<PAGE> 1
U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended July 31, 1997
-------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
--------------- ----------------
Commission File No. 33-2249-FW
MILLER PETROLEUM, INC.
----------------------
(Name of Small Business Issuer in its Charter)
TENNESSEE 75-2072206
--------- ----------
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
3651 Baker Highway
Huntsville, Tennessee 37756
----------------------------
(Address of Principal Executive Offices)
Issuer's Telephone Number: (423) 663-9457
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
(1) Yes X No (2) Yes X No
--- --- --- ---
<PAGE> 2
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the Issuer has filed all documents and reports required to be
filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a Plan confirmed by a court. Yes No X
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date:
September 15, 1997
6,521,886
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The Financial Statements of the Registrant required to be filed with
this 10-QSB Transition Report were prepared by management and commence on the
following page, together with related Notes. In the opinion of management,
the Financial Statements fairly present the financial condition of the
Registrant.
<TABLE>
MILLER PETROLEUM, INC.
Consolidated Balance Sheets
ASSETS
<CAPTION>
July 31, April 30,
1997 1997
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 259,338 $ 64,531
Accounts receivable - trade, net 72,229 149,459
Total Current Assets 331,567 213,990
FIXED ASSETS
Machinery and equipment 853,438 481,862
Vehicles 227,537 227,537
Buildings 173,375 173,375
Office equipment 28,745 27,272
Less: accumulated depreciation (482,445) (466,819)
Total Fixed Assets 800,650 443,227
OIL AND GAS PROPERTIES 353,452 275,500
OTHER ASSETS
Land 511,500 11,500
Investments 17,436 17,436
Inventory 357,054 354,163
Total Other Assets 885,990 383,099
TOTAL ASSETS $2,371,659 $1,315,816
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade $ 55,773 $ 96,277
Accounts payable - related 67,790 16,090
Accrued expenses 10,750 16,963
Notes payable - current portion 269,457 254,449
Total Current Liabilities 403,770 383,779
LONG-TERM LIABILITIES
Notes payable 160,464 142,573
Notes payable - shareholder 31,420 -
Total Long-Term Liabilities 191,884 142,573
Total Liabilities 595,654 526,352
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY
Common Stock: 500,000,000 shares
authorized at $0.0001 par value,
6,521,886 and 6,055,000 shares
issued and outstanding 652 606
Additional paid-in capital 1,506,700 684,532
Stock subscriptions receivable (69,210) -
Note receivable - shareholder - (304,355)
Retained earnings 337,863 408,681
Total Stockholders' Equity 1,776,005 789,464
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 2,371,659 $1,315,816
</TABLE>
<TABLE>
MILLER PETROLEUM, INC.
Consolidated Statements of Operations
(Unaudited)
<CAPTION>
For the Three Months Ended
July 31,
1997 1996
<S> <C> <C>
REVENUES
Service and drilling revenue $ 159,045 $ 163,096
Oil and gas revenue 38,554 59,584
Retail sales 9,920 49,292
Other revenue 1,334 8,404
Total Revenue 208,853 280,376
COSTS AND EXPENSES
Cost of oil and gas sales 68,474 137,094
Selling, general and administrative 96,949 37,118
Salaries and wages 84,632 52,105
Depreciation, depletion and amortization 25,206 27,870
Total Costs and Expenses 275,261 254,187
INCOME (LOSS) FROM OPERATIONS (66,408) 26,189
OTHER INCOME (EXPENSE)
Interest income 5,381 4,699
Interest expense (9,791) (8,846)
Total Other Income (Expense) (4,410) (4,147)
INCOME TAXES - -
NET INCOME (LOSS) $ (70,818) $ 22,042
NET EARNINGS (LOSS) PER SHARE $ (0.01) $ 0.00
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 5,565,873 5,750,000
</TABLE>
<TABLE>
MILLER PETROLEUM, INC.
