8-K/A

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                               450 Fifth Street NW
                             Washington, D.C. 20549

                              -------------------

                                   Form 8-K/A

                                 Amendment No. 1

                               -------------------

                                 CURRENT REPORT


                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934


     Date of Report                                          April 27, 2004


                         MILLER DIVERSIFIED CORPORATION
                         ------------------------------
             (Exact Name of Registrant as Specified in its Charter)

         Colorado                       01-19001                84-1070932
         --------                       --------                ----------
(State or Other Jurisdiction    (Commission File Number)     (I.R.S. Employer
       of Incorporation)                                  Identification Number)

                23360 Weld County Road 35
                   La Salle, Colorado                             80645
                   ------------------                             -----
       (Address of Principal Executive Offices)                 (Zip Code)

                                 (970) 284-5556
                                 --------------
              (Registrant's Telephone Number, including Area Code)

                                 Not Applicable
                                 --------------
          (Former Name or Former Address, if changed since last report)



Item 4. Change of Registrant's Certifying Accountant

     This Amendment No. 1 to the Registrant's Form 8-K filed on April 12, 2004
is for the purpose of (1) correcting a reference to a previous filing, (2)
correcting exhibits identified be filed with the Form 8-K filed on April 12,
2004, and (3) filing herewith a letter from Schumacher and Associates in
response to statements made in Item 4 of the Registrant's Form 8-K filed April
12, 2004.

(1) In the last unnumbered paragraph of paragraph (iv) near the bottom of page
3, there is a reference to the filing by the board of directors of the
Registrant of a Form 10-K on March 17, 2004. That reference should be to a Form
8-K filed on March 17, 2004.

(2) Exhibit 16.1 filed with the Registrant's Form 8-K filed on April 12, 2004 is
hereby deleted.

(3) A letter from Schumacher and Associates in response to statements made in
Item 4 of the Registrant's Form 8-K filed on April 12, 2004, is filed herewith
as Exhibit 16.1.

Item 7. Financial Statements, Proforma Financial Information and Exhibit

     (c) The following is a list of Exhibits attached hereto.

Exhibit 16.1 - Letter from Schumacher and Associates in response to statements
made in Item 4 of the Registrant's Form 8-K filed April 12, 2004.






                                        2



                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized. iller Diversified Corporation M

     April 27, 2004       /s/ James E. Miller
     --------------       -------------------
          Date            James E. Miller
                          President, Principal Executive
                          Officer, Principal Financial Officer,
                          and Director



     April 27, 2004       /s/ Clark A. Miller
     --------------       -------------------
          Date            Clark A. Miller
                          Secretary-Treasurer, Principal
                          Marketing Officer and Director



     April 27, 2004       /s/ Norman M. Dean
     --------------       ------------------
          Date            Norman M. Dean
                          Chairman of the Board and Director





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EX-16.1

                                                                    Exhibit 16.1

                          SCHUMACHER & ASSOCIATES, INC.
                          Certified Public Accountants
                              2525 15th Street, #3H
                                 Denver CO 80211
                        (303) 480-5037 FAX (303) 480-5038


April 20, 2004

Securities and Exchange Commission
450 Fifth Street NW
Washington D.C.  20549

Re: Miller Diversified Form 8-K, April 9, 2004, Item 4

The purpose of this letter is to respond to statements made in Item 4 of the
Form 8-K dated April 9, 2004. Please note, that we never completed the audit of
the financial statements for the year ended August 31, 2003. Therefore,
information included herein is unaudited and is based on preliminary information
not subjected to complete final documentation.

With respect to statements made in paragraph (a)(1), the scope of our engagement
was never expanded to include a restatement of the Company's financial
statements at August 31, 2002, the Company's report on Form 10-KSB as of that
date, and subsequent reports on Form 10-QSB. These restatements were the
responsibility of the Company. We discussed re-auditing the financial statements
of the Company for the year ended August 31, 2002 and reviewing various Form
10-QSB financial statements. Our accepting the expanded scope of the engagement
was contingent upon our review of requested information that we never received.
That requested information included a copy of the response to the SEC regarding
their inquiries as well as correspondence from the SEC on those matters. On
March 26, 2004 the Company's legal counsel, based on our inquiry as to the
status of the situation, informed us that they were working on a letter of
response to the SEC and would get back to us later. On March 30, 2004 Mr. Dean
informed us that they had written a long explanation to the SEC. On April 2,
2004 the Company's legal counsel informed us that he could not give us the
Company's response to the SEC until the Company decided what they were going to
do. We never received a copy of the Company's response nor did we receive a copy
of the SEC's communication regarding this matter. Acceptance of the expanded
scope of our services was also contingent upon our review of a response to our
concern that the material misstatements in the financial statements may have
been intentional and therefore may have been the result of fraud.

With respect to sections (i) and (ii) we agree with the statements.

With respect to section (iii) we have no knowledge.

With respect to the first paragraph of section (iv), the first sentence
regarding the former auditor's notification that it "would not" stand for
re-election as auditor, it is our understanding that they also "could not" stand

                                       1


for re-election. It is our understanding that because they had issued a fairness
opinion related to the $250,000 lease termination penalty for terminating the
lease with Miller Feed Lots. a related party, they were no longer independent
according to the SEC. This lack of independence along with the former auditor
not being a member of the PCAOB, led to the requirement that a new auditor be
engaged to re-audit the prior year ended August 31, 2002.

