As filed with the Securities and Exchange Commission on April 24, 2006
Registration No. 333-____


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

——————————

FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

MILLER PETROLEUM, INC.
(Name of Small Business Issuer in its Charter)

Tennessee
1311
62-1028629
(State or other jurisdiction
(Primary Standard
(I.R.S. Employer
of incorporation or
Industrial Classification
Identification No.)
organization)
Code Number)
 

3651 Baker Highway
Huntsville, Tennessee 37756
Telephone: (423) 663-9457
(Address and telephone number of principal executive offices)

——————————

Deloy Miller
Chief Executive Officer
Miller Petroleum, Inc.
3651 Baker Highway
Huntsville, Tennessee 37756
Telephone: (423) 663-9457
(Name, address and telephone number of agent for service)

——————————

Copies to:
Jack Becker, Esq.
Snow Becker Krauss, P.C.
605 Third Avenue
New York, New York 10158-0125
Telephone: (212) 687-0400
Telecopier: (212) 949-7052

——————————

Approximate Date of Proposed Sale to the Public:
As soon as practicable after the effective date of this registration statement.
 
If any of the securities registered on this form are to be offered on a delayed or continuing basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the "Securities Act") check the following box.  x
 
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.  o
 



CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered
 
Amount to be Registered (1)
 
Proposed Maximum Aggregate Offering Price Per Security (2)
 
Proposed Maximum Aggregate Offering Price (2)
 
Amount of Registration Fee
 
Common Stock, $.0001 par value per share
   
4,900,000
 
$
0.99
 
$
4,851,700
 
$
519.06
 
Common Stock, $.0001 par value per share
   
1,200,000
 
$
0.99
 
$
1,188,000
 
$
127.12
 
TOTAL
    6,100,000            
$
6,039,000
 
$
646.18
 
                           

(1)
In addition, pursuant to Rule 416(a) under the Securities Act of 1933, this registration statement includes an indeterminate number of additional shares as may be issuable as a result of stock splits, stock dividends or similar transactions which occur during this continuous offering. 
(2)
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the Securities Act of 1933 (the “Act”) under the Securities Act based on the average of the high and low sales prices per share of Common Stock as reported on the Over-the-Counter Bulletin Board on April 10, 2006.

——————————

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine.
 

 
The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
 
 
SUBJECT TO COMPLETION, DATED APRIL 24, 2006
 
 
PROSPECTUS
 
 
MILLER PETROLEUM, INC.
 
 
6,100,000 SHARES OF COMMON STOCK
 
——————————
 
The shares of common stock, par value $0.0001 per share (the “Common Stock”), of Miller Petroleum, Inc. are being offered by this prospectus. The 6,100,000 shares of Common Stock covered by this prospectus will be sold from time to time by the selling shareholders named in this prospectus at prices determined by the prevailing market price for the shares or in negotiated transactions. We will not receive any of the proceeds from the sale of the shares, although we will receive proceeds with respect to the exercise of the warrants.
 
Our Common Stock is quoted on the Over-the-Counter Bulletin Board (the "OTCBB") under the symbol "MILL." On April 7, 2006, the last sale price of our Common Stock as reported on the OTCBB was $0.99 per share.
 
Investment in our Common Stock involves a number of risks. See "RISK FACTORS" beginning on page 6 of this prospectus to read about certain factors you should consider before buying shares of our Common Stock.
 
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
 
The information in this prospectus is not complete and may be changed. The selling shareholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is declared effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
 
——————————
 
The date of this prospectus is April __, 2006.
 

 
TABLE OF CONTENTS

 
Page
3
6
11
11
12
20
24
25
26
27
28
29
30
31
33
33
33
34
35

We have not authorized any person to give you any supplemental information or to make any representations for us. You should not rely upon any information about our company that is not contained in this prospectus. Information contained in this prospectus or in our public reports may become stale. You should not assume that the information contained in this prospectus or any prospectus supplement is accurate as for any date other than their respective dates, regardless of the time of delivery of this prospectus or any sale of the shares. Our business, financial condition, results of operation and prospects may have changed since those dates. The selling shareholders are offering to sell, and seeking offers to buy, shares of our Common Stock only in jurisdictions where offers and sales are permitted.


——————————
 
-2-


PROSPECTUS SUMMARY

The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the “RISK FACTORS” section, the financial statements and the notes to the financial statements. As used throughout this prospectus, the terms “we,” “us,” and “our,” refer to Miller Petroleum, Inc.
        
 
MILLER PETROLEUM, INC.
 
——————————
 
Our Company
 
We are an independent oil and gas company actively engaged in the exploration, development, production and acquisition of crude oil and natural gas independently and through joint venture drilling programs with other companies in the industry. Our principal areas of interest are Tennessee and Texas. In December 2005, we entered into a joint venture agreement with Wind City Oil & Gas, LLC (“Wind City”) to form Wind Mill Oil & Gas, LLC (the “Wind Mill Joint Venture”). Currently, in conjunction with the Wind Mill Joint Venture, we have an aggregate of approximately 50,000 acres under lease. About 90% of such leases are held by production.

Business Strategy: Growth through the Drillbit

Our goal is to maximize shareholder value through the execution of a business strategy designed to capitalize on our strengths and the continued expansion of our operations through the growth of our oil and gas reserves. We believe this can best be achieved by:

 
·
Focusing on the development, drilling and production of natural gas and crude oil in east Tennessee’s Appalachian Basin--Appalachian gas sells at a premium price to Henry Hub, due to its proximity to major consuming regions.
 
 
·
Manage risk exposure by market testing prospects and optimizing our working interest--Drilling and development capital will be raised through partnership drilling programs where Miller keeps up to a 50% working interest, therefore limiting our financial and operating risks by varying our level of participation. We also seek to operate our projects in order to control costs associated with drilling and the timing of the drilling.
 
 
·
Exploration Activities--During 2006 we plan to focus our exploration activities on projects that are near currently owned productive fields, we believe that we can successfully add growth through exploratory activities given the much improved technology, and our experienced technical staff. We have allocated approximately one million dollars to our 2006 development budget for exploration activities.
 
Our executive offices are located at 3651 Baker Highway, Huntsville, Tennessee 37756. Our telephone number is (423) 663-9457. Our website is www.millerpetroleum.com.
 
-3-


The Offering
 
Common Stock offered by selling shareholders
6,100,000 shares
Common Stock outstanding after the offering
15,496,856 shares
Use of proceeds
We will not receive any of the proceeds from the sale of the shares, although, we may receive proceeds with respect to the exercise of the warrants.
Risk Factors
You should read the “Risk Factors” section beginning on page 6, as well as other cautionary statements throughout this prospectus, before investing in shares of our Common Stock.
Over-the-Counter Bulletin Board Symbol
“MILL”
 
The above information regarding Common Stock outstanding after the offering is based on 14,296,856 shares of Common Stock outstanding as of April 6, 2006 and assumes exercise of all warrants held by our selling shareholders.
 
-4-


The following summary of financial data as of and for the fiscal years ended April 30, 2005 and 2004 and the interim periods ended January 31, 2006 and 2005. This information is only a summary and does not provide all of the information contained in our financial statements and related notes. You should read the “Management’s Discussion and Analysis or Plan of Operation” beginning on page 20 and our financial statements and related notes included elsewhere in this prospectus.

   
For the Nine Month
Period Ended
 
For the Year
Ended
 
   
January 31,
 
April 30,
 
Statement of Operations
 
2006
 
2005
 
2005
 
2004
 
   
(Unaudited)
 
(Audited)
 
                 
Revenue
 
$
2,108,735
 
$
758,925
 
$
1,030,036
 
$
1,966,795
 
                           
Operating Expense
                         
Cost of Revenue
   
1,283,103
   
115,525
   
260,017
   
993,974
 
Selling, General and Administrative
   
1,744,774
   
491,354
   
604,040
   
567,112
 
Depreciation, Depletion and Amortization
   
255,657
   
152,659
   
366,279
   
233,439
 
Total Operating Expense
   
3,283,534
   
759,538
   
1,230,336
   
1,794,525
 
                           
Other Income (Expense)
                         
Gain on Sale of Equipment
   
   
98,638
   
157,562
   
42,897
 
Interest Expense (Net)
   
(1,319,084
)
 
(164,712
)
 
(218,686
)
 
(226,518
)
Loss before Provision for Income Taxes
   
(2,493,883
)
 
(66,687
)
 
(261,424
)
 
(11,351
)
Provision for Income Taxes
   
   
   
   
 
Total Comprehensive Loss
 
$
(2,493,883
)
$
(66,687
)
$
(261,424
)
$
(11,351
)

Balance Sheet Data:
 
As of Jan. 31, 2006
 
As of April 30, 2005
 
   
(Unaudited)
 
(Audited)
 
         
Cash and Cash Equivalents
 
$
268,780
 
$
2,365
 
Total Assets
   
5,885,590
   
5,257,625
 
Total Liabilities and Stockholders’ Equity
   
5,885,590
   
5,257,625
 
 

 
-5-


RISK FACTORS

Any investment in our Common Stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below and the other information included in this prospectus before purchasing our Common Stock. Although the risks described below are the risks that we believe are material, they are not the only risks relating to our business and our Common Stock. Additional risks and uncertainties, including those that are not yet identified or that we currently believe are immaterial, may also adversely affect our business, financial condition or results of operations. If any of the events described below occur, our business and financial results could be materially and adversely affected. The market price of our Common Stock could decline due to any of these risks, perhaps significantly, and you could lose all or part of your investment.

General Risks Related To Our Business 

The termination of the Wind Mill Joint Venture could have a material adverse effect on our financial condition.

On December 23, 2005 we entered into a joint venture agreement with Wind City Oil & Gas, LLC to form Wind Mill Oil & Gas, LLC to explore, drill and develop certain oil and gas properties. As part of the agreement, Wind City Oil & Gas, LLC purchased 2,900,000 common shares for $4,350,000 on December 23, 2005. The stock purchase agreement contains a put whereby Wind City Oil & Gas, LLC can put the stock back to us until September 30, 2006, thereby requiring us to repurchase the 2,900,000 shares. If this were to occur, we would have a significant cashflow shortfall, which would require additional financing arrangements. There is no assurance that such financing could be obtained on favorable terms, or at all. In such event, our financial condition could be adversely affected.

Our business may fail if we do not succeed in our efforts to develop and replace oil and gas reserves.

Our future success will depend upon our ability to find, acquire and develop additional economically recoverable oil and gas reserves. Our proved reserves will generally decline as they are produced, except to the extent that we conduct revitalization activities, or acquire properties containing proved reserves, or both. To increase reserves and production, we must continue our development drilling and completion programs, identify and produce previously overlooked or bypassed zones in shut-in wells, acquire additional properties or undertake other replacement activities. Our current strategy is to increase our reserve base, production and cash flow through the development of our existing oil and gas fields and selective acquisitions of other promising properties where we can use new, existing technology. Despite our efforts, our planned revitalization, development and acquisition activities may not result in significant additional reserves, and we may not be able to discover and produce reserves at economical exploration and development costs. If we fail in these efforts, our business may also fail.

Our revenues may be less than expected if our oil and gas reserve estimates are inaccurate.

Oil and gas reserve estimates and the present values attributed to these estimates are based on many engineering and geological characteristics as well as operational assumptions that generally are derived from limited data. Common assumptions include such matters as the anticipated future production from existing and future wells, future development and production costs and the ultimate hydrocarbon recovery percentage. As a result, oil and gas reserve estimates and present value estimates are frequently revised to reflect production data obtained after the date of the original estimate. If reserve estates are inaccurate, production rates may decline more rapidly than anticipated, and future production revenues may be less than estimated. In addition, significant downward revisions of reserve estimates may hinder our ability to borrow funds in the future, or may hinder other financing arrangements that we may consider.

