<PAGE>
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 October 31, 2000
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
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Commission File No. 33-2249-FW
MILLER PETROLEUM, INC.
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(Name of Small Business Issuer in its Charter)
TENNESSEE 62-1028629
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(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
3651 Baker Highway
Huntsville, Tennessee 37756
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(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
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Not applicable.
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:
October 31, 2000
7,668,056
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The Financial Statements of Miller Petroleum, Inc., a Tennessee
corporation (the "Company"), required to be filed with this Quarterly Report
were prepared by management and reviewed by Charles M. Stivers, Certified
Public Accountant of Manchester, Kentucky 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
<CAPTION>
ASSETS
October 31, April 30,
2000 2000
Unaudited
<S> <C> <C>
CURRENT ASSETS
Cash $ 427,314 $ 39,556
Accounts receivable - trade-, net 325,508 781,311
Inventory 481,549 484,549
Work in process 175,090
Prepaid expenses 27,988
Total Current Assets 1,409,461 1,333,404
FIXED ASSETS
Machinery and equipment 1,286,450 1,343,962
Vehicles 432,132 326,916
Buildings 313,335 313,335
Office Equipment 82,064 76,270
Less: accumulated depreciation (840,637) (833,519)
Total Fixed assets 1,273,344 1,226,964
OIL AND GAS PROPERTIES 750,764 2,311,825
PIPELINE FACILITIES 370,848 411,906
OTHER ASSETS
Land 511,500 511,500
Investments 500 500
Organization Costs 119 178
Total Other Assets 512,119 512,178
TOTAL ASSETS $4,316,536 $5,796,277
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable - trade $260,279 $ 402,330
Accrued expenses 58,992 50,795
Notes payable - current portion 504,761 2,418,566
Total Current Liabilities 824,032 2,871,691
LONG-TERM LIABILITIES
Notes payable - related 99,601 127,652
Notes payable 1,225,235 1,269,148
Total Long-Term Liabilities 1,324,836 1,396,800
Total Liabilities 2,148,868 4,268,491
STOCKHOLDERS' EQUITY
Common Stock: 500,000,000 shares
authorized at $0.0001 par value,
7,668,056 and 7,110,691 shares
issued and outstanding 767 711
Additional paid-in capital 2,967,582 2,462,138
Retained Earnings (800,681) (935,063)
Total Stockholders' Equity 2,167,668 1,527,786
TOTAL LIABILITIES AND
STOCKHOLDERS'S EQUITY $4,316,536 $5,796,277
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<TABLE>
MILLER PETROLEUM, INC.
Consolidated Statements of Operations
(UNAUDITED)
Three Months Six Months
Ended
October 31,2000
<S> <C> <C>
REVENUES
Service and drilling revenue $ 655,342 $1,177,290
Oil and gas revenue 183,355 345,371
Retail sales 135 1,126
Other revenue 1,500 125,404
Total Revenue 840,332 1,649,191
COSTS AND EXPENSES
Cost of sales 345,484 599,111
Selling, general and administrative 131,210 237,950
Salaries and wages 169,856 350,993
Depreciation, depletion and amortization 78,443 174,946
Total Costs and Expenses 724,993 1,363,000
INCOME (LOSS) FROM OPERATIONS 115,339 286,191
OTHER INCOME (EXPENSE)
Interest income 464 577
Interest expense (54,533) (152,386)
Total Other Income (Expense) (54,069) (151,809)
INCOME TAXES 0 0
NET INCOME (LOSS) 61,270 134,382
NET EARNING (LOSS) PER SHARE .01 .02
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 7,392,124 7,116,191
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<TABLE>
MILLER PETROLEUM, INC.