With respect to the second sentence in the first paragraph of section (iv),
which states that, "During its preparation for the audit for the periods
described above, Schumacher and Associates expressed disagreements .... if not
resolved to the satisfaction of Schumacher and Associates, would probably have
caused Schumacher and Associates to make reference to the subject matter of the
disagreements in connection with its report to be submitted with respect to its
restatement of the Company's financial statements for the fiscal year ended 2002
and the fiscal year 2003 interim reports on Form 10-QSB", we provide the
following clarifications. The disagreements, principally related to the prior
year that carried over to the most recent year, were noted by us during the
course of working on the audit for the most recent fiscal year ended August 31,
2003, not during the preparation for the audit of the most recent year and not
during the preparation for the audit for the prior year since we had not yet
accepted the engagement to re-audit the prior year. But we agree, if they were
not resolved to our satisfaction, they would probably have caused us to make
reference to the subject matter of the disagreements in our report.

With respect to the second paragraph of section (iv) we agree with the
statements made with the following clarifications:

The first part of the second paragraph of section (iv) refers to issues
concerning accounting for $179,000 paid to Mr. Dean in rather general terms
without specifics. For purpose of clarification we believe the following
specifics are relevant to the understanding of the issue. It is our
understanding, based on conversations with the Company's previous auditor, that
the "no loss guarantee" referred to in this paragraph was actually a "guaranteed
profit" agreement whereby Mr. Dean was actually guaranteed a $10 per head profit
on the cattle in the Company's feeding program. The $179,000 was paid to Mr.
Dean on April 19, 2002 related to losses incurred on cattle fed in eight lots
that were sold between January 2001 and February 2002. The $179,000 was charged
as an expense to cost of goods sold when it was paid, not when the loss was
incurred. On July 12, 2002 Mr. Dean returned the $179,000 to the Company. The
repayment of the $179,000 was then recorded as a reduction in cost of goods sold
and no liability was recorded for the $179,000. A file memo dated November 2,
2002, included in the workpapers of the prior auditor, described in general the
agreement with Mr. Dean, and indicated that a member of the former auditor's
firm had a discussion with Mr. Lowell Stuehm, Controller, and he indicated that
at year end there were no open lots held by Mr. Dean subject to participation
agreements. There was no liability recorded for the $179,000 at August 31, 2002,
or at any time subsequently. The Company's proxy relating to the sale of the
property and cattle feeding business to Miller Feed Lots, a related party, did
not disclose the liability and did not show payment of the amount in the pro
forma included therein. After the approval of the proxy and the shareholder
meeting approving the sale, the Company paid the $179,000 to Mr. Dean in October
2003 and charged it to cost of goods sold in the October 2003 internally
prepared Company financials statements. During phone discussions with Mr. Dean,
he indicated that these types of no loss or profit guarantee transactions were
normal in their business and were handled on a cash basis. In addition to the
material misstatement of the financial statements due to not recording the
liability and not disclosing the material related party transaction, the
accounting for these types of transactions on a cash basis raises concerns about
the presentation of the financials statements in general. Having no loss or
profit guarantee contracts with related parties and others raises other
accounting issues as to whether the transactions are actually unrecorded
off-balance sheet financing methods, rather than cattle feeding transactions.

                                       2


Another audit difficulty related to the $179,000 payment to Mr. Dean was that
there was no written agreement between the Company and Mr. Dean on this matter.
We were informed it was done on a "hand shake" basis. When we asked to see
director's minutes approving the related party transactions we were informed
that there were none. After informing the Company on December 30, 2003 that the
lack of documentation and no director's minutes were issues of concern, Mr. Dean
called and was seeking advice as to whether he should prepare minutes from notes
he had kept in his Daytimer. We informed Mr. Dean that in order to maintain our
independence, we could not give any advice regarding this or any other course of
action and we recommended that he consult with his attorney. We also informed
Mr. Dean that if he did prepare minutes from his Daytimer, then we would need to
audit his Daytimer. We subsequently received copies of minutes for various
meetings with the earliest date being November 9, 1999. On January 13, 2004
during a phone conversation with Mr. Dean we informed him that we thought the
information in the minutes he prepared for the November 13, 2002 meeting
regarding the line of credit non-renewal was in conflict with the Form 10-KSB
disclosures and that the minutes provided additional support for not recording
the deferred tax asset in the financial statements.

We also have been informed that in addition to the $179,000 paid to Mr. Dean,
there was an additional $60,000 due to him for additional lots of cattle and
that he had agreed to waive payment for this additional amount. The accounting
for this additional $60,000 was also not recorded in the Company's financial
statements.

Another area of concern with respect to the cash basis accounting for the Mr.
Norm deal $179,000 is the inconsistency of treatment as compared to the amount
described in the following paragraph due from Miller Feed Lots which was
recorded as a receivable on the accrual basis. Both transactions were
represented to being loss sharing arrangements with related parties and were
accounted for differently.

With respect to the Mr. Norm Dean transactions described above and the Miller
Feed Lots transaction discussed below we were havening difficulty determining
the substance of the transactions. While it was represented to us that the Mr.
Norm Dean October 2003 payment not being previously recording as a liability was
an inadvertent error, we noted that if the intent at the time Mr. Dean refunded
the original payment was to waive the amount rather than to defer it, the
accounting would have been totally different. The October 2003 payment might
then be classified as compensation or a dividend. Due to lack of documentation
other than documentation prepared after the fact, the substance of the
transactions was difficult to determine.

