SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDED
FORM 8-k
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
February 2, 1999 (January 29, 1999)
MILLER DIVERSIFIED CORPORATION
(Exact Name of Registrant as specified in its charter)
Nevada 0-19001 84-1070932
------ ------- ----------
(State or other jurisdiction) (Commission file number) (IRS Employer ID No.)
23360 Weld County Road, #35, LaSalle, Colorado 80645
- ---------------------------------------------- -----
(address of principal executive offices) (zip code)
(970) 284-5556
---------------
(Registrant's telephone number, including area code)
<PAGE>
Item 2. Acquisition or Disposition of Assets
- --------------------------------------------
On January 29, 1999 Miller Diversified Corporation ("Registrant") entered
in an Amended Exchange Agreement with Miller Feed Lots, Inc. ("MFL") the purpose
of which was to extend the previously announced deadline for the proposed
exchange of shares between the two companies as previously announced. The new
deadline for the completion of the proposed exchange, the effect of which would
make MFL a wholly owned subsidiary of Registrant, is April 30, 1999.
The parties also agreed to adjust the exchange formula for determining the
number of share of Registrant to be issued for all outstanding shares of MFL.
Under the prior agreement, Registrant was to issue 15,000,000 shares of its
common stock for all of the issued and outstanding common stock of MFL. The
Amended Exchange Agreement calls for the issuance of 7,000,000 shares of common
stock of Registrant. The lower number of shares to be issued reflects
Registrant's judgment that the current market price of Registrant's common stock
may not sufficiently reflect the value of Registrant when consideration of other
indices of value are taken into account.
The proposed exchange between the two companies is subject to shareholder
approval.
Item 7. Financial Statements and Exhibits.
- ------------------------------------------
(a) Financial Statements
------------------------
Audited financial statements of Miller Feed Lots, Inc. are filed
herewith.
(b) Pro forma Financial Statements
----------------------------------
Pro forma financial information of Registrant and Miller Feed Lots,
Inc. are filed herewith.
(c) Exhibits
------------
10.11 Amended Exchange Agreement
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, as
amended, the Registrant has caused this report to be signed on its behalf by the
undersigned duly authorized officer.
MILLER DIVERSIFIED CORPORATION
(Registrant)
Dated: February 2, 1999 By: /s/ James E. Miller
---------------------------------
James E. Miller President
<PAGE>
MILLER FEED LOTS, INC.
AND SUBSIDIARIES
FINANCIAL STATEMENTS
Years Ended August 31, 1998 and 1997
<PAGE>
TABLE OF CONTENTS
Independent Auditors' Report..................................................2
CONSOLIDATED BALANCE SHEETS...................................................3
CONSOLIDATED STATEMENTS OF OPERATIONS.........................................5
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY...............................6
CONSOLIDATED STATEMENTS OF CASH FLOWS.........................................7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS....................................9
-1-
<PAGE>
1001 Ninth Avenue
Greeley, Colorado 80631-4046
(970) 352-7990 * FAX (970) 352-1855
Fort Collins Line (970) 226-0525
Denver Line (303) 442-8988
E-mail Address: [email protected]
Independent Auditors' Report
----------------------------
Board of Directors
Miller Feed Lots, Inc.
La Salle, Colorado
We have audited the accompanying consolidated balance sheets of Miller Feed
Lots, Inc. and subsidiaries as of August 31, 1998 and 1997, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
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 consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by man agement, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Miller Feed
Lots, Inc. and subsidiaries as of August 31, 1998 and 1997, and the results of
their operations and their cash flows for the years then ended, in conformity
with generally accepted accounting principles.
ANDERSON & WHITNEY, P.C.
November 6, 1998
- --------------------------------------------------------------------------------
ANDERSON & WHITNEY, P.C. * CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS ADVISORS
-2-
<PAGE>
MILLER FEED LOTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
August 31
-----------------------
1998 1997
---- ----
ASSETS
Current Assets:
Cash $ 21,696 $ 18,219
Trade accounts receivable 65,853 60,877
Receivable from officers/directors 287,844 426,715
Income tax refunds receivable -- 7,995
Inventories -- 40,892
---------- ----------
Total Current Assets 375,393 554,698
---------- ----------
Property and equipment:
Land 56,924 56,924
Buildings and improvements 243,136 243,136
Equipment 700,129 563,157
---------- ----------
1,000,189 863,217
Less: Accumulated depreciation and amortization 533,189 415,914
---------- ----------
Total Property and Equipment 467,000 447,303
---------- ----------
Other Assets:
Net investment in sales type leases 12,953 27,915
Other investments 78,500 30,415
Deferred income taxes 51,000 51,016
Deposits and other 28,778 94,972
---------- ----------
Total Other Assets 171,231 204,318
---------- ----------
TOTAL ASSETS $1,013,624 $1,206,319
========== ==========
Continued on next page.