In addition, any estimates of future net revenues and their present value are based on period ending prices and on cost assumptions that only represent our best estimate. If these estimates of quantities, prices and costs prove inaccurate and we are unsuccessful in expanding our oil and gas reserves base, or if oil and gas prices decline or become unstable, we may have to write down the capitalized costs associated with our oil and gas assets. We will also largely rely on reserve estimates when we acquire producing properties. If we overestimate the potential oil and gas reserves of a property to be acquired, or if our subsequent operations on the property are not successful, the acquisition of the property could result in substantial losses.
 
-6-


Our current petroleum engineering report has substantially revised downward previous estimates of our petroleum reserves.

Our current petroleum engineer, Netherland Sewell & Associates, Inc. (“NSAI”), in its report dated June 28, 2005, estimated that our current petroleum “proven” reserves, calculated on the basis of a discounted cash flow analysis, are valued at approximately $3.5 million. This estimate is a significant reduction from the estimate at April 30, 2004 of approximately $23 million of proven reserves previously provided to us by our former petroleum engineering firm.

We are implementing a growth strategy which, if successful, will place significant demands on us and subject us to numerous risks.

Growing businesses often have difficulty managing their growth. If our growth strategy is successful, significant demands will be placed on our management, accounting, financial, information and other systems and on our business. We will have to expand our management and continue recruiting and employing experienced executives and key employees capable of providing the necessary support. In addition, to manage our anticipated growth we will need to continue to improve our financial, accounting, information and other systems in order to effectively manage our growth, and in doing so could incur substantial additional expenses that could harm our financial results. We cannot assure you that our management will be able to manage our growth effectively or successfully, or that our financial, accounting, information or other systems will be able to successfully accommodate our external and internal growth. Our failure to meet these challenges could materially impair our business.

We may not be able to compete successfully in acquiring prospective reserves, developing reserves, marketing oil and natural gas, attracting and retaining quality personnel and raising additional capital. 

Our ability to acquire additional prospects and to find and develop reserves in the future will depend on our ability to evaluate and select suitable properties and to consummate transactions in a highly competitive environment. In addition, there is substantial competition for capital available for investment in the oil and natural gas industry. Our inability to compete successfully in these areas could have a material adverse effect on our business, financial condition or results of operations.

A substantial or extended decline in oil and natural gas prices could reduce our future revenue and earnings. 

The price we receive for future oil and natural gas production will heavily influence our revenue, profitability, access to capital and rate of growth. Oil and natural gas are commodities and their prices are subject to wide fluctuations in response to relatively minor changes in supply and demand. Historically, the markets for oil and natural gas have been volatile and currently oil and natural gas prices are significantly above historic levels. These markets will likely continue to be volatile in the future and current record prices for oil and natural gas may decline in the future. The prices we may receive for any future production, and the levels of this production, depend on numerous factors beyond our control. These factors include the following:

 
 
changes in global supply and demand for oil and natural gas;
       
 
 
actions by the Organization of Petroleum Exporting Countries, or OPEC;
       
 
 
political conditions, including embargoes, which affect other oil-producing activities;
       
 
 
levels of global oil and natural gas exploration and production activity;
       
 
 
levels of global oil and natural gas inventories;
       
 
 
weather conditions affecting energy consumption;
       
 
 
technological advances affecting energy consumption; and
       
 
 
prices and availability of alternative fuels.
 
 
-7-

 
Lower oil and natural gas prices may not only decrease our future revenues but also may reduce the amount of oil and natural gas that we can produce economically. A substantial or extended decline in oil or natural gas prices may reduce our earnings, cash flow and working capital.

Drilling for and producing oil and natural gas are high risk activities with many uncertainties that could substantially increase our costs and reduce our profitability. 

Oil and natural gas exploration is subject to numerous risks beyond our control, including the risk that drilling will not result in any commercially viable oil or natural gas reserves. Failure to successfully discover oil or natural gas resources in properties in which we have oil and gas leases may materially adversely affect our operations and financial condition.

The total cost of drilling, completing and operating wells will be uncertain before drilling commences. Overruns in budgeted expenditures are common risks that can make a particular project uneconomical. Further, many factors may curtail, delay or cancel drilling, including the following:

 
 
delays imposed by or resulting from compliance with regulatory requirements;
       
 
 
pressure or irregularities in geological formations;
       
 
 
shortages of or delays in obtaining equipment and qualified personnel;
       
 
 
equipment failures or accidents;
       
 
 
adverse weather conditions;
       
 
 
reductions in oil and natural gas prices;
       
 
 
land title problems; and
       
 
 
limitations in the market for oil and natural gas.

Oil and gas operations involve many physical hazards.

Natural hazards, such as excessive underground pressures, may cause costly and dangerous blowouts or make further operations on a particular well financially or physically impractical. Similarly, the testing and completion of oil and gas wells involves a high degree of risk arising from operational failures, such as blowouts, fires, pollution, collapsed casing, loss of equipment and numerous other mechanical and technical problems. Any of these hazards may result in substantial losses to us or liabilities to third parties. These could include claims for bodily injuries, reservoir damage, loss of reserves, environmental damage and other damages to people or property. Any successful claim against us would probably require us to spend large amounts on legal fees and any successful claim may make us liable for substantial damages.
 
-8-


Our dependence on outside equipment and service providers may hurt our profitability.

We need to obtain logging equipment and cementing and well treatment services in the area of our operations. Several factors, including increased competition in the area, may limit their availability. Longer waits and higher prices for equipment and services may reduce our profitability.

The oil and gas industry is highly competitive and there is no assurance that we will be successful in acquiring any further leases.

The oil and gas industry is intensely competitive. We compete with numerous individuals and companies, including major oil and gas companies, which have substantially greater technical, financial and operational resources and staffs. Accordingly, there is a high degree of competition for desirable oil and gas leases, suitable properties for drilling operations and necessary drilling equipment, as well as access to funds. We cannot predict if the necessary funds can be raised. There are also other competitors that have operations in our potential areas of interest and the presence of these competitors could adversely affect our ability to acquire additional leases.

If we lose the services of Deloy Miller, our operations may suffer.

We are substantially dependent upon the continued services of Deloy Miller, our CEO and a director. Mr. Miller has been with us since our inception. The relationships that he has formed in our industry and in the local area where our principal operations are conducted are invaluable, and could be lost to us without his services. Mr. Miller is in good health; however, his retirement, disability or death would seriously hurt our business operations. If his services become unavailable, we will have to retain other qualified personnel. We may not be able to recruit and hire another qualified person on acceptable terms. We do not have an employment contract with Mr. Miller. Similarly, the oil and gas exploration industry requires the use of personnel with substantial technical expertise. If our current technical personnel become unavailable, we will need to hire qualified personnel to take their place. If we are not able to recruit and hire new people on mutually acceptable terms, our operations will suffer.

Oil and gas operations are subject to comprehensive regulation which may cause substantial delays or require capital outlays in excess of those anticipated, causing an adverse effect on our Company.

Oil and gas operations are subject to federal, state, and local laws relating to the protection of the environment, including laws regulating removal of natural resources from the ground and the discharge of materials into the environment. Oil and gas operations are also subject to federal, state, and local laws and regulations which seek to maintain health and safety standards by regulating the design and use of drilling methods and equipment. Various permits from government bodies are required for drilling operations to be conducted; no assurance can be given that such permits will be received. Environmental standards imposed by federal, provincial, or local authorities may be changed and any such changes may have material adverse effects on our activities. Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus causing an adverse effect on us. Additionally, we may be subject to liability for pollution or other environmental damages. To date we have not been required to spend any material amount on compliance with environmental regulations. However, we may be required to do so in future and this may affect our ability to expand or maintain our operations.

Risks Related To This Offering and Our Common Stock

The limited trading volume in our Common Stock may depress our stock price.

Our Common Stock is currently traded on a limited basis on the Over-the-Counter Bulletin Board (“OTCBB”). The quotation of our Common Stock on the OTCBB does not assure that a meaningful, consistent and liquid trading market currently exists. We cannot predict whether a more active market for our Common Stock will develop in the future. In the absence of an active trading market, investors may have difficulty buying and selling our Common Stock. Market visibility for our Common Stock may be limited. A lack of visibility of our Common Stock may have a depressive effect on the market price for our Common Stock.
 
-9-


The issuance of shares upon exercise of outstanding warrants may cause immediate and substantial dilution of our existing shareholders .

The issuance of shares upon exercise of warrants may result in substantial dilution to the interests of other shareholders since the selling shareholders may sell the full amount issuable on exercise. In addition, such shares would increase the number of shares in the “public float” and could depress the market price for our Common Stock.

If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board which would limit the ability of broker-dealers to sell our securities and the ability of shareholders to sell their securities in the secondary market.

Companies trading on the OTCBB, such as us, must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTCBB. If we fail to remain current on our reporting requirements, we could be removed from the OTCBB. As a result, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of shareholders to sell their securities in the secondary market.

We have never declared or paid cash dividends on our Common Stock. We currently intend to retain future earnings to finance the operation, development and expansion of our business. 

We do not anticipate paying cash dividends on our Common Stock in the foreseeable future. Payment of future cash dividends, if any, will be at the discretion of our board of directors and will depend on our financial condition, results of operations, contractual restrictions, capital requirements, business prospects and other factors that our board of directors considers relevant. Accordingly, investors will only see a return on their investment if the value of our securities appreciates.

New legislation, including the Sarbanes-Oxley Act of 2002, may make it difficult for us to retain or attract officers and directors. 

We may be unable to attract and retain qualified officers, directors and members of board committees required to provide for our effective management as a result of the recent and currently proposed changes in the rules and regulations which govern publicly-held companies. The enactment of the Sarbanes-Oxley Act of 2002 has resulted in a series of rules and regulations by the Securities and Exchange Commission that increase responsibilities and liabilities of directors and executive officers. The perceived increased personal risk associated with these recent changes may deter qualified individuals from accepting these roles.

Our Common Stock is Subject to the "Penny Stock" Rules of the SEC and the Trading Market in Our Securities is Limited, Which Makes Transactions in Our Stock Cumbersome and May Reduce the Value of an Investment in Our Stock.

The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:

 
that a broker or dealer approve a person's account for transactions in penny stocks; and
     
 
▪ 
that broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
 
 
-10-

 
In order to approve a person's account for transactions in penny stocks, the broker or dealer must:
 
 
obtain financial information and investment experience objectives of the person; and
     
 
make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
 
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:
 
 
sets forth the basis on which the broker or dealer made the suitability determination; and
     
 
that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our Common Stock and cause a decline in the market value of our stock.

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
 
FORWARD-LOOKING STATEMENTS
 
The information in this registration statement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This Act provides a "safe harbor" for forward-looking statements to encourage companies to provide prospective information about themselves so long as they identify these statements as forward looking and provide meaningful cautionary statements identifying important factors that could cause actual results to differ from the projected results. All statements other than statements of historical fact made in this registration statement are forward looking. In particular, the statements herein regarding industry prospects and future results of operations or financial position are forward-looking statements. Forward-looking statements reflect management's current expectations and are inherently uncertain. Our actual results may differ significantly from management's expectations.
 
USE OF PROCEEDS

We will not receive any of the proceeds from the sale of the shares of our Common Stock because such shares are being offered by the selling shareholders and we are not offering any shares for sale under this prospectus. We may receive proceeds from the exercise of the warrants held by the selling shareholders. We will apply such proceeds, if any, toward working capital. As of the date of this prospectus, none of these warrants have been exercised.
 
-11-

 
DESCRIPTION OF BUSINESS

Corporate History

We were founded in 1967 by Deloy Miller, our Chief Executive Officer, as a sole proprietorship. On January 22, 1978, we were incorporated under the laws of the State of Tennessee as “Miller Contract Drilling, Inc.” We changed our name to Miller Petroleum, Inc. on January 13, 1997.