With respect to the comments in the second paragraph of section (iv) regarding
the loss sharing by Miller Feed Lots, we are providing the following information
as additional clarification. As indicated in this paragraph we noted that the
written agreement indicated sharing of losses and not profits and that the
agreement had various payback provisions that were not disclosed in the
financial statements. The significance of these differences relates not only to
potential incorrect or inadequate disclosures, but also to the conditional
nature of the agreement which would likely make the Company's accounting for the
transaction incorrect.

                                       3


As with the Mr. Norm Dean profit guarantee agreement, the Miller Feed Lot
$514,000 loss sharing transaction was done initially without a written
agreement, based on a "hand shake" deal. It was also done approximately five
months into the fiscal year ending August 31, 2002, retroactively to September
1, 2001, the beginning of the fiscal year. It was also done at a time when the
Company had financial covenant ratios to meet in order to retain its $3,000,000
line of credit. The written Miller Feed Lot loss sharing agreement, according to
a letter we received from the Company's former auditor, was not done until
April, 2003 when the Company's attorney suggested that a written document would
be needed in connection with the proxy. The written agreement was done after the
Company was informed that its line of credit would not be renewed and therefore
no financial covenant requirements existed. The written agreement was also
prepared at a time when Miller Feed Lots was in the process of attempting to
acquire the assets and business of the Company. The written agreement had
conditions in it that in effect allowed Miller Feed Lots to not have to pay the
$514,000, while the accounting for the "hand shake" transaction recorded the
receivable as an unconditional asset of the Company. The pro forma in the proxy
on page 39 included footnote (3) showing a reduction in the sale price of
$594,630 (the $514,000 losses through August 31, 2002 plus losses after that
date) for the Purchaser's (Miller Feed Lots) participation in losses of the
Seller's fed cattle program. Reducing the purchase price by the loss sharing
amount, in effect would result in non-payment of the amount, presumably based on
the subsequently prepared written document with added conditional provisions.
The cover letter to the stockholders that was sent with the proxy also indicated
that the purchase price was being reduced by the $594,630 participation in
losses as well as a $250,000 penalty for the Company's early termination of the
lease with Miller Feed Lots.

After discussions of the various matters and discrepancies related to the Miller
Feed Lot loss sharing transaction, the Company subsequently prepared an Amended
Loss Sharing Agreement which appears to be back dated to October 31, 2003.

With respect to paragraph 3 of section (iv), we agree with the statements
regarding our questioning of the accounting for the deferred tax assets.

With respect to the statement in paragraph 3 of section (iv) that we raised ten
other additional observations and considerations, not all of which related to
the presentation of information in the financial statements, we agree with the
statement. We believe they may be of significance and relevance to accounting
and disclosure matters so we are providing the following information for
clarification related to these ten items.

1.   This comment indicated that the loan covenant required a 25% equity in
     assets to meet lender covenants at August 31, 2002. Not recording the
     liability to Mr. Dean in the amount of $179,000, recording what may be a
     conditional asset as a real asset in the form of a receivable from Miller
     Feed Lots in the amount of $514,000 and recording a deferred tax asset in
     the amount of $376,000 that may not have met the "more likely than not"
     test, resulted in the Company having a 25.3% equity in assets ratio.

                                       4


2.   This comment indicated that the stockholders' equity shown in the May 31,
     2003 financial statements included in the proxy was approximately
     $1,292,000. It also indicated that the approximate combination of the
     financial misstatements listed in item 1 above, plus the $250,000 penalty
     for early termination of the related party lease reduced the stockholders'
     equity to approximately zero. We asked the question: "Does this invalidate
     the stockholders' meeting?"

3.   The Company had an option to acquire the leased property from Miller Feed
     Lots for $1,300,000. We asked the question if the Company considered
     exercising its option to acquire the property in lieu of being penalized a
     $250,000 early termination fee and waiving its right to collect their
     $514,000 Miller Feed Lots loss sharing amount. In the subsequently prepared
     director's minutes this matter was addressed with the statement that the
     Company had no funds available to exercise the option. We noted that the
     Company had significant receivables from the lessor, Miller Feed Lots
     approximating $900,000, and in addition had loan guarantees on debt on the
     property of $400,000 according to the notes in the August 31, 2002
     financial statements. In view of the other related party accounting issues
     and due to the potential conflicts of interest of the directors, the
     question was raised as further understanding of the appropriateness of the
     $250,000 lease cancellation penalty and the appropriateness of the related
     party sale in general.

4.   This comment raises the question whether Miller Feed Lots failure to pay
     amounts (approximately $900,000) owed to the Company had an effect on
     losing the line of credit, which led to the necessity to terminate the
     lease. If so, this may have an effect on determining if the $250,000 lease
     termination penalty was appropriate.

5.   This comment raises the question of proper allocation of overlapping and
     joint expenses of the Company and Miller Feed Lots. Discussions with the
     former auditor indicated that part of the motivation of the Miller Feed Lot
     retroactive oral loss sharing agreement may have been to shift the tax
     losses from the Company to Miller Feed Lots. It was indicated that Miller
     Feed Lots may have had substantial taxable income while the Company had
     substantial taxable losses. This raises two questions; (1) whether tax
     motivations are proper GAAP accounting and (2) whether expenses are
     properly allocated when two very closely related companies have two
     significantly different tax considerations. Also in light of the other
     related party matters, we indicated in later discussions with Mr. Dean that
     we would need to audit these related party expense allocations as well as
     all other related party transactions in detail.