-3-
<PAGE>
MILLER FEED LOTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
August 31
---------------------------
1998 1997
---- ----
LIABILITIES
- -----------
Current Liabilities:
Note payable - officer/director $ 13,000 $ 13,000
Trade accounts payable 59,846 59,613
Accounts payable - related parties 203,137 9,415
Accrued expenses 5,328 25,389
Income taxes payable 676 --
Current portion:
Long-term debt 33,770 114,726
Long-term debt - related parties 126,280 344,567
----------- -----------
Total Current Liabilities 442,037 566,710
Long-term Debt 277,274 311,218
Long-term Debt - related parties 491,202 418,838
----------- -----------
Total Liabilities 1,210,513 1,296,766
----------- -----------
Commitments
----------- -----------
STOCKHOLDERS' EQUITY
- --------------------
Common Stock, par value $100 per share; 2,500 shares
authorized; 1,016 shares issued and outstanding 101,600 101,600
Additional Paid-In Capital 11,860 11,860
Retained Earnings (Deficit) (310,349) (203,907)
----------- -----------
Total Stockholders Equity (196,889) (90,447)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,013,624 $ 1,206,319
=========== ===========
See Accompanying Notes to Consolidated Financial Statements.
-4-
<PAGE>
MILLER FEED LOTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended August 31
-----------------------------
1998 1997
---- ----
Revenue:
Freight services income $ 317,085 $ 314,548
Rent and lease income 252,618 219,276
Commodity sales commissions 451,464 521,345
Speculative trading gains (losses) (104,854) 29,864
Interest income 25,515 24,814
Other 9,115 9,598
---------- ----------
Total Revenue 950,943 1,119,445
---------- ----------
Costs and Expenses:
Cost of:
Freight services 232,079 252,371
Rent and lease income 80,754 59,853
Commodity sales commissions 204,800 308,282
Selling, general, and administrative 375,386 324,435
Interest 33,360 44,230
Interest - related parties 64,664 78,769
---------- ----------
Total Costs and Expenses 991,043 1,067,940
---------- ----------
Earnings (Loss) Before Taxes (40,100) 51,505
Income Tax Expense 42,751 15,773
---------- ----------
NET EARNINGS (LOSS) $ (82,851) $ 35,732
========== ==========
Net Earnings (Loss) per Common Share $ (41.67) $ 35.17
========= =========
Weighted Average Number of Common Shares Outstanding 1,016 1,016
========= =========
See Accompanying Notes to Consolidated Financial Statements.
-5-
<PAGE>
MILLER FEED LOTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended August 31, 1997 and 1998
----------------------------------------------
Additional Retained
Common Paid-In Earnings
Stock Capital (Deficit) Total
----- ------- --------- -----
Balances, September 1, 1996 $ 101,600 $ 11,660 $(219,144) $(105,684)
Net earnings for the year ended
August 31, 1997 -- -- 35,732 35,732
Dividends paid -- -- (20,495) (20,495)
--------- --------- --------- ---------
Balances, August 31, 1997 101,600 11,860 (203,907) (90,447)
Net loss for the year ended
August 31, 1998 -- -- (82,851) (82,851)
Dividends paid -- -- (23,591) (23,591)
--------- --------- --------- ---------
Balances, August 31, 1998 $ 101,600 $ 11,860 $(310,349) $(196,889)
========= ========= ========= =========
See Accompanying Notes to Consolidated Financial Statements.
