<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 January 31, 2000
----------------
[ ] 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 62-1028629
--------- ----------
(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>
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:
January 31, 2000
7,100,691
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 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
January 31, April 30,
2000 1999
Unaudited
<S> <C> <C>
CURRENT ASSETS
Cash $50,184 $62,438
Accounts receivable - trade-, net 280,648 317,403
Inventory 473,900 472,586
Work in process 86,216
Prepaid expenses 25,274
Total Current Assets 890,948 877,701
FIXED ASSETS
Machinery and equipment 1,568,038 1,568,038
Vehicles 316,862 316,862
Buildings 313,335 313,335
Office Equipment 75,561 75,311
Less: accumulated depreciation (858,122) (719,886)
Total Fixed assets 1,415,674 1,553,660
OIL AND GAS PROPERTIES 2,366,988 2,502,648
PIPELINE FACILITIES 424,238 458,997
OTHER ASSETS
Land 511,500 511,500
Investments 500 500
Organization Costs 178 178
Total Other Assets 512,178 512,178
TOTAL ASSETS $5,610,026 $5,905,184
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable - trade $209,924 $335,207
Accrued expenses 72,972 48,040
Notes payable - current portion 616,300 586,256
Total Current Liabilities 899,196 969,503
LONG-TERM LIABILITIES
Notes payable - related 132,477 134,738
Notes payable 2,935,267 2,980,862
Total Long-Term Liabilities 3,067,744 3,115,600
Total Liabilities 3,966,940 4,085,103
STOCKHOLDERS' EQUITY
Common Stock: 500,000,000 shares
authorized at $0.0001 par value,
7,100,691 and 6,921,556 shares
issued and outstanding 710 692
Additional paid-in capital 2,452,139 2,271,157
Retained Earnings (809,763) (451,768)
Total Stockholders' Equity 1,643,086 1,820,081
TOTAL LIABILITIES AND
STOCKHOLDERS'S EQUITY $5,610,026 $5,905,184
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<TABLE>
MILLER PETROLEUM, INC.
Consolidated Statements of Operations
(UNAUDITED)
Three Months Nine Months
Ended
January 31,2000
<S> <C> <C>
REVENUES
Service and drilling revenue $ 103,910 $ 294,855
Oil and gas revenue 220,784 646,638
Retail sales 628 40,697
Other revenue 350,044 428,577
Total Revenue 675,366 1,410,767
COSTS AND EXPENSES
Cost of sales 175,346 375,190
Selling, general and administrative 106,899 273,658
Salaries and wages 162,532 510,582
Depreciation, depletion and amortization 119,384 353,693
Total Costs and Expenses 564,161 1,513,123
INCOME (LOSS) FROM OPERATIONS 111,205 (102,356)
OTHER INCOME (EXPENSE)
Interest income 1,781 5,922
Interest expense (81,337) (261,559)
Total Other Income (Expense) (79,556) (255,637)
INCOME TAXES 0 0
NET INCOME (LOSS) 31,649 (357,993)
NET EARNING (LOSS) PER SHARE 0 (0.05)
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 7,100,691 7,003,710
</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, 1998 6,646,067 $666 $1,705,080 $484,425 $2,190,171
Common stock
issued for cash at
$2.19 per share 150,000 15 328,110 - 328,125
Common stock
issued for cash at
$2.00 per share 60,500 5 120,994 - 120,999
Common stock
issued for cash at
$1.80 per share 28,556 3 51,397 - 51,400
Common stock
issued for services
at $1.80 per share 22,000 2 39,598 - 39,600
Common stock
issued for services
at $1.80 per share 3,333 6,000 - 6,000
Common stock
issued to employees
at $1.80 per share 11,100 1 19,979 - 19,980
40,000
Net loss for the
year ended
April 30,1999 (936,195) (936,195)
Balance
April 30, 1999 6,921,556 $692 $2,271,158 (451,770) $1,820,080
Common stock
issued for cash at
$1.00 per share 25,000 3 24,997 - 25,000
Common stock
issued for cash at
$1.59 per share 3,135 5,000 - 5,000
Common stock
issued for cash at
$1.00 per share 150,000 15 149,985 - 150,000
Common stock
issued for services
at $1.00 per share 1,000 1,000 - 1,000
Net loss for the
nine months ended
January 31, 2000 (357,993) (357,993)
Balance
January 31, 2000 7,100,691 $710 $2,452,140 $(809,763) 1,643,087
</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 Nine Months
Ended
January 31, 2000
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 31,649 ($357,993)
Adjustments to Reconcile Net Income to
Net Cash Provided (Used) by Operating
Activities:
Depreciation, depletion and amortization 119,384 353,693
Common stock issued for services 1,000
Changes in Operating Assets and Liabilities:
Decrease (increase) in accounts receivable 42,887 36,755
Decrease (increase) in prepaid expense 25,274
Decrease (increase) in inventory (400) (1,314)
Decrease (increase) in work in process (86,216) (86,216)
Increase (decrease) in accounts payable 5,165 (125,283)
Increase (decrease) in accrued expenses (31,339) 24,932
Net Cash Provided (Used) by Operating
Activities 81,130 (129,152)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (250)
Purchase of oil and gas properties (6,000) (42,800)
Purchase of pipeline (1,512) (1,512)
Net Cash Provided (Used) by Investing
Activities (7,512) (44,562)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable (81,535) (186,254)
Sale of common stock 180,000
Proceeds from borrowing 167,714
Net Cash Provided (Used) by Financing
Activities ($81,535) $ 161,460
NET INCREASE IN CASH ($7,917) ($12,254)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 58,101 62,438
CASH AND CASH EQUIVALENTS,
END OF PERIOD $50,184 $50,184
CASH PAID FOR
Interest $81,337 $261,559
Income taxes - -
NON-CASH FINANCING ACTIVITIES:
Common stock issued for services $ 1,000
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
MILLER PETROLEUM, INC.