Current Business

We are actively engaged in the exploration, development, production and acquisition of crude oil and natural gas primarily in eastern Tennessee. In December 2005, we entered into a joint venture agreement with Wind City Oil & Gas, LLC (“Wind City”) to form Wind Mill Oil & Gas, LLC (the “Wind Mill Joint Venture”). We own 49.9% of the Wind Mill Joint Venture and Wind City owns 50.1%. We contributed approximately 43,000 acres, which we held under lease in Tennessee, to the Wind Mill Joint Venture for oil and gas exploration, development and exploitation of undeveloped wells. The joint venture will only encompass new drilling projects. We retained our working interest in the developed and producing wells located on such leases. In connection with the development of wells by the Wind Mill Joint Venture, we will also receive revenue for providing labor and equipment.

Oil and Gas Leases

We are an exploration and production company who utilize seismic data, and other advanced technologies for geophysical exploration and development of oil and gas wells. In addition to our engineering and geological capabilities, we have work over rigs, dozers, roustabout crews and equipment to set pumping units, tanks and lay flow lines, winch trucks and trailers for traveling support, backhoes, ditchers, fusion machines and welders for pipeline and compression installation, as well as other equipment necessary to take a drilling program from the development stage to completion. The company also sells rigs, oilfield trailers, compressors and other miscellaneous oil and gas production equipment. In addition to this equipment, our Wind Mill Joint Venture has purchased a new Atlas Copco RD20 drilling rig, used RD 20 drilling rig and placed an order for two new SS185 Speed Star rigs to be delivered in December 2006.

Through the Wind Mill Joint Venture, we are presently developing leases referred to as the Koppers North Field and Cardin to form 10,500 contiguous acres, the Koppers South Field with 20,700 contiguous acres and the Lindsay Field with 3400 contiguous acres. The Koppers, Cardin and Lindsay Fields are in Campbell County, Tennessee. Additionally, we are developing prospects in Roane County, Tennessee to include 3500 acres and 4800 acres in Anderson County, Tennessee. All of these prospects are located in the Appalachian Basin. In addition to our prospects in the Appalachian Basin, we are currently drilling a 10,800 foot well in Brazoria County, Texas. This well is located in the South Rowan Field and will penetrate to 15 Frio Sands exploiting attic reserves. There are no market restrictions in any of the mentioned areas.
 
Our current drilling program calls for the development of 150 wells comprising Devonian Shale gas wells in the Koppers North/Cardin Tract and "Big Lime" oil and gas wells in the Koppers South and Lindsay Fields. Our drilling program will aslo include the development of oil and gas wells in the Trenton/Stonesriver/Knox formations to a depth of 6200 feet in the Roane and Anderson Counties.
 
In Roane County, the Eula Butler Et Al #1 well and the Edwards-Fowler Unit #1 well have been completed. The 2850 foot zone of the Edwards has been completed in the Trenton where a 24 hour open flow test indicates natural gas flowing through a 3/8” choke at 210 psi or about 750 mcfgd. The Stonesriver section in the Butler has not been that encouraging. We are currently considering treating the same prolific Trenton zone as in the Edwards.

On April 11, 2005, we signed an agreement with Norwest Energy, NL of Perth, Australia (“Norwest”) and Golden Triangle Energy of Houston, Texas (“GTE”) to develop the Koppers North and Carden Tract. Five wells were drilled and this agreement has terminated. GTE and Norwest retain a 75% working interest and Miller Petroleum has a 25% working interest in the five wells. Other than 40 acres around each of the wells, the remaining acreage has reverted to us.
 
-12-


Lease and Royalty Terms

Koppers Lease or "ARCO/GULF Farmout"

Located in Campbell County, Tennessee, this is the largest acreage block we have under lease. This acreage was acquired through a farmout agreement with Atlantic Richfield (“ARCO”), which has since merged into British Petroleum. We own a 100% working interest in approximately 27,000 acres. This lease provides for a landowner royalty of 12.5% and an overriding royalty interest of 7.5% with an 80% net royalty interest. The lease is split into two parcels. A 6,300 acre northern parcel borders the Kentucky state line and a 20,700 acre parcel borders the city of LaFollette, Tennessee. Currently, there are ten producing oil wells on the southern tract of this lease, consisting of Koppers 9b, 10b, 18b, 20b, 22b, 23b, 26b, 27b, 28b, 32b,. The ten wells have produced 163,983 barrels of oil from the “Big Lime” formation through April 30, 2005. The Koppers North and the Cardin tracts are producing gas from five wells in the “Devonian Shale”. An extensive gathering system is in place to transport gas to the Delta Natural Gas sales line. This lease remains in effect for as long as there is production. The Company has leased and is currently leasing smaller tracts of 50 to 1,000 acres adjacent to or near the Koppers South Fields acreage. We will engage in future development on this acreage through the Wind Mill Joint Venture.

Carden Tract

This lease includes 4,200 acres in which we have a 100% working interest and an 81.25% net royalty interest. This tract joins the Koppers North parcel of 6,300 acres to form a 10,500 acre contiguous block in the north. The Koppers North and the Cardin tracts are producing gas from five wells in the “Devonian Shale”. The lease has a three-year term with a five well drilling commitment. Three of these wells have been drilled. We will engage in future development on this acreage through the Wind Mill Joint Venture.
 
Delta Producers, Inc. Joint Venture

We are continuing our joint venture with Delta Producers, Inc. of Greenville, Mississippi ("Delta Producers"). Currently, we are jointly producing ten gas wells in the Jellico, Tennessee area northwest of the Pine Mountain Thrust Fault. We have an average 25% working interest in these wells as well as interest in several oil and gas leases consisting of approximately 2,000 acres (collectively the "Delta Leases"). All of the Delta Leases are subject to a 12.5% landowner's royalty. These leases remain in effect for as long as there is production.

We have drilled seven wells with Delta Producers in the Lindsay Field #9, #10, #11, #12, #13, #14, #15, #16 and #17 well. The #11 well may not be completed. The #17 well is currently being completed and the #16 will be completed considering the results of #17. The remaining wells are all producing with gas being sold to the Powell-Clinch Utility District (“PCUD”), which serves the Harriman, Lake City and Lafollette, Tennessee areas. The production of gas in the Lindsay Field is from the Big Lime Formation. We have a 50% working interest in the Lindsay Field lease. The lease also provides for a landowner’s royalty of 12.5%. With Delta Producers, we purchased and built more than four miles of three-inch and four-inch gathering lines to carry the gas to the market. This lease remains in effect for as long as there is production.

 
Well #
 
Date Began
Sales of
Natural Gas
 
Amount of Natural
Gas Sold as of
April 30, 2005 (Mcf)
 
Amount of Natural
Gas Sold as of
January 31, 2006 (Mcf)
 
9
   
3/02
   
85,165
   
99,572
 
10
   
1/03
   
29,057
   
31,932
 
11
   
*
   
*
   
*
 
12
   
3/02
   
194,432
   
212,515
 
13
   
8/03
   
38,090
   
46,803
 
14
   
8/03
   
24,721
   
30,894
 
15
   
11/03
   
20,707
   
27,121
 
16
   
*
   
*
   
*
 
17
   
*
   
*
   
*
 
                     

*
This well is awaiting completion.
 
 
-13-


Harriman Prospect Joint Venture

The Harriman Prospect Joint Venture includes several small leases in Roane County, Tennessee with a total acreage of approximately 3,500 acres. The net royalty interest is 87.5% with the landowners receiving a 12.5% royalty. We have a 50% working interest in these leases. There are several smaller leases that expire at different times. When drilled , as in the Butler and Edwards wells, they will be held by production.” We will engage in future development on this prospect through our Wind Mill Joint Venture.

Additional Oil and Gas Leases and Wells

We have several small leases in Campbell, Fentress, Morgan, Overton and Hancock counties of Tennessee totaling approximately 3,000 acres. Each of these leases are subject to a 12.5% to 20% landowner's royalty. There are fourteen producing oil wells and eleven producing natural gas wells on these leases that have produced 164,693 barrels of oil and 431,996 Mcf of natural gas.
 
Oil and Gas Reserve Analyses

Our estimated net proved oil and gas reserves and the present value of estimated cash flows from those reserves are summarized below. The reserves were estimated by Netherland Sewell and Associates, Inc., independent petroleum engineers, in accordance with regulations of the Securities and Exchange Commission, using market or contract prices at the end of each of the years presented in the consolidated financial statements. These prices were held constant over the estimated life of the reserves.

Ownership interests in estimated quantities of proved oil and gas reserves and changes in net proved reserves, all of which are located in the continental United States, are summarized below for each of the years presented in the consolidated financial statements.
           
 
Oil (Bbls)
 
Gas (Mcf)
 
Proved reserves
         
Balance, April 30, 2003
   
208,821
   
5,365,057
 
Discoveries and extensions
   
68,903
   
718,160
 
Revisions of previous estimates
   
79,169
   
2,642,073
 
Production
   
(5,957
)
 
(28,771
)
               
Balance April 30, 2004
   
350,936
   
8,696,519
 
Discoveries and extensions
   
35,400
   
220,000
 
Revisions of previous estimates
   
(284,979
)
 
(7,592,419
)
Production
   
(7,532
)
 
(74,534
)
Balance April 30, 2005
   
93,825
   
1,249,566
 
               
Proved developed producing reserves at April 30, 2005
   
60,734
   
697,916
 
               
Proved developed producing reserves at April 30, 2004
   
62,106
   
1,035,850
 

Our standardized measure of discounted future net cash flows from our estimated proved oil and gas reserves is provided for the financial statement user as a common base for comparing oil and gas reserves of enterprises in the industry and may not represent the fair market value of our oil and gas reserves or the present value of future cash flows of equivalent reserves due to various uncertainties inherent in making these estimates. Those factors include changes in oil and gas prices from year-end prices used in the estimates, unanticipated changes in future production and development costs and other uncertainties in estimating quantities and present values of oil and gas reserves.
 
The following table presents the standardized measure of discounted future net cash flows from our ownership interests in proved oil and gas reserves as of the end of each of the years presented in the consolidated financial statements. The standardized measure of future net cash flows as of April 30, 2005 and 2004 are calculated using weighted average process in effect as of those dates. Those prices were $6.75 and $6.25 respectively, per Mcf of natural gas, and $44.50 and $32.75 respectively, per barrel of oil. The resulting estimated future cash inflows are reduced by estimated future costs to develop and produce the estimated proved reserves based on year-end cost levels. Future income taxes are based on year-end statutory rates, adjusted for any operating loss carryforwards and tax credits. The future net cash flows are reduced to present value by applying a 10% discount rate.
 
-14-


Standardized measures of discounted future net cash flows at April 30, 2005 and 2004 are as follows:

   
2005
 
2004
 
Future cash flows
 
$
12,747,600
 
$
65,105,641
 
Future production costs and taxes
   
(1,939,000
)
 
(2,769,464
)
Future development costs
   
(745,000
)
 
(4,740,000
)
Future income tax expense
   
(3,119,716
)
 
(17,854,815
)
Future cash flows
   
6,943,884
   
39,741,362
 
Discount at 10% for timing of cash flows
   
(3,463,248
)
 
(16,591,415
)
Discounted future net cash flows from proved reserves
 
$
3,480,636
 
$
23,149,947
 

Changes in Standardized Measure of Discounted Future Net Cash Flows

The following table summarized the changes in the standardized measure of discounted future net cash flows from estimated production of our proved oil and gas reserves after income taxes for each of the years presented in the consolidated financial statements.

The following table sets forth the changes in the standardized measure of discounted future net cash flows from proved reserves for April 30, 2005 and 2004.