-6-
<PAGE>
<TABLE>
<CAPTION>
MILLER FEED LOTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended August 31
--------------------------
1998 1997
---- ----
Cash Flows from Operating Activities:
<S> <C> <C>
Cash received from customers $ 920,452 $ 1,100,717
Cash paid to suppliers and employees (570,642) (939,714)
Interest received 1,924 4,319
Interest paid (98,646) (123,457)
Income taxes paid (34,064) (132,372)
----------- -----------
Net Cash Provided (Used) by Operating Activities 219,024 (90,507)
----------- -----------
Cash Flows from Investing Activities:
(Increase) decrease in receivables from officers/directors 138,871 (40,450)
Acquisition of property and equipment (136,972) (144,800)
Payments received on sales type leases 14,962 31,690
Proceeds from other investments 28,415 30,811
Payment of other deposits -- (49,953)
----------- -----------
Net Cash Provided (Used) by Investing Activities 45,276 (172,702)
----------- -----------
Cash Flows from Financing Activities:
Advances on long-term debt - related parties 181,000 402,000
Payments on:
Long-term debt (114,900) (55,690)
Long-term debt - related parties (326,923) (86,463)
----------- -----------
Net Cash Provided (Used) by Financing Activities (260,823) 259,847
----------- -----------
Net Increase (Decrease) in Cash 3,477 (3,362)
Cash, beginning of year 18,219 21,581
----------- -----------
Cash, end of year $ 21,696 $ 18,219
=========== ===========
Continued on next page.
-7-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MILLER FEED LOTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS -- Continued
Years Ended August 31
---------------------
1998 1997
---- ----
<S> <C> <C>
Reconciliation of Net Earnings (Loss) to Net Cash Provided
(Used) by Operating Activities:
Net earnings (loss) $ (82,851) $ 35,732
Adjustments:
Imputed interest income (23,591) (20,495)
Depreciation 117,275 104,826
Amortization 1,694 1,528
Deferred income taxes 16 8,161
(Increase) decrease in:
Trade accounts receivable (4,976) 6,086
Income tax refunds receivable 7,995 (7,995)
Inventories 40,892 --
Prepaid expenses, deposits, and other (12,000) 99
Increase (decrease) in:
Accounts payable 193,955 (98,095)
Accrued expenses (20,061) (3,589)
Income taxes payable 676 (116,765)
--------- ---------
Net Cash Provided (Used) by Operating Activities $ 219,024 $ (90,507)
========= =========
Supplemental Disclosure of Noncash Investing and Financing Activities:
Imputed interest on receivables from officers/directors
reported as dividends paid $ 23,591 $ 20,495
========= =========
See Accompanying Notes to Consolidated Financial Statements.
-8-
</TABLE>
<PAGE>
MILLER FEED LOTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies:
The accounting and reporting policies of Miller Feed Lots, Inc. (the
Company) and its subsidiaries conform to generally accepted accounting
principles. The following summary of significant accounting policies
is presented to assist the reader in evaluating the Company's
consolidated financial statements.
Description of Business:
The Company's primary business is a trucking operation for a feedlot
facility near La Salle, Colorado. The Company also leases the feedlot
facility and various equipment to a related party and, through its
subsidiaries, serves as a commodity broker for commercial and retail
customers. Most of the customers to which the Company has granted
credit either operate in the cattle industry or feed cattle as an
investment.
Principles of Consolidation:
The consolidated financial statements include Miller Feed Lots, Inc.
and its wholly-owned subsidiaries, D & M Feeders (D&M - a cattle
feeding operation), Miller Trading Company (MTC - a commission agent
for the execution of retail commodities contracts), and La Salle
Commodity and Cattle Services Co. (LCCS - a commission agent for the
execution of commercial commodities contracts). All material
intercompany profits, transactions, and balances have been eliminated.
Cash Equivalents:
The Company considers all highly-liquid debt instruments purchased
with a maturity of three months or less to be cash equivalents.
Trade Accounts Receivable:
No allowance for doubtful accounts receivable has been recorded based
on the history of the Company and the nature of the receivables.
Concentration of Credit Risk:
At August 31, 1998 and 1997, the Company has trade accounts receivable
from an unrelated customer, totaling $44,148 and $38,103,
respectively, which exceeded 10% of the Company's total trade accounts
receivable.
Inventories:
Inventories are stated at the lower of cost (weighted average) or
market.
Property and Equipment:
Property and equipment are recorded at acquisition cost. Depreciation
is computed using the accelerated and straight line methods over the
estimated useful lives of the assets.
