Other Revenue 71,731 346,339
Total Revenues 1,611,096 1,840,202
Cost and Expenses
Drilling/Operating Expense 452,833 638,941
Depr. and Amortization 60,981 61,516
Interest Expense 27,734 17,065
General & Administrative Expenses 1,115,320 1,051,245
Total Costs and Expenses 1,656,868 1,768,767
Net Loss from Continuing Operations (45,772) 71,435
Other Income
Interest Income 1,746 584
Loss before Provision for Income Taxes (44,026) 72,019
Current 0 0
Deferred 0 0
Total Income Taxes 0 0
Net Loss $ (44,026) $ 72,019
Loss Per Share $ (440) $ 720
Weighted Average Shares Outstanding 100 100
</TABLE>
<TABLE>
MILLER SERVICES, INC.
STATEMENT OF STOCKHOLDER'S EQUITY
<CAPTION>
Common Common Additional Net
Stock Stock Paid - In Retained Stockholders'
# Shares Amount Capital Earnings Equity
<S> <C> <C> <C> <C> <C>
BALANCE,
December 31,1993 100 $33,110 $ 195,300 $ 361,187 $ 589,597
Net Income (loss) for the
year ended December 31, 1994 72,019 72,019
Distributions (270,611) (270,611)
BALANCE,
December 31,1994 100 33,110 195,300 162,595 391,005
Net Income (loss) for the
year ended December 31, 1995 (44,026) (44,026)
BALANCE,
December 31,1995 100 $33,110 $ 195,300 $ 118,569 $ 346,979
</TABLE>
<TABLE>
MILLER SERVICES, INC.
STATEMENT OF CASH FLOWS
<CAPTION>
For the Year For the Year
Ended December 31, Ended December 31,
1995 1994
<S> <C> <C>
Cash Flows Provided by/(Used for)
Operating Activities:
Net Income (Loss) $ (44,026) $ 72,019
Depreciation & Amortization 60,981 61,516
Changes in Assets and Liabilities:
Accounts Receivable (10,747) 54,960
Notes Receivable (107,188) 74,762
Inventory (279,347) 10,765
Bonds (6,000) (31,500)
Accounts Payable 50,870 69,554
Accrued Expenses 3,614 (8,503)
Net Cash Provided by/(Used for)
Operating Activities (331,843) 303,573
Cash Flows Used for Investing
Activities:
Machinery and Equipment (29,906) (272,146)
Oil and Gas Properties (13,919) 37,081
Net Cash Used for Investing
Activities (43,825) (235,065)
Cash Flows Provided by/(Used for)
Financing Activities:
Notes Payable 376,404 (56,874)
Net Cash Provided by/(Used for)
Financing Activities 376,404 (56,874)
Net Increase/(Decrease) in Cash 736 11,634
Beginning Cash 22,246 10,612
Ending Cash $ 22,982 $ 22,246
Supplemental Disclosure of Cash Flow Information
Cash Paid for Income Taxes $ 0 $ 0
</TABLE>
MILLER SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
Note 1 Summary of Significant Accounting Policies
A. Organization
The Company incorporated under the laws of the State of Tennessee on
October 16, 1987. The Company drills and services 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 Per Share
Income 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 methods of
accounting for depletion, depreciation and 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 time 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 prorate share.
G. Accounts Receivable
Accounts receivable is presented at net realizable value. All accounts
receivable are considered collectible.
H. Inventory
Inventory is stated at cost.
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 interests 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 consists of the following:
Buildings $ 173,375
Machinery & Equipment 267,255
Vehicles 204,125
Office Equipment 14,313
659,068
Accum. Depreciation (270,501)
Net $ 388,567
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, Deloy is
listed by the state as well operator for Miller Petroleum, Inc. wells.
Deloy got the bonds before the Company was incorporated.
Note 5 Related Party Transactions
The Company has a notes receivable from Deloy Miller (a majority
stockholder) for $318,460 at December 31, 1995. The Company also owed
Miller Petroleum, Inc. (a related company) a total of $301,141 in
operating loans at December 31, 1995 to be repaid on a long-term basis at
9% interest with maturity in two years.
Note 6 Long-Term Debt
Long-term debt consists of the following:
Note payable at 8% interest, due in monthly
installments of $1272.50, secured by video
logging equipment $ 8,756
Note payable at 10% interest, due in monthly
installments of $292, secured by a waste oil
furnace 2,875
Note payable at 9.25% interest, due in monthly
installments of $386, secured by a 1985
Chevrolet Pickup 18,500
Line of credit note payable at 9%, due
currently, secured by pledged receivables 40,469
Line of credit note payable at 10.5%, due
currently, secured by equipment and
inventory 112,326
Notes payable at 10% interest, secured by
working interest in six natural wells 100,818
Notes payable at 10% interest, payable in
monthly installments of $146, secured by
Dell computer 2,866
Notes payable at 9% interest, unsecured,
no scheduled payment 301,141
Line of credit note payable at 11.30%,
due currently, secured by real estate 47,692
Note payable to Lawrence LaRue 10,824
Debt payable for prepaid drilling 90,000
Total Long-Term Debt $ 736,267
Less: Current Portion (720,553)
Long-Term Debt, excluding
Current Portion $ 15,714
Note 7 General and Administrative Expenses
Details of general and administrative expenses are as follows:
<TABLE>
<CAPTION>
For the Year For the Year
Ended December 31, Ended December 31,
1995 1994
<S> <C> <C>
Direct Labor $ 280,478 $ 338,501
Sub-Contract 11,988 0
Fuel and Oil 44,993 79,303
Parts and Repairs 92,980 136,730
Sub-Contract Services 65,416 53,140
Travel 33,772 64,277
Trucking and Dozer 19,974 66,621
Well Operating Costs 8,569 4,027
Purchases-Resales 315,184 98,592
Equipment Rentals 14,220 20,481
Office Expense 7,552 9,881
Insurance 59,031 55,542
Legal 47,501 25,329
Telephone 19,918 25,642
Office Rent 9,706 8,937
Tax & License 21,567 16,065
Payroll Taxes 28,156 32,195
Utilities 12,503 6,523
Professional 5,500 0
Miscellaneous 16,152 9,459
Donations 160 0
Total General and Administrative $ 1,115,320 $ 1,051,245
</TABLE>
Note 8 Subsequent Events
Miller Services, Inc. was merged into Miller Petroleum, Inc. effective
May 1, 1996.
Triple Chip Systems, Inc.
Formerly Known as Single Ship international, Inc.
Pro Forma Balance Sheet
October 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Miller Petroleum, Triple Chip Combined
Inc Systems
<C> <S> <S> <S>
ASSETS
Cash Assets
Cash $ 10,575.00 $ $ 10,575.00
Accounts Receivable 178,001.00 178,001.00
Inventory 232,752.00 232,752.00
Total Current Assets 421,328.00 421,328.00
Property and Equipment
Property and
equipment 873,646.00 873,646.00
Less: Accumulated
deprec. (430,575.00) (430,575.00)
Properties being
amortized 394,751.00 394,751.00
Less: Accumulated
amortization (180,616.00) (180,616.00)
Total Property and
Equipment 657,206.00 657,206.00
Other Assets
Bonds 40,500.00 40,500.00
Land 11,500.00 11,500.00
Investments 25,507.00 25,507.00
Note receivable
305,622.00 305,622.00
Total Other Assets 383,129.00 383,129.00
TOTAL ASSETS $1,461,663.00 $ $1,461,663.00
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 175,751.00 $ $ 175,751.00
Accrued expenses 9,478.00 9,478.00
Loans from stockholders 0.00 3,876.00 3,876.00
Current portion of long-
term debt 349,982.00 349,982.00
Total Current
Liabilities 535,211.00 3,876.00
539,087.00
Long-Term Debt
Long-term debt 365,458.00 365,458.00
Current portion (349,984.00)
(349,984.00)
Total Long-Term Debt 15,474.00 0.00 15,474.00
Stockholders' Equity
Common stock -
50,000,000 shares
authorized, 297,044.00 42.00 570.00
$0.0001 par,
5,700,000 shares
issued and
outstanding
Additional paid
in capital 195,300.00 249,215.00 741,031.00
Retained earnings
(Accumulated
deficit) 418,634.00 (253,133.00) 165,501.00
Total Stockholders'
Equity 910,978.00 (3,876.00) 907,102.00
TOTAL LIABILITIES $1,461,663.00 $ 0.00 $1,461,663.00
STOCKHOLDERS' EQUITY
</TABLE>
<PAGE>
Triple Chip Systems, Inc.
Formerly Known as Single Chip Systems International, Inc.
Notes to Pro Forma Balance Sheet
October 31, 1996
Note 1 Plan of Reorganization
On December 20, 1996, Triple Chip Systems, Inc. ("Company"), a Delaware
corporation entered into an Agreement and Plan of Reorganization ("Plan") with
Miller Petroleum, Inc., a Tennessee corporation, wherein the Company acquired
all of the issued and outstanding stock of Miller Petroleum, Inc. in exchange
for 5,000,000 shares of the Company's unregistered and restricted common
stock. In addition to the shares issued to Miller Petroleum, Inc., the
Company also issued 282,535 shares to certain consultants of the Company, one
of whom is an officer and director of the Company, as additional consideration
for services rendered. The combination of these companies has been accounted
for as a purchase.
Note 2 Stockholders' Equity
The par value of the Company's common stock is $.0001. At the time of
closing, the Company had 5,700,000 shares issued and outstanding, resulting in
a common stock account of $570. The adjustment to reflect the correct common
stock amount was effected through the additional paid in capital account.
Note 3 Subsequent Event
In conjunction with the Plan, the Company adopted a Written Compensation
Agreement pursuant to which an aggregate total of 300,000 shares of its common
stock will be issued in consideration for non-capital raising services
rendered in connection with the Plan, subject to being registered with the
Securities and Exchange Commission ("SEC") pursuant to an S-8 Registration
Statement filed with the SEC.
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT (the "Plan") is made this 20th day of December,
1996, between Triple Chip Systems, Inc., a Delaware corporation ("Triple
Chip"), Miller Petroleum, Inc., a Tennessee corporation ("Miller Petroleum"),
and the persons listed in Exhibit A hereof who are the owners of record of all
of the issued and outstanding securities of Miller Petroleum (the "Miller
Petroleum Stockholders").
Triple Chip wishes to acquire all of the issued and outstanding
stock of Miller Petroleum in exchange for stock of Triple Chip in a
transaction qualifying as a tax-free exchange pursuant to Section 368(a)(1)(B)
of the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, IT IS AGREED:
Section 1
Exchange of Stock
1.1 Number of Shares. The Miller Petroleum Stockholders agree
to transfer to Triple Chip at the closing (the "Closing") 100% of the
outstanding securities of Miller Petroleum, which are listed in Exhibit A
attached hereto and incorporated herein by reference (the "Miller Petroleum
Shares"), in exchange for an aggregate total of 5,000,000 shares of $0.0001
par value "unregistered" and "restricted" common voting stock of Triple Chip,
which shares shall represent approximately 83.33% of the outstanding voting
securities of Triple Chip at the time of Closing (this percentage assumes that
there are presently 417,465 outstanding shares of common voting stock of
Triple Chip, and the issuance of the shares of common stock of Triple Chip
outlined in Sections 1.7 and 1.8 below); all of such shares of common voting
stock shall be issued to the Miller Petroleum Stockholders as outlined in
Exhibit A.
1.2 Delivery of Certificates by Miller Petroleum Stockholders.
The transfer of the Miller Petroleum Shares by the Miller Petroleum
Stockholders shall be effected by the delivery to Triple Chip at the Closing
of stock certificate or certificates representing the transferred shares duly
endorsed in blank or accompanied by stock powers executed in blank, with all
signatures witnessed or guaranteed to the satisfaction of Triple Chip and with
all necessary transfer taxes and other revenue stamps affixed and acquired at
the Miller Petroleum Stockholders expense.
1.3 Further Assurances. At the Closing and from time to time
thereafter, the Miller Petroleum Stockholders shall execute such additional
instruments and take such other action as Triple Chip may request in order to
exchange and transfer clear title and ownership in the Miller Petroleum Shares
to Triple Chip.
1.4 Name Change. As soon after the Closing as is practicable,
the Stockholders of Triple Chip shall adopt, ratify and approve all
resolutions required or necessary to change Triple Chip's name to "Miller
Petroleum, Inc." and its domicile from the State of Delaware to the State of
Tennessee.
1.5 Resignations of Present Directors and Executive Officers and
Designation of New Directors and Executive Officers. On Closing, the present
directors and executive officers of Triple Chip shall resign, in seriatim, and
designate the directors and executive officers of Miller Petroleum to serve in
their place and stead, until the next respective annual meetings of the
stockholders and Board of Directors of Triple Chip, and until their respective
successors shall be elected and qualified or until their respective prior
resignations or terminations.
1.6 Assets and Liabilities of Triple Chip at Closing. Triple
Chip shall have no assets or liabilities at Closing, and all costs incurred by
Triple Chip incident to the Plan shall have been paid or satisfied.
1.7 Adoption of Written Compensation Agreement. Simultaneous
with the Closing, Triple Chip shall have adopted, ratified and approved a
written compensation agreement pursuant to which an aggregate total of 300,000
shares of its common voting stock will be issued in consideration of $3,000 in
"non-capital raising" services rendered in connection with this Plan, subject
to being registered with the Securities and Exchange Commission pursuant to an
S-8 Registration Statement; copies of the written compensation agreement and
S-8 Registration Statement shall have been provided to Miller Petroleum and
the Miller Petroleum Stockholders prior to Closing.
1.8 Issuance of Additional Shares for Finders' Fees.
Simultaneous with the Closing, Triple Chip shall also have adopted, ratified
and approved resolutions providing for the issuance of an aggregate total of
282,535 "unregistered" and "restricted" shares of its common voting stock to
the same consultants, as additional consideration for services rendered, which
shall be outlined in the Consent of Directors, related to the adoption,
ratification and approval of the Plan.
Section 2
Closing
The Closing contemplated by Section 1.1 shall be held at the
offices of Leonard W. Burningham, Suite 205 Hermes Building, 455 East 500
South, Salt Lake City, Utah 84111, unless another place or time is agreed upon
in writing by the parties. The Closing may be accomplished by wire, express
mail or other courier service, conference telephone communications or as
otherwise agreed by the respective parties or their duly authorized
representatives.
Section 3
Representations and Warranties of Triple Chip
Triple Chip represents and warrants to, and covenants with, the
Miller Petroleum Stockholders and Miller Petroleum as follows:
3.1 Corporate Status. Triple Chip is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware and is licensed or qualified as a foreign corporation in all
states in which the nature of its business or the character or ownership of
its properties makes such licensing or qualification necessary (Delaware
only.) Triple Chip is a publicly held company, having lawfully offered and
sold a portion of its securities in accordance with applicable federal and
state securities laws, rules and regulations, pursuant to an S-18 Registration
Statement filed with the Securities and Exchange Commission, and a Prospectus
dated June 5, 1987. There is presently no "established trading market" for
these or any other securities of Triple Chip; however, Triple Chip has
obtained a listing on the OTC Bulletin Board of the National Association of
Securities Dealers, Inc. (the "NASD"), under the symbol "TCSY." Triple Chip
voluntarily files reports with the Securities and Exchange Commission pursuant
to Section 15(d) of the Securities Exchange Act of 1934, as amended (the "1934
Act"), and is presently "current" in the filing of all such reports which were
required to be filed during the past 12 months; copies of these reports shall
have been provided to Miller Petroleum and the Miller Petroleum Stockholders
prior to Closing.
3.2 Capitalization. The authorized capital stock of Triple Chip
consists of 500,000,000 shares of common voting stock, having a par value of
$0.0001 per share, of which 417,465 shares are issued and outstanding, all
fully paid and non-assessable; except as indicated in Sections 1.7 and 1.8
above, there are no outstanding options, warrants or calls pursuant to which
any person has the right to purchase any authorized and unissued capital stock
of Triple Chip.