6.   This comment discusses the possibility of an additional undisclosed Company
     loan guarantee. Note 11 to the August 31, 2002 financial statements states
     that the Company is the guarantor on a Miller Feed Lot loan in the amount
     of $400,000. Our discussions with the Company's controller indicated that
     there may be another loan guarantee in addition to the $400,000. Also we
     were later given a Company guaranteed note in the amount of $650,000, dated
     March 26, 2002 that replaced the $400,000 note. It therefore appears that
     the $400,000 guarantee may have been a $650,000 guarantee and that there
     may be an additional undisclosed guarantee.

7.   This comment asked for further information regarding the 2001 related party
     sale of an interest in Highland Water, LLC to a related party.

8.   This comment states that in view of related party accounting issues,
     including lack of documentation and lack of directors minutes, completion
     of the audit will require substantial additional review of all related
     party transactions to determine if the accounting was done properly.

                                       5


9.   This comment discusses the fact that our audit fee quote was based on
     representation that the prior years financial statements were materially
     correct. When first asked to consider accepting the audit engagement we
     were directed by the Company's former auditor to look at the prior years
     Form 10-KSB and financial statements. We subsequently learned that they
     were materially incorrect and therefore informed the Company that
     completion of the audit would require substantially more time and fees than
     originally estimated.

10.  This comment suggested that these matters should be discussed with their
     attorney since we may need a legal opinion regarding the issues.

With respect to the last sentence of the third paragraph of section (iv) we
agree with the statement; "Pursuant to the Registrant's request for a telephone
conference call with Schumacher and Associates concerning the questions raised,
Schumacher and Associates advised that if a conference call was for the purpose
of clarification of any areas of concern, Schumacher and Associates could
discuss them, but could not give any advice on what the Registrant should do,
and that it would not serve any purpose for Schumacher and Associates to debate
any of the issues they had raised during the conference call." The issues
referred to herein were summarized in a letter faxed to Mr. Dean on December 29,
2003, which letter prompted Mr. Deans on December 30, 2003 to request a
conference phone call to discuss the issues. Our written response on December
30, 2003 related to that request was as indicated above but also stated that we
could not advise them on what to do because we needed to maintain our
independence. In our December 30, 2003 written response we included phone
numbers for our agreed to conference phone call. At 10:30 am on December 31,
2003 Mr. Dean called and indicated that a conference phone call may not be
productive and cancelled it. As an alternative to a conference phone call Mr.
Dean suggested that they would write a letter responding to the issues. We told
Mr. Dean that if he wished he could do so but that would require us then to
write a response reiterating our issues. We told him that while individual
issues could be debated, that overall we thought there was a material problem
for them to deal with.

With respect to the fourth paragraph of section (iv) we agree with the
statements with the following clarifications. Recording the Miller Feed Lots
loss sharing as a contribution of capital was only appropriate if it was
determined that it agreed with the substance of the transaction and not just the
form and if it was determined that payment of the amount was unconditional and
it was determined that the amount was collectable. We raised concerns regarding
all of these issues and resolutions for these concerns had not been determined.

With respect to the first sentence of the fifth paragraph of section (iv) we
agree with the statement. With respect to the second sentence we believe that
the statement; "Schumacher and Associates replied that they had not asserted
that the misstatements were the result of fraud and did not believe the
requirements of Section 10A of the 1934 Act was invoked." needs clarification.
Our reply to the Registrant's special counsel was that we believed there was a
distinction between believing that the misstatements "may" be the result of
fraud as compared to the Section 10A conclusion criteria that the misstatements
are "likely" the result of fraud. We indicated that we were waiting for the
Company's response to our belief that there "may" be fraud before we could
determine if fraud was "likely."

                                       6


With respect to the statement that "The board of directors of the Registrant has
also undertaken its own review of the misstatements in the financial statements
and has filed a Form 10-K on March 17, 2004, stating that the financial
statements for 2002 and intervening periodic report on Form 10-QSB would be
restated in compliance with Schumacher and Associates' observations." we have
the following comments. On January 12, 2004 we talked to the former auditor in
response to his letter dated January 9, 2004 which was a response to our letter
dated December 29, 2003. We talked about some of the issues and we told him that
we did not feel another written response to his letter would accomplish
anything. We told him the same thing that we told Mr. Dean, that being, debating
the issues did not solve the problem. We told him that the financial statements
were the Company's financial statements and that they had an attorney that
needed to help them determine what to do and that I could not give them advice.
We have observed by looking at Edgar filings that the Company did file a Form
8-K on March 17, 2004. We did not review or audit the filing and can make no
representations regarding anything included therein. Our letters of December 29,
2003 and January 30, 2004 summarized areas of concern and observations. We do
not know if the Company addressed all of our areas of concern and whether or not
they were handled appropriately.

With respect to the last sentence of paragraph five of section (iv) we have no
direct knowledge if the board of directors determined the misstatements were not
the result of fraud by the officers or employees of the Company. On April 8,
2004 during the phone call that dismissed us as auditors, Mr. Dean stated that
they had a board meeting and discussed the fraud issues and determined that
there wasn't any fraud. We have not received any written report or document
indicating that the board of directors investigated the matter and determined
that there was no fraud.