-9-
<PAGE>
Note 1 - Summary of Significant Accounting Policies - Continued:
Income Taxes:
Deferred tax assets or liabilities, net of any applicable valuation
allowance for deferred tax assets, are recognized for the estimated
future tax effects attributable to temporary differences and
carryforwards. Deferred tax assets and liabilities are classified as
current or noncurrent based on the classification of the asset and
liability to which they relate. Deferred tax assets and liabilities
not related to an asset or liability for financial reporting,
including deferred tax assets related to carryforwards, are classified
as current or noncurrent according to the expected reversal date of
the temporary difference. The Company and its subsidiaries file
consolidated corporate income tax returns.
Earnings per Common Share:
Earnings per common share is computed by using the weighted average
number of common shares outstanding during the period presented. Fully
diluted earnings per share amounts are not presented for 1998 and 1997
as there are no stock options or warrants outstanding.
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Reclassifications:
Certain reclassifications of 1997 financial information have been made
to conform with the 1998 presentation.
Note 2 - Sales-type Leases:
The Company leases various pieces of equipment to an affiliate, Miller
Diversified Corporation, under various agreements expiring through
2000. Following is a summary of the components of the Company's
investment in the sales-type leases
August 31
----------------
1998 1997
---- ----
Total minimum lease payments to be received $14,328 $31,971
Less: Unearned income 1,375 4,056
------- -------
Net Investment $12,953 $27,915
======= =======
Minimum lease payments to be received as of August 31, 1998 for the
next two years are: 1999, $8,023; 2000, $6,305.
-10-
<PAGE>
MILLER FEED LOTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
Note 3 - Note Payable - Officer/Director:
The Company has a $13,000 note payable with an officer/director that
is payable on demand. The note is non-interest bearing and without
collateral.
Note 4 - Long-term Debt:
August 31
------------------------
1998 1997
---- ----
Unrelated:
Mortgage payable to an insurance company
maturing in April 2005, with quarterly
payments of principal and interest at
10.25%, collateralized by feedlot
facilities $ 311,044 $ 341,738
Note payable to bank maturing in
September 1997, with monthly payments of
principal and interest at 8.75%,
collateralized by a house near the
feedlot facilities -- 84,206
---------- ----------
311,044 425,944
Less: Current portion 33,770 114,726
---------- ----------
$ 277,274 $ 311,218
========== ==========
Related Parties:
Notes payable to Miller Diversified
Corporation, interest payable monthly at
6%, $250,000 due May 1998, $300,000 due
May 2002, without collateral,
subordinated to mortgagor $ 300,000 $ 550,000
Various notes payable to a related party
maturing in varying amounts from 1998 to
2008 with monthly payments of principal
and interest at 12% to 14%,
collateralized by equipment 162,000 152,766
Note payable to a related party maturing
in 2007, with monthly payments of
principal and interest at 8%,
collateralized by a condominium 45,000 45,000
Various notes payable to a related-party
financing company maturing in various
amounts from 1997 to 2001, monthly
payments of principal and interest at
from 7.5% to 14%, collateralized by
equipment 30,767 15,639
Note payable to a related party maturing
in 2007, with monthly payments of
principal and interest at 8%,
collateralized by a house near the
feedlot facilities 79,715 --
---------- ----------
617,482 763,405
Less: Current portion 126,280 344,567
---------- ----------
$ 491,202 $ 418,838
========== ==========
-11-
<PAGE>
Note 4 - Long-term Debt - Continued:
The current maturities of long term debt for each of the next five years
and thereafter are as follow:
Year Ending August 31 Amount
--------------------- ------
1999 $ 160,050
2000 117,722
2001 86,369
2002 111,576
2003 350,624
2004-2007 102,185
Note 5 - Income Taxes:
Years Ended August 31
---------------------
1998 1997
---- ----
Current income taxes $42,735 $ 7,612
Deferred income taxes 16 8,161
------- -------
Income Tax $42,751 $15,773
======= =======
Significant components and the related tax effect of temporary differences
and carryforwards are as follows:
August 31
-------------------------------------------
1998 1997
-------------------- --------------------
Current Long-Term Current Long-Term
------- --------- ------- ---------
Deferred Tax Assets:
Capital loss carryforwards $ -- $ 38,200 $ -- $ 14,473
Allowance for Note Receivable -- 51,000 -- 51,000
Deferred Tax Liabilities:
D & M Cash basis for tax -- -- -- (14,457)
-------- -------- -------- --------
-- 89,200 -- 51,016
Deferred Tax Assets Valuation
Allowance -- (38,200) -- --
-------- -------- -------- --------
Net Deferred Tax Asset $ -- $ 51,000 $ -- $ 51,016
======== ======== ======== ========
The capital loss carryforwards expire in 1999 and 2003.