3.3 Financial Statements. The financial statements of Triple
Chip furnished to the Miller Petroleum Stockholders and Miller Petroleum,
consisting of an audited balance sheet for the years ended December 31, 1995
and 1994, and a related statement of income for the periods then ended,
attached hereto as Exhibit B, and the unaudited balance sheet and income
statement for the period ended October 31, 1996, attached hereto as Exhibit B-
1, which are incorporated herein by reference, are correct and fairly present
the financial condition of Triple Chip at such dates and for the periods
involved; such statements were prepared in accordance with generally accepted
accounting principles consistently applied, and no material change has
occurred in the matters disclosed therein, except as indicated in Exhibit C,
which is attached hereto and incorporated herein by reference. Such financial
statements do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made, in light
of the circumstances under which they were made, not misleading.
3.4 Undisclosed Liabilities. Triple Chip has no liabilities of
any nature except to the extent reflected or reserved against in its balance
sheets, whether accrued, absolute, contingent or otherwise, including, without
limitation, tax liabilities and interest due or to become due, except as set
forth in Exhibit C.
3.5 Interim Changes. Since the date of its balance sheets,
except as set forth in Exhibit C, there have been no (1) changes in financial
condition, assets, liabilities or business of Triple Chip which, in the
aggregate, have been materially adverse; (2) damages, destruction or losses of
or to property of Triple Chip, payments of any dividend or other distribution
in respect of any class of stock of Triple Chip, or any direct or indirect
redemption, purchase or other acquisition of any class of any such stock; or
(3) increases paid or agreed to in the compensation, retirement benefits or
other commitments to employees.
3.6 Title to Property. Triple Chip has good and marketable
title to all properties and assets, real and personal, reflected in its
balance sheets, and the properties and assets of Triple Chip are subject to no
mortgage, pledge, lien or encumbrance, except for liens shown therein or in
Exhibit C, with respect to which no default exists.
3.7 Litigation. There is no litigation or proceeding pending,
or to the knowledge of Triple Chip, threatened, against or relating to Triple
Chip, its properties or business, except as set forth in Exhibit C. Further,
no officer, director or person who may be deemed to be an affiliate of Triple
Chip is party to any material legal proceeding which could have an adverse
effect on Triple Chip (financial or otherwise), and none is party to any
action or proceeding wherein any has an interest adverse to Triple Chip.
3.8 Books and Records. From the date of this Plan to the
Closing, Triple Chip will (1) give to the Miller Petroleum Stockholders and
Miller Petroleum or their respective representatives full access during normal
business hours to all of its offices, books, records, contracts and other
corporate documents and properties so that the Miller Petroleum Stockholders
and Miller Petroleum or their respective representatives may inspect and audit
them; and (2) furnish such information concerning the properties and affairs
of Triple Chip as the Miller Petroleum Stockholders and Miller Petroleum or
their respective representatives may reasonably request.
3.9 Tax Returns. Triple Chip has filed all federal and state
income or franchise tax returns required to be filed or has received currently
effective extensions of the required filing dates.
3.10 Confidentiality. Until the Closing (and thereafter if there
is no Closing), Triple Chip and its representatives will keep confidential any
information which they obtain from the Miller Petroleum Stockholders or from
Miller Petroleum concerning the properties, assets and business of Miller
Petroleum. If the transactions contemplated by this Plan are not consummated
by December 31, 1996, Triple Chip will return to Miller Petroleum all written
matter with respect to Miller Petroleum obtained by Triple Chip in connection
with the negotiation or consummation of this Plan.
3.11 Investment Intent. Triple Chip is acquiring the Miller
Petroleum Shares to be transferred to it under this Plan for investment and
not with a view to the sale or distribution thereof, and Triple Chip has no
commitment or present intention to liquidate Miller Petroleum or to sell or
otherwise dispose of the Miller Petroleum Shares.
3.12 Corporate Authority. Triple Chip has full corporate power
and authority to enter into this Plan and to carry out its obligations
hereunder and will deliver to the Miller Petroleum Stockholders and Miller
Petroleum or their respective representatives at the Closing a certified copy
of resolutions of its Board of Directors authorizing execution of this Plan by
its officers and performance thereunder, and the directors adopting and
delivering such resolutions are the duly elected and incumbent directors of
Triple Chip.
3.13 Due Authorization. Execution of this Plan and performance
by Triple Chip hereunder have been duly authorized by all requisite corporate
action on the part of Triple Chip, and this Plan constitutes a valid and
binding obligation of Triple Chip and performance hereunder will not violate
any provision of the Articles of Incorporation, Bylaws, agreements, mortgages
or other commitments of Triple Chip.
3.14 Environmental Matters. Triple Chip has no knowledge of any
assertion by any governmental agency or other regulatory authority of any
environmental lien, action or proceeding, or of any cause for any such lien,
action or proceeding related to the business operations of Triple Chip. In
addition, to the best knowledge of Triple Chip, there are no substances or
conditions which may support a claim or cause of action against Triple Chip or
any of its current or former officers, directors, agents or employees, whether
by a governmental agency or body, private party or individual, under any
Hazardous Materials Regulations. "Hazardous Materials" means any oil or
petrochemical products, PCB's, asbestos, urea formaldehyde, flammable
explosives, radioactive materials, solid or hazardous wastes, chemicals, toxic
substances or related materials, including, without limitation, any substances
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," or "toxic substances" under any applicable
federal or state laws or regulations. "Hazardous Materials Regulations" means
any regulations governing the use, generation, handling, storage, treatment,
disposal or release of hazardous materials, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act and the Federal Water Pollution Control
Act.
Section 4
Representations, Warranties and Covenants of Miller Petroleum
and Miller Petroleum Stockholders
Miller Petroleum and the Miller Petroleum Stockholders represent
and warrant to, and covenant with, Triple Chip as follows:
4.1 Miller Petroleum Shares. The Miller Petroleum Stockholders
are the record and beneficial owners of all of the Miller Petroleum Shares,
free and clear of adverse claims of third parties; and Exhibit A correctly
sets forth the names, addresses and the number of shares of Miller Petroleum
owned by the Miller Petroleum Stockholders.
4.2 Corporate Status. Miller Petroleum is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Tennessee and is licensed or qualified as a foreign corporation in all
states in which the nature of its business or the character or ownership of
its properties makes such licensing or qualification necessary.
4.3 Capitalization. The authorized capital stock of Miller
Petroleum consists of 2,000 shares of common voting stock, having no par value
per share, of which all 1,156 shares are issued and outstanding, all fully
paid and non-assessable; there are no outstanding options, warrants or calls
pursuant to which any person has the right to purchase any authorized and
unissued capital stock of Miller Petroleum.
4.4 Financial Statements. The financial statements of Miller
Petroleum furnished to Triple Chip, consisting of an unaudited balance sheet
for the period ended October 31, 1996, and related statement of operations for
the period then ended, attached hereto as Exhibit D and incorporated herein by
reference, are correct and fairly present the financial condition of Miller
Petroleum as of that date and for the periods involved, and such statements
were prepared in accordance with generally accepted accounting principles
consistently applied. These financial statements do not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements made, in light of the circumstances under which
they were made, not misleading.
4.5 Undisclosed Liabilities. Miller Petroleum has no material
liabilities of any nature except to the extent reflected or reserved against
in the balance sheet, whether accrued, absolute, contingent or otherwise,
including, without limitation, tax liabilities and interest due or to become
due, except as set forth in Exhibit E attached hereto and incorporated herein
by reference.
4.6 Interim Changes. Since the date of this balance sheet,
except as set forth in Exhibit E, there have been no (1) changes in the
financial condition, assets, liabilities or business of Miller Petroleum, in
the aggregate, have been materially adverse; (2) damages, destruction or loss
of or to the property of Miller Petroleum, payment of any dividend or other
distribution in respect of the capital stock of Miller Petroleum, or any
direct or indirect redemption, purchase or other acquisition of any such
stock; or (3) increases paid or agreed to in the compensation, retirement
benefits or other commitments to their employees.
4.7 Title to Property. Miller Petroleum has good and marketable
title to all properties and assets, real and personal, proprietary or
otherwise, reflected in its balance sheet, and the properties and assets of
Miller Petroleum are subject to no mortgage, pledge, lien or encumbrance,
except for reflected in the balance sheet or in Exhibit E, with respect to
which no default exists.
4.8 Litigation. There is no litigation or proceeding pending,
or to the knowledge of Miller Petroleum, threatened, against or relating to
Miller Petroleum or its properties or business, except as set forth in Exhibit
E. Further, no officer, director or person who may be deemed to be an
affiliate of Miller Petroleum is party to any material legal proceeding which
could have an adverse effect on Miller Petroleum (financial or otherwise), and
none is party to any action or proceeding wherein any has an interest adverse
to Miller Petroleum.
4.9 Books and Records. From the date of this Plan to the
Closing, the Miller Petroleum Stockholders will cause Miller Petroleum to (1)
give to Triple Chip and its representatives full access during normal business
hours to all of its offices, books, records, contracts and other corporate
documents and properties so that Triple Chip may inspect and audit them; and
(2) furnish such information concerning the properties and affairs of Miller
Petroleum as Triple Chip may reasonably request.
4.10 Tax Returns. Miller Petroleum has filed all federal and
state income or franchise tax returns required to be filed or has received
currently effective extensions of the required filing dates.
4.11 Confidentiality. Until the Closing (and continuously if
there is no Closing), the Miller Petroleum Stockholders and their
representatives will keep confidential any information which they obtain from
Triple Chip concerning its properties, assets and business. If the
transactions contemplated by this Plan are not consummated by December 31,
1996, the Miller Petroleum Stockholders will return to Triple Chip all written
matter with respect to Triple Chip obtained by them in connection with the
negotiation or consummation of this Plan.
4.12 Investment Intent. The Miller Petroleum Stockholders are
acquiring the shares to be delivered to them under this Plan for investment
and not with a view to the sale or distribution thereof, and the Miller
Petroleum Stockholders have no commitment or present intention to liquidate
the Company or to sell or otherwise dispose of the Triple Chip common voting
stock. The Miller Petroleum Stockholders shall execute and deliver to Triple
Chip on the Closing an Investment Letter attached hereto as Exhibit F and
incorporated herein by reference, acknowledging the "unregistered" and
"restricted" nature of the securities of Triple Chip being received under the
Plan in exchange for the Miller Petroleum Shares, and receipt of certain
material information regarding Triple Chip.
4.13 Corporate Authority. Miller Petroleum has full corporate
power and authority to enter into this Plan and to carry out its obligations
hereunder and will deliver to Triple Chip or its representative at the Closing
a certified copy of resolutions of its Board of Directors authorizing
execution of this Plan by its officers and performance thereunder.
4.14 Due Authorization. Execution of this Plan and performance
by Miller Petroleum hereunder have been duly authorized by all requisite
corporate action on the part of Miller Petroleum, and this Plan constitutes a
valid and binding obligation of Miller Petroleum and performance hereunder
will not violate any provision of the Articles of Incorporation, Bylaws,
agreements, mortgages or other commitments of Miller Petroleum.
4.15 Environmental Matters. Miller Petroleum and the Miller
Petroleum Stockholders have no knowledge of any assertion by any governmental
agency or other regulatory authority of any environmental lien, action or
proceeding, or of any cause for any such lien, action or proceeding related to
the business operations of Miller Petroleum or its predecessors. In addition,
to the best knowledge of Miller Petroleum, there are no substances or
conditions which may support a claim or cause of action against Miller
Petroleum or any of its current or former officers, directors, agents,
employees or predecessors, whether by a governmental agency or body, private
party or individual, under any Hazardous Materials Regulations. "Hazardous
Materials" means any oil or petrochemical products, PCB's, asbestos, urea
formaldehyde, flammable explosives, radioactive materials, solid or hazardous
wastes, chemicals, toxic substances or related materials, including, without
limitation, any substances defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials," or "toxic
substances" under any applicable federal or state laws or regulations.
"Hazardous Materials Regulations" means any regulations governing the use,
generation, handling, storage, treatment, disposal or release of hazardous
materials, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, the Resource Conservation and
Recovery Act and the Federal Water Pollution Control Act.
Section 5
Conditions Precedent to Obligations of Miller Petroleum Stockholders and
Miller Petroleum
All obligations of the Miller Petroleum Stockholders and Miller
Petroleum under this Plan are subject, at their option, to the fulfillment,
before or at the Closing, of each of the following conditions:
5.1 Representations and Warranties True at Closing. The
representations and warranties of Triple Chip contained in this Plan shall be
deemed to have been made again at and as of the Closing and shall then be true
in all material respects and shall survive the Closing.
5.2 Due Performance. Triple Chip shall have performed and
complied with all the terms and conditions required by this Plan to be
performed or complied with by it before the Closing.
5.3 Officers' Certificate. The Miller Petroleum Stockholders
and Miller Petroleum shall have been furnished with a certificate signed by
the President of Triple Chip, in his capacity as President, attached hereto as
Exhibit G and incorporated herein by reference, dated as of the Closing,
certifying (1) that all representations and warranties of Triple Chip
contained herein are true and correct; and (2) that since the date of the
financial statements (Exhibit B and B-1 hereto), there has been no material
adverse change in the financial condition, business or properties of Triple
Chip, taken as a whole.
5.4 Opinion of Counsel of Triple Chip. The Miller Petroleum
Stockholders and Miller Petroleum shall have received an opinion of counsel
for Triple Chip, dated as of the Closing, to the effect that (1) the
representations of Sections 3.1, 3.2 and 3.12 are correct; (2) except as
specified in the opinion, counsel knows of no inaccuracy in the
representations in 3.5, 3.6 or 3.7; and (3) the shares of Triple Chip to be
issued to the Miller Petroleum Stockholders under this Plan will, when so
issued, be validly issued, fully paid and non-assessable.
5.5 Assets and Liabilities of Triple Chip. Triple Chip shall
have no assets and liabilities at Closing, and all costs, expenses and fees
incident to the Plan shall have been paid.
5.6 Resignations of Present Directors and Executive Officers and
Designation of New Directors and Executive Officers. The present directors
and executive officers of Triple Chip shall have resigned, in seriatim, and
shall have designated the directors and executive officers of Miller Petroleum
to serve in their place and stead, until the next respective annual meetings
of the stockholders and Board of Directors of Triple Chip, and until their
respective successors shall be elected and qualified or until their respective
prior resignations or terminations.
Section 6
Conditions Precedent to Obligations of Triple Chip
All obligations of Triple Chip under this Plan are subject, at its
option, to the fulfillment, before or at the Closing, of each of the following
conditions:
6.1 Representations and Warranties True at Closing. The
representations and warranties of Miller Petroleum and the Miller Petroleum
Stockholders contained in this Plan shall be deemed to have been made again at
and as of the Closing and shall then be true in all material respects and
shall survive the Closing.
6.2 Due Performance. The Miller Petroleum Stockholders and
Miller Petroleum shall have performed and complied with all the terms and
conditions required by this Plan to be performed or complied with by them
before the Closing.
6.3 Officers' and Stockholders' Certificate. Triple Chip shall
have been furnished with a certificate signed by the President of Miller
Petroleum, in his capacity as President and Personally, attached hereto as
Exhibit H and incorporated herein by reference, dated as of the Closing,
certifying (1) that all representations and warranties of Miller Petroleum
contained herein are true and correct; and (2) that since the date of the
financial statements (Exhibit D), there has been no material adverse change in
the financial condition, business or properties of Miller Petroleum, taken as
a whole.
6.4 Opinion of Counsel of Miller Petroleum. Triple Chip shall
have received an opinion of counsel for Miller Petroleum, dated as of the
Closing, to the effect that (1) the representations of Sections 4.2, 4.3 and
4.13 are correct; (2) except as specified in the opinion, counsel knows of no
inaccuracy in the representations in 4.6, 4.7 or 4.8; and (3) the Miller
Petroleum Shares to be delivered to Triple Chip under this Plan will, when so
delivered, have been validly issued, fully paid and non-assessable, and will
be free and clear of any liens or encumbrances.