   
April 30,
 
   
2005
 
2004
 
Balance, beginning of year
 
$
23,149,947
 
$
13,165,412
 
Sales, net of production costs and taxes
   
(784,409
)
 
(773,033
)
Changes in prices and production costs
   
7,490,059
   
9,737,935
 
Revisions of quantity estimates
   
(39,206,898
)
 
5,505,439
 
Development costs incurred
   
3,995,000
   
 
Net changes in income taxes
   
8,836,937
   
(4,485,806
)
Balances, end of year
 
$
3,480,636
 
$
23,149,947
 

The reserves presented in this Report were evaluated in accordance with Rule 4-10 of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”).

Principal Products or Services and Markets

The principal markets for our crude oil and natural gas are refining companies, utility companies and private industry end users. Direct purchases of our crude oil are made statewide at our well sites by South Kentucky Purchasing Company, a refinery located in Somerset, Kentucky (“South Kentucky Purchasing”).
 
Our natural gas has multiple markets throughout the eastern United States through gas transmission lines. Access to these markets is presently provided by four companies in North-Eastern Tennessee. Cumberland Valley Resources (“CV Resources”) purchases our natural gas that is produced from the "Delta Leases." Nami Resources Company (“Nami Resources”) purchases our gas from the Jellico West field and Tengasco services the Swan Creek production. Local markets in Tennessee are served by Citizens Gas Utility District (‘Citizens Gas”) and the Powell Clinch Utility District. Surplus gas is placed in storage facilities or transported to East Tennessee Natural Gas which serves Tennessee and Virginia.
 
We anticipate that our products will be sold to the aforementioned companies; however, no assurance can be given that we will be able to make such sales or that if we do, we will be able to receive a price that is sufficient to make our operations profitable.
 
-15-


Distribution Methods of Products or Services.

Crude oil is stored in tanks at the well site until the purchaser retrieves it by tank truck. Natural gas is delivered to the purchaser via gathering lines into the main gas transmission line.

Competition

Our oil and gas exploration activities in Tennessee are undertaken in a highly competitive and speculative business environment. In seeking any other suitable oil and gas properties for acquisition, we compete with a number of other companies located in Tennessee and elsewhere, including large oil and gas companies and other independent operators, many with greater financial resources than us.
 
At the local level, we have several competitors in the areas of the acreage which we have under lease in the State of Tennessee, five of which may be deemed to be significant. These are Consol Energy, Inc., Can Argo Energy Corporation (“CNR”), Champ Oil, John Henry Oil and Tengasco. These companies are in competition with us for oil and gas leases in known producing areas in which we currently operate, as well as other potential areas of interest.

Although, our management generally does not foresee difficulties in procuring logging, cementing and well treatment services in the area of our operations, several factors, including increased competition in the area, may limit the availability of logging equipment, cementing and well treatment services in the future. If such an event occurs, it may have a significant adverse impact on the profitability of our operations.
The prices of our products are controlled by the world oil market and the United States natural gas market; thus, competitive pricing behaviors in this regard are considered unlikely; however, competition in the oil and gas exploration industry exists in the form of competition to acquire the most promising acreage blocks and obtaining the most favorable prices for transporting the product.
 
Dependence on One or a Few Major Customers

We are dependent on local purchasers of hydrocarbons to purchase our products in the areas where our properties are located. The loss of one or more of our primary purchasers may have a substantial adverse impact on our sales and on our ability to operate profitably.

Currently, we are selling natural gas to the following purchasers:
 
 
·
Citizens Gas purchases natural gas from our wells in Scott County, Tennessee. Citizens is paying the Inside FERC Tn Zone 1 (Louisiana) monthly index less transportation costs. Sales to Citizens is less than 1% of our total natural gas sales.
 
 
·
Nami Resources purchases our gas from the Jellico Field. The sales price varies each month but will not be less than $6.00 per Mcf. Sales to Nami Resources at the present time are approximately 25% of our total natural gas sales.
 
 
·
Tengasco purchases natural gas from wells in the Swan Creek Field. Tengasco, Inc. is paying the New York Mercantile Exchange first of the month posting plus $0.05 less transportation charges. Sales to Tengasco are about 10 % of total natural gas sales.
 
 
·
CV Resources purchases the gas produced from the joint venture with Delta Producers, Inc. in the Jellico East Field, Tennessee. The sales price is Appalachian Index minus Columbia transportation and fuel. Cumberland Valley Resources purchases approximately 20% of total natural gas sales.
 
 
·
PCUD purchases the gas from the Lindsay Land Company lease which is another joint venture with Delta Producers. The sales price is Inside FERC Tn Zone 1 (Louisiana) monthly index less transportation costs. About 44% of our gas sales are to the PCUD.
 
 
·
South Kentucky Purchasing purchases all of our crude oil. South Kentucky Purchasing’s purchase price is based on postings for the Illinois Basin less $2.50.
 
 
-16-


Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts
 
Royalty agreements relating to oil and gas production are standard in the industry. The amounts of the royalty payments which we receive varies from lease to lease. (See Description of Business—“Current Business” in this Annual Report.)

Governmental Approval and Regulation
 
The production and sale of oil and gas are subject to regulation by federal, state and local authorities. None of the principal products that we offer require governmental approval, although permits are required for the drilling of oil and gas wells.
 
Our sales of natural gas are affected by intrastate and interstate gas transportation regulation. Beginning in 1985, the Federal Energy Regulatory Commission (“FERC”), which sets the rates and charges transportation and sale of natural gas, adopted regulatory changes that have significantly altered the transportation and marketing of natural gas. The stated purpose of FERC’s changes are to promote competition among the various sectors of the natural gas industry. In 1995, FERC implemented regulations generally grandfathering all previously approved interstate transportation rates and establishing an indexing system for those rates by which adjustments are made annually based on the rate of inflation, subject to certain conditions and limitations. These regulations may tend to increase the cost of transporting oil and natural gas by pipeline. Every five years, FERC will examine the relationship between the change in the applicable index and the actual cost changes experienced by the industry. We are not able to predict with certainty what effect, if any, these regulations will have on us.

Tennessee law requires that we obtain state permits for the drilling of oil and gas wells and to post a bond with the Tennessee Gas and Oil Board (the “Oil and Gas Board”) to ensure that each well is reclaimed and properly plugged when it is abandoned. The reclamation bonds cost $1,500 per well. The cost for the plugging bonds are $2,000 per well or $10,000 for ten wells. Currently, we have several of the $10,000 plugging bonds. For most of the reclamation bonds, we have deposited a $1,500 Certificate of Deposit with the Oil and Gas Board.
The state and regulatory burden on the oil and natural gas industry generally increases our cost of doing business and affects our profitability. While we believe we are presently in compliance with all applicable federal, state and local laws, rules and regulations, continued compliance (or failure to comply) and future legislation may have an adverse impact on our present and contemplated business operations. Because such federal and state regulation are amended or reinterpreted frequently, we are unable to predict with certainty the future cost or impact of complying with these laws.

Research and Development

We did not incur any research and development expenditures during the fiscal year ended April 30, 2005.

Environmental Compliance
 
We are subject to various federal, state and local laws and regulations governing the protection of the environment, such as the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“CERCLA”), and the Federal Water Pollution Control Act of 1972, as amended (the “Clean Water Act”), which affect our operations and costs. In particular, our exploration, development and production operations, our activities in connection with storage and transportation of oil and other hydrocarbons and our use of facilities for treating, processing or otherwise handling hydrocarbons and related wastes may be subject to regulation under these and similar state legislation. These laws and regulations:
 
 
·
restrict the types, quantities and concentration of various substances that can be released into the environment in connection with drilling and production activities;
 
 
·
limit or prohibit drilling activities on certain lands lying within wilderness, wetlands and other protected areas; and
 
 
·
impose substantial liabilities for pollution resulting from our operations.
 
 
-17-

 
Failure to comply with these laws and regulations may result in the assessment of administrative, civil and criminal fines and penalties or the imposition of injunctive relief. Changes in environmental laws and regulations occur regularly, and any changes that result in more stringent and costly waste handling, storage, transport, disposal or cleanup requirements could materially adversely affect our operations and financial position, as well as those in the oil and natural gas industry in general. While we believe that we are in substantial compliance with current applicable environmental laws and regulations and that continued compliance with existing requirements would not have a material adverse impact on us, there is no assurance that this trend will continue in the future.
 
As with the industry generally, compliance with existing regulations increases our overall cost of business. The areas affected include:
 
 
·
unit production expenses primarily related to the control and limitation of air emissions and the disposal of produced water;
 
 
·
capital costs to drill exploration and development wells primarily related to the management and disposal of drilling fluids and other oil and natural gas exploration wastes; and
 
 
·
capital costs to construct, maintain and upgrade equipment and facilities.
 
CERCLA, also known as “Superfund,” imposes liability for response costs and damages to natural resources, without regard to fault or the legality of the original act, on some classes of persons that contributed to the release of a “hazardous substance” into the environment. These persons include the “owner” or “operator” of a disposal site and entities that disposed or arranged for the disposal of the hazardous substances found at the site. CERCLA also authorizes the Environmental Protection Agency (“EPA”) and, in some instances, third parties to act in response to threats to the public health or the environment and to seek to recover from the responsible classes of persons the costs they incur. It is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the hazardous substances released into the environment. In the course of our ordinary operations, we may generate waste that may fall within CERCLA’s definition of a “hazardous substance.” We may be jointly and severally liable under CERCLA or comparable state statutes for all or part of the costs required to clean up sites at which these wastes have been disposed.
 
We currently lease properties that for many years have been used for the exploration and production of oil and natural gas. Although we and our predecessors have used operating and disposal practices that were standard in the industry at the time, hydrocarbons or other wastes may have been disposed or released on, under or from the properties owned or leased by us or on, under or from other locations where these wastes have been taken for disposal. In addition, many of these properties have been operated by third parties whose actions with respect to the treatment and disposal or release of hydrocarbons or other wastes were not under our control. These properties and wastes disposed on these properties may be subject to CERCLA and analogous state laws. Under these laws, we could be required:
 
 
·
to remove or remediate previously disposed wastes, including wastes disposed or released by prior owners or operators;
 
 
·
to clean up contaminated property, including contaminated groundwater; or to perform remedial operations to prevent future contamination.
 
 
·
to clean up contaminated property, including contaminated groundwater; or to perform remedial operations to prevent future contamination.
 
At this time, we do not believe that we are associated with any Superfund site and we have not been notified of any claim, liability or damages under CERCLA.
 
-18-

 
The Resource Conservation and Recovery Act (“RCRA”) is the principal federal statute governing the treatment, storage and disposal of hazardous wastes. RCRA imposes stringent operating requirements and liability for failure to meet such requirements on a person who is either a “generator” or “transporter” of hazardous waste or an “owner” or “operator” of a hazardous waste treatment, storage or disposal facility. At present, RCRA includes a statutory exemption that allows most oil and natural gas exploration and production waste to be classified as nonhazardous waste. A similar exemption is contained in many of the state counterparts to RCRA. As a result, we are not required to comply with a substantial portion of RCRA’s requirements because our operations generate minimal quantities of hazardous wastes. At various times in the past, proposals have been made to amend RCRA to rescind the exemption that excludes oil and natural gas exploration and production wastes from regulation as hazardous waste. Repeal or modification of the exemption by administrative, legislative or judicial process, or modification of similar exemptions in applicable state statutes, would increase the volume of hazardous waste we are required to manage and dispose of and would cause us to incur increased operating expenses.
 
The Clean Water Act imposes restrictions and controls on the discharge of produced waters and other wastes into navigable waters. Permits must be obtained to discharge pollutants into state and federal waters and to conduct construction activities in waters and wetlands. The Clean Water Act requires us to construct a fresh water containment barrier between the surface of each drilling site and the underlying water table. This involves the insertion of a seven-inch diameter steel casing into each well, with cement on the outside of the casing. The cost of compliance with this environmental regulation is approximately $10,000 per well. Certain state regulations and the general permits issued under the Federal National Pollutant Discharge Elimination System program prohibit the discharge of produced waters and sand, drilling fluids, drill cuttings and certain other substances related to the oil and natural gas industry into certain coastal and offshore waters. Further, the EPA has adopted regulations requiring certain oil and natural gas exploration and production facilities to obtain permits for storm water discharges. Costs may be associated with the treatment of wastewater or developing and implementing storm water pollution prevention plans.