-12-
<PAGE>
MILLER FEED LOTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
Note 5 - Income Taxes - Continued:
The differences between income tax expense (benefit) and the amount
computed by applying the federal statutory rates are as follows:
Years Ended August 31
---------------------
1998 1997
---- ----
Computed at expected federal statutory rate $ 6,015 $ 9,938
Change in deferred tax assets 16 8,161
Capital loss carryover utilized -- (8,161)
Change in deferred tax asset valuation allowance 38,200 --
Other (1,480) 5,835
-------- --------
Income Tax $ 42,751 $ 15,773
======== ========
Note 6 - Related Party Transactions:
The Company is related to Miller Diversified Corporation (MDC) through
partial common ownership and management. The following schedule
summarizes transactions between the Company and MDC.
Years Ended August 31
---------------------
1998 1997
---- ----
Payments from MDC for:
Freight $177,931 $274,302
Operating lease of feedlot facility 129,000 129,000
Capital lease of equipment 17,020 36,010
Operating lease of equipment 114,618 81,276
Housing rent 9,000 9,000
Payments to MDC for:
Interest expense on long-term debt 24,000 18,000
In August 1992, the Company purchased substantially all of MDC's
operating equipment and leased a portion of the equipment back to MDC
under a lease which terminated during the year ended August 31, 1997.
Short-term advances are made to two officers/directors that are due on
demand. Interest income of $23,591 and $20,495 was imputed on these
advances for the years ended August 31, 1998 and 1997, respectively,
and is reported as dividends paid to stockholders. The balances
outstanding at August 31, 1998 and 1997 were $287,844 and $426,715,
respectively.
-13-
<PAGE>
Note 7 - Operating Leases:
The Company leases feedlot facilities to MDC under an operating lease
agreement expiring in 2016. Monthly lease payments are two and
one-third cents (21/3(cent)) per head per day for cattle actually in
the feedlot, subject to a minimum of $10,750 and maximum of $13,300.
MDC is responsible for all maintenance, insurance, utilities, and
taxes on the property, and has the option to purchase the feedlot
facility for $1,300,000 during the lease term. The feedlot facilities
consist of $48,014 of land and $52,066 of buildings and improvements,
less accumulated depreciation of $39,897.
Future minimum lease payments for the feedlot facilities are $129,000
per year through 2016, totaling $2,117,750.
The Company also leases certain equipment and a house to MDC on a
month-to-month basis. Rents received during the years ended August 31,
1998 and 1997 were $123,618 and $90,276, respectively.
Note 8 - Fair Value of Financial Instruments:
The Company's financial instruments include cash, accounts receivable,
notes receivable, accounts payable, and notes payable. The Company
estimates that the fair value of all financial instruments at August
31, 1998 and 1997 does not differ materially from the aggregate
carrying values of its financial instruments recorded in the
accompanying balance sheet.
The estimated fair value amounts have been determined using available
market information and appropriate valuation methodologies. The
carrying amount of cash, accounts receivable, and accounts payable
approximates fair value because of the short maturity of these
instruments. The carrying amount of notes receivable and notes payable
approximates fair value as interest rates approximate current rates
for loans with similar terms and remaining maturities.
Note 9 - Pending Merger:
On June 22, 1998, the Company signed an Agreement and Plan of Exchange
with MDC, which would make the Company a wholly-owned subsidiary of
MDC. The agreement calls for MDC to issue 15,000,000 shares of its
common stock to the Company's shareholders in exchange for all of the
Company's issued and outstanding common shares. The transaction is
subject to the approval of MDC shareholders.
-14-
<PAGE>
<TABLE>
<CAPTION>
MILLER DIVERSIFIED CORPORATION AND SUBSIDIARY
AND MILLER FEED LOTS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
Historical Pro Forma
---------------------------- -----------------------------
Miller Miller
Diversified Feed
Corporation Lots, Inc.