6.5 Books and Records. The Miller Petroleum Stockholders or the
Board of Directors of Miller Petroleum shall have caused Miller Petroleum to
make available all books and records of Miller Petroleum, including minute
books and stock transfer records; provided, however, only to the extent
requested in writing by Triple Chip at Closing.
6.6 Acceptance by Miller Petroleum Stockholders. The terms of
this Plan shall have been accepted by the Miller Petroleum Stockholders by
their execution and delivery of a copy of the Plan.
6.7 Issuance of Securities for Services and Filing of S-8
Registration Statement. The common voting stock of Triple Chip referred to in
Sections 1.7 and 1.8 above shall have been issued as contemplated, and the
related Registration Statement covering the shares of common voting stock to
be issued as indicated in Section 1.7 shall have been filed with the
Securities and Exchange Commission; provided, however, the individual persons,
consultants and entities who are entitled to receive these shares may waive
compliance of issuance of these securities prior to Closing, in their sole
discretion, provided reasonable written assurances of future compliance by
Triple Chip and the new directors and executive officers to be designated to
serve in these capacities following the Closing, are received.
Section 7
Termination
Prior to Closing, this Plan may be terminated (1) by mutual
consent in writing; (2) by either the Directors of Triple Chip or the Miller
Petroleum Stockholders and Miller Petroleum if there has been a material
misrepresentation or material breach of any warranty or covenant by the other
party; or (3) by either the Directors of Triple Chip or the Miller Petroleum
Stockholders and Miller Petroleum if the Closing shall not have taken place,
unless adjourned to a later date by mutual consent in writing, by the date
fixed in Section 2.
Section 8
General Provisions
8.1 Further Assurances. At any time, and from time to time,
after the Closing, each party will execute such additional instruments and
take such action as may be reasonably requested by the other party to confirm
or perfect title to any property transferred hereunder or otherwise to carry
out the intent and purposes of this Plan.
8.2 Waiver. Any failure on the part of any party hereto to
comply with any of its obligations, agreements or conditions hereunder may be
waived in writing by the party to whom such compliance is owed.
8.3 Brokers. Each party represents to the other parties
hereunder that no broker or finder has acted for it in connection with this
Plan, and agrees to indemnify and hold harmless the other parties against any
fee, loss or expense arising out of claims by brokers or finders employed or
alleged to have been employed by it.
8.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been given if delivered in
person or sent by prepaid first-class registered or certified mail, return
receipt requested, as follows:
If to Triple Chip: 1787 East Ft. Union Blvd., #106
Salt Lake City, Utah 84121
With a copy to: Leonard W. Burningham, Esq.
455 East 500 South, #205
Salt Lake City, Utah 84111
If to Miller Petroleum: 3651 Baker Hwy.
P. O. Box 130
Huntsville, Tennessee 37756
If to the Miller To the addresses listed on Exhibit A
Petroleum Stockholders:
8.5 Entire Agreement. This Plan constitutes the entire
agreement between the parties and supersedes and cancels any other agreement,
representation, or communication, whether oral or written, between the parties
hereto relating to the transactions contemplated herein or the subject matter
hereof.
8.6 Headings. The section and subsection headings in this Plan
are inserted for convenience only and shall not affect in any way the meaning
or interpretation of this Plan.
8.7 Governing Law. This Plan shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware, except to
the extent pre-empted by federal law, in which event (and to that extent
only), federal law shall govern.
8.8 Assignment. This Plan shall inure to the benefit of, and be
binding upon, the parties hereto and their successors and assigns; provided
however, that any assignment by any party of its rights under this Plan
without the prior written consent of the other parties shall be void.
8.9 Counterparts. This Plan may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement and
Plan of Reorganization effective the day and year first above written.
TRIPLE CHIP SYSTEMS, INC.
By:/s/Jeffrey D. Jenson
Its President
MILLER PETROLEUM, INC.
By:/s/Deloy Miller
Its President
/s/Deloy Miller
/s/Sharon Miller
/s/Lawrence LaRue
<PAGE>
EXHIBIT A
Number of Shares of
Number of Shares Triple Chip
Owned of to be
Name Miller Petroleum Received in Exchange
Deloy Miller 725 3,135,815
3651 Baker Hwy.
P. O. Box 130
Huntsville, Tennessee 37756
Sharon Miller 414 1,790,660
3651 Baker Hwy.
P. O. Box 130
Huntsville, Tennessee 37756
Lawrence LaRue 17 73,525
3651 Baker Hwy.
P. O. Box 130
Huntsville, Tennessee 37756
1,156 5,000,000
<PAGE>
EXHIBIT B
TRIPLE CHIP SYSTEMS, INC.
FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 1995 and 1994
SINGLE CHIP SYSTEMS INTERNATIONAL, INC.
[Formerly Longhorn Development Company, Inc.]
[A DEVELOPMENT STAGE COMPANY]
FINANCIAL STATEMENTS
DECEMBER 31, 1995 and DECEMBER 31, 1994
[WITH INDEPENDENT AUDITORS' REPORT]
MANTYLA, McREYNOLDS AND ASSOCIATES, C.P.A.'s
(Letterhead)
Independent Auditors' Report
The Board of Directors and Shareholders
Single Chip Systems International Inc.
We have audited the balance sheets of Single Chip Systems International,
Inc. [a development stage company] as of December 31, 1995 and December
31, 1994, and the related statements of operations, stockholders'
deficit, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audit. Information in the accumulated columns on the
operations statements and cash flows statements have been audited by the
auditors of those periods respectively.
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 audit
provides a reasonable basis for our opinion.
In our opinion, the 1995 and 1994 financial statements referred to above
present fairly, in all material respects, the financial position of
Single Chip Systems International, Inc. as of December 31, 1995 and
December 31, 1994, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that
Single Chip Systems International, Inc. will continue as a going concern.
As discussed in note 6 to the financial statements, the Company has
incurred losses from inception amounting to $243,900, and has no assets
as of the audit date. These issues raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to
these matters are also described in note 6. The financial statements do
not include any adjustment that might result from the outcome of this
uncertainty.
MANTYLA, McREYNOLDS & ASSOCIATES
Salt Lake City, Utah
February 5, 1996
<TABLE>
SINGLE CHIP SYSTEMS INTERNATIONAL, INC.
[Formerly Longhorn Development Company, Inc.]
[A Development Stage Company]
BALANCE SHEETS
December 31, 1995 and 1994
<CAPTION>
ASSETS
1995 1994
<S> <C> <C>
Assets $ -0- $ -0-
Total Assets $ -0- $ -0-
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Loans Payable to Shareholders [Note 4] $ -0- $ 60,500
Total Current Liabilities -0- 60,500
Stockholders' Deficit
Common stock, $.0001 par value;
authorized 500,000,000 shares; issued
and outstanding 33,483,334 and 33,333,334
shares as of December 31, 1995 and 1994,
respectively 3,349 3,333
Additional paid in capital 240,551 180,056
Accumulated deficit during the
development stage (243,900) (243,889)
Total Stockholders' Deficit -0- (60,500)
Total Liabilities and
Stockholders Deficit $ -0- $ -0-
</TABLE>
<TABLE>
SINGLE CHIP SYSTEMS INTERNATIONAL, INC.
Formerly Longhorn Development Company, Inc.
[A Development Stage Company]
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1995 and December 31, 1994
And for the Period from November 12, 1985 (Inception)
through December 31, 1995
<CAPTION>
Inception
[11/12/85]
through
1995 1994 12/31/95
<S> <C> <C> <C>
Revenue $ -0- $ -0- $ -0-
General and Administrative Expenses (11) -0- (146,964)
Operating Loss (11) -0- (146,964)
Other Income
Interest income -0- -0- 3,618
Net Loss Before Taxes (11) -0- (143,346)
Income taxes -0- -0- 204
Loss from operating activities (11) -0- (143,550)
Extraordinary Items
Loss on license agreement [Note 2] -0- -0- (100,000)
Write-off investment loss [Note 3] -0- -0- (350)
Net loss $ (11) $ -0- $(243,900)
Loss per share $ (.01) $ .00 $ (.01)
Weighted Average Shares Outstanding 33,333,334 33,333,334 29,016,394
</TABLE>
<TABLE>
SINGLE CHIP SYSTEMS INTERNATIONAL, INC.
[Formerly Longhorn Development Company, Inc.]
[A Development Stage Company]
STATEMENTS OF STOCKHOLDERS' EQUITY/(DEFICIT)
For the Years Ended December 31, 1995 and December 31, 1994
and for the Period from November 12, 1985 [Inception]
through December 31, 1995
<CAPTION>
Accumulated Net
Common Common Additional Deficit During Stockholders'
Stock Stock Paid in Development Equity/
Shares Amount Capital Stage (Deficit)
<S> <C> <C> <C> <C> <C>
Balance at Inception,
November 12, 1985 0 $ -0- $ -0- $ -0- $ -0-
Issue stock to
Officers and
Directors for
cash at $.00025
per share,
November, 1985 20,000,000 2,000 3,000 5,000
Net Income for the
Period ended
December 31, 1985 -0- -0-
Balance, December
31, 1985 20,000,000 2,000 3,000 -0- 5,000
Net Income for the
Period ended
December 31, 1986 -0- -0-
Balance, December
31, 1986 20,000,000 2,000 3,000 -0- 5,000
Three-for-One
Reverse Stock
Split,
March, 1987 (13,333,333)(1,333) 1,333 -0-
Issue stock
through Public
Offering for
cash at $.02 per
per share,
June, 1987 10,000,000 1,000 199,000 200,000
Less: Underwriting
Costs of Public
Offering (49,846) (49,846)
Net Loss for the
Period Ended
December 31, 1987 (3,163) (3,163)
Balance, December
31, 1987 16,666,667 $1,667 $153,487 $ (3,163) $ 151,991
Five-for-One
Reverse Stock
Split,
August, 1988 (13,333,333)(1,333) 1,333 -0-
Issue stock for
brokerage firm
services at
$.02 per share,
August, 1988 2,666,667 266 53,067 53,333
Issue stock in
exchange for all
outstanding
shares of Single
Chip Systems, Inc.,
August, 1988 27,333,333 2,733 (27,831) (25,098)
Net Loss for the
Period Ended
December 31, 1988 (240,111) (240,111)
Balance, December
31, 1988 33,333,334 3,333 180,056 (243,274) (59,885)
Net Loss for the
Period Ended
December 31, 1989 (611) (611)
Balance, December
31, 1989 33,333,334 3,333 180,056 (243,885) (60,496)
Net Loss for the
Period Ended
December, 1990 (4) (4)
Balance, December
31, 1990 33,333,334 3,333 180,056 (243,889) (60,500)
Net Loss for the
Period Ended
December 31, 1991 (0) (0)
Balance, December
31,1991 33,333,334 $3,333 $180,056 $(243,889) $ (60,500)
Net Loss for the
Period Ended
December 31, 1992 (0) (0)
Balance, December
31, 1992 33,333,334 3,333 180,056 (243,889) (60,500)
Net Loss for the
Period Ended
December 31, 1993 (0) (0)
Balance, December
31, 1993 33,333,334 3,333 180,056 (243,889) (60,500)
Net Loss for the
Period Ended
December 31, 1994 (0) (0)
Balance, December
31, 1994 33,333,334 3,333 180,056 (243,889) (60,500)
Issue stock in
exchange for
release and
indemnification
agreement against
debts incurred by
Company, previously
reported as Loans
Payable to Shareholders
in the financial
statements 45,000 5 60,495 60,500
Issue stock at par
value for services
rendered by current
executive officers
and directors of the
Company 105,000 11 11
Net Loss for the
Period Ended
December 31, 1995 (11) (11)
Balance, December
31, 1995 33,483,334 $3,349 $240,551 $(243,900) $ -0-
</TABLE>
<TABLE>
SINGLE CHIP SYSTEMS INTERNATIONAL, INC.
[Formerly Longhorn Development Company, Inc.]
[A Development Stage Company]
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1995 and December 31, 1994
And for the Period From November 12, 1985 [Inception]
through December 31, 1995
<CAPTION>
Inception
[11/12/85]
through
1995 1994 12/31/95
<S> <C> <C> <C>
Cash Flows Provided by/(Used) for
Operating Activities:
Net Loss $ (11) $ -0- $(143,550)
Issue stock for services rendered by
current executive officers and
directors of the Company 11 -0- 11
Exchange of stock for release and
indemnification against debts
incurred by the Company, previously
reported as Loans Payable to
Shareholders in the financial
statements 60,500 -0- 60,500
Decrease in loans from shareholders (60,500) -0- (60,500)
Net Cash Provided by/(Used for)
Operating Activities -0- -0- (143,539)
Cash Flows Used for Investing
Activities:
Technology license agreement -0- -0- (100,000)
Investment purchase -- Symetrix -0- -0- (350)
Net Cash Used for Investing
Activities -0- -0- (100,350)
Cash Flows Provided by/(Used for)
Financing Activities:
Loans from shareholders -0- -0- 60,500
Proceeds from issuance of
common stock -0- -0- 183,389
Net Cash Provided by/(Used for)
Financing Activities -0- -0- 243,889
Net Increase/(Decrease) in cash -0- -0- -0-
Beginning Cash -0- -0- -0-
Ending Cash $ -0- $ -0- $ -0-
Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes $ -0- $ -9- $ 204
</TABLE>
SINGLE CHIP SYSTEMS INTERNATIONAL, INC.
[Formerly Longhorn Development Company, Inc.]
[A Development Stage Company]
Notes to Financial Statements
December 31, 1995 and December 31, 1994
Note 1 Summary of Significant Accounting Policies
(a) Organization
The Company originally incorporated under the laws of the State of
Delaware on November 12, 1985, as Longhorn Development Company, Inc., for
the purpose of searching out and acquiring or participating in a business
or business opportunity. During 1988, the Company completed a
reorganization as outlined in note 5 below, resulting in, among other
things, a name change to Single Chip Systems International, Inc.
(b) Loss Per Share
Loss per common share is based on the weighted average number of common
shares outstanding.
(c) Additional Paid-In Capital
The amount shown on the financial statements as additional paid-in
capital consists primarily of proceeds from the sale of common stock in
excess of its par value, reduced by any direct expenses of such sales and
the exchange of common stock for brokerage services in excess of its par
value.
(d) Income Taxes
No provision has been made in the financial statements for income taxes
because the Company has accumulated losses totaling $243,900 since
inception.
Note 2 Technology Utilization License Agreement
On July 1, 1988, Single Chip Systems, Inc., a California corporation,
entered into a technology utilization license agreement with Ramtron
International Corporation, a Delaware corporation. The agreement granted
Single Chip Systems, Inc. the royalty-bearing, non-exclusive licenses
covering all nations of the world except and excluding the Ramax
Exclusive Territories of Australia, New Zealand, Papua New Guinea and the
islands of the South Western Pacific Region and the right of first
offerings in the territories of South Korea, Hong Kong, Taiwan and
Singapore, to use the ferroelectric technologies and the Ramtron
trademarks in production, manufacture and sales of Single Chip Systems,
Inc. products. If any of the Ramax First Refusal Territories become free
of the first refusal obligations, Ramtron International Corporation
agreed to negotiate with Single Chip Systems, Inc. regarding a grant of
license rights to the technology and the Ramtron trademarks in that
territory on the same terms and conditions as with any other party.
The agreement provided for an expiration date as of the close of business
on June 30, 1994, unless earlier terminated or extended according to the
provisions of the agreement. On that date, the term would be
automatically extended for an additional six year term upon agreement
between Ramtron International Corporation and Single Chip Systems, Inc.
on the amount and payment terms of a license extension fee and the
revenues to be received by Single Chip Systems, Inc. during such
extension period, negotiated on a good faith basis.
Payment terms for the agreement included the following:
1. $100,000 and 39,000 shares of the authorized Single Chip Systems, Inc.
common stock by July 1, 1988. Single Chip Systems, Inc. paid Ramtron
International Corporation $100,000 by cashiers check drawn on Community
Bank April 28, 1988. It does not appear, based on an analysis of the
statement of stockholders' equity, that any stock was issued pursuant to
the agreement.