Consolidated Statement of Stockholders' Equity
(UNAUDITED)
Additional
Common Shares Paid-in Retained
Shares Amount Capital Earnings Total
<S> <C> <C> <C> <C> <C>
Balance
April 30, 1999 6,921,556 $692 $2,271,158 ($451,768) $1,820,082
Common stock
issued for cash at
$1.00 per share 185,000 19 184,981 - 185,000
Common stock
issued for cash at
$1.59 per share 3,135 5,000 - 5,000
Common stock
issued for services
at $1.00 per share 1,000 1,000 - 1,000
Net loss for the
year ended
April 30, 2000 (483,295) (483,295)
Balance
April 30, 2000 7,110,691 $711 $2,462,139 $(935,063) 1,527,787
Common stock
repurchased for
$2.00 per share (45,000) (5) (89,995) (90,000)
Common stock
issued for services
at $1.00 per share 5,500 1 5,499 5,500
Common stock
issued for cash
at $0.90 per share 50,000 5 44,995 45,000
Common stock
repurchased for
$1.60 per share (3,135) 5 (5,000) (5,000)
Common stock
issued for cash
at $1.00 per share 550,000 55 549,945 550,000
Net income for the
six months ended
October 31, 2000 134,382 134,382
Balance
October 31, 2000 7,668,056 $767 $2,967,582 ($800,681)$2,167,669
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
<TABLE>
MILLER PETROLEUM, INC.
Consolidated Statement of Cash Flows
(UNAUDITED)
Three Months Six Months
Ended
October 31, 2000
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 61,270 $134,382
Adjustments to Reconcile Net Income to
Net Cash Provided (Used) by Operating
Activities:
Depreciation, depletion and amortization 78,443 174,946
Allowance for bad debt
Common stock issued for services 5,500
Changes in Operating Assets and Liabilities:
Decrease (increase) in accounts receivable 1,862,533 455,803
Decrease (increase) in inventory 3,000 3,000
Decrease (increase) in work in process (30,278) (175,090)
Increase (decrease) in accounts payable (24,042) (142,051)
Increase (decrease) in prepaid expenses (13,994) (27,988)
Increase (decrease) in accrued expenses (6,057) 8,197
Net Cash Provided (Used) by Operating
Activities 1,930,875 436,699
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (30,997) (68,413)
Purchase of oil and gas properties (262,497) (262,497)
Net Cash Provided (Used) by Investing
Activities (293,494) (330,910)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable (1,952,170) (2,034,411)
Sale of common stock 550,000 595,000
Repurchase of common stock (5,000) (95,000)
Proceeds from borrowing 88,695 88,695
Sale of Oil and Gas Properties 1,600,260
Sale of Equipment 1,500 127,425
Net Cash Provided (Used) by Financing
Activities ($1,316,975) $281,969
NET INCREASE IN CASH $320,406 $387,758
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 106,908 39,556
CASH AND CASH EQUIVALENTS,
END OF PERIOD $427,314 $427,314
CASH PAID FOR
Interest $54,533 $152,386
Income taxes - -
NON-CASH FINANCING ACTIVITIES:
Common stock issued for services $5,500 $ 5,500
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
MILLER PETROLEUM, INC.
Notes to the Consolidated Financial Statements
April 30, 2000 and October 31, 2000
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, 2000 Annual Report on Form 1OKSB. The results of
operations for the period ended October 31, 2000 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
None.
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Item 2. Management's Discussion and Analysis or Plan of Operation.
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Miller Petroleum has more than 40,000 acres held by production in
Tennessee. This acreage is made up primarily of development drilling
locations. It produces both gas and oil, mainly from the Mississippian age
Big Lime Formation. The properties contain a minimum three-year inventory of
conventional drilling locations. A recent "high volume" development oil well
drilled on one of these properties showed that the oil reservoir has not yet
been pressure depleted. A second development well has recently been staked on
this property, and the company plans to drill an additional four to five oil
wells on this lease. This property also contains a "sizeable" gas cap, which
Miller Petroleum intends to develop in the near future
All 40,000 Tennessee acres are presently being evaluated for their CBM
potential. Currently the company is drilling two CBM test wells on an
8,000-acre block of company leases, which are strategically located near an
existing pipeline. If the test wells are successful Miller Petroleum will
begin a development drilling program that will be able to quickly market the
produced gas.