August 31, 1998 Consolidated Consolidated Adjustments Combined
- ---------------------------------------------------------------------------------------------------------------
ASSETS
- ------
<S> <C> <C> <C> <C>
Current Assets:
Cash $ 63,656 $ 21,696 $ -- $ 85,352
Trade accounts receivable 823,576 65,853 -- 889,429
Receivable from officers/directors -- 287,844 -- 287,844
Accounts receivable - related parties 203,137 -- (203,137)C4 --
Inventories 1,321,467 -- -- 1,321,467
Prepaid expenses 13,542 -- -- 13,542
----------- ----------- -------------- -----------
Total Current Assets 2,425,378 375,393 (203,137) 2,597,634
----------- ----------- -------------- -----------
Property and Equipment:
Land -- 56,924 -- 56,924
Buildings and improvements -- 243,136 -- 243,136
Feedlot facilities under capital lease -
related party 1,497,840 -- (1,497,840)C1 --
Equipment 77,453 700,129 -- 777,582
Equipment under capital leases - related party 30,649 -- (30,649)C2 --
Leasehold improvements 131,043 -- -- 131,043
----------- ----------- -------------- -----------
1,736,985 1,000,189 (1,528,489) 1,208,685
Less: Accumulated depreciation and
amortization 581,331 533,189 (454,345)C1 640,253
(19,922)C2
Total Property and Equipment 1,155,654 467,000 (1,054,222) 568,432
----------- ----------- -------------- -----------
Other Assets:
Net investment in sales type leases -- 12,953 (12,953)C2 --
Securities available for sale 10,347 -- -- 10,347
Other investments 186,366 78,500 -- 264,866
Notes receivable - related party 300,000 -- (300,000)C4 --
Deferred income taxes 233,142 51,000 -- 284,142
Deposits and other 30,885 28,778 (16,778)C3 42,885
----------- ----------- -------------- -----------
Total Other Assets 760,740 171,231 (329,731) 602,240
----------- ----------- -------------- -----------
TOTAL ASSETS $ 4,341,772 $ 1,013,624 $ (1,587,090) $ 3,768,306
=========== =========== ============== ===========
Continued on next page.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MILLER DIVERSIFIED CORPORATION AND SUBSIDIARY
AND MILLER FEED LOTS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
Historical Pro Forma
---------------------------- -----------------------------
Miller Miller
Diversified Feed
Corporation Lots, Inc.
August 31, 1998 Consolidated Consolidated Adjustments Combined
- ---------------------------------------------------------------------------------------------------------------
LIABILITIES
- -----------
<S> <C> <C> <C> <C>
Current Liabilities:
Notes payable $ 1,001,327 $ -- $ -- $ 1,001,327
Note payable - officer/director -- 13,000 -- 13,000
Trade accounts payable 440,848 59,846 -- 500,694
Accounts payable - related parties -- 203,137 (203,137)C4 --
Accrued expenses 32,046 5,328 -- 37,374
Income taxes payable -- 676 -- 676
Customer advance feed contracts 14,907 -- -- 14,907
Current portion:
Long-term debt -- 33,770 -- 33,770
Long-term debt - related parties -- 126,280 -- 126,280
Capital lease obligations - related party 27,094 -- (20,153)C1 --
(6,941)C2
----------- ----------- -------------- -----------
Total Current Liabilities 1,516,222 442,037 (230,231) 1,728,028
Long-term Debt -- 277,274 -- 277,274
Long-term Debt - related parties -- 491,202 (300,000)C4 191,202
Capital Lease Obligations - related party 984,432 -- (978,420)C1 --
(6,012)C2
----------- ----------- -------------- -----------
Total Liabilities 2,500,654 1,210,513 (1,514,663) 2,196,504
----------- ----------- -------------- -----------
Commitments
----------- ----------- -------------- -----------
STOCKHOLDERS' EQUITY
- --------------------
Preferred Stock -- -- -- --
Common Stock 636 101,600 700 A 1,336
(101,600)B
Additional Paid-In Capital 1,351,693 11,860 (700)A 1,154,104
(11,860)B
(196,889)B
Unrealized Loss - Securities Available
for Sale (9,753) -- -- (9,753)
Retained Earnings (Deficit) 498,542 (310,349) 310,349 B 426,115
(44,922)C1
(10,727)C2
(16,778)C3
----------- ----------- -------------- -----------
Total Stockholders' Equity 1,841,118 (196,889) (72,427) 1,571,802
----------- ----------- -------------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 4,341,772 $ 1,013,624 $ (1,587,090) $ 3,768,306
=========== =========== ============== ===========
See Accompanying Note to Unaudited
Pro Forma Combined Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MILLER DIVERSIFIED CORPORATION AND SUBSIDIARY
AND MILLER FEED LOTS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED INCOME STATEMENT
Historical Pro Forma
------------------------------ -------------------------------
Miller Miller
Diversified Feed
For the Year Ended Corporation Lots, Inc.