Consolidated Statements of Stockholders' Equity
<CAPTION>
Note
Additional Receivable Stock
Common Shares Paid-in Retained From Subscription
Shares Amount Capital Earnings Stockholder Receivable Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
April 30, 1996 3,501,197 $350 $263,583 $356,688 $ - $ - $620,621
Common stock
issued for
acquisition of
subsidiary 2,081,338 208 314,990 - - - 315,198
Recapitalization 167,465 17 (17) - - - -
Common stock
issued for cash
at $1.83 per
share 55,000 6 100,644 - - - 100,650
Common stock
issued for
services
rendered 250,000 25 5,332 - - - 5,357
Payment for note
receivable from
stockholder - - - - (304,355) - (304,355)
Net income for the
year ended
April 30, 1997 - - - 51,993 - - 51,993
Balance
April 30, 1997 6,055,000 606 684,532 408,681(304,355) - 789,464
Received payment
from shareholder
(Unaudited) - - - - 50,170 - 50,170
Common stock
issued for cash at
approximately
$1.74 per share
(Unaudited) 322,442 32 562,182 - - (69,210) 493,004
Common stock
issued for
equipment at
$1.80 per share
(Unaudited) 144,444 14 259,986 - - - 260,000
Net loss for the
three months
ended July 31,
1997 (Unaudited) - - - (70,818) - - (70,818)
Balance,
July 31, 1997
(Unaudited) 6,521,886 $652 $1,506,700 $337,863 $(254,185)$(69,210)$1,521,820
</TABLE>
<TABLE>
MILLER PETROLEUM, INC.
Consolidated Statements of Cash Flows
(Unaudited)
<CAPTION>
For the Three Months Ended
July 31,
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $ (70,818) $ 22,042
Adjustments to Reconcile Net Income to Net Cash
Provided (Used) by Operating Activities:
Depreciation, depletion and amortization 25,206 2,427
Disposition of equipment and property - 125,391
Changes in Operating Assets and Liabilities:
Decrease (increase) in accounts receivable 77,230 (2,293)
Decrease (increase) in inventory (2,891) (5,000)
Increase (decrease) in accounts payable (41,594) 13,822
Increase (decrease) in accrued expenses (6,213) (1,464)
Net Cash Provided (Used) by Operating Activities (19,080) 154,925
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (113,049) -
Purchase of land (500,000) -
Loan to shareholder - (296,691)
Purchase of investments - (16,375)
Purchase of oil and gas properties (87,532) -
Net Cash Provided (Used) by Investing Activities (700,581) (313,066)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments from note receivable 50,170 -
Sale of common stock 493,004 -
Proceeds from borrowings 417,530 182,085
Payment for notes payable (46,236) -
Net Cash Provided (Used) by Financing Activities $914,468 $ 182,085
NET INCREASE IN CASH $194,807 $ 23,944
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 64,531 68,785
CASH AND CASH EQUIVALENTS,
END OF PERIOD $259,338 $ 92,729
CASH PAID FOR:
Interest $ 9,791 $ 8,846
Income taxes $ - $ -
NON-CASH FINANCING ACTIVITIES:
Common stock issued for equipment $260,000 $ -
</TABLE>
MILLER PETROLEUM, INC.
(Formerly Triple Chip Systems, Inc.)
Notes to the Consolidated Financial Statements
July 31, 1997 and April 30, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Certain information and footnote disclosures normally included in the
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these financial statements be read in conjunction with the
Registrant's April 30, 1997 Annual Report on Form 10KSB. The results of
operations for the periods ended July 31, 1997 and 1996 are not
necessarily indicative of operating results for the full year.
The consolidated financial statements and other information furnished
herein reflect all adjustment which are, in the opinion of management of
the Registrant, necessary for a fair presentation of the results of the
interim periods covered by this report.
NOTE 2 - RELATED PARTY TRANSACTIONS
During the three months ended July 31, 1997, the Company purchased real
property from a major shareholder s wife. The property is located in
Huntsville, Tennessee and is currently used as an office, shop and
equipment yard by the Company. The appraisal price is $550,000. The
Company paid $82,470 cash, assumed a $39,906 note payable with the First
National Bank of Oneida, and issued a note payable for $377,624 to the
seller. The note is secured by the real property and bears 7% interest.
An annual payment of $92,019 plus interest is due beginning August 1,
1998. The total purchase price of the above real property is $500,000.
The Company purchased drilling equipment for the sum of $360,000.
$100,000 cash was paid by the Company and 144,444 shares of its common
stock was issued for the balance of $260,000. The equipment was
appraised at $383,000.
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
Plan of Operation
- -----------------
Plan of Operation for Existing Leases
In the next 12 months, the Company intends to commence full-scale
development of its oil and gas leases. The Company plans a fifteen well
drilling program on the northern portion of its "Koppers Lease" in Campbell
County, Tennessee. Industry partners have agreed to participate for a 25%
working interest with the Company retaining a 75% working interest in the
wells. Drilling depth will be approximately 3,000 feet. In the opinion of
management, both the Big Lime and Chattanooga Shale formations have a high
potential of producing natural gas; however, there can be no assurance that
its drilling program will be successful. After drilling the first five wells,
the Company will evaluate the success of said wells and use the geological
information acquired in drilling said wells in choosing the locations of the
future wells.
Also, in Campbell County, the Company plans to continue its joint
venture with Delta Producers. Estimated activities with Delta Producers call
for recompleting two wells and possibly drilling at least one.
