SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15 (d)
of the Securities and Exchange Act of 1934
For the Quarter Ended November 30, 2003
Commission File Number 01-19001
MILLER DIVERSIFIED CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
Nevada 84-1070932
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Mailing Address:
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P. O. Box 237
La Salle, Colorado 80645
23360 Weld County Road 35
La Salle, Colorado 80645
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(Address of Principal Executive Office)
(970) 284-5556
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 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.
YES NO X
----- -----
The number of shares of Common Stock, with a par value of $.0001, that are
outstanding on August 20, 2004, 6,404,640.
Transitional Small Business Disclosure Format: YES NO X
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
MILLER DIVERSIFIED CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
Nov. 30 Aug. 31
2003 2003
- --------------------------------------------------------------------------------
ASSETS
- ------
Current Assets:
Cash $ 26,895 $ --
Receivables:
Accounts receivable - related parties 8,410 --
-------- --------
Total current assets 35,305 --
-------- --------
Other Assets:
Notes receivable - related parties 21,752 --
Deferred income taxes -- --
Net assets of discontinued operations -- 252,371
-------- --------
Total other assets 21,752 252,371
-------- --------
Total assets $ 57,057 $252,371
======== ========
LIABILITIES
- -----------
Current Liabilities:
Cash overdraft $ -- $ 9,262
Current portion of:
Long-term debt - related party 60,915 72,503
-------- --------
Total current liabilities 60,915 81,765
Long-term debt - related party 175,000 --
Accrued interest - related party 324 --
-------- --------
Total liabilities 236,239 81,765
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Commitments
- -----------
Continued on next page
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MILLER DIVERSIFIED CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS - Continued
- -------------------------------------------------------------------------------
Nov. 30 Aug. 31
2003 2003
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STOCKHOLDERS' EQUITY
- --------------------
Preferred stock -- --
Common stock, par value $.0001 per share
25,000,000 shares authorized; 6,404,640
shares issued and outstanding 640 640
Additional paid-in capital 1,867,854 1,867,854
Less: receivable for additional paid-in capital (516,165) (516,165)
Retained earnings (1,531,511) (1,175,723)
Accumulated other comprehensive loss -- (6,000)
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Total stockholders' equity (179,182) 170,606
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Total liabilities and stockholders' equity $ 57,057 $ 252,371
=========== ===========
See Accompanying Notes to Consolidated Financial Statements.
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MILLER DIVERSIFIED CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
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Three Months Ended November 30 2003 2002
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Revenue:
- --------
Total revenue -- --
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Costs and Expenses:
Interest on note payable - related party 1,484 3,323
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Total costs and expenses 1,484 3,223
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Loss before income taxes (1,484) (3,323)
Income tax expense -- --
----------- -----------
Loss from continuing operations (1,484) (3,323)
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Discontinued Operations:
Loss from operations of disposed net assets (171,680) (219,305)
Loss on disposal of net assets (182,624) --
----------- -----------
(354,304) (219,305)
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NET LOSS $ (355,788) $ (222,628)
=========== ===========
Loss per Common Share:
Loss from continuing operations $ -- $ --
Loss from discontinued operations (0.03) (0.03)
Loss on disposal of net assets (0.03) --
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LOSS PER COMMON SHARE $ (0.06) $ (0.03)
=========== ===========
Weighted average number of common
shares outstanding 6,404,640 6,404,640
=========== ===========
See Accompanying Notes to Consolidated Financial Statements
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MILLER DIVERSIFIED CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
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Three Months Ended November 30, 2003 2002
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Cash Flows From Operating Activities:
Net loss from continuing operations $ (1,484) $ (3,323)
Adjustments to reconcile net loss to net cash flows
from operating activities:
Changes in assets and liabilities:
Increase in accounts receivable - related parties (8,410) --
Increase in accrued interest payable - related parties 324 --
--------- ---------
Net cash used in continuing operations (9,570) (3,323)
Net cash provided by (used in) discontinued operations 34,365 (134,048)
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Net cash provided by (used in) operating activities 24,795 (137,371)
Cash Flows From Investing Activities:
Increase in note receivable - related party (21,752) --
--------- ---------
Net cash used in continuing operations (21,752) --
Net cash provided by discontinued operations 46,284 412,723
Cash paid in sale of net assets (307,281) --
--------- ---------
Net cash provided by (used in) investing activities (282,749) 412,723
Cash Flows From Financing Activities:
Proceeds from:
Long-term debt - related party 175,000 --
Principal payments on:
Long-term debt - related party (11,588) (15,800)
Change in cash overdraft (139,695) --
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Net cash provided by (used in) continuing operations 23,717 (15,800)
Net cash used in discontinued operations (60,538) (289,650)
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Net cash used in financing activities (36,821) (305,450)
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Net decrease in cash (294,775) (30,098)
Cash, beginning of period 321,670 214,345
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Cash, end of Period $ 26,895 $ 184,247
========= =========
See Accompanying Notes to Consolidated Financial Statements.
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MLLER DIVERSIFIED CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- ---------------------
The consolidated balance sheets as of November 30, 2003 and August 31, 2003, the
consolidated statements of earnings and of cash flows for the three months ended
November 30, 2003 and 2002 have been prepared by the Company, without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements have been condensed or omitted as allowed by the rules and
regulations of the Securities and Exchange Commission.