August 31, 1998 Consolidated Consolidated Adjustments Combined
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue:
Feed and related sales $ 8,211,839 $ -- $ -- $ 8,211,839
Fed cattle sales 1,373,688 -- -- 1,373,688
Feedlot services 1,524,310 -- -- 1,524,310
Freight services income -- 317,085 -- 317,085
Rent and lease income -- 252,618 (129,000)C1 --
(123,618)C5
Commodity sales commissions -- 451,464 -- 451,464
Speculative trading gains (losses) -- (104,854) -- (104,854)
Interest income 27,319 25,515 -- 52,834
Interest income - related party 24,000 -- (24,000)C4 --
Other 23,005 9,115 (1,800)C5 30,320
------------ ------------ --------------- ------------
Total Revenue 11,184,161 950,943 (278,418) 11,856,686
------------ ------------ --------------- ------------
Costs and Expenses:
Cost of:
Feed and related sales 7,372,392 -- -- 7,372,392
Fed cattle sold 1,477,479 -- -- 1,477,479
Feedlot services 1,386,796 -- (59,914)C1 1,195,593
(7,671)C2
(123,618)C5
Freight services -- 232,079 -- 232,079
Rent and lease income -- 80,754 -- 80,754
Commodity sales commissions -- 204,800 -- 204,800
Selling, general, and administrative 773,055 375,386 (1,294)C3 1,145,347
(1,800)C5
Write-down of cattle inventory 140,416 -- -- 140,416
Interest 31,563 33,360 -- 64,923
Interest - related parties -- 64,664 (24,000)C4 40,664
Interest on capital leases - related party 112,997 -- (110,937)C1 --
(2,060)C2
Total Costs and Expenses 11,294,698 991,043 (331,294) 11,954,447
------------ ------------ --------------- ------------
Earnings (Loss) Before Taxes (110,537) (40,100) 52,876 (97,761)
Income Tax Expense (Benefit) (56,180) 42,751 -- (13,429)
------------ ------------ --------------- ------------
NET EARNINGS (LOSS) $ (54,357) $ (82,851) $ 52,876 $ (84,332)
============ ============ =============== ============
See Accompanying Note to Unaudited
Pro Forma Combined Financial Statement.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MILLER DIVERSIFIED CORPORATION AND SUBSIDIARY
AND MILLER FEED LOTS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED INCOME STATEMENT
Historical Pro Forma
------------------------------ --------------------------------
Miller Miller
Diversified Feed
For the Year Ended Corporation Lots, Inc.
August 31, 1997 Consolidated Consolidated Adjustments Combined
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue:
Feed and related sales $ 9,215,851 $ -- $ -- $ 9,215,851
Feedlot services 2,040,105 -- -- 2,040,105
Freight services income -- 314,548 -- 314,548
Rent and lease income -- 219,276 (129,000)C1 --
(90,276)C5
Commodity sales commissions -- 521,345 -- 521,345
Speculative trading gains -- 29,864 -- 29,864
Interest income 23,561 24,814 -- 48,375
Interest income - related party 18,000 -- (18,000)C4 --
Other 80,052 9,598 (1,800)C5 87,850
------------ ------------ --------------- ------------
Total Revenue 11,377,569 1,119,445 (239,076) 12,257,938
------------ ------------ --------------- ------------
Costs and Expenses:
Cost of:
Feed and related sales 8,483,551 -- -- 8,483,551
Feedlot services 1,844,037 -- (59,914)C1 1,664,197
(29,650)C2
(90,276)C5
Freight services -- 252,371 -- 252,371
Rent and lease income -- 59,853 -- 59,853
Commodity sale commission -- 308,282 -- 308,282
Selling, general, and administrative 704,296 324,435 (1,262)C3 1,025,669
(1,800)C5
Loss of sale of land and water rights 178,452 -- -- 178,452
Interest 12,146 44,230 -- 56,376
Interest - related parties -- 78,769 (18,000)C4 60,769
Interest on capital lease - related party 117,130 -- (112,811)C1 --
(4,319)C2
Total Costs and Expenses 11,339,612 1,067,940 (318,032) 12,089,520
------------ ------------ --------------- ------------
Earnings Before Taxes 37,957 51,505 78,956 168,418
Income Tax Expense (Benefit) (141,284) 15,773 -- (125,511)
------------ ------------ --------------- ------------
NET EARNINGS $ 179,241 $ 35,732 $ 78,956 $ 293,929
============ ============ =============== ============
See Accompanying Note to Unaudited
Pro Forma Combined Financial Statement.