With respect to the first paragraph of section (v) we agree with the first
sentence, but as stated previously the initial fee estimate was based on the
correctness of the prior year financial statements that turned out to be
materially misstated. With respect to rest of the first paragraph in section (v)
we are providing the following clarifications. With respect to the second
sentence stating that the audit could be performed within 30 days, we informed
the Company's legal counsel on March 16, 2004 that getting the prior years audit
done in 30 days might be possible but would be difficult at that time of the
year. We told him on March 16, 2004 that we needed until March 17, 2004 to
attempt to answer the timing issue. On March 17, 2004 we informed the Company's
legal counsel that completing the audit within 30 days was overly optimistic
considering the information requested by the SEC during the conference call. In
addition we indicated that before we would commit to auditing the prior year we
would need to (1) review the Form 8-K requested by the SEC, (2) review the
letter to the SEC that they requested summarizing the chronology of events
regarding the misstatements and (3) we needed to have a response to our concern
that the misstatements "may" be the result of fraud. On March 18, 2004 Mr. Dean
called and asked if we could estimate the time it would take to complete the
audit including re-auditing the prior year. We first told him we didn't know how
long it would take and how much it would cost and told him that it depended on
the response to the SEC and the fraud questions. He said he really needed an
estimate. We then told him that it was just a guess but it might be able to be
done in 60 days and it might cost $100,000 but that he needed to understand that
it was just an estimate. Mr. Dean said he realized that it depended on what we
found. On March 30, 2004 Mr. Dean called and said that the SEC had said that 60
days was too long to get the audits completed. He asked if there was any chance

                                       7


to get them done in less than 60 days. We told him it might be possible to get
the audits done within 45 days of March 30, 2004. On April 2, 2004 the Company's
legal counsel called and we discussed various issues including his concern about
the estimated audit fee of $100,000. He wondered if it was a fixed fee or an
hourly estimate. We told him about our March 30, 2004 conversation with Mr. Dean
when we made the estimate and told him that it was merely a guess and that we
would bill on an hourly basis. We also told him we needed to have a response to
the fraud issues before we go on. He said he understood our need. On April 3,
2004 Mr. Dean called and said that we should commence the audit. We told him we
could not commence the audit until we had a response to the fraud issue and we
understood why the material misstatements had occurred. We suggested again as we
did on March 18, 2004 that the Company engage the services of an independent
person to investigate the issues, due to the possible conflicts of interests of
the board members. He said he would think about it and we should talk the
following week. We talked to Mr. Dean again on April 6, 2004 and he indicated
that he had not yet decided what to do and that he would think about the issues
and let us know what he decides. On April 8, 2004 Mr. Dean called and said that
they had found a firm that would do the audit for a very low price and would do
it in 30 days. Mr. Dean said that they needed to get the audits done so that
they could sell the shell to have the money to pay legal and accounting fees.
Until the phone call on April 8, 2004 when we were dismissed we had no idea that
the payment of our fees was contingent upon selling the shell. A contingent fee
arrangement such as this would have impaired our independence. Mr. Dean informed
us that he was changing auditors. We told Mr. Dean that the new auditor's fees
might not be so low if they knew all the facts and circumstances and that it was
the auditor's responsibility to talk to us before accepting the engagement. We
also told him that we needed a release from the Company before we could talk to
them. On April 9, 2004 we called Mr. Dean to confirm that we were terminated and
asked if they had hired another firm and he said yes to both. We informed Mr.
Dean that the new firm had not talked to us before accepting the engagement and
that might be an audit rule violation on their part. He said: "Well maybe he had
not technically hired them, he just talked to them." We told him that we needed
to notify the SEC within 5 days of being terminated and indicated that we would
do so. On April 13, 2004 Jennifer Maliar, CPA of Cominskey & Company CPAs called
and said her firm had been talking to Mr. Norm Dean about Miller Diversified and
would like to talk to us. We told her that we needed a release from the Company
before we could talk to her. We asked her if she knew that the Company had filed
a Form 8-K regarding dismissing us as their auditors. She said she did not know
that. We suggested that she read the Form 8-K as background information and that
we would talk on April 14, 2004 after we received authorization from the Company
to talk to her. She agreed with the suggestion. We did not talk to Jennifer or
anyone in their firm on April 14, 2004. We looked at Company filings on Edgar
and noticed a Form 8-K that was filed on April 14, 2004 stating that Cominskey &
Company was engaged at the new auditors for the Company on April 13, 2004.

With respect to the last sentence of the first paragraph of section (v) we do
not agree that we stated that the minimum fee would be $100,000.

With respect to the second paragraph of section (v) we have no direct knowledge
of communications between the Company and its new auditor.

With respect to the first sentence of the third paragraph of section (v) we have
no current knowledge of the Company's financial condition.

                                       8


With respect to the second sentence of the third paragraph of section (v) which
states; "The time required for Schumacher and Associates to complete its audit
work and the amount of its estimated fee were two of the reasons the Registrant
dismissed Schumacher and Associates as auditors." we have no knowledge as to the
thought process that went into our dismissal but we believe that the following
information is relevant. Our most recent estimate of the time to complete the
audit was 45 days from March 30, 2004 which would target May 14th as the
estimated completion date. According to the Form 8-K filed on April 14, 2004 the
new auditors estimated audit completion date of the audit is May 31, 2004,
subject to an extension. The new auditors time period to complete the audit is
47 days plus extensions as necessary. According to the second paragraph of
section (v) the new auditor's $10,000 fee estimate is subject to enlargement if
the engagement so requires. Our fees are billed on an hourly basis and are not
subject to a minimum. Also with respect to the timing of completing the audit,
our letter raising concerns was submitted to the Company on December 29, 2003.
The Company's auditor did not withdraw their audit opinion until March 17, 2004
even though we suggested to them on January 13, 2004 that it may be time to do
so. We contacted the Company's legal counsel on March 5, 2004 to make certain he
was aware that we were not the hold-up on getting the audit done. He said he
understood that we were not holding up the project and that the former auditor
was still working on the amendments. During this conversation on March 5, 2004
we raised the question regarding the former auditor being able to re-issue their
reports due to their lack of independence and not being a member of the PCAOB.
He said he was not aware of the problem. We first raised this concern with the
former auditor on February 26, 2004. Up to that point, the plan was for the
former auditor to re-issue his report on the restated financial statements. We
could not complete the audit for the most recent year until the prior year
restatements were completed.