Notes to the Consolidated Financial Statements
January 31, 2000 and April 30,1999
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, 1999 Annual Report on Form 1OKSB. The results of
operations for the period ended January 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.
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
----------------------------------------------------------
Miller Petroleum, Inc. is now drilling its first Swan Creek Field
test on its 20 well Tengasco farmout in Claiborne County, Tennessee. This
well will be Miller's first test of the Ordovician Knox formation, a 2.25 mile
step out from the existing proven reserve limit of the Swan Creek Field.
Tengasco is a 50% working interest partner in the venture. Tengasco currently
has 21 wells in the Swan Creek Field with proven developed reserves of over 92
Bcfe. Total depth of 5100' is expected to be reached early in February.
Drilling was suspended on another Knox test in Hawkins County,
Tennessee, approximately 14 miles from the Swan Creek Field. Adverse hole
conditions caused the drilling contractor to abandon efforts to complete the
proposed 7000' test. This was to be a wildcat test of a Knox structure with
striking similarities to the Swan Creek play. Miller plans to re-enter the
wellbore for further evaluation and, if possible, completion. Another test of
this structure is scheduled for spudding in the fourth fiscal quarter.
Miller is planning an extension of its Koppers South oil field in
its fourth fiscal quarter. While the limits of this field have yet to be
defined, some of Miller's existing wells have exceeded 40,000 barrels of oil
produced to date. This well is expected to be completed in the Monteagle lime
formation.
Liquidity and Capital Resources
- -------------------------------
Cash and cash equivalents at January 31, 2000, decreased by $7,917
from the October 31, 1999 balance, due primarily to a payment on notes
payable.
The Company believes that its current cash flow will be sufficient
to support its cash requirements for the next 12 months.
Results of Operations
- ---------------------
The Company had revenues of $675,366 for the third quarter of its
fiscal year, up from the $435,135 in revenues recognized during the last
quarter.
The Company's net income was $31,649. Income before depreciation,
depletion and amortization for the third quarter was $151,033.
The Company has returned to profitability this quarter. The return
to profitability is due to the recovery in oil and gas prices and to increased
drilling in the East Tennessee area.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
------------------
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.
On or about January 19, 2000, the Company filed a complaint against
Ronnie Griffith, formerly an officer and director of the Company, in the
Chancery Court for Scott County, Tennessee at Huntsville, Case No. 8459,
asserting that the defendant had breached his fiduciary duty of loyalty to the
Company by soliciting current Miller customers, as well as prospective
customers, for another competing business, by using company resources, company
employees, company information and company time to solicit customers for the
competing business as well as to implement and operate the competing business,
by either directly or indirectly engaging in the operation of the competing
business, and by hiring Miller employees, who formerly worked under Griffith's
supervision, to work for the competing business, by using company credit cards
for personal expenses. The plaintiff has asked that it be awarded injunctive
relief restraining the defendant from engaging in any activity which
constitutes unfair competition with Miller or tortious interference with the
Company's business relationships, and that Griffith shall not communicate
about business matters with any person or entity who was a Miller customer,
during the period that the defendant was employed by Miller. Miller has also
asked that it be awarded damages for losses and damages suffered as a result
of Griffith's breach of fiduciary duty to the corporation, damages for use of
and/or conversion of the Company's property, assets or resources, damages for
wage disgorgement to the extent Griffith participated in the operation of
another business while employed by Miller, punitive damages for acting
maliciously and/or recklessly and/or intentionally and/or gross negligence,
for the costs of this cause, including discretionary costs incurred by Miller,
and any other type of damages sustained by Miller.
The Griffith case is pending and it is the belief that all the above
assertions are true. However, a decision for the defendant would not have a
material effect on the future operations of the Company.
Item 2. Changes in Securities.
----------------------
None.
Item 3. Defaults Upon Senior Securities.
--------------------------------
None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
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: 3/14/2000 By: /s/ Deloy Miller
----------------- -----------------------------
Deloy Miller, CEO and Director
Date: 3/14/2000 By: /s/ Lawrence L. LaRue
----------------- -----------------------------
Lawrence L. LaRue,
Secretary/Treasurer and Director
Date: 3/14/2000 By: /s/ Herman Gettelfinger
----------------- -----------------------------
Herman Gettelfinger Director
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-END> JAN-31-2000
<CASH> 50184
<SECURITIES> 0
<RECEIVABLES> 366864
<ALLOWANCES> 0
<INVENTORY> 473900
<CURRENT-ASSETS> 890948
<PP&E> 5576522
<DEPRECIATION> 858122
<TOTAL-ASSETS> 5610026
<CURRENT-LIABILITIES> 899196
<BONDS> 0
0
0
<COMMON> 710
<OTHER-SE> 1642376
<TOTAL-LIABILITY-AND-EQUITY> 5610026
<SALES> 628
<TOTAL-REVENUES> 675366
<CGS> 175346
<TOTAL-COSTS> 564161
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 81337
<INCOME-PRETAX> 31649
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31649
<EPS-BASIC> (.00)
<EPS-DILUTED> (.00)
</TABLE>