2. $400,000 upon Ramtron International Corporation's transfer to Single
Chip Systems, Inc. of the Technical Information, which Single Chip
Systems, Inc. should have requested on or before June 30, 1989. No
additional payments other than the $100,000 mentioned in [1.] were sent
to Ramtron International Corporation by Single Chip Systems, Inc.,
effectively terminating the agreement.
3. Additional payment terms outlined in the agreement became irrelevant
when the parties failed to comply with the provisions outlined in [2.].
Single Chip Systems International, Inc. failed to receive any economic
benefit related to the license agreement. The Company recorded the
$100,000 loss on the license agreement in the period ended December 31,
1988.
Note 3 Investment -- Symetrix Corporation
In April, 1988, Single Chip Systems, Inc. purchased 1,071 share of
Symetrix Corporation, a Delaware corporation, common stock with a par
value of $ 1.00 per share from Larry McMillan for $350.00. The purchase
represented 51% of the total outstanding shares of Symetrix Corporation.
Since audited financial statements were not available at the time of
acquisition, Single Chip Systems, Inc. elected to report the investment
at cost. The securities were classified as "available-for-sale" under the
provisions of FASB Statement Number 115.
Single Chip Systems International, Inc. failed to receive any economic
benefit related to the investment. The Company recorded an investment
write-off for the cost of the shares purchased in the period ended
December 31, 1988.
Note 4 Loans Payable to Shareholders
Financing for the Company's activities to date has been generated
primarily from the issuance of its shares and loans from shareholders.
The loans from shareholders are unsecured with no specific repayment
terms. On December 18, 1995, the Board of Directors approved the issuance
of 45,000 shares of stock in exchange for a release and indemnification
agreement against debts incurred by the Company, which had been reported
in the financial statements as loans payable to shareholders. The final
agreement was executed January 11, 1996, as explained in note 7 to the
financial statements.
Note 5 Reverse Stock Split and Reorganization
On or about August 24, 1988 an amendment to the Articles of Incorporation
of Longhorn Development Company, Inc., was filed with the Secretary of
State of the State of Delaware to amend the Certificate of Incorporation
of Longhorn Development Company, Inc. to change its name to Single Chip
Systems International, Inc. and amend its business purpose. Effective
August 26, 1988, the then issued and outstanding shares of Single Chip
Systems International, Inc. [formerly Longhorn Development Company, Inc.]
were reverse split at the ratio of one new share for every five shares
issued and outstanding.
After the reversal, 27,333,333 shares of Single Chip Systems
International, Inc. were issued in exchange for all outstanding shares of
Single Chip Systems, Inc. Effective September 2, 1988, the directors and
officers of Single Chip Systems International, Inc. [formerly Longhorn
Development Company, Inc.] resigned and were replaced with a new set of
directors and officers.
Note 6 Liquidity and Going Concern
The Company has incurred losses since inception amounting to $243,900,
and has no assets at December 31, 1995. The Company's ability to achieve
a level of profitable operations and/or additional financing impacts the
Company's ability to continue as a going concern as it is presently
organized. These factors raise substantial doubt about the Company's
ability to continue as a going concern. Management is currently seeking a
well-capitalized merger candidate in order to commence its operations.
Note 7 Subsequent Events
On January 11, 1996, Mark Lebens, personally and as Chief Executive
Officer of Technology Exchange, Inc., a California corporation, executed
a release and indemnification agreement against all debts incurred by the
Company [reported as Loans Payable to Shareholders in the financial
statements] to Lebens and Technology Exchange, Inc. during 1988 and 1989.
Consideration for the agreement consisted of $300 and the issuance of
45,000 unregistered and unrestricted shares of the Company.
Note 8 Change in Accounting Principle -- Accounting for Income Taxes
During 1993, the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," which effective for
fiscal years beginning after December 31, 1992. The statement requires
the recognition of deferred tax assets and liabilities for the temporary
differences between the financial reporting basis and tax basis of the
Company's assets and liabilities at enacted tax rates expected to be in
effect when such amounts are realized or settled. The cumulative effect
of this change in accounting for income taxes as of January 1, 1993 was
$0, due to losses carried over from prior years and the unlikely nature
of future earnings. For the years ended December 31, 1995 and December
31, 1994, the Company had no income tax expenses. Any deferred tax
benefit arising from the losses carried forward would be offset entirely
by a valuation allowance since it is not likely that the Company will be
sufficiently profitable in the future to take advantage of the losses
carried forward.
<PAGE>
EXHIBIT B-1
TRIPLE CHIP SYSTEMS, INC.
BALANCE SHEET AND STATEMENTS OF OPERATIONS
FOR THE TEN MONTHS ENDED OCTOBER 31, 1996
<TABLE>
TRIPLE CHIP SYSTEMS, INC.
Formerly Known as Single Chip Systems International, Inc.
BALANCE SHEETS
October 31, 1996 and December 31, 1995
<CAPTION>
10/31/96 12/31/95
(Unaudited)
<S> <C> <C>
ASSETS
Total Current Assets $ 0 $ 0
TOTAL ASSETS $ 0 $ 0
LIABILITIES & EQUITY
LIABILITIES
Current Liabilities
Loans from stockholders $ 3,876 $ 0
Total Current Liabilities 3,876 0
TOTAL LIABILITIES 3,876 0
EQUITY
Common Stock 42 3,349
Paid-in Capital 249,215 240,551
Accumulated Deficit (253,133) (243,900)
TOTAL EQUITY (3,876) 0
TOTAL LIABILITIES & EQUITY $ (0) $ 0
</TABLE>
<TABLE>
TRIPLE CHIP SYSTEMS, INC.
Formerly Known as Single Chip Systems International, Inc.
STATEMENT OF OPERATIONS
For the Ten Month Period Ended October 31, 1996
And for the Year Ended December 31, 1995
<CAPTION>
Ten Months The Year
Ended Ended
10/31/96 12/31/95
(unaudited)
<S> <C> <C>
REVENUE
Income $ 0 $ 0
NET REVENUE 0 0
OPERATING EXPENSES
Office Expenses 4,206 0
Professional Fees 5,027 0
Other Expenses 450 11
TOTAL OPERATING EXPENSES 9,233 11
NET INCOME/(LOSS) $(9,233) $ (11)
NET LOSS PER SHARE $ (0.01) $ (0.01)
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 20,011,647 33,333,334
</TABLE>
<PAGE>
EXHIBIT C
None.
<PAGE>
EXHIBIT D
MILLER PETROLEUM, INC.
UNAUDITED BALANCE SHEET AND STATEMENT OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
MILLER PETROLEUM, INC.
BALANCE SHEET
October 31, 1996
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash $10,576
Accounts receivable $178,001
Inventory $232,752
Total Current Assets $421,328
OIL AND GAS PROPERTIES
Properties being amortized $394,751
Less: Accumulated amortization ($180,616)
Total Oil and Gas Properties $214,135
OTHER ASSETS
Property & Equipment, less
Accum. Depr. $443,071
Bonds $40,500
Land $11,500
Investments $25,507
Note Receivable $305,622
Total Other Assets $826,200
TOTAL ASSETS $1,461,663
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable $175,751
Accrued expenses $9,478
Long-Term debt-current $349,982
Total Current Liabilities $535,211
LONG-TERM DEBT
Long-Term Debt $15,474
$15,474
STOCKHOLDERS' EQUITY
Common stock, 1,156 shares,
issued and outstanding $297,044
Paid-in-capital $195,300
Retained Earnings $418,634
Total Stockholders Equity $910,978
TOTAL LIABILITIES AND EQUITY $1,461,663
</TABLE>
<TABLE>
<CAPTION>
MILLER PETROLEUM, INC.
Statement of Operations and Retained Earnings
For the six months ended October 31, 1996
(Unaudited)
<S> <C>
Revenues
Service and Drilling Revenue $268,867
Oil and Gas Revenue $113,196
Retail Sales $79,069
Other Revenue $67,887
Total Revenue $529,019
Cost and Expenses
Drilling/Operating Expense $117,325
Depreciation and Amortization $52,835
Interest Expense $17,930
General and Administrative Expenses $376,391
Total Cost and Expenses $564,481
Net loss from Continuing Operations ($35,462)
Other Income
Interest income $10,621
loss before Provision for Income Taxes ($24,841)
Current $0
Deferred $0
Total Income Taxes $0
Net Income ($24,841)
Income Per Share ($21)
Weighted Average Shares Outstanding 1156
RETAINED EARNINGS MAY 1, 1996 $443,475
RETAINED EARNINGS OCTOBER 31, 1996 $418,634
</TABLE>
MILLER PETROLEUM, INC.
NOTES TO 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 Per share
Income 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 methods 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 prorate share.
G. Accounts Receivable
Accounts receivable is presented at net realizable value. All accounts
receivable are considered collectible.
H. Inventory
Inventory is stated at cost.
Note 2: Oil and Gas Properties
The Company uses the successful efforts method of accounting for oil and
producing activities. Costs to acquire mineral interests in oil and gas prop
to drill and equip exploratory wells that find proved reserves, and to drill a
equip development wells are capitalized. Costs to drill exploratory wells th
find proved reserves, geological and geophysical costs, and costs of carr
and retaining unproved properties are expensed.
Note 3: Property and Equipment
Property and equipment are stated at cost. Depreciation is computed usin
straight-line method over the estimated useful lives of the related assets.
Property and equipment consist of the following;
Machinery and Equipment $455,778
Vehicles $217,221
Office Equipment $27,272
Building Improvements $173,375
$873,646
Accum. Depreciation ($430,575)
Net $443,071
Note 4: Bonds
All the oil and gas bonds required for well operators by the Tennessee Oil
Gas Board are in the name of Deloy Miller. Consequently, Deloy is listed
state as well operator for Miller Petroleum, Inc. wells. Deloy got the bond
the Company was incorporated.
Note 5: Related Party Transactions
The Company has a note receivable from Deloy Miller (majority stockholder
for $296,690. at July 31, 1996
Note 6: Notes payable
Notes payable are as follows:
Note payable @ 10% interest due in monthly installments
of $292, secured by a waste oil furnace $288
Note payable @ 9.85%, due 12/28/96, secured by
operating equipment $13,095
Line of credit note payable @ 11.3%, due currently,
secured by real estate $50,687
Note payable @ 9.25% interest due in monthly installments
of $386, secured by a 1995 Chevrolet Pickup $15,977
Note payable @ 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 @ 10% interest, secured by working
interest in six natural gas wells. $83,852
Note payable to Lawrence LaRue $16,090
Note payable @ 6%, secured by working interest
in an oil well. $2,688
Note payable @ 6%, secured by working interest
in an oil well. $2,688
Notes payable @ 10% interest, payable in monthly
installments of $146, secured by Dell computer $1,882
Note payable @ 10% interest due in monthly installments
of $255, secured by a DCZ355 Mita Copier $4,679
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:
Direct Labor $146,896
Fuel & Oil $26,647
Parts and Repairs $37,990
Subcontractors $18,976
Travel $659
Trucking & Dozer $9,304
Well Operating Costs $27,098
Purchases-Resale $14,517
Equipment Rentals $8,766
Office Expense $3,272
Insurance $18,632
Legal & Professional $21,619
Telephone $11,147
Office Rent $4,070
Payroll Taxes $12,179
Utilities $7,689
Miscellaneous $6,655
Donations $275
Total General and Administrative $376,391
Note 8: Income Taxes
The Company has a tax basis net operating loss carryforward at October 31,
1996, by which it may effect future taxable income.
Note 9: Current Events
Miller Services, Inc. and Energy Cell, Inc. were merged into Miller Petroleum,
Inc. effective May 1, 1996.
<PAGE>
EXHIBIT E
Legal Actions Pending
Charles Lois Neal, et al. vs. Miller Services, Inc., a Tennessee
corporation, and predecessor of Miller Petroleum, et al., pending in the
Circuit Court for Overton County, Tennessee, Civil No. 3083; and Arvil and
Anna Sue Reeder vs. Miller Services, et al., pending in the Circuit Court of
Overton County, Tennessee, Civil No. 3030.
<PAGE>
EXHIBIT F
Interwest Transfer
1981 East Murray-Holladay Road
Salt Lake City, Utah 84117
Triple Chip Systems, Inc.
1787 East Ft. Union Blvd., #106
Sandy, Utah 84121
Re: Exchange of shares of Miller Petroleum, Inc., a
Tennessee corporation ("Miller Petroleum"), for shares
of Triple Chip Systems, Inc., a Delaware corporation
("Triple Chip or "Company")
Dear Ladies and Gentlemen:
Pursuant to that certain Agreement and Plan of Reorganization (the
"Plan") between the undersigned, Miller Petroleum, the other stockholders of
Miller Petroleum and Triple Chip, I acknowledge that I have approved this
exchange; that I am aware of all of the terms and conditions of the Plan; that
I have received and personally reviewed a copy of any and all material
documents regarding the Company, including, but not limited to Articles of
Incorporation, Bylaws, minutes of meetings of directors and stockholders,
financial statements and reports filed with the Securities and Exchange
Commission during the past twelve months, including Triple Chip s Annual
Report on Form 10-KSB for the year ended December 31, 1995, and its Quarterly
Reports on Form 10-QSB for the quarters ended March 31, June 30 and September
30, 1996. I represent and warrant that no director or officer of the Company
or any associate of either has solicited this exchange; that I am an
"accredited investor" as that term is known under the Rules and Regulations of
the Securities and Exchange Commission (see Exhibit "A" hereto); and/or, I
represent and warrant that I have sufficient knowledge and experience to
understand the nature of the exchange and am fully capable of bearing the
economic risk of the loss of my entire cost basis.
I further understand that immediately prior to the completion of
the Plan, Triple Chip had little, if any assets, of any measurable value, and
that in actuality, the completion of the Plan and the exchange of my shares of
Miller Petroleum for shares of Triple Chip results in a decrease in the actual
percentage of ownership that my shares of Miller Petroleum represented in
Miller Petroleum prior to the completion of the Plan.
I understand that you have and will make books and records of your
Company available to me for my inspection in connection with the contemplated
exchange of my shares, and that I have been encouraged to review the
information and ask any questions I may have concerning the information of any
director or officer of the Company or of the legal and accounting firms for
the Company. I understand that the accounting firm for Triple Chip is
Mantyla, McReynolds & Associates, Certified Public Accountants, 5872 South 900
East, Suite 250, Salt Lake City, Utah 84121; Telephone #801-269-1818; and that
legal counsel for Triple Chip is Leonard W. Burningham, Esq., 455 East 5th
South, Suite 205, Salt Lake City, Utah 84111, Telephone #801-363-7411.
I also understand that I must bear the economic risk of ownership
of any of the Triple Chip shares for a long period of time, the minimum of
which will be two (2) years, as these shares are "unregistered" shares and may
not be sold unless any subsequent offer or sale is registered with the United
States Securities and Exchange Commission or otherwise exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Act"), or other applicable laws, rules and regulations.