</TABLE>
<PAGE>
NOTE TO UNAUDITED PRO FORMA
COMBINED FINANCIAL STATEMENTS
The following note is included to assist the reader in understanding the
adjustment needed to illustrate the business combination of the Company and MFL.
(a) To record issuance of 7,000,000 of the Company's Common Stock to acquire
all outstanding shares of MFL.
(b) To eliminate MFL stockholders' equity balances.
(c) To eliminate intercompany transactions as identified below:
(c1) Feedlot facilities under capital lease between MDC and MFL.
(c2) Equipment under capital lease between MDC and MFL.
(c3) MFL goodwill on acquisition of LCCS and MTC from MDC.
(c4) Accounts and notes receivable on MDC with accounts and notes payable
on MFL.
(c5) Accounting fees and equipment rentals between MDC and MFL.
AMENDED EXCHANGE AGREEMENT Exhibit 10.11
THIS AMENDED EXCHANGE AGREEMENT is dated as of January 29, 1999 and is
entered into by and between Miller Diversified Corporation, a Nevada corporation
("Miller"), and Miller Feed Lots, Inc. ('MFL").
WHEREAS, the parties hereto have determined that it is desirable to amend
that certain Exchange Agreement dated as of June 20, 1998 between the parties
hereto (the "Exchange Agreement").
THEREFORE IN CONSIDERATION of the mutual promises and agreements contained
herein, the parties hereby amend the Exchange Agreement as follows:
1. The Recital to the Exchange Agreement is amended to read as follows:
The Boards of Directors of Miller and MFL have adopted resolutions
approving the exchange pursuant to Section 78.450 of the Nevada
General Corporation Act (the "Exchange") of the issued and outstanding
capital stock of MFL, consisting solely of 1,000 shares of common
stock, for 7,000,000 shares of Miller common stock in accordance with
this Agreement and the Plan of Exchange (the "Plan") in the form of
Exhibit "A" attached hereto and by this reference made a part hereof.
2. Article II, Section 2.3 is amended as follows:
Subsections (C) and (d) are to have inserted the date November 30,
1998 wherever the date of February 28, 1998 had previously appeared.
3. Article V, Section 5.4(b) is hereby amended to read as follows:
(b) Lapse of Time. By the Board of Directors of Miller or MFL if the
Effective Time of the Exchange has not occurred on or prior to
April 30, 1999.
4. Article VII, Section 7.2 is amended as follows:
7.2 Closing. The Closing of the Exchange contemplated by this
Agreement shall take place at the offices of Miller at such time as
may be convenient to all the parties but in no event later that April
30, 1999. At the Closing MFL shall deliver share certificates in
amounts representing all of the issued and outstanding common shares
of MFL to Miller and Miller shall deliver 7,000,000 of its common
shares to James E. Miller and Norman M Dean or to their assigns as
Miller is directed at Closing.
<PAGE>
5. Section B (I) of the Plan of Exchange of Miller Diversified
Corporation and Miller Feed Lots, Inc. attached to the Exchange
Agreement and made a part thereof is amended to read as follows:
(i) Each outstanding share of MFL stock shall by operation of law be
exchanged for 7,000 shares of previously unissued common stock of
Miller.
6. As amended above, the Exchange Agreement shall remain in full force
and effect.
Dated and Signed as of the Date First Above Written:
Miller Diversified Corporation
By: ________________________
Norman M. Dean
And By: _____________________
James E. Miller
Miller Feed Lots, Inc.
By: __________________________
James E. Miller
And By: _______________________
Norman M. Dean