The Company will drill the four wells in Overton County, Tennessee
as called for in its Farmout Agreement with Mitchell Energy Corporation.
Industry partners have agreed to purchase 75% of the working interest with the
Company retaining a 25% working interest. Potential pay zones for crude oil
that will be drilled are the Murfreesboro and the Knox formations. Currently,
the Company operates about 10 wells in this area producing crude oil. The
Company's past drilling experience here reveals that production from the
Murfreesboro formation is much greater than the Knox formation; however, it is
much more difficult to locate.
Many variables relating to engineering and other matters can not
be ascertained at this time. These variables will affect the economics of
such a program; many factors, such as well rates, decline rates, best
completion techniques and use of collateral production will not be definable
until the Company's development plans are underway.
Other Significant Plans
The Company also intends to take advantage of opportunities to
purchase existing oil and gas production. Changes in management or economic
conditions often bring properties to market at a level below replacement
costs. These acquisitions may quickly enhance cash flow and earnings to the
Company at no risk. Prospective acquisitions will be fully evaluated, which
evaluations will include a reserve analysis of the properties in question.
In addition to an active drilling program, the Company intends to
continue strategically acquiring leases in promising areas in the States of
Tennessee and Kentucky during the first year of operation. No assurance can
be given that the Company will be able to identify or acquire any such leases
or that, if it does acquire any such leases, that they will be profitable.
Results of Operations
- ---------------------
During the quarterly period ended July 31, 1997, the Company
received total revenues of $208,853, including service and drilling revenue of
$159,045 and oil and gas revenue of $38,554. Total costs and expenses during
this period were $275,261, and the Company had a net loss from operations of
$66,408. Net loss during the quarterly period ended July 31, 1997, was
$70,818, or $0.01 per share.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None; not applicable.
Item 2. Changes in Securities.
None; not applicable.
Item 3. Defaults Upon Senior Securities.
None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
On July 30, 1997, acting pursuant to applicable provisions of the
Tennessee General Corporation Act, the holders of a majority of the Company's
issued and outstanding common stock voted to adopt an Incentive Stock Option
Plan providing for the granting of options to certain employees each of whom
owns or will own less than 15 percent of the total combined voting power of
all classes of the Company's stock (this provision is waived if at the time
the option is granted the option price is at least 115% of the fair market
value of the Company's common stock and the option is not exercisable after
the expiration of five years from the date of issuance). Each optionee shall
receive options to purchase no more than 150,000 shares of the Company's
common stock and such options shall be exercisable for a period not more than
10 years. The exercise price of each option shall be 115% of the fair market
value of the Company's common stock at the time the option is granted.
As of the date of this Report, options to purchase a total of
490,000 shares have been granted to six individuals, including each of the
Company's directors and executive officers.
Item 5. Other Information.
Commencing on August 11, 1997, which is subsequent to the period
covered by this Report, the Company offered and sold a total of 466,886
"unregistered" and "restricted" shares of its common stock to 20 subscribers
for a total consideration of $822,208. These shares were sold pursuant to
Rule 506 of Regulation D of the Securities and Exchange Commission.
Item 6. Exhibits and Reports on Form 8-K.*
(a) Exhibits.
None.
(b) Reports on Form 8-K.
None.
* A summary of any Exhibit is modified in its entirety by reference to the
actual Exhibit.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
MILLER PETROLEUM, INC.
Date: 9/15/97 By: /s/ Deloy Miller
----------------- -----------------------------
Deloy Miller, President and
Director
Date: 9/15/97 By: /s/ Lawrence L. LaRue
----------------- -----------------------------
Lawrence L. LaRue,
Secretary/Treasurer and Director
Date: 9/15/97 By: /s/ Herbert J. White
----------------- -----------------------------
Herbert J. White, Vice
President and Director
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-END> JUL-31-1997
<CASH> 259338
<SECURITIES> 0
<RECEIVABLES> 72229
<ALLOWANCES> 0
<INVENTORY> 357054
<CURRENT-ASSETS> 331567
<PP&E> 1283095
<DEPRECIATION> 482445
<TOTAL-ASSETS> 2371659
<CURRENT-LIABILITIES> 403770
<BONDS> 0
0
0
<COMMON> 652
<OTHER-SE> 1775353
<TOTAL-LIABILITY-AND-EQUITY> 2371659
<SALES> 9920
<TOTAL-REVENUES> 208853
<CGS> 68474
<TOTAL-COSTS> 275261
<OTHER-EXPENSES> 4410
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9791
<INCOME-PRETAX> (70818)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (70818)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