I intend that you rely on all of my representations made herein
and those in the personal questionnaire (if applicable) I provided to Miller
Petroleum for use by Triple Chip as they are made to induce you to issue me
the shares of Triple Chip under the Plan, and I further represent (of my
personal knowledge or by virtue of my reliance on one or more personal
representatives), and agree as follows, to-wit:
1. That the shares being acquired are being received for
investment purposes and not with a view toward further distribution;
2. That I have a full and complete understanding of the phrase
"for investment purposes and not with a view toward further distribution";
3. That I understand the meaning of "unregistered shares" and
know that they are not freely tradeable;
4. That any stock certificate issued by you to me in connection
with the shares being acquired shall be imprinted with a legend restricting
the sale, assignment, hypothecation or other disposition unless it can be made
in accordance with applicable laws, rules and regulations;
5. I agree that the stock transfer records of your Company
shall reflect that I have requested the Company not to effect any transfer of
any stock certificate representing any of the shares being acquired unless I
shall first have obtained an opinion of legal counsel to the effect that the
shares may be sold in accordance with applicable laws, rules and regulations,
and I understand that any opinion must be from legal counsel satisfactory to
the Company and, regardless of any opinion, I understand that the exemption
covered by any opinion must in fact be applicable to the shares;
6. That I shall not sell, offer to sell, transfer, assign,
hypothecate or make any other disposition of any interest in the shares being
acquired except as may be pursuant to any applicable laws, rules and
regulations;
7. I fully understand that my shares which are being exchanged
for shares of the Company are "risk capital," and I am fully capable of
bearing the economic risks attendant to this investment, without
qualification; and
8. I also understand that without approval of counsel for
Triple Chip, all shares of Triple Chip to be issued and delivered to me in
exchange for my shares of Miller Petroleum shall be represented by one stock
certificate only and which such stock certificate shall be imprinted with the
following legend or a reasonable facsimile thereof on the front and reverse
sides thereof:
The shares of stock represented by this certificate
have not been registered under the Securities Act of
1933, as amended, and may not be sold or otherwise
transferred unless compliance with the registration
provisions of such Act has been made or unless
availability of an exemption from such registration
provisions has been established, or unless sold
pursuant to Rule 144 under the Act.
Any request for more than one stock certificate must be
accompanied by a letter signed by the requesting stockholder setting forth all
relevant facts relating to the request. Triple Chip will attempt to
accommodate any stockholders' request where Triple Chip views the request is
made for valid business or personal reasons so long as in the sole discretion
of Triple Chip, the granting of the request will not facilitate a "public"
distribution of unregistered shares of common voting stock of Triple Chip.
You are requested and instructed to issue a stock certificate as
follows, to-wit:
Deloy Miller 3,135,815 shares
3651 Baker Hwy.
P. O. Box 130
Huntsville, Tennessee 37756
Thank you very much.
Dated this 20th day of December, 1996.
Very truly yours,
/s/ Deloy Miller
<PAGE>
EXHIBIT F
Interwest Transfer
1981 East Murray-Holladay Road
Salt Lake City, Utah 84117
Triple Chip Systems, Inc.
1787 East Ft. Union Blvd., #106
Sandy, Utah 84121
Re: Exchange of shares of Miller Petroleum, Inc., a
Tennessee corporation ("Miller Petroleum"), for shares
of Triple Chip Systems, Inc., a Delaware corporation
("Triple Chip or "Company")
Dear Ladies and Gentlemen:
Pursuant to that certain Agreement and Plan of Reorganization (the
"Plan") between the undersigned, Miller Petroleum, the other stockholders of
Miller Petroleum and Triple Chip, I acknowledge that I have approved this
exchange; that I am aware of all of the terms and conditions of the Plan; that
I have received and personally reviewed a copy of any and all material
documents regarding the Company, including, but not limited to Articles of
Incorporation, Bylaws, minutes of meetings of directors and stockholders,
financial statements and reports filed with the Securities and Exchange
Commission during the past twelve months, including Triple Chip s Annual
Report on Form 10-KSB for the year ended December 31, 1995, and its Quarterly
Reports on Form 10-QSB for the quarters ended March 31, June 30 and September
30, 1996. I represent and warrant that no director or officer of the Company
or any associate of either has solicited this exchange; that I am an
"accredited investor" as that term is known under the Rules and Regulations of
the Securities and Exchange Commission (see Exhibit "A" hereto); and/or, I
represent and warrant that I have sufficient knowledge and experience to
understand the nature of the exchange and am fully capable of bearing the
economic risk of the loss of my entire cost basis.
I further understand that immediately prior to the completion of
the Plan, Triple Chip had little, if any assets, of any measurable value, and
that in actuality, the completion of the Plan and the exchange of my shares of
Miller Petroleum for shares of Triple Chip results in a decrease in the actual
percentage of ownership that my shares of Miller Petroleum represented in
Miller Petroleum prior to the completion of the Plan.
I understand that you have and will make books and records of your
Company available to me for my inspection in connection with the contemplated
exchange of my shares, and that I have been encouraged to review the
information and ask any questions I may have concerning the information of any
director or officer of the Company or of the legal and accounting firms for
the Company. I understand that the accounting firm for Triple Chip is
Mantyla, McReynolds & Associates, Certified Public Accountants, 5872 South 900
East, Suite 250, Salt Lake City, Utah 84121; Telephone #801-269-1818; and
that legal counsel for Triple Chip is Leonard W. Burningham, Esq., 455 East
5th South, Suite 205, Salt Lake City, Utah 84111, Telephone #801-363-7411.
I also understand that I must bear the economic risk of ownership
of any of the Triple Chip shares for a long period of time, the minimum of
which will be two (2) years, as these shares are "unregistered" shares and may
not be sold unless any subsequent offer or sale is registered with the United
States Securities and Exchange Commission or otherwise exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Act"), or other applicable laws, rules and regulations.
I intend that you rely on all of my representations made herein
and those in the personal questionnaire (if applicable) I provided to Miller
Petroleum for use by Triple Chip as they are made to induce you to issue me
the shares of Triple Chip under the Plan, and I further represent (of my
personal knowledge or by virtue of my reliance on one or more personal
representatives), and agree as follows, to-wit:
1. That the shares being acquired are being received for
investment purposes and not with a view toward further distribution;
2. That I have a full and complete understanding of the phrase
"for investment purposes and not with a view toward further distribution";
3. That I understand the meaning of "unregistered shares" and
know that they are not freely tradeable;
4. That any stock certificate issued by you to me in connection
with the shares being acquired shall be imprinted with a legend restricting
the sale, assignment, hypothecation or other disposition unless it can be made
in accordance with applicable laws, rules and regulations;
5. I agree that the stock transfer records of your Company
shall reflect that I have requested the Company not to effect any transfer of
any stock certificate representing any of the shares being acquired unless I
shall first have obtained an opinion of legal counsel to the effect that the
shares may be sold in accordance with applicable laws, rules and regulations,
and I understand that any opinion must be from legal counsel satisfactory to
the Company and, regardless of any opinion, I understand that the exemption
covered by any opinion must in fact be applicable to the shares;
6. That I shall not sell, offer to sell, transfer, assign,
hypothecate or make any other disposition of any interest in the shares being
acquired except as may be pursuant to any applicable laws, rules and
regulations;
7. I fully understand that my shares which are being exchanged
for shares of the Company are "risk capital," and I am fully capable of
bearing the economic risks attendant to this investment, without
qualification; and
8. I also understand that without approval of counsel for
Triple Chip, all shares of Triple Chip to be issued and delivered to me in
exchange for my shares of Miller Petroleum shall be represented by one stock
certificate only and which such stock certificate shall be imprinted with the
following legend or a reasonable facsimile thereof on the front and reverse
sides thereof:
The shares of stock represented by this certificate
have not been registered under the Securities Act of
1933, as amended, and may not be sold or otherwise
transferred unless compliance with the registration
provisions of such Act has been made or unless
availability of an exemption from such registration
provisions has been established, or unless sold
pursuant to Rule 144 under the Act.
Any request for more than one stock certificate must be
accompanied by a letter signed by the requesting stockholder setting forth all
relevant facts relating to the request. Triple Chip will attempt to
accommodate any stockholders' request where Triple Chip views the request is
made for valid business or personal reasons so long as in the sole discretion
of Triple Chip, the granting of the request will not facilitate a "public"
distribution of unregistered shares of common voting stock of Triple Chip.
You are requested and instructed to issue a stock certificate as
follows, to-wit:
Deloy Miller 1,790,660 shares
3651 Baker Hwy.
P. O. Box 130
Huntsville, Tennessee 37756
Thank you very much.
Dated this 20th day of December, 1996.
Very truly yours,
/s/ Sharon Miller
<PAGE>
EXHIBIT F
Interwest Transfer
1981 East Murray-Holladay Road
Salt Lake City, Utah 84117
Triple Chip Systems, Inc.
1787 East Ft. Union Blvd., #106
Sandy, Utah 84121
Re: Exchange of shares of Miller Petroleum, Inc., a
Tennessee corporation ("Miller Petroleum"), for shares
of Triple Chip Systems, Inc., a Delaware corporation
("Triple Chip or "Company")
Dear Ladies and Gentlemen:
Pursuant to that certain Agreement and Plan of Reorganization (the
"Plan") between the undersigned, Miller Petroleum, the other stockholders of
Miller Petroleum and Triple Chip, I acknowledge that I have approved this
exchange; that I am aware of all of the terms and conditions of the Plan; that
I have received and personally reviewed a copy of any and all material
documents regarding the Company, including, but not limited to Articles of
Incorporation, Bylaws, minutes of meetings of directors and stockholders,
financial statements and reports filed with the Securities and Exchange
Commission during the past twelve months, including Triple Chip s Annual
Report on Form 10-KSB for the year ended December 31, 1995, and its Quarterly
Reports on Form 10-QSB for the quarters ended March 31, June 30 and September
30, 1996. I represent and warrant that no director or officer of the Company
or any associate of either has solicited this exchange; that I am an
"accredited investor" as that term is known under the Rules and Regulations of
the Securities and Exchange Commission (see Exhibit "A" hereto); and/or, I
represent and warrant that I have sufficient knowledge and experience to
understand the nature of the exchange and am fully capable of bearing the
economic risk of the loss of my entire cost basis.
I further understand that immediately prior to the completion of
the Plan, Triple Chip had little, if any assets, of any measurable value, and
that in actuality, the completion of the Plan and the exchange of my shares of
Miller Petroleum for shares of Triple Chip results in a decrease in the actual
percentage of ownership that my shares of Miller Petroleum represented in
Miller Petroleum prior to the completion of the Plan.
I understand that you have and will make books and records of your
Company available to me for my inspection in connection with the contemplated
exchange of my shares, and that I have been encouraged to review the
information and ask any questions I may have concerning the information of any
director or officer of the Company or of the legal and accounting firms for
the Company. I understand that the accounting firm for Triple Chip is
Mantyla, McReynolds & Associates, Certified Public Accountants, 5872 South 900
East, Suite 250, Salt Lake City, Utah 84121; Telephone #801-269-1818; and
that legal counsel for Triple Chip is Leonard W. Burningham, Esq., 455 East
5th South, Suite 205, Salt Lake City, Utah 84111, Telephone #801-363-7411.
I also understand that I must bear the economic risk of ownership
of any of the Triple Chip shares for a long period of time, the minimum of
which will be two (2) years, as these shares are "unregistered" shares and may
not be sold unless any subsequent offer or sale is registered with the United
States Securities and Exchange Commission or otherwise exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Act"), or other applicable laws, rules and regulations.
I intend that you rely on all of my representations made herein
and those in the personal questionnaire (if applicable) I provided to Miller
Petroleum for use by Triple Chip as they are made to induce you to issue me
the shares of Triple Chip under the Plan, and I further represent (of my
personal knowledge or by virtue of my reliance on one or more personal
representatives), and agree as follows, to-wit:
1. That the shares being acquired are being received for
investment purposes and not with a view toward further distribution;
2. That I have a full and complete understanding of the phrase
"for investment purposes and not with a view toward further distribution";
3. That I understand the meaning of "unregistered shares" and
know that they are not freely tradeable;
4. That any stock certificate issued by you to me in connection
with the shares being acquired shall be imprinted with a legend restricting
the sale, assignment, hypothecation or other disposition unless it can be made
in accordance with applicable laws, rules and regulations;
5. I agree that the stock transfer records of your Company
shall reflect that I have requested the Company not to effect any transfer of
any stock certificate representing any of the shares being acquired unless I
shall first have obtained an opinion of legal counsel to the effect that the
shares may be sold in accordance with applicable laws, rules and regulations,
and I understand that any opinion must be from legal counsel satisfactory to
the Company and, regardless of any opinion, I understand that the exemption
covered by any opinion must in fact be applicable to the shares;
6. That I shall not sell, offer to sell, transfer, assign,
hypothecate or make any other disposition of any interest in the shares being
acquired except as may be pursuant to any applicable laws, rules and
regulations;
7. I fully understand that my shares which are being exchanged
for shares of the Company are "risk capital," and I am fully capable of
bearing the economic risks attendant to this investment, without
qualification; and
8. I also understand that without approval of counsel for
Triple Chip, all shares of Triple Chip to be issued and delivered to me in
exchange for my shares of Miller Petroleum shall be represented by one stock
certificate only and which such stock certificate shall be imprinted with the
following legend or a reasonable facsimile thereof on the front and reverse
sides thereof:
The shares of stock represented by this certificate
have not been registered under the Securities Act of
1933, as amended, and may not be sold or otherwise
transferred unless compliance with the registration
provisions of such Act has been made or unless
availability of an exemption from such registration
provisions has been established, or unless sold
pursuant to Rule 144 under the Act.
Any request for more than one stock certificate must be
accompanied by a letter signed by the requesting stockholder setting forth all
relevant facts relating to the request. Triple Chip will attempt to
accommodate any stockholders' request where Triple Chip views the request is
made for valid business or personal reasons so long as in the sole discretion
of Triple Chip, the granting of the request will not facilitate a "public"
distribution of unregistered shares of common voting stock of Triple Chip.
You are requested and instructed to issue a stock certificate as
follows, to-wit:
Lawrence LaRue 73,525 shares
3651 Baker Hwy.
P. O. Box 130
Huntsville, Tennessee 37756
Thank you very much.
Dated this 20th day of December, 1996.
Very truly yours,
/s/ Lawrence LaRue
<PAGE>
EXHIBIT G
CERTIFICATE OF OFFICER PURSUANT TO
AGREEMENT AND PLAN OF REORGANIZATION
The undersigned, the President of Triple Chip Systems, Inc., a
Delaware corporation ("Triple Chip"), represents and warrants the following as
required by the Agreement and Plan of Reorganization (the "Plan") between
Triple Chip and Miller Petroleum, Inc., a Tennessee corporation ("Miller
Petroleum"), and the stockholders of Miller Petroleum (the Miller Petroleum
Stockholders ):
1. That he is the President of Triple Chip and has been
authorized and empowered by its Board of Directors to execute and deliver this
Certificate to Miller Petroleum and the Miller Petroleum Stockholders.
2. Based on his personal knowledge, information, belief and
opinions of counsel for Triple Chip regarding the Plan:
(i) All representations and warranties of Triple Chip
contained within the Plan are true and correct;
(ii) Triple Chip has complied with all terms and provisions
required of it pursuant to the Plan; and
(iii) There have been no material adverse changes in the
financial position of Triple Chip as set forth in its
financial statements for the periods ended December
31, 1995 and 1994, and October 31, 1996, except as
set forth in Exhibit C to the Plan.
TRIPLE CHIP SYSTEMS, INC.
By /s/ Jeffrey D. Jenson, President
<PAGE>
EXHIBIT H
CERTIFICATE OF OFFICER PURSUANT TO
AGREEMENT AND PLAN OF REORGANIZATION
The undersigned, the President of Miller Petroleum, Inc., a
Tennessee corporation ("Miller Petroleum"), represents and warrants the
following as required by the Agreement and Plan of Reorganization (the "Plan")
between Miller Petroleum, its stockholders (the "Miller Petroleum
Stockholders") and Triple Chip Systems, Inc., a Delaware corporation ("Triple
Chip"):
1. That he is the President of Miller Petroleum and has been
authorized and empowered by its Board of Directors to execute and deliver this
Certificate to Triple Chip.
2. Based on his personal knowledge, information, belief:
(i) All representations and warranties of Miller Petroleum
contained within the Plan are true and correct;
(ii) Miller Petroleum has complied with all terms and
provisions required of it pursuant to the Plan; and
(iii) There have been no material adverse changes in the
financial position of Miller Petroleum as set forth in
its unaudited balance sheet and statement of
operations for the period ended October 31, 1996,
except as set forth in Exhibit D to the Plan.
MILLER PETROLEUM, INC.