Miller Petroleum's exploration effort is being concentrated in the
East Tennessee portion of the Eastern Overthrust Belt. Management feels that
this area has tremendous petroleum potential as shown by the development of
Swan Creek Field. Knox Dolomite wells in this field have reserves in excess
of two Bcf gas per well. Swan Creek Field is already producing substantial
amounts of oil from a separate shallow reservoir.
Miller Petroleum has obtained a 20-well farmout from Tengasco, Inc. in
the Swan Creek Field area. On this farmout Miller has drilled two successful
Knox Dolomite wells in Swan Creek Field proper. A third Knox well drilled by
Miller has resulted in a new field discovery on a separate structure from Swan
Creek. The Dewey Sutton #1 established oil production for Miller Petroleum on
this farmout. This well was drilled in August of 2,000 and is presently
producing 80 BOPD. The initial offset to this well is being evaluated for
completion, while a second well recently drilled by the company has flowed oil
to the surface. Initial testing of this second well, the Purkey #2, indicates
that it will begin production at a rate of 90 to 100 BOPD.
At this time Miller Petroleum management has identified 12 additional
large structures similar to Swan Creek Field in the Eastern Overthrust of
Tennessee. The company plans to test these structures as aggressively as
possible while continuing to identify additional targets in the Eastern
Overthrust Belt.
Liquidity and Capital Resources
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Cash and cash equivalents at October 31, 2000, increased by $387,758
from the April 30, 2000 balance, due primarily to sale of 595,000 shares of
common stock, increases in the price for crude oil and natural gas and the
increase in our drilling activity.
The Company believes that its current cash flow will be sufficient to
support its cash requirements for the next 12 months.
Results of Operations
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The Company had revenues of $840,332 for the first quarter of its
fiscal year, up from the $808,859 in revenues recognized during the first
quarter.
The Company's net income was $61,270. Income before depreciation,
depletion and amortization for the first quarter was $139,713. This is the
second quarter the Company has been profitable.
Increases in Miller Petroleum, Inc. revenue is due to the successful
drilling program it commenced this year in Campbell, Claiborne and Hancock
County, Tennessee.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
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On or about January 20, 2000, the Company filed a complaint against
Blue Ridge Group, Inc. in the Chancery Court of Hawkins County at Rogersville,
Tennessee, Case No. 13951, asserting that Blue Ridge had breached a Footage
Drilling Contract with the Company. Miller asserted that Blue Ridge had
breached the said contract by quitting the job without drilling to the
required depth, failing to drill a straight hole, and by damaging the well
bore by failing to conduct its operations in a good and workmanlike manner in
accordance with good industry practice. The plaintiff has asked that it be
awarded its initial payment of $37,000.00 to Blue Ridge, damages occasioned by
the improper deviation of the hole from the vertical plane; damages for the
cost of re-drilling and/or re-working the hole, damages allowed by the parties
contract, further and equitable relief to which it may be entitled, and to
assess the costs of this cause, including Miller's discretionary costs, to
Blue Ridge.
The Blue Ridge action is pending and the Company believes that its
contract with the plaintiff was breached. However, a decision for the
defendant would not have a material effect on the Company.
Item 2. Changes in Securities.
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None.
Item 3. Defaults Upon Senior Securities.
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None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
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None; not applicable.
Item 5. Other Information.
None; not applicable.
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: 12-14-2000 By: /s/ Deloy Miller
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Deloy Miller, CEO and
Director
Date: 12-14-2000 By: /s/ Lawrence L. LaRue
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Lawrence L. LaRue,
Secretary/Treasurer and
Director
Date: 12-14-2000 By: /s/ Herman Gettelfinger
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Herman Gettelfinger
Director