With respect to the third sentence of the third paragraph of section (v) the
following additional information is provided for clarification. On March 16,
2004 during a conference phone call with the SEC, the Company's legal counsel,
various members of Company management and Mr. Schumacher, the issue of the past
due audits was raised. A representative of the SEC stated that the audits are an
issue to be handled in due course, but the current most important issue was that
there was financial information out there that was not correct and that the
Company should file an 8-K with estimates of the changes forthcoming. The filing
of the Form 8-K dated March 17, 2004 had addressed the matter considered most
urgent by the SEC and as indicated by the SEC the audits could be handled in due
course. We also informed the Company's legal counsel and Mr. Dean when
discussing the urgency of getting the audits done that it was more important to
get them done right than to get them done fast. We again informed them that we
needed a response to the fraud questions raised before we could accept the
engagement to re-audit the prior year and complete the audit of the most recent
year. We also suggested the Company consider an independent review of the fraud
concerns by an outside person that did not have potential conflicts of interest.

Also with respect to the "urgency" to get the audits done, it had been three and
one half months since we wrote our first letter describing the areas of concern.
We cooperated fully and have not been the cause of the delays as confirmed to us
by the Company's legal counsel. In addition with respect to the "urgency" to get
the audits done it appears that to a certain extent the "urgency" has been self
inflicted, not only with respect to the delays for which we had nothing to do
with but also with respect to the "urgency" concerns to get the audits done so

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that the shell could be sold. During a phone call with the Company's legal
counsel, he stated that we need to get the audits done so that the shell could
be sold. During our dismissal phone conversation with Mr. Dean on April 8, 2004
he also said that he needed to get the audits done to be able to get the shell
sold so that they could pay the legal and accounting fees. He also indicated
that they had a buyer that had been waiting six months to buy the shell. We told
him that we couldn't imagine a buyer wanting to buy the shell with all of the
issues. If Miller Feed Lots had not charged a $250,000 penalty for termination
of the Company's lease and had the management of the Company not paid the
chairman of the board $179,000 in October 2003, there may be not be an "urgency"
to get the audits done to be able to sell the shell.

Also with respect to the statement in sentence three of the third paragraph of
section (v), the most recent estimate of completion of the audits was 45 days
from March 30, 2004, not 60 days.

With respect to the last sentence of the third paragraph of section (v) that
states a third reason for dismissing Schumacher and Associates was the inability
of the Company to meet with Schumacher and Associates to discuss the asserted
misstatements and the Registrant's financial statements, we have the following
comments. The following chronological summary of communications with
representatives of the Company is provided to show the extent to which we have
"discussed" the asserted misstatements. Our initial written summary of areas of
concern was provided to the Company on December 30, 2003. On December 30, 2003
Mr. Dean suggested a telephone conference call to discuss the issues. On
December 30, 2003 we responded in writing to the request for a conference phone
call and provided our phone numbers for this purpose. We informed Mr. Dean in
this written response that if the purpose of the conference phone call was for
clarification of any of the concern, we could discuss them but that we could not
give any advice on what to do so that we could maintain our independence. We
also stated that it would not serve any purpose for us to debate the issues
during the conference call. A conference phone call was scheduled for December
31, 2003. At 10:30 am on December 31, 2003 Mr. Dean called and cancelled the
conference phone call because he thought it may not be productive. He suggested
writing a letter to us responding to the issues. We told him that they could
write a letter of response if they wanted to but it would then necessitate
another response from us reiterating our issues which would cause delays. We
told him that the individual issues could be debated but overall we thought
there was a material problem. We informed him that we were not sure the problems
could be fixed and suggested that he talk to his attorney for guidance. On
January 9, 2004 we received a letter from the former auditor regarding the
issues expressing agreement on certain issues and disagreement on other issues.
On January 12, by telephone call we discussed their letter and the issues for
additional clarification. We told the former auditors that we believed a written
response to their letter would not accomplish anything and we emphasized that
the financial statements were the Company's financial statements and that they
had an attorney that needed to advise them what to do and that we could not give
them any advice. On January 13, 2004 we had two phone conversations with Mr.
Dean regarding the issues. On January 13, 2004 we talked to the Company's
attorney and to the Company's former accountant regarding the issues. On January
23, 2004 we received a four page letter from the Company's attorney discussing
the issues. Also included with the letter were various recently prepared
director's minutes that were indicated to have been prepared from Mr. Dean's
Daytimer. Also included with the letter and minutes was an amended Miller Feed
Lots Loss Sharing Agreement that was back dated to October 31, 2003. On January
30, 2004 we responded to the Company attorney's letter with an eight page