By /s/ Deloy Miller, President
/s/ Deloy Miller, Personally
TRIPLE CHIP SYSTEMS, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS OF
TRIPLE CHIP SYSTEMS, INC.
TO BE HELD DECEMBER 31, 1996
TO ALL STOCKHOLDERS:
NOTICE is hereby given that a special meeting of the stockholders
of Triple Chip Systems, Inc. has been called to be held on December 31, 1996,
at 3651 Baker Hwy., Huntsville, Tennessee, at the hour of 10:00 o'clock a.m.,
Local Time, for the following purposes:
1. Following the completion of an Agreement and Plan of
Reorganization (the "Plan") between the Company and Miller Petroleum, Inc., a
Tennessee corporation ("Miller Petroleum"), as outlined in the enclosed News
Release, and whereby the Company issued 5,000,000 shares of its $0.0001 par
value "unregistered" and "restricted" common voting stock in exchange for all
of the issued and outstanding shares of Miller Petroleum:
(a) To amend the Articles of Incorporation of the Company to
change the name of the Company to Miller Petroleum, Inc. ;
(b) To change the domicile of the Company to the State of
Tennessee by merging the Company with and into its wholly-
owned subsidiary, Miller Petroleum, Inc.
2. To conduct such other business as may properly come before
the meeting.
The Board of Directors of Triple Chip Systems, Inc. has set 5:00
o'clock p.m. on December 20, 1996, as the record date for the purpose of
determining the stockholders of the Company who shall be entitled to notice of
the meeting. No proxies are being solicited.
Huntsville, Tennessee
TRIPLE CHIP SYSTEMS, INC.
December 20, 1996
BY ORDER OF THE BOARD OF DIRECTORS
NEWS RELEASE
Triple Chip Systems, Inc., a Delaware corporation ("Triple Chip"),
OTC Bulletin Board Symbol, "TCSY," announced today the closing of an Agreement
and Plan of Reorganization (the "Plan") pursuant to which Triple Chip acquired
all of the outstanding securities of Miller Petroleum, Inc., a Tennessee
corporation ("Miller Petroleum").
Pursuant to the Plan, 5,000,000 "unregistered" and "restricted"
shares of Triple Chip's common stock were issued to the stockholders of Miller
Petroleum in exchange for all of their respective shares of Miller Petroleum;
282,535 unregistered and restricted shares of Triple Chip s common stock
were also issued to certain consultants for services rendered; and 300,000
shares of Triple Chip s common stock were also issued to some of these
consultants pursuant to a
written compensation agreement and an S-8 Registration Statement for
additional non-capital raising services rendered.
Miller Petroleum is engaged in the business of development,
exploration and production of oil and gas; it is successor to Miller Services,
Inc., and Energy Cell, Inc., Tennessee corporations.
Triple Chip's current directors and executive officers have
resigned, in seriatim, and the following persons have been designated to serve
on the Board of Directors and/or as executive officers of Triple Chip until
the next respective annual meetings of the stockholders and directors or until
their respective successors have been elected and qualified or their prior
resignations or terminations: Deloy Miller, Chairman, President, Chief
Executive Officer and Director; and Lawrence LaRue., Secretary/Treasurer.
These persons held the same positions with Miller Petroleum prior to the
completion of the Plan.
The new principal executive offices of the reorganized company are
located at 3651 Baker Hwy., Huntsville, Tennessee 37756.
A special meeting of stockholders has been scheduled for December
31, 1996, to consider a change in the name of Triple Chip to "Miller
Petroleum, Inc., and to change the domicile of the Company from the State of
Delaware to the State of Tennessee.
For further information, contact: Deloy Miller or Lawrence LaRue
Telephone: (423) 663-9457
December 20, 1996
cc. Dow Wire Service Fax No. 212-416-4008
Bloomberg Financial Markets Fax No. 609-279-5976
Reuters Fax No. 212-859-1717
CERTIFICATE OF OWNERSHIP AND MERGER
AND ARTICLES OF MERGER
OF
TRIPLE CHIP SYSTEMS, INC.
(a Delaware corporation)
INTO
MILLER PETROLEUM, INC.
(a Tennessee corporation)
It is hereby certified that:
1. Triple Chip Systems, Inc. (the Corporation ) is a
corporation of the State of Delaware, and Miller Petroleum, Inc. ( Miller
Petroleum ) is a corporation of the State of Tennessee.
2. An Agreement of Merger has been approved, adopted,
certified, executed and acknowledged by the Corporation and Miller Petroleum
in accordance with Sections 228, 252 and 253 of the Delaware General
Corporation Law, and Section 48-21-105 of the Tennessee Corporation Act.
3. The Corporation, as the owner of all of the outstanding
shares of the common voting stock of Miller Petroleum, hereby merges itself
into Miller Petroleum, a corporation of the State of Tennessee, the laws of
which permit a merger of a corporation of that jurisdiction with a corporation
of another jurisdiction, and Miller Petroleum shall be the surviving
corporation.
4. The following amendments to the Articles of Incorporation of
the Corporation and the Articles of Charter of Miller Petroleum shall be
effected as of the date of filing of this Certificate of Ownership and Merger,
to-wit:
The Corporation s Articles of Amendment
Article I: The name of this Corporation shall be Miller
Petroleum, Inc.
Miller Petroleum s Charter Amendments
Article VI: The Corporation is authorized to issue 500,000,000
shares of $0.0001 par value common stock.
5. The following is a copy of the resolutions and Agreement of
Merger adopted on the 31st day of December, 1996, by the Board of Directors of
the Corporation to merge the Corporation into Miller Petroleum:
RESOLVED, that this Corporation be reincorporated in the State of
Tennessee by merging itself into Miller Petroleum pursuant to the
laws of the State of Delaware and the State of Tennessee as
hereinafter provided, so that the separate existence of this
Corporation shall cease as soon as the merger shall become
effective, and thereupon this Corporation and Miller Petroleum
will become a single corporation, which shall continue to exist
under, and be governed by, the laws of the State of Tennessee;
FURTHER, RESOLVED, that the terms and conditions of the proposed
merger are as follows, to-wit:
(a) From and after the effective time of the merger, all
of the estate, property, rights, privileges, powers and franchises
of this Corporation shall become vested in and be held by Miller
Petroleum as fully and entirely and without change or diminution
as the same were before held and enjoyed by this Corporation, and
Miller Petroleum shall assume all of the obligations of this
Corporation.
(b) Each share of common stock, $0.0001 par value, of this
Corporation which shall be issued and outstanding immediately
prior to the effective time of the merger shall be converted into
one issued and outstanding share of common stock, $0.0001 par
value, of Miller Petroleum, and, from and after the effective time
of the merger, the holders of all of said issued and outstanding
shares of common stock of this Corporation shall automatically be
and become holders of shares of Miller Petroleum upon the basis
above specified, whether or not certificates representing said
shares are then issued and delivered.
(c) After the effective time of the merger, each holder of
record of any outstanding certificate or certificates theretofore
representing common stock of this Corporation may surrender the
same to Miller Petroleum or its transfer and registrar agent at
their offices in Huntsville, Tennessee, and Salt Lake City, Utah,
respectively, and such holder shall be entitled upon such
surrender to receive in exchange therefor a certificate or
certificates representing an equal number of shares of common
stock of Miller Petroleum. Until so surrendered, each outstanding
certificate which prior to the effective time of the merger
represented one or more shares of common stock of this Corporation
shall be deemed for all corporate purposes to evidence ownership
of an equal number of shares of common stock of Miller Petroleum.
(d) From and after the effective time of the merger, the
Articles of Charter and the Bylaws of Miller Petroleum as amended
above shall be the Articles of Charter and the Bylaws of Miller
Petroleum as in effect immediately prior to such effective time.
(e) The members of the Board of Directors and officers of
the Corporation shall be the members of the Board of Directors and
the corresponding officers of Miller Petroleum immediately after
the effective time of the merger.
(f) From and after the effective time of the merger, the
assets and liabilities of this Corporation and of Miller Petroleum
shall be entered on the books of Miller Petroleum at the amounts
at which they shall be carried at such time on the respective
books of this Corporation and of Miller Petroleum, subject to such
intercorporate adjustments or eliminations, if any, as may be
required to give effect to the merger; and, subject to such action
as may be taken by the Board of directors of Miller Petroleum, in
accordance with generally accepted accounting principles, the
capital and surplus of Miller Petroleum shall be equal to the
capital and surplus of this Corporation and of Miller Petroleum.
FURTHER, RESOLVED, that this Corporation does hereby agree that it
may be served with process in the State of Delaware in any
proceeding for enforcement of any obligation of the Corporation,
as well as for enforcement of any obligation of this Corporation
arising from the merger herein provided for; does hereby
irrevocably appoint the Secretary of State of the State of
Delaware as its agent to accept service of process in any such
proceeding; and does hereby specify the following address outside
of the State of Delaware to which a copy of such process shall be
mailed by the Secretary of State of Delaware:
Deloy Miller
Miller Petroleum, Inc.
3651 Baker Hwy.
P. O. Box 130
Huntsville, Tennessee 37756
FURTHER, RESOLVED, that the Certificate of Ownership and Merger
and Articles of Merger be deemed to be adopted, ratified and
approved by persons owning a majority of the outstanding voting
securities of the Corporation pursuant to Section 228 of the
Delaware General Corporation Law as evidenced by Exhibit A
attached hereto and incorporated herein by reference.
FURTHER, RESOLVED, that, in the event that the proposed merger
shall not be terminated, the proper officers of this Corporation
be and they hereby are authorized and directed to make and
execute, under the corporate seal of this Corporation, a
Certificate of Ownership and Merger and Articles of Merger setting
forth a copy of these resolutions to merge itself into Miller
Petroleum and the date of adoption thereof, and to cause the same
to be filed and recorded as provided by law, and to do all acts
and things whatsoever, within the States of Tennessee and Delaware
or in any other appropriate jurisdiction, necessary or proper to
effect this merger.
6. The proposed merger therein certified has been approved by
Written Consent of the Board of Directors and in writing by persons owning a
majority of the outstanding voting securities of the Corporation and entitled
to vote in accordance with the provisions of Sections 141 and 228,
respectively, of the General Corporation Law of the State of Delaware. The
Board of Directors of Miller Petroleum adopted, ratified and approved the
Agreement of Merger on December 31, 1996. The Corporation, as the sole
stockholder of Miller Petroleum, has adopted, ratified and approved the
merger, on December 31, 1996.
7. A copy of the Agreement of Merger is on file at the office
of Miller Petroleum at 3651 Baker Hwy., P. O. Box 130, Huntsville, Tennessee
37756, and is available for copying, on request and without cost, to any
stockholder of the Corporation or Miller Petroleum, and is also set forth in
Exhibit A hereto.
8. The effective time of the Certificate of Ownership and
Merger and Articles of Merger, and the time when the merger therein agreed
upon shall become effective, shall be the date upon which the Secretaries of
State of Delaware and Tennessee endorse the word Filed on this instrument.
IN WITNESS WHEREOF, the undersigned have executed this instrument
under penalty of perjury as of the date set opposite their respective names.
TRIPLE CHIP SYSTEMS, INC.
Date: 1/9/97. By /s/ Deloy Miller, President
MILLER PETROLEUM, INC.
Date: 1/9/97. By /s/ Deloy Miller, President
<PAGE>
CONSENT OF MAJORITY STOCKHOLDERS
OF
TRIPLE CHIP SYSTEMS, INC.
The undersigned majority stockholders of Triple Chip Systems,
Inc., a Delaware corporation ( Triple Chip ), acting pursuant to Section 228
of the Delaware General Corporation Law, do hereby consent to the following
resolutions, effective the 31st day of December, 1996, to-wit:
RESOLVED, that this Corporation be reincorporated in the State of
Tennessee by merging itself into Miller Petroleum pursuant to the
laws of the State of Delaware and the State of Tennessee as
hereinafter provided, so that the separate existence of this
Corporation shall cease as soon as the merger shall become
effective, and thereupon this Corporation and Miller Petroleum
will become a single corporation, which shall continue to exist
under, and be governed by, the laws of the State of Tennessee;
FURTHER, RESOLVED, that the terms and conditions of the proposed
merger are as follows, to-wit:
AGREEMENT OF MERGER
(a) From and after the effective time of the merger, all
of the estate, property, rights, privileges, powers and franchises
of this Corporation shall become vested in and be held by Miller
Petroleum as fully and entirely and without change or diminution
as the same were before held and enjoyed by this Corporation, and
Miller Petroleum shall assume all of the obligations of this
Corporation.
(b) Each share of common stock, $0.0001 par value, of this
Corporation which shall be issued and outstanding immediately
prior to the effective time of the merger shall be converted into
one issued and outstanding share of common stock, $0.0001 par
value, of Miller Petroleum, and, from and after the effective time
of the merger, the holders of all of said issued and outstanding
shares of common stock of this Corporation shall automatically be
and become holders of shares of Miller Petroleum upon the basis
above specified, whether or not certificates representing said
shares are then issued and delivered.
(c) After the effective time of the merger, each holder of
record of any outstanding certificate or certificates theretofore
representing common stock of this Corporation may surrender the
same to Miller Petroleum or its transfer and registrar agent at
their offices in Huntsville, Tennessee, and Salt Lake City, Utah,
respectively, and such holder shall be entitled upon such
surrender to receive in exchange therefor a certificate or
certificates representing an equal number of shares of common
stock of Miller Petroleum. Until so surrendered, each outstanding
certificate which prior to the effective time of the merger
represented one or more shares of common stock of this Corporation
shall be deemed for all corporate purposes to evidence ownership
of an equal number of shares of common stock of Miller Petroleum.
(d) From and after the effective time of the merger, the
Articles of Charter and the Bylaws of Miller Petroleum as amended
above shall be the Articles of Charter and the Bylaws of Miller
Petroleum as in effect immediately prior to such effective time.
(e) The members of the Board of Directors and officers of
the Corporation shall be the members of the Board of Directors and
the corresponding officers of Miller Petroleum immediately after
the effective time of the merger.
(f) From and after the effective time of the merger, the
assets and liabilities of this Corporation and of Miller Petroleum
shall be entered on the books of Miller Petroleum at the amounts
at which they shall be carried at such time on the respective
books of this Corporation and of Miller Petroleum, subject to such
intercorporate adjustments or eliminations, if any, as may be
required to give effect to the merger; and, subject to such action
as may be taken by the Board of directors of Miller Petroleum, in
accordance with generally accepted accounting principles, the
capital and surplus of Miller Petroleum shall be equal to the
capital and surplus of this Corporation and of Miller Petroleum.
FURTHER, RESOLVED, that this Corporation does hereby agree that it
may be served with process in the State of Delaware in any
proceeding for enforcement of any obligation of the Corporation,
as well as for enforcement of any obligation of this Corporation
arising from the merger herein provided for; does hereby
irrevocably appoint the Secretary of State of the State of
Delaware as its agent to accept service of process in any such
proceeding; and does hereby specify the following address outside
of the State of Delaware to which a copy of such process shall be
mailed by the Secretary of State of Delaware:
Deloy Miller
Miller Petroleum, Inc.
3651 Baker Hwy.
P. O. Box 130
Huntsville, Tennessee 37756
FURTHER, RESOLVED, that the Certificate of Ownership and Merger
and Articles of Merger be deemed to be adopted, ratified and
approved by persons
owning a majority of the outstanding voting securities of the
Corporation pursuant to Section 228 of the Delaware General
Corporation Law.
FURTHER, RESOLVED, that, in the event that the proposed merger
shall not be terminated, the proper officers of this Corporation
be and they hereby are authorized and directed to make and
execute, under the corporate seal of this Corporation, a
Certificate of Ownership and Merger and Articles of Merger setting
forth a copy of these resolutions to merge itself into Miller
Petroleum and the date of adoption thereof, and to cause the same
to be filed and recorded as provided by law, and to do all acts
and things whatsoever, within the States of Tennessee and Delaware
or in any other appropriate jurisdiction, necessary or proper to
effect this merger.