The Clean Water Act and comparable state statutes provide for civil, criminal and administrative penalties for unauthorized discharges for oil and other pollutants and impose liability on parties responsible for those discharges for the costs of cleaning up any environmental damage caused by the release and for natural resource damages resulting from the release. We believe that our operations comply in all material respects with the requirements of the Clean Water Act and state statutes enacted to control water pollution. 
 
Our operations are also subject to laws and regulations requiring removal and cleanup of environmental damages under certain circumstances. Laws and regulations protecting the environment have generally become more stringent in recent years, and may in certain circumstances impose "strict liability," rendering a corporation liable for environmental damages without regard to negligence or fault on the part of such corporation. Such laws and regulations may expose us to liability for the conduct of operations or conditions caused by others, or for acts which may have been in compliance with all applicable laws at the time such acts were performed. The modification of existing laws or regulations or the adoption of new laws or regulations relating to environmental matters could have a material adverse effect on our operations.
 
 In addition, our existing and proposed operations could result in liability for fires, blowouts, oil spills, discharge of hazardous materials into surface and subsurface aquifers and other environmental damage, any one of which could result in personal injury, loss of life, property damage or destruction or suspension of operations. We have an Emergency Action and Environmental Response Policy Program in place. This program details the appropriate response to any emergency that management believes to be possible in our area of operations. We believe we are presently in compliance with all applicable federal and state environmental laws, rules and regulations; however, continued compliance (or failure to comply) and future legislation may have an adverse impact on our present and contemplated business operations.
 
The foregoing is only a brief summary of some of the existing environmental laws, rules and regulations to which our business operations are subject, and there are many others, the effects of which could have an adverse impact on our business. Future legislation in this area will no doubt be enacted and revisions will be made in current laws. No assurance can be given as to what effect these present and future laws, rules and regulations will have on our current future operations.
 
-19-


Insurance

Our operations are subject to all the risks inherent in the exploration for, and development and production of oil and gas including blowouts, fires and other casualties. We maintain insurance coverage customary for operations of a similar nature, but losses could arise from uninsured risks or in amounts in excess of existing insurance coverage.

Employees

We currently have 11full-time employees.

MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion is intended to facilitate an understanding of our business and results of operations. It should be read in conjunction with our consolidated financial statements and the accompanying notes to the consolidated financial statements included elsewhere in this prospectus.
 
Introduction

The following discussion is intended to facilitate an understanding of our business and results of operations and includes forward-looking statements that reflect our plans, estimates and beliefs. It should be read in conjunction with our unaudited consolidated financial statements and the accompanying notes to the consolidated financial statements included herein. Our actual results could differ materially from those discussed in these forward-looking statements.

Overview

We are actively engaged in the exploration, development, production and acquisition of crude oil and natural gas primarily in eastern Tennessee. In December 2005, we entered into a joint venture agreement with Wind City Oil & Gas, LLC (“Wind City”) to form Wind Mill Oil & Gas, LLC (the “Wind Mill Joint Venture”). We own 49.9% of the Wind Mill Joint Venture and Wind City owns 50.1%. We contributed approximately 43,000 acres, which we held under lease in Tennessee, to the Wind Mill Joint Venture for oil and gas exploration, development and exploitation of undeveloped wells. The joint venture will only encompass new drilling projects. We retained our working interest in the developed and producing wells located on such leases. In connection with the development of wells by the Wind Mill Joint Venture, we will also receive revenue for providing labor and equipment. Currently, in conjunction with those acres held by the Wind Mill Joint Venture, we have approximately 50,000 acres under lease. About 90% of such leases are held by production.

Most of our current oil and gas production is from the Big Lime Formation. However, there are more than 160 development drilling locations that target the Devonian (Chattanooga Shale) as well as the Big Lime Formation. We completed the drilling and fracing of the first five wells on Koppers North and Carden Prospect in Campbell County, Tennessee, which consist of, the Koppers 6A and 7A and the Carden 1A, 2A and 3A. The wells have been drilled to approximately 3,000 feet in depth to fully penetrate a thickened Devonian Shale, with up to 828 feet of potential hydrocarbon entry. Average open flows are 130 Mcf of natural gas per day for each such well. Gathering lines have been installed to begin gas sales.

In June 2001, we made a conventional Big Lime gas discovery, on the Lindsay Land Company lease that we jointly own with Delta Producers, Inc. Currently there are six producing wells on the property. Two wells were drilled in June 2005, the Lindsay #16 and #17. These wells fully penetrated the Big Lime and Devonian Shale to depths of approximately 4,700 feet. The Lindsay #17 has been foam fraced in the Devonian Shale and will be fraced in the Big Lime when testing is completed in the shale. There are at a minimum twenty-three additional drill sites on this 3,400 acre lease which is situated near Caryville, Tennessee. The balance of this lease was assigned to the Wind Mill Joint Venture.

On January 5, 2006, we drilled the Edwards/Fowler #1 gas well to 4,632 feet. This well is the first well to be drilled under the Wind Mill Joint Venture pursuant to which Wind Mill Oil & Gas, LLC will have a 25% net interest in the wells, of which we will own 49.9%. The well is being completed and management anticipates that it will be put on production in the near future.
 
-20-


We are continuing our leasing efforts in the Eastern Tennessee portion of the Eastern Overthrust Belt, which runs from Eastern Canada through Appalachia into Alabama. Acreage is being leased there in selected areas, which will be a part of the Wind Mill Joint Venture.
 
Results of Operations

Year Ended April 30, 2005 compared to Year Ended April 30, 2004

In fiscal 2005, we increased our capitalized costs of oil and gas properties from $2,638,005 to $2,941,832. Our development costs for oil and gas properties decreased from $565,779 to $549,687. Estimates of proved reserves of oil decreased from 350,937 barrels to 93,825 and estimates of proved reserves of natural gas decreased from 8,696,519 Mcf to 1,249,566 Mcf. Proved developed producing reserves of oil decreased to 60,734 barrels from 62,106 barrels and proved developed producing reserves of natural gas decreased to 697,916 Mcf from 1,035,850 Mcf. These decreases were primarily due to a change in the evaluations by our new engineering firm NSAI, which reclassified previous estimates of proved reserves as possible and probable. (See Description of Business—“Oil and Gas Reserve Analyses.” in this Annual Report.) During fiscal 2005, future cash flows discounted 10% after income taxes from proved reserves decreased from $23,149,947 to $3,480,639. Our oil and gas revenue was $784,409 for fiscal 2005, up from $773,033 for fiscal 2004. Volatile changes in the price of natural gas and oil partially offset by normal declines in our production curves brought about this increase. During fiscal 2005, service and drilling revenue was $209,680, down from $1,186,823, in part due to the disposal of a drilling rig. Cost of revenue from service and drilling decreased by $682,943 from Fiscal 2004 to Fiscal 2005. The drilling rig was old and in need of major repairs. To acquire new drill pipe, hammers and a compressor would cost $320,000, and likely the motor would need to be replaced to continue using the rig. The cost of repairs, combined with high worker’s compensation insurance rates, would have resulted in a negative cash flow to the Company. At the time the rig was sold it was not being utilized, and management believed that it was in the best interests of the Company sell the rig and use the funds to enhance the Company’s oil and gas leases. Retail sales increased from $6,939 in fiscal 2004, to $35,947 in fiscal 2005 primarily due to the market volatility, and are included in service and drilling revenue for financial statement purposes.

During fiscal 2005, Miller Petroleum produced 75 MMBTUs of natural gas, with an average price of $6.28 per MMBTU. Production decreased from about 88 MMBTUs in fiscal 2004, and the average price per MMBTU was $5.63. The following tables reflect our production figures for the fiscal years ended April 30, 2005, and 2004

Fiscal Year
 
Average Net Production Gas /MBTU
 
Sales Price
/MMBTU
 
2004
   
88,000
 
$
5.63
 
2005
   
75,000
 
$
6.28
 
 
Fiscal Year
 
Average Net
Barrels of Oil
 
Sales Price
 
2004
   
10,100
 
$
27.30
 
2005
   
7,500
 
$
40.48
 

   
2003
 
2004
 
2005
 
Net Productive Wells
   
22.60
   
20.20
   
20.20
 
Developed Acreage
   
1,480
   
1,480
   
1,480
 
Undeveloped Acreage
   
41,120
   
41,120
   
41,120
 
Net Productive Exploratory Wells
   
0
   
0
   
0
 
Net Dry Exploratory Wells
   
0.24
   
0.30
   
0.30
 
Net Productive Developmental Wells
   
1.408
   
1.20
   
1.20
 
Net Dry Developmental Wells
   
0
   
0
   
0
 
 
 
-21-


Nine Months Ended January 31, 2006 compared to Nine Months Ended January 31, 2005

   
For the Nine Months Ended
 
Increase /
 
   
January 31
 
(Decrease)
 
 
2006
 
2005
 
2005 to 2006
 
REVENUES
             
Oil and gas revenue
 
$
627,931
 
$
601,240
 
$
26,691
 
Service and drilling revenue
   
1,480,804
   
157,685
   
1,323,119
 
Total Revenue
   
2,108,735
   
758,925
   
1,349,810
 
                     
COSTS AND EXPENSES
                   
Cost of oil and gas revenue
   
62,793
   
60,010
   
2,783
 
Cost of service and drilling revenue
   
1,220,310
   
55,515
   
1,164,795
 
Selling, general and administrative
   
1,515,630
   
310,696
   
1,204,934
 
Salaries and wages
   
229,144
   
180,658
   
48,486
 
Depreciation, Depletion and amortization
   
255,657
   
152,659
   
102,998
 
Total Costs and Expenses
   
3,283,534
   
759,538
   
2,523,996
 
                     
INCOME (LOSS) FROM OPERATIONS
   
(1,174,799
)
 
(613
)
 
(1,174,186
)
                     
OTHER INCOME (EXPENSE)
                   
Interest income
   
667
   
674
   
(7
)
Gain on sale of equipment
       
98,638
   
(98,638
)
Interest expense
   
(1,319,751
)
 
(165,386
)
 
(1,154,365
)
Total Other Income (Expense)
   
(1,319,084
)
 
(66,074
)
 
(1,253,010
)
NET INCOME (LOSS)
 
$
(2,493,883
)
$
(66,687
)
$
(2,427,196
)

Revenue

Oil and gas revenue was $627,931 for the nine months ended January 31, 2006 as compared to $601,240 for the nine months ended January 31, 2005, an increase of $26,691. This resulted from more wells producing more oil and gas.

Service and drilling revenue was $1,480,804 for the nine months ended January 31, 2006 as compared to $157,685 for the nine months ended January 31, 2005, an increase of $1,323,119. This resulted from an increase in drilling activity with several participants.

Cost and Expense

The cost of oil and gas revenue was $62,793 for the nine months ended January 31, 2006 as compared to $60,010 for the nine months ended January 31, 2005, an increase of $2,783. This increase resulted from the cost associated with increased production.
 
-22-


The cost of service and drilling revenue was $1,220,310 for the nine months ended January 31, 2006 as compared to $55,515 for the nine months ended January 31, 2005, an increase of $1,164,795. This increase is due to the increase in drilling activities and revenue.

Selling, general and administrative expense was $1,515,630 for the nine months ended January 31, 2006 as compared to $310,696 for the nine months ended January 31, 2005, an increase of $1,204,934. This increase results from an increase in stock compensation of approximately $700,000, increased legal and professional fees of approximately $360,000 and a general increase of selling, general and administrative expense.