In preparation of the above-described financial statements, all adjustments of a
normal and recurring nature have been made. The Company believes that the
accompanying financial statements contain all adjustments necessary to present
fairly the results of operations and cash flows for the periods presented.
Further, management believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that these financial
statements be read in conjunction with the annual financial statements and the
notes thereto. The operations for the three-month period ended November 30, 2003
are not necessarily indicative of the results to be expected for the year.
Company-owned Cattle:
As a result of the Company's line-of-credit which financed the feeding of
Company-owned cattle not being renewed in January 2003, the remaining
Company-owned cattle were completed and sold by August 31, 2003. No
Company-owned cattle were fed during the three months ended November 30, 2003
during which time the Company was pursuing financing that would allow them to
feed cattle.
Related-Party Transactions
- --------------------------
The Company had an agreement with a related party, Miller Feed Lots, Inc. (MFL)
to share losses from the Company's fed cattle sales beginning September 1, 2001.
Under the agreement, the amount due from MFL is cancelled if the Company ceases
to feed cattle. The agreement is reported as additional paid-in capital less the
related receivable from MFL. At November 30, 2003, this receivable amounted to
$516,165. Subsequently in May 2004, the Company's management concluded they had
exhausted their efforts to obtain financing to continue feeding cattle, which
triggered the cancellation of the $516,165 due from MFL and the related
additional paid-in capital.
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Related-Party Transactions (continued)
Sale of Assets and Liabilites:
Effective October 31, 2003, the Company's shareholders approved the sale of
substantially all of its assets and liabilities to MFL. The sales agreement also
provided for cancellation of lease agreement between the two entities for the
feedlot facility in exchange for paying a cancellation fee of $250,000 to MFL.
The sale resulted in a net receivable from MFL of $21,752 and a loss on sale of
$182,624. After the sale, the Company had no active operating activity.
The note receivable created from the sale of assets and liabilities sold to MFL
consisted of the following:
Cash $ 307,281
Accounts receivable 542,250
Notes receivable 1,688,500
Inventories 466,480
Other current assets 14,136
Other assets 11,495
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Total assets $ 3,030,142
Accounts payable 785,543
Accrued expenses 41,152
Notes payable 1,955,095
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Total liabilities $ 2,781,790
Net assets disposed of 248,352
Sales price for fixed assets 23,400
Cancellation fee ( 250,000)
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Note receivable - MFL $ 21,752
===========
The loss created from the sale of assets and liabilities sold to MFL consisted
of the following:
Property and equipment - net $ ( 822,113)
Capital lease obligation 866,089
Sales price for fixed assets 23,400
Cancellation fee ( 250,000)
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Loss on sale $ ( 182,624)
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Related-Party Transactions (continued)
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Notes Payable:
During the quarter ended November 30, 2003, the Company has a $175,000 unsecured
note payable to a related entity. The note plus accrued interest at 7.5% is due
upon demand. Interest of $324 was included in operations for the quarter ended
November 30, 2003. Interest payable at November 30, 2003 totaled $324.
During the quarter ended November 30, 2003, the Company has a $300,000 note
payable to a related entity. The balance of this note at November 30, 2003 was
$60,915. During the quarter ended November 30, 2003 $12,748 was paid which
included $1,160 of interest that was included in operations.
New Accounting Pronouncements
- -----------------------------
Management does not believe there are new accounting standards the
implementation of which will significantly impact the Company's financial
statements.
ITEM 3. CONTROLS AND PROCEDURES
The Company disposed of its active business operations during the fiscal quarter
ended November 30, 2003. As of the end of the period covered by this report, the
Company conducted an evaluation, under the supervision and with the
participation of the Chief Executive Officer and Chief Financial Officer, of the
Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the 1934 Act. Based on this evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that the Company's disclosure
controls and procedures had not been effective to ensure that information
required to be disclosed by the Company in reports that it files or submits
under the 1934 Act is recorded, processed, summarized and reported within the
time periods specified in Securities and Exchange Commission rules and forms, in
particular, disclosure controls and procedures relative to off balance sheet
arrangements and guarantees. Consequently, the Company instituted procedures to
ensure that off balance sheet arrangements and guarantees pertaining to cattle
feeding arrangements between the Company and its customers are properly
disclosed in the financial statements and public filings. The Company thereby
effected a change in its internal control over financial reporting beginning
with the Company's November 30, 2003 fiscal quarter. With the disposal of the
Company's cattle feeding business, specific controls relating to cattle feeding
arrangements will no longer pertain to the Company's public filings. However,
general controls over off-balance sheet arrangements and guarantees remain in
effect.
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PART II OTHER INFORMATION
Items 1 through 5 None.
Item 6 Exhibits and reports on form 8-K
a) Exhibits
Exhibit 31 - Certification pursuant to section 302 for
Principle Executive Officer and Principal Financial Officer.
Exhibit 32 - Certification pursuant to section 906 for
Principle Executive Officer and Principal Financial Officer.
b) Reports on form 8-K None filed
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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 DIVERSIFIED CORPORATION
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(Registrant)
Signature Title Date
- --------- ----- ----
/s/ James E. Miller President, Principal August 30, 2004
- ----------------------------- Executive Officer
James E. Miller Principal Financial
Officer, and Director
/s/ Clark A. Miller Secretary-Treasurer August 30, 2004
- ----------------------------- Principal Marketing
Clark A. Miller Officer
/s/ Norman M. Dean Chairman of the August 30, 2004
- ----------------------------- Board and Director
Norman M. Dean
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