/s/ Deloy Miller
Number of Shares Owned: 4,926,475
Percent of Class: 91%
/s/ Lawrence LaRue
Number of Shares Owned: 73,525
Percent of Class: 1%
<TABLE>
MILLER PETROLEUM, INC.
April 30, 1997
<CAPTION> VALUE
YEAR MAKE DESCRIPTION VIN $32993.00 Method
Drilling Equipment
<S> <C> <C> <C>
30-04-90 Bucynrus Erie 22 S/N P107331 $ 5000.00 SL-10
30-04-90 Bucynrus Erie 22W S/N 101983 $ 4500.00 SL-10
30-04-90 Franks Pulling Unit
(Incomplete) S/N 187 $ 7500.00 SL-10
30-04-90 Smeal Model 12TSWX S/N 32485 $25500.00 SL-10
30-04-90 Wilson Rotary Rig
(Incomplete) $20000.00 SL-10
30-04-90 IRDR600/125Air Compressor $13500.00 SL-10
30-04-90 Gardner-Denver900CFM1150Air Compressor $ 4500.00 SL-10
30-04-90 Gardner-Denver 5 X 10 Mud Pump $15000.00 SL-10
01-03-88 Holley Exploration, Inc. Purchase
75 International Fleetstar 2070A
S/N 75797EGU13996
74 Mack Tractor Trailer
S/N RS767LST20888
81 Lowboy Trailer (HLB3422)
S/N HLB342251039
76 Chevy 1 Ton WAdobart Model 250
Welder, Winch S/N CCL 3365150295
Mobile Doghouse $10000.00 SL/5
05-07-88 Trailer from Johnny Garrett $ 1000.00 SL/5
08-07-88 Power Tongs Purl Alabama $ 2750.00 SL/5
01-03-90 Koppers 20B $ 7500.00 SL-10
01-03-90 Koppers 21B $ 3750.00 SL-10
01-03-90 Koppers 23B $ 7500.00 SL-10
01-03-90 Koppers 18B $ 7500.00 SL-10
01-03-90 Koppers 10B $ 7500.00 SL-10
01-03-90 Koppers 9B $ 7500.00 SL-10
30-04-90 D6B Caterpillar Dozer S/N 44A6238 $ 7500.00 SL-10
30-04-90 D6B Caterpillar Dozer
(Incomplete) S/N 44A10779 $ 3000.00 SL-10
30-04-90 D6C Carerpillar Dozer S/N 74A2984 $ 8500.00 SL-10
30-04-90 Miller Welder 3 phase $ 500.00 SL-5
30-04-90 Ross Towmotor $ 1020.00 SL-5
30-04-90 Yale Forklift $ 1275.00 SL-5
30-04-90 2 D.A. Coulson Compressor $ 8500.00 SL-10
30-04-90 214-P Wilson Synder Mud Pump
(Incomplete) $ 4500.00 SL-10
30-04-90 Dehydrator Glycol Unit Skid Mounted $ 5100.00 SL-10
30-04-90 D5 Caterpillar Dozer S/N 94Jg78 $ 4000.00 SL-10
15-06-90 ACO Waukesha Compressor $ 3000.00 SL/5
15-06-90 100 barrel skid tank $ 200.00 SL/5
25-10-90 Koppers 18B $ 7830.00 SL-10
25-10-90 Koppers 10B $ 8100.00 SL-10
25-10-90 Koppers 20B $ 7830.00 SL-10
16-07-91 Jack Windle#M-1 $13500.00 SL-10
23-09-91 Cecil Thurman #1 $12000.00 SL-10
23-09-91 Kenneth Jackson #1 $ 9000.00 SL-10
08-01-92 Jack Windle #M-3 $ 6538.00 SL-10
31-03-92 Jack Windle#M-7 $ 8276.00 SL-10
05-06-92 Travel Trailer (John Beason) $ 2000.00 SL/5
28-07-92 Miller Welder (Harriman Welding Supply)$ 2820.00 SL/5
14-09-92 Drilling Recorder (Pam Glass) $ 1500.00 SL/5
31-08-93 Mark Bowlin #1 Well Equipment $ 3991.81 SL-10
31-08-93 Tommy Overton #1 Well Equipment $ 4205.04 SL-10
31-08-93 Drill Pipe plus freight $18282.80 SL-10
31-08-93 Syl Bowlin etal #1 Well Equipment $ 3039.65 SL-10
21-09-93 Billy Bowlin et al #1 $ 2645.89 SL-10
27-09-93 W.H. Bowlin #1 $ 2827.37 SL-10
01-10-93 IR T4 Drill Rig (Puerto Rico)
Modifications $55925.24 SL-10
01-10-93 Cementer, Mud Pump & Generator $10756.82 SL-10
16-11-93 Lewis Duncan Heirs #2 $ 2534.15 SL-10
24-11-93 J.C. Bowlin #1 $ 2844.76 SL-10
16-02-94 Jack Windle#M-11 $ 3101.00 SL-10
02-05-94 Drilling Equipment (Ray Armstrong) $52134.58 SL-10
30-06-g4 Bucyrus Erie 28L with Tools S/N 109692 $ 8000.00 SL-10
31-08-95 Taylor Forklift $ 8500.00 SL-10
$455778.11
10-05-91 Smeal Service Rig ( Pipeline Equipment)$16500.00 SL/5
Vehicles:
02-06-88 87 F250 FordPickup-Diesel- Red $ 7803.48 SL-5
20-06-88 88Toyota4X4 Silver + Bed Liner-Herb $12118.25 SL-5
20-06-88 88 Toyota 4X4 Extended Cab-Silver-Steve$13004.69 SL-5
07-09-88 85 Ford F250 Pickup-Diesel-White $ 7300.00 SL-5
01-02-89 87 Ford F25 Extended Cab - Crown Ford $15465.31 SL-5
30-04-90 68 Chev. Boom Truck HM8120P104674 $ 1750.00 SL-5
30-04-90 76 Ford Winch Truck $ 5000.00 SL-5
30-04-90 Freehauf Lowboy Trailer FW114584 $ 2000.00 SL-5
30-04-90 Oilfield Float $ 1500.00 SL-5
30-04-90 68 Mack Tractor R685ST4644 $ 4000.00 SL-7
30-04-90 Oilfield Float $ 1500.00 SL-5
30-04-90 85 Toyota 4X4 JT4RN66D5F5061 $ 3500.00 SL-5
30-04-90 71 KW Winch Truck LWW92486073 $ 7500.00 SL-7
30-04-90 84 GMC 4X4 1GTGK24M3EF71 $ 3000.00 SL-5
30-04-90 78 Mack Winch Truck R686S18662 $11000.00 SL-7
30-04-90 73 KW Water Truck 128615 $ 9000.00 SL-7
01-05-90 86 Ford 1 ton w trailer $ 9000.00 SL-5
15-06-90 78 Ford 9000 red Tandem Unit 13 $16718.79 SL-5
15-06-90 Vulcan Trailers $ 1000.00 SL-5
15-06-90 34 ft. Oilfield Float (Texas) $ 1200.00 SL-5
15-06-90 84 Ford Clayton Smith $ 4442.27 SL-5
15-06-90 Fruehauf 35 ton lowbed $ 4000.00 SL-5
26-03-91 87 Ford 4 X 4 (Lindsey Sexton) $10000.00 SL-5
15-07-91 85 Ford Ext. Cab Unit #212 $ 2300.00 SL-5
31-12-92 1990 Bronco (U12) $ 6192.43 SL-5
04-11-94 Baaef Trucking 45 ft. Van $ 4000.00 SL-5
11-12-95 1995 Chevrolet Model IGC $17950.00 SL-5
26-08-96 1994 Toyota Land Cruiser $29026.20 SL-5
11-09-96 84 GMC Brigadier (Porter's Truck Parts)$ 5950.00 SL-5
$217221.42
Office Equipment:
01-04-88 Acer Computer & HP Lase Printer $ 6000.00 SL-5
01-09-89 Houston Instruments Phtter $ 2500.00 SL-5
30-04-90 Xerox 3107 Copier $ 250.00
30-04-90 Metal Office Desks (10)
Wood Office Desks (6) $ 600.00
30-04-90 Odd Credenzas (2) $ 50.00
30-04-90 Calculators (8) $ 100.00
30-04-90 IBM Selectric II Electric Typewriter $ 140.00
30-04-90 Odd Couches (3) $ 25.00
30-04-90 Silver Reed EX 50 Electric Typewriter $ 200.00
30-04-90 Cannon S-66 MX Electric Typewriter $ 100.00
30-04-90 A T & T computer with accesories $ 2200.00
30-04-90 4 Drawer Fireproof Filing Cabinets (3) $ 250.00
30-04-90 Metal Cabinets (2) $ 30.00
30-04-90 Wooden Book Shelves $ 30.00
30-04-90 Odd Upholstered Chairs (23) $ 100.00
30-04-90 Desk Chairs (22) $ 90.00
30-04-90 Fold-up Metal Tables 5 ft. to 7 ft. (9)$ 100.00
30-04-90 Oval Wood Tables (4) $ 120.00
30-04-90 Wood Conference Tables (3) $ 500.00
30-04-9o Metal Filing Cabinets - 4 drawer (25) $ 150.00
30-04-90 Metal Filing Cabinets - 2 drawer (16) $ 50.00
30-04-90 2 Drawer Fireproof Filing Cabinets $ 100.00
30-04-90 Xerox 400 Telecopier $ 200.00
30-04-90 Paymaster Checkwriter $ 10.00
30-04-90 Front Offie Furniture $ 300.00
30-04-90 Deloy's Office Furniture $ 400.00
30-04-90 Odd End Tables (4) $ 50.00
04-12-90 Epson Printer Model 510 $ 324.21 SL-5
07-12-90 COBOL Compiler by Microsoft $ 325.36 SL-5
12-12-90 Plus Hardcard $ 685.01 SL-5
19-04-91 Epson 9 pin Printer $ 419.22 SL-5
15-01-95 DellPentium90 Tower Computer $ 4059.00 SL-5
10-06-96 Mita Copier $ 6814.70 SL-5
$27272.50
BUILDINGS:
31-12-90 Pump Shop (construction in process) $ 2623.69 SL-40
31-12-90 Shop (construction in process) $58302.14 SL-40
01-02-91 Highland Steal Erectors $27730.00 SL-40
01-02-91 Double S Construction $ 2300.00 SL-40
01-03-91 Double S Construction $ 6945.00 SL-40
01-03-91 Highland Steel Erectors $ 4370.00 SL-40
31-12-90 Office (construction in process) $59644.32 SL-40
01-01-91 Carpet Plus $ 369.58 SL-40
01-02-91 Home Depot $ 188.05 SL-40
01-02-91 Frances Hamess $ 525.00 SL-40
01-04-91 Carpet Plus $ 110.98 SL-40
01-04-91 Jerry Weiler (Siding) $ 373.92 SL-40
01-05-91 Double S Construction (porch) $ 1950.00 SL-40
01-05-91 Carpet Plus $ 223.05 SL-40
01-05-91 West Ready Mix(Radio Tower) $ 167.95 SL-40
01-08-91 Double S Construction (porch) $ 1363.13 SL-40
25-11-94 Shenandoah Furnace WG-F-350 $ 6188.50 SL-10
$173,375.31
</TABLE>
<TABLE>
MILLER PETROLEUM, INC.