Salaries and wages expense was $229,144 for the nine months ended January 31, 2006 as compared to $180,658 for the nine months ended January 31, 2005, an increase of $48,486. This increase resulted from the addition of new employees and less cost being capitalized in lease acquisitions.

Depreciation, depletion and amortization was $255,657 for the nine months ended January 31, 2006 as compared to $152,659 for the nine months ended January 31, 2005, an increase of $102,998. This resulted from more wells and equipment being placed into service.

Gain on the sale of equipment was zero for the nine months ended January 31, 2006 as compared to $98,638 for the nine months ended January 31, 2005, a decrease of $98,638. The gain for the nine months ended January 31, 2005 resulted from the sale of a drilling rig. There were no sales of equipment during the nine months ended January 31, 2006.

Interest expense was $1,319,751 for the nine months ended January 31, 2006 as compared to $165,386 for the nine months ended January 31, 2005, an increase of $1,154,365. This resulted from increased interest cost, loan cost, warrants and penalty warrants associated with loans.

Three Months Ended January 31, 2006 compared to Three Months Ended January 31, 2005

   
For the Three Months Ended
 
Increase /
 
   
January 31
 
(Decrease)
 
   
2006
 
2005
 
2005 to 2006
 
REVENUES
             
Oil and gas revenue
 
$
285,973
 
$
238,790
 
$
47,183
 
Service and drilling revenue
   
138,632
   
30,014
   
108,618
 
Total Revenue
   
424,605
   
268,804
   
155,801
 
                     
COSTS AND EXPENSES
                   
Cost of oil and gas revenue
   
23,751
   
19,567
   
4,184
 
Cost of service and drilling revenue
   
153,114
   
19,323
   
133,791
 
Selling, general and administrative
   
969,907
   
74,706
   
895,201
 
Salaries and wages
   
70,152
   
82,884
   
(12,732
)
Depreciation, Depletion and amortization
   
93,890
   
63,330
   
30,560
 
Total Costs and Expenses
   
1,310,814
   
259,810
   
1,051,004
 
                     
INCOME (LOSS) FROM OPERATIONS
   
(886,209
)
 
8,994
   
(895,203
)
                     
OTHER INCOME (EXPENSE)
                   
Interest income
   
470
   
429
   
41
 
Gain on sale of equipment
       
56,149
   
(56,149
)
Interest expense
   
(690,995
)
 
(52,363
)
 
(638,632
)
Total Other Income (Expense)
   
(690,525
)
 
4,215
   
(694,740
)
NET INCOME (LOSS)
 
$
(1,576,734
)
$
13,209
 
$
(1,589,943
)
 
 
-23-


Revenue

Oil and gas revenue was $285,973 for the three months ended January 31, 2006 as compared to $238,790 for the three months ended January 31, 2005, an increase of $47,183. This increase resulted from more wells producing more oil and gas.

Service and drilling revenue was $138,632 for the three months ended January 31, 2006 as compared to $30,014 for the three months ended January 31, 2005, an increase of $108,618. This increase resulted from an increase in drilling activity with several participants.

Cost and Expense

The cost of oil and gas revenue was $23,751 for the three months ended January 31, 2006 as compared to $19,567 for the three months ended January 31, 2005, an increase of $4,184. This increase resulted from the cost associated with increased production.

The cost of service and drilling revenue was $153,114 for the three months ended January 31, 2006 as compared to $19,323 for the three months ended January 31, 2005, an increase of $133,791. This increase is due to the increase in drilling activities and revenue.

Selling, general and administrative expense was $969,907 for the three months ended January 31, 2006 as compared to $74,706 for the three months ended January 31, 2005, an increase of $895,201. This increase results from an increase in stock compensation of approximately $640,000, increased legal and professional fees of approximately $200,000 and a general increase of selling, general and administrative expense.

Salaries and wages expense was $70,152 for the three months ended January 31, 2006 as compared to $82,884 for the three months ended January 31, 2005, a decrease of $12,732. This decrease resulted from reimbursement of a part of our salaries from the Wind Mill Oil & Gas, LLC joint venture.

Depreciation, depletion and amortization expense was $93,890 for the three months ended January 31, 2006 as compared to $63,330 for the three months ended January 31, 2005, an increase of $30,560. This resulted from more wells and equipment being placed into service.

Gain on the sale of equipment was zero for the three months ended January 31, 2006 as compared to $56,149 for the three months ended January 31, 2005, a decrease of $56,149. The gain for the three months ended January 31, 2005 resulted from the sale of a drilling rig. There were no sales of equipment during the three months ended January 31, 2006.

Interest expense was $690,995 for the three months ended January 31, 2006 as compared to $52,363 for the three months ended January 31, 2005, an increase of $638,632. This resulted from increased interest cost, loan cost, warrants and penalty warrants associated with loans.

Off Balance Sheet Arrangements

None.
 
DESCRIPTION OF PROPERTY

Our executive offices presently comprise approximately 6,300 square feet on 14 acres of land in Huntsville, Tennessee that the company owns. Please see “Current Business” for a description of our oil and gas leases and for additional disclosure regarding our oil and gas operations in accordance with pursuant to Industry Guides 2 of the Securities and Exchange Act (the “Act”). See also “Description of Business—Oil an Gas Leases.”
 
-24-


MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

Our Common Stock is quoted on the National Association of Securities Dealers Over-the-Counter Bulletin Board (“OTCBB”) under the symbol “MILL.” The following quotations, obtained from National Quotation Bureau, reflect the high and low bids for our shares for the periods indicated and are based on inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

   
High
 
Low
 
Quarter Ended:
 
Bid Prices ($)
 
         
July 31, 2005
   
1.45
   
1.20
 
October 31, 2005
   
1.24
   
1.10
 
January 31, 2006
   
1.30
   
1.30
 
               
July 31, 2004
   
1.01
   
1.01
 
October 31, 2004
   
0.45
   
0.38
 
January 31, 2005
   
0.38
   
0.38
 
April 30, 2005
   
0.90
   
0.90
 
               
July 31, 2003
   
0.55
   
0.55
 
October 31, 2003
   
0.68
   
0.45
 
January 31, 2004
   
0.45
   
0.35
 
April 30, 2004
   
0.91
   
0.59
 
               
Holders

There were approximately 386 shareholders of record of our Common Stock as of April 6, 2006.

Dividends

We have not paid or declared any cash dividends to date and do not anticipate paying any in the foreseeable future. There are no present restrictions that limit our ability to pay dividends or that are likely to do so in the future. We intend to retain earnings, if any, to support the growth of our business.

Shares Issuable Under Equity Compensation Plans

The table below provides information, as of April 30, 2005, concerning securities authorized for issuance under equity compensation plans.

Plan category
 
Number of securities to be issued upon exercise of outstanding options, warrants and rights
 
Weighted average exercise price of outstanding options, warrants and rights
 
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
 
   
(a)
 
(b)
 
(c)
 
Equity compensation plans approved by shareholders
   
   
   
 
Equity compensation plans not approved by shareholders
   
540,000(1
)
 
1.30
   
 
Total
   
540,000
   
1.30
   
 
                     

(1)
Includes 50,000 warrants granted to Herman Gettelfinger which expired in July 2005.
 
 
-25-


DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
 
The following table shows the names, ages and positions held by our executive officers, directors and significant employees.

Name
 
Age
 
Position
Deloy Miller
 
58
 
Director and Chief Executive Officer
Ernest Payne
 
58
 
President
Lyle H. Cooper
 
63
 
Chief Financial Officer
Herbert J. White
 
79
 
Vice President and Director
Herman E. Gettelfinger
 
72
 
Director
Charles M. Stivers
 
43
 
Director
Gary Bible
 
55
 
Vice President of Geology
Teresa Cotton
 
43
 
Secretary and Treasurer

Business Experience.

Deloy Miller has been Chairman of the Board of Directors since December 1996, and Chief Executive Officer since December 1997. Mr. Miller is a seasoned gas and oil professional with more than 30 years of experience in the drilling and production business in the Appalachian basin. During his years as a drilling contractor, he acquired extensive geological knowledge of Tennessee and Kentucky and received training in the reading of well logs. A native Tennessean, Miller is credited with being the leader in converting the Appalachian Basin from cable tool drilling to air drilling, using the Ingersoll-Rand T3 Drillmaster rigs. The introduction of air drilling sparked the 1969 drilling boom and Miller soon became a successful drilling contractor in the southern Appalachian basin. He served two terms as president of the Tennessee Oil & Gas Association and in 1978 the organization named Miller the Tennessee Oil Man of the Year. He continues to serve on the board of that organization. Mr. Miller was appointed by the Governor of Tennessee to be the petroleum industry's representative on the Tennessee Oil & Gas Board, the state agency that regulates gas and oil operations in the state.

Ernest Payne was appointed President on August 2003. Mr. Payne rejoined the Miller Team after serving as Project Manager and Superintendent for Youngquist Brothers of Fort Myers, Florida from early 1994 through May of 2001. Mr. Payne has 20 years experience in oil and gas well design and stimulations as well as supervising the operation of drilling and workover rigs. He earned a B.S. in engineering at Tennessee Technological University. He originally joined Miller in the early 70's and was the general manager for 17 years. He directed the operation of 18 drilling and workover rigs. In the mid 1980's he formed his own company and managed large drilling jobs in Florida and Puerto Rico until joining Youngquist.

Lyle H. Cooper was appointed Chief Financial Officer on January 20, 2006. Mr. Cooper owns a private CPA firm where since 1991 he has specialized in providing accounting, auditing, tax and SEC related services. During 2002 and 2003 he served as the Secretary of Aurora Lighting, Inc., a leading manufacturer of electronic ballasts. In 2003 and 2004, Mr. Cooper participated as principal in an oil drilling venture in Clinton County, Kentucky.

Charles M. Stivers has been a Director since 2004. He also served as our Chief Financial Officer from 2004 until January 2006. Mr. Stivers has over 18 years accounting experience and over 12 years of experience within the energy industry. He owns and operates Charles M. Stivers, C.P.A., which specializes in the oil and gas industry and has clients located in eight different states. His responsibilities include all forms of SEC audit work, SEC quarterly financial statement filings, oil and gas consulting work, and income tax work. Mr. Stivers served as Treasurer and CFO for Clay Resource Company and Senior Tax and Audit Specialist for Gallaher and Company. He received a Bachelor of Science degree in accounting from Eastern Kentucky University.
 
-26-


Herbert J. White has been a Vice President and Director since April 1997. Mr. White has more than 44 years of Petroleum related experience. After earning his BS degree from North Texas University, he became an engineer with Halliburton, handling Louisiana Gulf Coast and offshore operations and serving in Australia. In 1975 he joined Petroleum Development Corporation, a West Virginia-based public company, supervising engineering and operations in Southern Appalachian basin. He also has experience in Devonian Shale production, enhanced recovery and coal degasification. Miller Petroleum and its predecessor corporation have employed Mr. White as a Petroleum Engineer since July of 1985. In April, 1997, he became a director and Vice President of Development Engineering for Miller Petroleum.

Herman Gettelfinger has been a Director since 1997. Mr. Gettelfinger is a co-owner of Kelso Oil Company, Knoxville Tennessee and has been the President of Kelso since 1960. Kelso is one of eastern Tennessee's largest distributors of motor oils, fuels and lubricants to the industrial and commercial market. Mr. Gettelfinger has been active in the gas and oil drilling and exploration business for more than 35 years and has been associated with Miller Petroleum for more than 25 years.

Dr. Gary Bible was appointed Vice President of Geology in September 1997. Dr. Bible came from Alamco, where he had served since May of 1991 as Manager of Geology and Senior Geologist. Dr. Bible earned his BS Degree in Geology from Kent State University and his Msc. and PhD. Degrees in Geology from Iowa State University. He is a proven hydrocarbon finder who drilled his first successful wildcat as a Trainee Geologist. Dr. Bible brings to the Company 20 years experience as a Petroleum Geologist. In addition, Dr. Bible has spent more than 10 years in the Appalachian Basin in the exploration and development of reserves in the Big Lime, Devonian Shale and in deeper horizons. He is credited with managing a drilling program at Alamco that kept its finding cost the lowest in the nation.