                                       10


written response regarding the issues he raised and the issues in general. Our
letter dated January 30, 2004 indicated that we believed that the material
misstatements in the August 31, 2002 financial statements "may" be the result of
fraud. We received a letter from the Company's attorney dated February 20, 2004
responding to our letter of January 30, 2004. Also included with the letter was
a copy of an unsigned Closing Agreement between the Company and Miller Feed
Lots, dated January __, 2004 but effective October 31, 2003 which appeared to
have been for the purpose of clarifying some of the issues and concerns we
raised. We talked to the Company's former auditor on February 26, 2004 and
indicated that the exchanging of letters was not accomplishing much and that it
appeared the Company's attorney had passed on the responsibility to handle the
issues to him. He said he was working on the amended financial statements. We
asked him to consider if their lack of independence and their lack of membership
in the PCAOB precluded them from re-issuing their report. He said he would look
into the issue. We mentioned our concern that the Company was not addressing the
potential fraud issue and that is important for a lot of reasons including
whether or not we could trust management representations. On March 4, 2004 we
talked to the former auditor. He said he had been too busy to work on Miller
Diversified and that he had been planning on working on it over the weekend. He
said he had not yet determined if they could re-issue their report. We again
discussed the issues. After talking to the former auditor we placed a call to
the Company's legal counsel for the purpose of making certain he was informed
regarding the potential inability of the former auditor to be able to re-issue
their report after the restatement of the August 31, 2002 financial statements.
He was not available so we left a message asking him to call. On March 5, 2004
we talked to the Company's attorney and he said he was not aware of the
potential audit report re-issue problem. We also told him that we wanted to make
sure he was aware that we were not the hold up on the project. He said he
understood that and that he had talked to the former auditor and he was told
that the former auditor would work on the amendments over the weekend. On March
17, 2004 we wrote a memo to the Company's attorney, again discussing the issues
after the March 16, 2004 SEC phone conference. Among other matters we suggested
consideration of engaging an outside independent person or group to investigate
the issues since there were significant conflicts of interest. We also stated
that with the new PCAOB rules governing both the actions of accountants and
management it would seem likely that the board of directors would be responsible
for investigating the matter to determine if and at what level fraud may exist.
We emphasized that it was important for the Company to review the amended
financial statements in detail for problem areas, rather than merely responding
to issues we have raised since the fairness of presentation of the financial
statements was the Company's responsibility. We also advised the Company that
when they file the 8-K summarizing the financial statement corrections that
missing or incomplete disclosures fall into the same category as actual dollar
amount changes. We again mentioned that we needed a response to our concern that
the misstatements "may" be the result of fraud prior to our agreeing to re-audit
the prior year. We closed the memo with the statement that if we could provide
any additional information, please do not hesitate to let us know. We again
talked to Mr. Dean on March 18, 2004 and discussed the issues. On March 18, 2004
we wrote a memo to the Company's attorney emphasizing how important it was that
the response to the SEC be 100% accurate as well as credible and emphasized the
existing conflicts of interest and provided a name of an independent person that
may be able to help with investigating the issues. We received a fax dated March
17, 2004 from the Company's legal counsel with a copy of a draft on an 8-K dated
March 17, 2004 indicating the former auditor's withdrawal of their report and
their summary of the misstatements in the financial statements. Also included

                                       11


with the fax was a letter from the Company's former auditor addressed to the SEC
indicating the withdrawal of their report and summarizing what was indicated to
be their understanding of restatements. On March 19, 2004 we had a phone
discussion with the Company's attorney which was followed-up with a faxed memo.
We told him that we read the proposed letter to the SEC from the former auditor
and the draft of the 8-K but that we take no responsibility for them. We
indicated that the letter from the former auditor did not address all the
concerns raised by the SEC. The Company's legal counsel stated that the Company
was going to provide another response to the SEC in addition to the former
auditor's response. We also expressed concern with inference of the statement in
the 8-K which stated that; "On or about March 1, 2004, Miller Diversified
confirmed that the reimbursements owed to the chairman of its board directors
had been inadvertently omitted from its financial statements beginning in the
second quarter of its fiscal year ended August 31, 2001 and continuing through
August 31, 2003." We also expressed concern with the inference of the statement
in the letter from the former auditor to the SEC which stated: "On or about
March 1, 2004, MDC informed us that the cumulative reimbursement owed to the
chairman through August 31, 2003 was $242,092, of which the chairman was willing
to forgive $62,274." We informed the Company on December 30, 2003 of our
concerns regarding the payment to Mr. Dean. On January 9, 2004 in the former
auditor's letter to us he confirmed that the October 2003 payment to Mr. Dean in
the amount of $179,298.24 was "unfortunately" not recorded as a liability in the
August 31, 2002 financial statements. In addition, Mr. Dean informed us that a
member of the former auditor's firm had assisted him with 2003 tax planning
related to this $179,000 payment made to him in October, 2003. The Company and
their former auditor knew about this issue long before March 1, 2004. Therefore,
we believe that stating that "On or about March 1, 2004, Miller Diversified
confirmed the reimbursements owed to the chairman of its board of directors had
been inadvertently omitted......." And "On or about March 1, 2004, MDC informed
us that the cumulative reimbursement owed to the chairman through August 31,
2003 was $242,092....." are misleading.