April 30, 1997
<CAPTION>
Accum Depr Net
Depr Expense Value
YEAR MAKE DESCRIPTION VIN 4-30-96 4-30-97 4-30-97
Drilling Equipment
<S> <C> <C> <C>
30-04-90 Bucynrus Erie 22 S/N P107331 $ 3000.00 $ 500.00 $ 1500.00
30-04-90 Bucynrus Erie 22W S/N 101983 $ 2700.00 $ 450.00 $ 1350.00
30-04-90 Franks Pulling Unit
(Incomplete) S/N 187 $ 4500.00 $ 750.00 $ 2250.00
30-04-90 Smeal Model 12TSWX S/N 32485 $15300.00 $2550.00 $ 7650.00
30-04-90 Wilson Rotary Rig
(Incomplete) $12000.00 $2000.00 $ 6000.00
30-04-90 IRDR600/125Air Compressor $ 8100.00 $1350.00 $ 4050.00
30-04-90 Gardner-Denver900CFM1150Air Compressor $ 2700.00 $ 450.00 $ 1350.00
30-04-90 Gardner-Denver 5 X 10 Mud Pump $ 9000.00 $1500.00 $ 4500.00
01-03-88 Holley Exploration, Inc. Purchase
75 International Fleetstar 2070A
S/N 75797EGU13996
74 Mack Tractor Trailer
S/N RS767LST20888
81 Lowboy Trailer (HLB3422)
S/N HLB342251039
76 Chevy 1 Ton WAdobart Model 250
Welder, Winch S/N CCL 3365150295
Mobile Doghouse $10000.00 $ 0.00 $ 0.00
05-07-88 Trailer from Johnny Garrett $ 1000.00 $ 0.00 $ 0.00
08-07-88 Power Tongs Purl Alabama $ 2750.00 $ 0.00 $ 0.00
01-03-90 Koppers 20B $ 4625.00 $ 750.00 $ 2875.00
01-03-90 Koppers 21B $ 2312.00 $ 375.00 $ 1438.00
01-03-90 Koppers 23B $ 4625.00 $ 750.00 $ 2875.00
01-03-90 Koppers 18B $ 4625.00 $ 750.00 $ 2875.00
01-03-90 Koppers 10B $ 4625.00 $ 750.00 $ 2875.00
01-03-90 Koppers 9B $ 4625.00 $ 750.00 $ 2875.00
30-04-90 D6B Caterpillar Dozer S/N 44A6238 $ 4500.00 $ 750.00 $ 3000.00
30-04-90 D6B Caterpillar Dozer
(Incomplete) S/N 44A10779 $ 1800.00 $ 300.00 $ 1200.00
30-04-90 D6C Carerpillar Dozer S/N 74A2984 $ 5100.00 $ 850.00 $ 3400.00
30-04-90 Miller Welder 3 phase $ 500.00 $ 0.00 $ 0.00
30-04-90 Ross Towmotor $ 1020.00 $ 0.00 $ 0.00
30-04-90 Yale Forklift $ 1275.00 $ 0.00 $ 0.00
30-04-90 2 D.A. Coulson Compressor $ 5100.00 $ 850.00 $ 3400.00
30-04-90 214-P Wilson Synder Mud Pump
(Incomplete) $ 2700.00 $ 450.00 $ 1800.00
30-04-90 Dehydrator Glycol Unit Skid Mounted $ 3060.00 $ 510.00 $ 2040.00
30-04-90 D5 Caterpillar Dozer S/N 94Jg78 $ 2400.00 $ 400.00 $ 1600.00
15-06-90 ACO Waukesha Compressor $ 3000.00 $ 0.00 $ 0.00
15-06-90 100 barrel skid tank $ 200.00 $ 0.00 $ 0.00
25-10-90 Koppers 18B $ 4698.00 $ 783.00 $ 3132.00
25-10-90 Koppers 10B $ 4860.00 $ 810.00 $ 3240.00
25-10-90 Koppers 20B $ 4698.00 $ 783.00 $ 3132.00
16-07-91 Jack Windle#M-1 $ 6750.00 $1350.00 $ 6750.00
23-09-91 Cecil Thurman #1 $ 6000.00 $1200.00 $ 6000.00
23-09-91 Kenneth Jackson #1 $ 4500.00 $ 900.00 $ 4500.00
08-01-92 Jack Windle #M-3 $ 3269.00 $ 653.80 $ 3269.00
31-03-92 Jack Windle#M-7 $ 4138.00 $ 827.60 $ 4138.00
05-06-92 Travel Trailer (John Beason) $ 1533.33 $ 400.00 $ 466.67
28-07-92 Miller Welder (Harriman Welding Supply)$ 2162.00 $ 564.00 $ 658.00
14-09-92 Drilling Recorder (Pam Glass) $ 1075.00 $ 300.00 $ 425.00
31-08-93 Mark Bowlin #1 Well Equipment $ 1091.09 $ 399.18 $ 2900.72
31-08-93 Tommy Overton #1 Well Equipment $ 981.17 $ 420.50 $ 3223.87
31-08-93 Drill Pipe plus freight $ 3351.85 $1828.28 $14930.95
31-08-93 Syl Bowlin etal #1 Well Equipment $ 709.26 $ 303.97 $ 2330.39
21-09-93 Billy Bowlin et al #1 $ 749.67 $ 264.59 $ 1896.22
27-09-93 W.H. Bowlin #1 $ 800.98 $ 282.74 $ 2026.39
01-10-93 IR T4 Drill Rig (Puerto Rico)
Modifications $10252.95 $5592.52 $45672.29
01-10-93 Cementer, Mud Pump & Generator $ 1972.08 $1075.68 $ 8784.74
16-11-93 Lewis Duncan Heirs #2 $ 591.31 $ 253.42 $ 1942.84
24-11-93 J.C. Bowlin #1 $ 663.79 $ 284.48 $ 218O.97
16-02-94 Jack Windle#M-11 $ 1080.00 $ 310.10 $ 2021.00
02-05-94 Drilling Equipment (Ray Armstrong) $10426.92 $5213.46 $41707.66
30-06-g4 Bucyrus Erie 28L with Tools S/N 109692 $ 1466.67 $ 800.00 $ 6533.33
31-08-95 Taylor Forklift $ 496.84 $ 850.00 $ 8003.16
$205459.91 $44235.31 $240768.20
$22117.66 October
$227577.56
10-05-91 Smeal Service Rig ( Pipeline Equipment)$15583.33
Vehicles:
02-06-88 87 F250 FordPickup-Diesel- Red $ 7803.48 $ 0.00 $ 0.00
20-06-88 88Toyota4X4 Silver + Bed Liner-Herb $12118.25 $ 0.00 $ 0.00
20-06-88 88 Toyota 4X4 Extended Cab-Silver-Steve$13004.69 $ 0.00 $ 0.00
07-09-88 85 Ford F250 Pickup-Diesel-White $ 7300.00 $ 0.00 $ 0.00
01-02-89 87 Ford F25 Extended Cab - Crown Ford $15465.31 $ 0.00 $ 0.00
30-04-90 68 Chev. Boom Truck HM8120P104674 $ 1750.00 $ 0.00 $ 0.00
30-04-90 76 Ford Winch Truck $ 5000.00 $ 0.00 $ 0.00
30-04-90 Freehauf Lowboy Trailer FW114584 $ 2000.00 $ 0.00 $ 0.00
30-04-90 Oilfield Float $ 1500.00 $ 0.00 $ 0.00
30-04-90 68 Mack Tractor R685ST4644 $ 3428.57 $ 571.43 $ 0.00
30-04-90 Oilfield Float $ 1500.00 $ 0.00 $ 0.00
30-04-90 85 Toyota 4X4 JT4RN66D5F5061 $ 3500.00 $ 0.00 $ 0.00
30-04-90 71 KW Winch Truck LWW92486073 $ 6428.57 $1071.43 $ 0.00
30-04-90 84 GMC 4X4 1GTGK24M3EF71 $ 3000.00 $ 0.00 $ 0.00
30-04-90 78 Mack Winch Truck R686S18662 $ 9428.57 $1571.43 $ 0.00
30-04-90 73 KW Water Truck 128615 $ 7714.29 $1285.71 $ 0.00
01-05-90 86 Ford 1 ton w trailer $ 9000.00 $ 0.00 $ 0.00
15-06-90 78 Ford 9000 red Tandem Unit 13 $16718.79 $ 0.00 $ 0.00
15-06-90 Vulcan Trailers $ 1000.00 $ 0.00 $ 0.00
15-06-90 34 ft. Oilfield Float (Texas) $ 1200.00 $ 0.00 $ 0.00
15-06-90 84 Ford Clayton Smith $ 4442.27 $ 0.00 $ 0.00
15-06-90 Fruehauf 35 ton lowbed $ 4000.00 $ 0.00 $ 0.00
26-03-91 87 Ford 4 X 4 (Lindsey Sexton) $ 9555.55 $ 444.45 $ 0.00
15-07-91 85 Ford Ext. Cab Unit #212 $ 2121.11 $ 178.89 $ 0.00
31-12-92 1990 Bronco (U12) $ 4128.29 $1238.49 $ 825.65
04-11-94 Baaef Trucking 45 ft. Van $ 311.11 $ 800.00 $ 2888.89
11-12-95 1995 Chevrolet Model IGC $ 398.90 $3590.00 $13961.10
26-08-96 1994 Toyota Land Cruiser $ 3872.10
11-09-96 84 GMC Brigadier (Porter's Truck Parts)Being repaired and remodeled
$153817.75 $10751.83 $17675.64
$5375.91 October
$159193.66
Office Equipment:
01-04-88 Acer Computer & HP Lase Printer $ 6000.00 $ 0.00 $ 0.00
01-09-89 Houston Instruments Phtter $ 2500.00 $ 0.00 $ 0.00
30-04-90 Xerox 3107 Copier $ 250.00 $ 0.00 $ 0.00
30-04-90 Metal Office Desks (10)
Wood Office Desks (6) $ 600.00 $ 0.00 $ 0.00
30-04-90 Odd Credenzas (2) $ 50.00 $ 0.00 $ 0.00
30-04-90 Calculators (8) $ 100.00 $ 0.00 $ 0.00
30-04-90 IBM Selectric II Electric Typewriter $ 140.00 $ 0.00 $ 0.00
30-04-90 Odd Couches (3) $ 25.00 $ 0.00 $ 0.00
30-04-90 Silver Reed EX 50 Electric Typewriter $ 200.00 $ 0.00 $ 0.00
30-04-90 Cannon S-66 MX Electric Typewriter $ 100.00 $ 0.00 $ 0.00
30-04-90 A T & T computer with accesories $ 2200.00 $ 0.00 $ 0.00
30-04-90 4 Drawer Fireproof Filing Cabinets (3) $ 250.00 $ 0.00 $ 0.00
30-04-90 Metal Cabinets (2) $ 30.00 $ 0.00 $ 0.00
30-04-90 Wooden Book Shelves $ 30.00 $ 0.00 $ 0.00
30-04-90 Odd Upholstered Chairs (23) $ 100.00 $ 0.00 $ 0.00
30-04-90 Desk Chairs (22) $ 90.00 $ 0.00 $ 0.00
30-04-90 Fold-up Metal Tables 5 ft. to 7 ft. (9)$ 100.00 $ 0.00 $ 0.00
30-04-90 Oval Wood Tables (4) $ 120.00 $ 0.00 $ 0.00
30-04-90 Wood Conference Tables (3) $ 500.00 $ 0.00 $ 0.00
30-04-9o Metal Filing Cabinets - 4 drawer (25) $ 150.00 $ 0.00 $ 0.00
30-04-90 Metal Filing Cabinets - 2 drawer (16) $ 50.00 $ 0.00 $ 0.00
30-04-90 2 Drawer Fireproof Filing Cabinets $ 100.00 $ 0.00 $ 0.00
30-04-90 Xerox 400 Telecopier $ 200.00 $ 0.00 $ 0.00
30-04-90 Paymaster Checkwriter $ 10.00 $ 0.00 $ 0.00
30-04-90 Front Offie Furniture $ 300.00 $ 0.00 $ 0.00
30-04-90 Deloy's Office Furniture $ 400.00 $ 0.00 $ 0.00
30-04-90 Odd End Tables (4) $ 50.00 $ 0.00 $ 0.00
04-12-90 Epson Printer Model 510 $ 324.21 $ 0.00 $ 0.00
07-12-90 COBOL Compiler by Microsoft $ 325.36 $ 0.00 $ 0.00
12-12-90 Plus Hardcard $ 685.01 $ 0.00 $ 0.00
19-04-91 Epson 9 pin Printer $ 395.84 $ 0.00 $ 23.38
15-01-95 DellPentium90 Tower Computer $ 1082.38 $ 811.80 $ 2164.82
10-06-96 Mita Copier $ 0.00 $1249.36 $ 5565.34
$17457.80 $2061.16 $ 7753.54
$1030.58 October
$18488.38
BUILDINGS:
31-12-90 Pump Shop (construction in process) $ 349.81 $ 65.59 $ 2208.29
31-12-90 Shop (construction in process) $ 7773.62 $1457.55 $49070.97
01-02-91 Highland Steal Erectors $ 3581.79 $ 693.25 $23454.96
01-02-91 Double S Construction $ 297.09 $ 57.50 $ 1945.41
01-03-91 Double S Construction $ 882.60 $ 173.63 $ 5888.78
01-03-91 Highland Steel Erectors $ 555.36 $ 109.25 $ 3705.39
31-12-90 Office (construction in process) $ 7952.58 $1491.11 $50200.63
01-01-91 Carpet Plus $ 48.51 $ 9.24 $ 311.83
01-02-91 Home Depot $ 24.29 $ 4.70 $ 159.06
01-02-91 Frances Hamess $ 67.82 $ 13.13 $ 444.06
01-04-91 Carpet Plus $ 13.87 $ 2.77 $ 94.34
01-04-91 Jerry Weiler (Siding) $ 46.74 $ 9.35 $ 317.83
01-05-91 Double S Construction (porch) $ 239.69 $ 48.75 $ 1661.56
01-05-91 Carpet Plus $ 27.42 $ 5.58 $ 190.05
01-05-91 West Ready Mix(Radio Tower) $ 20.64 $ 4.20 $ 143.11
01-08-91 Double S Construction (porch) $ 159.01 $ 34.08 $ 1170.04
25-11-94 Shenandoah Furnace WG-F-350 $ 876.70 $ 618.85 $ 4692.95
$22917.54 $4798.52 $145659.25
$2399.26 October
$25316.80
</TABLE>
<TABLE>
MILLER PETROLEUM, INC.
OIL AND GAS PROPERTIES
<CAPTION>
Date
of permit Accum 1997
Purchase No. Well Name N.R.I. Value Method Amort Amort Net
<S> <C> <C> <C> <C> <C> <C> <C> <C>
30-04-90 6984 Gernt 1B 0.5500 $15763 DDB/10 $ 6049.03 $1943.79 $ 7775.18
30-04-90 1677 Koppers #2 0.3740 $12440 DDB/10 $ 4772.32 $1533.54 $ 6134.14
30-04-90 1951 Koppers #3 0.3740 $ 7056 DDB/10 $ 2706.87 $ 869.83 $ 3479.30
30-04-90 2037 Koppers #4 0.3740 $12980 DDB/10 $ 4979.47 $1600.11 $ 6400.42
30-04-90 2190 Koppers #5 0.3740 $ 870 DDB/10 $ 333.76 $ 107.25 $ 429.00
30-04-90 2361 Koppers #6 0.3740 $ 1751 DDB/10 $ 671.73 $ 215.85 $ 863.42
30-04-90 3673 Lewallen #1 0.0530 $ 167 DDB/10 $ 64.07 $ 102.93 $ 0.00
30-04-90 4909 Lewallen #2 0.4280 $ 2853 DDB/10 $ 1098.33 $1764.67 $ 0.00
30-04-90 5596 Lewallen #5 0.2440 $ 550 DDB/10 $ 214.83 $ 345.17 $ 0.00
30-04-90 7158 Hardy-Nance
Unit 1 0.2000 $ 2062 DDB/10 $ 791.04 $1270.96 $ 0.00
30-04-90 5908 P.S. Smith #1 0.0950 $ 201 DDB/10 $ 77.11 $ 123.89 $ 0.00
30-04-90 6901 Whitehead P-440.1110 $ 3511 DDB/10 $ 1346.91 $ 432.82 $ 1731.27
30-04-90 3612 Whitehead 5E 0.1380 $ 476 DDB/10 $ 182.61 $ 293.39 $ 0.00
30-04-90 5074 Windle#1F 0.7210 $ 3297 DDB/10 $ 1264.82 $ 406.44 $ 1625.74
30-04-90 5506 Windle U #1 0.1080 $ 3205 DDB/10 $ 1229.52 $ 395.10 $ 1580.38
30-04-90 7695 Koppers 10B 0.0330 $ 868 DDB/10 $ 340.68 $ 109.47 $ 437.87
01-12-88 P. S. SMITH
01-12-88 Windle Unit#1 $11667.00 DDB/10 $ 9289.19 $ 475.56 $ 8482.44
01-06-89 HoneyCreekCorp #8 $15439.44 DDB/10 $12134.10 $ 661.07 $11012.64
01-12-90 HoneyCreekCorp #6 $ 7095.14 DDB/10 $ 4925.21 $ 433.99 $ 4188.97
01-12-91 HoneyCreekCorp #9 $11435.11 DDB/10 $ 7063.54 $ 874.31 $ 5580.33
31-08-93 Syl Bowlin #1 $ 6925.81 DDB/10 $ 2788.79 $ 827.40 $ 1385.16
31-08-93 TommyOverton#1 $11686.88 DDB/10 $ 0.00 $2337.38
31-08-93 Mark Bowlin #1 $ 8581.80 DDB/10 $ 3968.22 $ 2402.90
21-09-93 Billy Bowlin etal#1$ 6995.44 DDB/10 $ 3234.69 $ 1958.72
27-09-93 W. H. Bowlin #1 $ 5555.50 DDB/10 $ 2569.07 $ 1555.54
16-11-93 Lewis DuncanHeirs#2$ 5826.63 DDB/10 $ 0.00
24-11-93 J. C. Bowlin #1 $ 6609.64 DDB/10 $ 2661.48 $ 1321.93
04-11-94 Gunagoe Production
Lease $ 2262.00 DDB/10 $ 0.00
01-12-94 AJ Croley Lease
800 acres Tim White$ 1200.00 DDB/10 $ 0.00
28-02-95 Blake Hannahs
Pemberton Baker&Bla$ 6000.00 DDB/10 $ 1333.14
28-02-95 A/R Forgave
Pemberton Bakar&Bla$ 6718.63 DDB/10 $ 1493.04
20-12-94 AJ Croley Lease
800 acres Tim White$ 1200.00 DDB/10 $ 0.00
30-04-90 7658 Koppers 18B 0.0330 $ 1934 DDB/10 $ 741.94 $ 238.41 $ 953.65
30-04-90 7684 Koppers 20B 0.0380 $ 8748 DDB/10 $ 3355.97 $1078.41 $ 4313.62
30-04-90 7734 Koppers 21B 0.1940 $14027 DDB/10 $ 5381.13 $1729.17 $ 6916.70
30-04-90 7788 Koppers 23B 0.1880 $11327 DDB/10 $ 4345.34 $1396.33 $ 5585.33
30-04-90 Koppers Lease
CampbellCounty $76000 DDB/10 $29155.65 $9368.87 $37475.48
30-04-90 5073 ThurmanUnit#1 0.5625 $63560 DDB/10 $24383.32 $7835.34 $31341.34
30-04-90 5074 Windle#1F 0.1125 $ 618 DDB/10 $ 237.08 $ 76.18 $ 304.74
30-04-90 6984 Gernt #1B 0.2625 $ 7527 DDB/10 $ 2887.56 $ 927.89 $ 3711.55
30-04-90 4909 Lewallen #2 0.3750 $ 2529 DDB/10 $ 970.20 $ 600.00 $ 958.80
30-04-90 5596 Lewallen #3 0.1875 $ 720 DDB/10 $ 276.21 $ 276.00 $ 167.79
30-04-90 6255 Lewallen #5 0.1875 $ 445 DDB/10 $ 170.72 $ 211.00 $ 63.28
30-04-90 6901 Whitehead P44 0.1750 $ 5528 DDB/10 $ 2120.69 $ 681.46 $ 2725.85
30-04-90 4416 K Jackson U#1 0.3900 $18494 DDB/10 $ 7094.78 $ 2279.84$ 9119.38
$394751.02 $158704.13$43823.81$171982.87
$21911.91 October
$180616.04
</TABLE>