Teresa Cotton was appointed Secretary/Treasurer in December 2001. Prior to joining the Miller Team, Mrs. Cotton was employed by Halliburton Services. She has more than twenty years experience in the oil and gas industry. Mrs. Cotton, a Tennessee native, earned an A.S. in Business Administration at Roane State Community College in Huntsville, Tennessee 37756.

Audit Committee Financial Expert

We have an audit committee consisting of Herman Gettelfinger and Charles Stivers. Our board of directors has determined that Mr. Stivers is an “audit committee financial expert” based on his qualification as a certified public accountant and his prior experience.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information concerning the number of shares of our Common Stock owned beneficially as of April 6, 2006 by: (i) each person (including any group) known to us to own more than five percent (5%) of our Common Stock, (ii) each of our directors and each of our named executive officers and (iii) officers and directors as a group. We based our calculations on 14,296,856 shares outstanding on April 6, 2006.

The number and percentage of shares beneficially owned is determined in accordance with Rule 13d-3 of the Securities Exchange Act of 1934, and is not necessarily indicative of beneficial ownership for any other purpose. Shares of Common Stock that a person has a right to acquire within 60 days are deemed outstanding for purposes of computing the percentage ownership of that person, but are not deemed outstanding for purposes of computing the percentage ownership of any other person, except with respect to the percentage ownership of all directors and executive officers as a group.

Except as otherwise indicated, each director and named executive officer (1) has sole investment and voting power with respect to the securities indicated or (2) shares investment and/or voting power with that individual’s spouse.
 
-27-


The address of each director and named executive officer listed in the table below is c/o Miller Petroleum, Inc., 3651 Baker Highway, Huntsville, Tennessee 37756.

Name of Beneficial Owner
 
Amount and Nature of Beneficial Ownership
 
Percent of Class
 
Directors and Officers
         
Deloy Miller
   
4,090,343
   
28.61
%
Ernest Payne
   
605,000(1
)
 
4.21
%
Herman E. Gettelfinger
   
342,901(2
)
 
2.39
%
Herbert J. White
   
300
   
*
 
Charles Stivers
   
20,000
   
*
 
All directors and executive officers (5 persons)
   
5,058,544(3
)
 
35.07
%
               
Beneficial Owner of More Than 5%
             
Wind City Oil & Gas, LLC
   
2,900,000
   
20.28
%
               

*
Represents less than 1% of our outstanding Common Stock.
(1)
Includes 75,000 shares issuable upon the exercise of presently exercisable stock options.
(2)
Includes 50,000 shares issuable upon the exercise of presently exercisable stock options and 100,000 shares held by Mr. Gettelfinger’s spouse.
(3)
Includes 125,000 shares issuable upon the exercise of presently exercisable stock options.
 
 
-28-


EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
 
The following table sets forth information for the periods indicated concerning compensation paid to our Chief Executive Officer and each of our other executive officer who received the highest compensation for services rendered to us with respect to 2005. 

 
ANNUAL
COMPENSATION 
LONG TERM COMPENSATION 
Name
Title
Year
Salary
Bonus
Other
Annual
Compen-
sation
AWARDS
PAYOUTS
All Other
Compen-
sation
Restricted
Stock
Awarded
Options/
SARs* (#)
LTIP
payouts ($)
Deloy Miller
Chief Executive Officer
2005
2004
2003
$180,000
$183,000
$180,000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

Long-Term Incentive Plan

We do not have any long-term incentive plans, pension plans, or similar compensatory plans for our directors and executive officers.

Compensation of Directors

Directors receive attendance fees of $500 for each meeting of the Board attended.

Employment Contracts, Termination of Employment and Change in Control Arrangements

On February 21, 2006 we entered into an Employment Agreement with our President, Ernest Payne. Pursuant to the terms of the agreement, Mr. Payne will receive an annual base salary of $200,000 for the three year term of the Employment Agreement. In addition, Mr. Payne is entitled to receive certain discretionary bonuses as may be determined by the Board of Directors. In connection with Mr. Payne’s Employment Agreement, we issued to Mr. Payne 500,000 shares of Common Stock. We may offer long term contracts to other executive officers, directors or key employees in the future.

Our company has no plans or arrangements in respect of remuneration received or that may be received by named executive officers of our company in fiscal year 2006 to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control.
 
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company entered into a two-year consulting agreement with Scott Boruff for the provision of certain advisory and business development services. As consideration for these services, the Company issued to Mr. Boruff 400,000 shares or our Common Stock.

On September 8, 2005, we agreed to issue 400,000 shares of Common Stock to Scott Boruff (son-in-law of Deloy Miller, our Chief Executive Officer), in consideration of consulting services.

The Company had a note payable to Sharon Miller (wife of Deloy Miller, our chief executive officer) for $56,693 at July 31, 2005 for the balance remaining on the original purchase of the property which houses our executive offices. This note was settled May 11, 2005.
 
-29-


The Company issued a note payable for $254,000 at 8% with principle due in December 2005 to Herman E. Gettelfinger. This note was settled May 10, 2005.

Other than the transactions disclosed above, there have been no material transactions, similar transactions or currently proposed transactions, to which we, or any of our subsidiaries was or is to be a party, in which the amount involved exceeds $60,000 and in which any director, executive officer or any security holder who is known to u s to own of record or beneficially more than 5% of the Company’s Common Stock, or any member of the immediate family of any of the foregoing persons, had a material interest.

SELLING SHAREHOLDERS
 
This prospectus relates to the offering and sale, from time to time, of up to 6,100,000 shares of our Common Stock held by the selling shareholders named in the table below, which amount includes 1,200,000 common shares issuable upon the exercise of warrants held by selling shareholders. The selling shareholders may exercise their warrants at any time in their sole discretion up until the expiration date of such warrants. All of the selling shareholders named below acquired their shares of our Common Stock and warrants directly from us in private transactions.
 
The following table sets forth certain information known to us regarding the selling security holders’ beneficial ownership of our Common Stock as of the date of this prospectus. Because the selling security holders may sell none, all, or a portion of the shares they hold pursuant to this prospectus, no precise estimate can be given as to the amount or percentage of shares that will be held by the selling security holders after completion of any offering by the selling shareholders . The selling shareholders have sole voting and investment power with respect to all shares beneficially owned by them.
 
The selling shareholders may sell all or some of the shares of Common Stock they are offering, and may sell shares of our Common Stock otherwise than pursuant to this prospectus. The table below assumes that each selling shareholders exercises all of its warrants and sells all of the shares issued upon exercise thereof, and that each selling shareholder sells all of the shares offered by it in offerings pursuant to this prospectus, and does acquire any additional shares. We are unable to determine the exact number of shares that will actually be sold or when or if these sales will occur.
 
-30-

 
   
Shares
Beneficially Owned
Prior to Offering
 
Shares Offered
 
Shares
Beneficially Owned
After Offering
 
Name of Beneficial Owner
 
Number
 
Percent
 
Number
 
Number
 
Percent
 
Wind City Oil & Gas, LLC
   
2,900,000
   
20.28
%
 
2,900,000
   
-0-
   
-0-
 
Prospect Energy Corporation
   
781,805(1
)
 
5.18
%
 
781,805
   
-0-
   
-0-
 
Petro Capital III, L.P.
   
248,195(2
)
 
1.71
%
 
248,195
   
-0-
   
-0-
 
Petro Capital Advisors, LLC
   
170,000(3
)
 
1.18
%
 
170,000
   
-0-
   
-0-
 
Scott Boruff(4)
   
400,000
   
2.80
%
 
400,000
   
-0-
   
-0-
 
Growth Management LLC
   
600,000
   
4.20
%
 
600,000
   
-0-
   
-0-
 
Ernest Payne(5)
   
605,000(6
)
 
4.21
%
 
500,000
   
105,000(6
)
 
*
 
GunnAllen Financial, Inc.
   
400,000
   
2.80
%
 
400,000
   
-0-
   
-0-
 
North Star Capital Markets, Inc.
   
50,000
   
*
   
50,000
   
-0-
   
-0-
 
Charles Stivers
   
20,000
   
*
   
20,000
   
-0-
   
-0-
 
Everett G. Titus III
   
15,000
   
*
   
15,000
   
-0-
   
-0-
 
William P. Farland
   
15,000
   
*
   
15,000
   
-0-
   
-0-
 
                                 

(1)
Represents 781,805 shares of common stock underlying warrants.
(2)
Represents 248,195 shares of common stock underlying warrants.
(3)
Represents 170,000 shares of common stock underlying warrants.
(4)
Scott Boruff is the son-in-law of Deloy Miller, our Chief Executive Officer.
(5)
Ernest Payne is our President.
(6)
Includes 75,000 shares issuable upon the exercise of presently exercisable stock options.
 
 
-31-

 
 
The selling shareholders and any of their donees, pledges, assignees and other successors-in-interest, may, from time to time, sell any or all of their shares of Common Stock being offered under this prospectus on any stock exchange, market or trading facility on which the shares are traded or in private transactions. The selling shareholders may use any one or more of the following methods when selling shares:
 
 
·
ordinary brokerage transactions and transactions in which the broker-dealer solicits the purchaser;
 
 
·
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
 
 
·
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
 
 
·
an exchange distribution in accordance with the rules of the applicable exchange;
 
 
·
privately-negotiated transactions;
 
 
·
short sales that are not violations of the laws and regulations of any state or the United States;
 
 
·
broker-dealers may agree with the selling shareholders to sell a specified number of such shares at a stipulated price per share;
 
 
·
through the writing of options on the shares;
 
 
·
a combination of any such methods of sale; and
 
 
·
any other method permitted pursuant to applicable law.
 
The selling shareholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.

Broker-dealers engaged by the selling shareholders may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling shareholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The selling shareholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved.
Brokers or dealers effecting transactions in the shares should confirm the registration of these securities under the securities laws of the states in which transactions occur or the existence of an exemption from registration.

The selling shareholders may from time to time pledge or grant a security interest in some or all of the shares of Common Stock owned by them and, if they default in the performance of their secured obligations, the pledge or secured parties may offer and sell the shares of Common Stock from time to time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of selling shareholders to include the pledgee, transferee or other successors in interest as selling shareholders under this prospectus.

The selling shareholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. The selling shareholders have informed us that they do not have any agreement or understanding, directly or indirectly, with any person to distribute the Common Stock.
 
-32-


We are required to pay certain fees and expenses incurred by us incident to the registration of the shares. We have agreed to indemnify the selling shareholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

DESCRIPTION OF SECURITIES

General

We are authorized to issue up to 500,000,000 shares of our Common Stock, of which, as of April 6, 2006 14,296,856 shares were issued and outstanding.

Common Stock

Each share of our Common Stock is entitled to one vote at all meetings of shareholders. Each share of our Common Stock is entitled to share ratably in distributions to shareholders and to receive ratably such dividends as we may declare. The shares of our Common Stock are not entitled to preemptive rights and are not subject to redemption or assessment. Upon our liquidation, dissolution or winding up, holders of our Common Stock will be entitled to receive, on a pro rata basis, those assets which are legally available to shareholders .

Private Placement Warrants

We issued warrants to purchase Common Stock as part of the May 9, 2005 private placement transaction with Prospect Energy, Petro Capital and Capital Advisors. In connection with such transaction, (i) Prospect Energy received warrants to purchase 630,000 shares of our Common Stock; (ii) Petro Capital received warrants to purchase 200,000 shares of our Common Stock and Capital Advisors received warrants to purchase 170,000 shares of our Common Stock. Such warrants are presently exercisable at an exercise price of $0.50 per share and have a term of five years. None of the warrants have been exercised as of the date of this prospectus.