During our phone conversation with the Company's attorney on March 19, 2004 he
indicated the need to get the audits done. We again explained the outstanding
issues that needed to be addressed before the audits could be completed. We
discussed in detail the fraud concerns. In our January 30, 2003 letter to the
Company's legal counsel we noted that when he responded to questions we asked,
in certain instances it appeared that he was merely relaying information he
received from the Company's former auditor. In view of this consideration, and
in view of the March 17, 2004 8-K with the March 1, 2004 references described
above, which closely followed the former auditor's description, we expressed our
concern as to whether his responses to our inquiries were his legal opinions or
whether they were forwarded Company responses. We believed this was a very
important distinction due to the significant potential conflicts of interests of
the parties and since we were seeking guidance on legal matters related to the
issues including the concern that there "may" be fraud. We called the Company's
attorney on March 26, 2004 and asked for an update on the status. He said they
were working on a letter to the SEC and that he would get back to us. Mr. Dean
called on March 30, 2004 and said they had written a long explanation to the SEC
and were negotiating with the SEC. We have never received a copy of this letter
to the SEC or their response. Timing of getting the audit done was the primary
focus of this conversation. On April 2, 2004 the Company's attorney called to
discuss the provisions of section 10A of the Securities Act and we informed him
that at this point we had not come to the conclusion that misstatements were
"likely" the result of fraud, but rather we currently believe that they "may" be
a result of fraud. We told him that we were waiting for the results of the

                                       12


Company's investigation of this matter. In addition we discussed the audit fee
and confirmed what we had told Mr. Dean originally; that our fees were based on
hourly rates and there was not a fixed $100,000 minimum and we informed him of
our hourly rates. On April 3, 2004 Mr. Dean called and said that we should
commence the audit and we informed him again of the need for us to understand
the reasons for and causes of the misstatements. He said he would think about
the issues and that we should talk again on Monday. We talked to Mr. Dean again
on April 6, 2004. We again discussed the issues. Mr. Dean asked that we meet
with the directors. We informed Mr. Dean that Mr. Schumacher would be in Denver
commencing April 14, 2004 and he would meet with them. Mr. Dean said he again
would think about the issues and let us know what they are going to do. Mr. Dean
called on April 8, 2004 and dismissed us as the Company's auditors.

Therefore, in summary regarding the Company's statement that a reason for
dismissing us was the inability to meet with us and discuss the asserted
misstatements, we believe that we have more than adequately been available to
discuss the issues and have both by telephone and by written documents discussed
the issues with Mr. Dean, with the Company's attorney and with the Company's
former auditor.

With respect to the first sentence of the last paragraph of section (v)
regarding the statement; "The dismissal of Schumacher and Associates is not due
to unresolved disagreements with them on any matter of accounting principles or
practices." we have the following comment. We believe that there are still
unresolved issues as previously described herein.

With respect to the second sentence in the last paragraph of section (v)
regarding the statement, "The dismissal is due to the reason stated above." We
have the following comments. In general the Company indicates three reasons for
dismissing us. The first reason relates to the timing of completing the audit.
We have not been the cause of the delays in completing the audit as evidenced by
the information provided herein. In addition, the most recent estimate of our
completion of the audits was 45 days from March 30, 2004. The new auditor's
estimated completion date on April 14, 2004 was May 31, 2004, a time period of
47 days. We and the new auditors both have indicated that it may take longer
depending on the circumstances. Therefore it appears there is no material
difference in the timing. The second reason relates to the fees. The form 8-K
indicates that our fee would be a minimum of $100,000. That statement is
incorrect. As described above, on April 2, 2004 we informed the Company's
attorney that our fees were being billed on hourly rates and that there was no
minimum and that our fees would depend on what we found if we commenced the
engagement to re-audit the prior year. The new auditors quoted an estimated fee
of $10,000 but also indicated that it might be increased if the engagement
required. In addition, with respect to the new auditor's estimated fee (with the
right to increase) it should be noted that the prior year audit fee was $17,500
and our original estimate for the current most recent year was $17,500, which
would total $35,000 for the two years, plus the need to review of all of the
corrected, previously misstated Form 10-QSB's for at least two years, plus
having to deal with significant originally undocumented related party
transactions, plus deal with the yet to be resolved concern regarding
determining if the material misstated financial statements were the result of
fraud, plus dealing with the SEC inquiries, would appear to make the $10,000 fee
estimate be a very low estimate in view of the "Florida Ruling" regarding
re-auditing financial statements. Had the new auditors discussed these matters
with us prior to accepting the engagement, they may have estimated a much higher
fee. The third reason relates to the company's assertion that they were unable
to meet with us and discuss the issues. As stated above we believe that we have
more than adequately discussed the issues with representatives of the Company.

                                       13


With respect to the last sentence of the first paragraph of section (v) we have
no direct knowledge if the Company had engaged another independent accounting
firm on or before April 9, 2004 but Mr. Dean informed us during our phone
conversation on April 9, 2004 that they had hired another firm. After we
expressed concern about potential audit rule violation issues regarding
accepting audit engagements without first talking to the prior auditor, he then
said that maybe he technically didn't hire them, he had just talked to them.

With respect to statements made in section (vi) we take no responsibility for
what may have been included in the March 17, 2004 Form 8-K. We did not review it
or audit it but did read it and have previously commented regarding certain
inferences related to the March 1, 2004 references. With respect to the
statement that, "These decisions by the Registrant are consistent with
Schumacher and Associates recommendation." we have the following comments. We
raised areas of concern and suggested consideration of certain issues and
informed the Company that it was their responsibility to determine the
resolution of the matters. We take no responsibility and cannot comment on the
correctness or completeness of the information included in the Form 8-K. We have
no knowledge regarding the statements made related to any requests of any newly
engaged accountant.

We agree with the statements made in section (vii).



Respectfully Submitted,

/s/ Schumacher & Associates

Schumacher & Associates, Inc.










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