In connection with the above private placement transaction and for failure to file the required registration statement and to have that registration statement become effective by a certain date, we subsequently issued five additional warrants (the “Penalty Warrants”) to each of Prospect Energy and Petro Capital to purchase aggregate amounts of 151,805 and 48,195 shares of our Common Stock, respectively. The Penalty Warrants are presently exercisable at an exercise price of $1.15 per share and have a term of five years. None of the Penalty Warrants have been exercised as of the date of this prospectus.

Transfer Agent

The Transfer Agent for our Common Stock is Interwest Transfer Company, 1981 East Murray Holladay Road, Suite 100, Salt Lake City Utah, 84117.

EXPERTS

Our financial statements as of April 30, 2005 and April 30, 2004 are included in this prospectus and have been audited by Rodefer Moss & Co., PLLC, an independent registered public accounting firm, as set forth in their report appearing elsewhere in this prospectus.
 
Rodefer Moss has not been hired on a contingent basis, will not receive a direct or indirect interest in us and has not been our promoter, underwriter, voting trustee, director, officer, or employee.
 
WHERE YOU CAN FIND ADDITIONAL INFORMATION

We file annual, quarterly and current reports and other information with the Securities and Exchange Commission. You may read and copy any document we file at the SEC’s public reference room at Room 1024, 450 Fifth Street, NW, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for information on the public reference room.
 
-33-


In addition, we are electronic filers and our reports and information filed with the SEC are available on the SEC’s website located at www.sec.gov. Our website is located at www.millerpetroleum.com. Under the “Archive” section of the website, you may access our most recent press releases.

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

The Tennessee Business Corporation Act (the “TBCA”) provides that a corporation may indemnify any of its directors and officers against liability incurred in connection with a proceeding if:

 
·
the director or officer acted in good faith;
 
·
in the case of conduct in his or her official capacity with the corporation, the director or officer reasonably believed such conduct was in the corporation’s best interest;
 
·
in all other cases, the director or officer reasonably believed that his or her conduct was not opposed to the best interest of the corporation; and
 
·
in connection with any criminal proceeding, the director or officer had no reasonable cause to believe that his conduct was unlawful.

In actions brought by or in the right of the corporation, however, the TBCA provides that no indemnification may be made if the director or officer was adjudged to be liable to the corporation. In cases where the director or officer is wholly successful, on the merits or otherwise, in the defense of any proceeding instituted because of his or her status as an officer or director of a corporation, the TBCA mandates that the corporation indemnify the director or officer against reasonable expenses incurred in the proceeding. The TBCA also provides that in connection with any proceeding charging improper personal benefit to an officer or director, no indemnification may be made if the officer or director is adjudged liable on the basis that personal benefit was improperly received. Notwithstanding the foregoing, the TBCA provides that a court of competent jurisdiction, upon application, may order that an officer or director be indemnified for reasonable expenses if, in consideration of all relevant circumstances, the court determines that the individual is fairly and reasonably entitled to indemnification, notwithstanding the fact that:

 
·
the officer or director was adjudged liable to the corporation in a proceeding by or in the right of the corporation;
 
·
the officer or director was adjudged liable on the basis that personal benefit was improperly received by him or her; or
 
·
the officer or director breached his or her duty of care to the corporation.

Our Board of Directors has adopted these provisions to indemnify our directors, executive officers and agents.

Insofar as indemnification for liabilities under the Securities Act of 1933 may be permitted to our directors, officers, and controlling persons, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and therefore unenforceable.

 
-34-


FINANCIAL STATEMENTS

Index to Consolidated Financial Statements

 
Page
   
36
38
39
40
41
   
44
45
47
48
49
50
 

 
-35-

 
MILLER PETROLEUM, INC.
Consolidated Balance Sheets
           
   
January 31
 
April 30
 
   
2006
 
2005
 
   
Unaudited
     
ASSETS
         
CURRENT ASSETS
         
           
Cash
 
$
268,780
 
$
2,362
 
Accounts receivable
   
214,667
   
182,951
 
Participant receivables
   
268,371
     
Current portion of note receivable
   
42,250
   
47,000
 
Inventory
   
67,389
   
67,389
 
Deferred offering costs
   
     
   
88,842
 
Total Current Assets
   
861,457
   
388,544
 
               
FIXED ASSETS
             
               
Machinery and equipment
   
837,379
   
941,601
 
Vehicles
   
309,606
   
333,583
 
Buildings
   
313,335
   
313,335
 
Office Equipment
   
22,045
   
72,549
 
     
1,482,365
   
1,661,068
 
Less: accumulated depreciation
   
(755,966
)
 
(939,579
)
Total Fixed assets
   
726,399
   
721,489
 
               
OIL AND GAS PROPERTIES
   
2,756,568
   
2,941,832
 
(On the basis of successful efforts accounting)
             
               
PIPELINE FACILITIES
   
197,035
   
206,298
 
               
OTHER ASSETS
             
Investment in joint venture at cost
   
336,669
     
Land
   
496,500
   
496,500
 
Investments
   
500
   
500
 
Equipment held for sale
   
427,462
   
431,462
 
Cash - restricted
   
83,000
   
71,000
 
Total Other Assets
   
1,344,131
   
999,462
 
TOTAL ASSETS
 
$
5,885,590
 
$
5,257,625
 

 
See notes to consolidated financial statements.
 
-36-


MILLER PETROLEUM, INC.
Consolidated Balance Sheets
           
   
January 31
 
April 30
 
   
2006
 
2005
 
 
Unaudited
     
LIABILITIES AND SHAREHOLDERS ' EQUITY
         
CURRENT LIABILITIES
         
           
Accounts payable - trade
 
$
162,951
 
$
330,620
 
Accrued expenses
   
43,519
   
224,306
 
Current portion of notes payable
   
13,717
   
      
 
Total Current Liabilities
   
220,187
   
554,926
 
               
LONG-TERM LIABILITIES
             
               
Notes payable-Related parties
       
1,673,693
 
Other
   
330,207
   
655,646
 
Total Long-Term Liabilities
   
330,207
   
2,329,339
 
Total Liabilities
   
550,394
   
2,884,265
 
               
TEMPORARY EQUITY
             
Common Stock subject to put
   
4,350,000
     
               
SHAREHOLDERS ' EQUITY
             
Common Stock: 500,000,000 shares authorized at $0.0001 par value, 14,276,856 and 9,383,856 shares issued and outstanding
   
1,427
   
939
 
Additional paid-in capital
   
10,775,560
   
4,495,498
 
Unearned compensation
   
(824,831
)
   
Common Stock subject to put
   
(4,350,000
)
     
Retained Earnings
   
(4,616,960
)
 
(2,123,077
)
Total Shareholders ' Equity
   
985,196
   
2,373,360
 
TOTAL LIABILITIES AND SHAREHOLDERS ' EQUITY
 
$
5,885,590
 
$
5,257,625
 
 
 
See notes to consolidated financial statements.
 
-37-


MILLER PETROLEUM, INC.
Consolidated Statements of Operations
(UNAUDITED)
           
   
For the Three Months Ended
 
For the Nine Months Ended
 
   
January 31
 
January 31
 
   
2006
 
2005
 
2006
 
2005
 
       
As Restated
     
As Restated
 
                 
REVENUES
                 
Oil and gas revenue
 
$
285,973
 
$
238,790
 
$
627,931
 
$
601,240
 
Service and drilling revenue
   
138,632
   
30,014
   
1,480,804
   
157,685
 
Total Revenue
   
424,605
   
268,804
   
2,108,735
   
758,925
 
                           
COSTS AND EXPENSES
                         
Cost of oil and gas revenue
   
23,751
   
19,567
   
62,793
   
60,010
 
Cost of service and drilling revenue
   
153,114
   
19,323
   
1,220,310
   
55,515
 
Selling, general and administrative
   
969,907
   
74,706
   
1,515,630
   
310,696
 
Salaries and wages
   
70,152
   
82,884
   
229,144
   
180,658
 
Depreciation, depletion and amortization
   
93,890
   
63,330
   
255,657
   
152,659
 
Total Costs and Expense
   
1,310,814
   
259,810
   
3,283,534
   
759,538
 
                           
INCOME (LOSS) FROM OPERATIONS
   
(886,209
)
 
8,994
   
(1,174,799
)
 
(613
)
                           
OTHER INCOME (EXPENSE)
                         
Interest Income
   
470
   
429
   
667
   
674
 
Gain on sale of equipment
       
56,149
       
98,638
 
Interest expense
   
(690,995
)
 
(52,363
)
 
(1,319,751
)
 
(165,386
)
Total Other Income (Expense)
   
(690,525
)
 
4,215
   
(1,319,084
)
 
(66,074
)
NET INCOME (LOSS)
 
$
(1,576,734
)
$
13,209
 
$
(2,493,883
)
$
(66,687
)
                           
Basic and Diluted - Loss per Share
   
(0.16
)
 
   
(0.26
)
 
(0.01
)
                           
Basic and Diluted -Shares Outstanding
   
10,022,922
   
9,383,856
   
9,674,601
   
9,141,342
 
 
 
See notes to consolidated financial statements.
 
-38-


MILLER PETROLEUM, INC
Consolidated Statement of Shareholders ' Equity
(UNAUDITED)
                           
           
Additional
             
   
Common
 
Shares
 
Paid-in
 
Unearned
 
Retained
     
   
Shares
 
Amount
 
Capital
 
Compensation
 
Earnings
 
Total
 
                         
Restated balance, April 30, 2005
   
9,396,856
 
$
939
 
$
4,495,498
       
$
$ (2,123,077
)
$
2,373,360
 
                                       
Issuance of warrants as prepayment of financing costs
           
370,392
           
370,392
 
Issuance of warrants for financing cost penalty
           
36,000
           
36,000
 
Issuance of shares as payments of services
   
1,580,000
   
158
   
1,612,842
   
(824,831
)
     
788,169
 
Issuance of shares for stock sales commission
   
400,000
   
40
   
459,960
           
460,000
 
Cost of stock sales
           
(460,000
)
         
(460,000
)
Issuance of shares
   
2,900,000
   
290
   
4,349,710
           
4,350,000
 
Deferred offering cost
           
(88,842
)
         
(88,842
)
Net loss for the nine months ended January 31, 2006
   
   
   
   
   
   
   
    
   
(2,493,883
)
 
(2,493,883
)
Balance, January 31, 2006
   
14,276,856
 
$
1,427
 
$
10,775,560
 
$
(824,831
)
$
(4,616,960
)
$
5,335,196
 
 
 
See notes to consolidated financial statements.
 
-39-


MILLER PETROLEUM, INC.
Consolidated Statement of Cash Flows
(UNAUDITED)
           
       
As Restated
 
   
For the Nine
 
For the Nine
 
   
Months Ended
 
Months Ended
 
   
January 31, 2006
 
January 31, 2005
 
           
CASH FLOWS FROM OPERATING ACTIVITIES:
         
Net Income (Loss)
 
$
(2,493,883
)
$
(66,687
)
               
Depreciation, depletion and amortization
   
255,657
   
152,659
 
               
Adjustments to Reconcile Net Loss to Net Cash Provided (Used) by Operating Activities:
             
Gain on sale of equipment
       
6,665
 
Issuance of stock for services
   
788,169
   
110,000
 
Accretion of warrant costs
   
406,392
       
Changes in Operating Assets and Liabilities:
             
Decrease (increase) in accounts receivable
   
(31,716
)
 
48,169
 
Decrease (increase) in participant receivables
   
(268,371
)
 
(339
)
Decrease (increase) in prepaid expenses
       
88,590
 
Increase (decrease) in accounts payable
   
(167,670
)
 
(37,864
)
Increase (decrease) in accrued expenses