U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB
(Mark One)
[X] Annual report under section 13 or 15(d) of the Securities Exchange Act of
1934 for the fiscal year ended March 31, 1997
[ ] Transition report under section 13 or 15(d) of the Securities Exchange Act
of 1934 for the transition period from to
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Commission file number: 0-21867
BISHOP CAPITAL CORPORATION
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(Name of small business issuer in its charter)
Wyoming 84-0839926
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
716 College View Drive, Riverton, Wyoming 82501
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (307) 856-3800
Securities registered under Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Act:
Common Stock, $.01 Par Value
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months and (2) has
been subject to such filing requirements for the past 90 days. Yes X No
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Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
Issuer's revenues for fiscal year ended March 31, 1997 were $90,411.
The aggregate market value of the voting stock held by non-affiliates as of June
20, 1997 was $-0-. (There is currently no trading market for the issuer's
securities.)
The number of shares outstanding of the issuer's Common Stock as of June 20,
1997 was 885,481.
Documents incorporated by reference: None
Transitional Small Business Disclosure Format (Check one):
Yes No X
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Part I
Item 1. Description of Business
-----------------------
Bishop Capital Corporation, formerly known as Bishop Cable Communications
Corporation, (the "Company") was originally incorporated under the laws of the
State of Colorado on February 22, 1983 and reincorporated under the laws of the
State of Wyoming on June 2, 1992. On November 22, 1995, the Company changed its
name. The Company is primarily engaged in the development and sale of real
estate and has a royalty interest in a natural gas property. At March 31, 1997,
the Company was a wholly-owned subsidiary of a public company listed on Nasdaq.
On June 20, 1997, the shares of the Company were distributed as a partial
liquidating dividend as discussed below (the "Distribution").
In December 1995, the Company's parent corporation, then known as Metro Capital
Corporation ("Metro"), upon approval of its shareholders, completed a
transaction with Karlton Terry Oil Company and its affiliates ("KTOC") whereby
KTOC exchanged certain oil and gas properties for 80% of the then issued and
outstanding voting securities of Metro (the "Transaction" or the "Metro/KTOC
Transaction"). The only class of securities of Metro issued and outstanding
prior to the Transaction was Common Stock. Under terms of the Transaction, Metro
issued shares of newly created Class B Common Stock to KTOC in order to exclude
KTOC from participation in a distribution of the Company's Common Stock. Metro
and KTOC previously were not affiliated. Prior to and in connection with the
Transaction, Metro transferred all of its assets to the Company, except for
$700,000 cash and an insignificant oil property prior to the Distribution. These
transferred assets, together with the Company's previously owned assets, were
being operated autonomously by the prior management of Metro who became officers
and directors of the Company pursuant to the terms of separate five-year
Operating and Voting Agreements. Upon completion of the Transaction, the parent
corporation's name was changed to American Rivers Oil Company ("AROC").
Management of KTOC succeeded to the board of directors and serve as officers of
AROC operating the oil and gas properties previously owned by KTOC. As a result,
AROC and the Company operate separate businesses under separate management.
The Company's operations, prior to the transfer of assets from Metro, were
primarily related to the development and sale of real estate. Liabilities of the
Company, consisting of trade accounts payable, were insignificant. In connection
with the Metro/KTOC Transaction, Metro transferred assets of $1,731,000
(excluding $700,000 cash and an insignificant oil property) and related
liabilities of $41,000 to the Company. The assets transferred included
$1,055,000 in cash and marketable securities, net property and equipment of
$200,000 and a net gas royalty interest of $400,000.
Pursuant to the terms of the Transaction, AROC's Board of Directors on November
8, 1996 authorized a spin-off distribution of the Company's Common Stock as a
partial liquidating dividend to AROC's Common shareholders of record on November
18, 1996 on the basis of one share of the Company's Common Stock for four shares
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of AROC's Common Stock. AROC's Class B Common shareholders did not participate
in the Distribution. The Distribution occurred on June 20, 1997 and the separate
Operating and Voting Agreements discussed above were terminated. Subsequent to
the termination of these agreements, the officers and directors of the Company
are continuing in their positions.
The Company had four full-time employees as of March 31, 1997.
Real Estate Operations
In October 1993, the Company entered into two limited partnership agreements to
purchase approximately 90 contiguous acres of land in Colorado Springs,
Colorado. The property surrounding the acreage is primarily retail development
(restaurants, major grocery chains, gas stations, convenience stores and small
retailers) to serve nearby residential developments. A summary of the Company's
participation in each partnership is as follows:
(1) The Company contributed $250,000 cash to the first partnership (Bishop
Powers, Ltd.) which purchased approximately 55 acres of land for commercial
development. The Company, as general partner, has an 81% interest with the
remaining 19% interest held by the limited partner (Powers Golf LLC) who is the
general partner in the second partnership discussed below. The Company will be
allocated 100% of the income and losses until it has been paid $600,000 plus
interest thereon at 8% per annum (not to exceed $100,000) after which the income
and losses will be allocated 81% to the Company and 19% to the limited partner.
The Company, as general partner, has exclusive management of the partnership.
Any transfer of a limited partner's interest requires the written consent of the
general partner. The Company is planning a three phase development of commercial
pad sites for a 20 acre parcel with a remaining 35 acre parcel not being
developed at the present time.
(2) The Company contributed $100,000 cash to the second partnership (Z-H,
Ltd.) which purchased approximately 35 acres of land on which Z-H, Ltd.
constructed a recreational facility consisting of a 60 station golf driving
range, 36 holes of miniature golf, 9 baseball/softball batting machines, and a
1,200 square foot clubhouse. This facility, which encompasses all of the acreage
purchased, commenced operations in July 1994. The Company, as the limited
partner, has a 19% interest with the remaining 81% interest held by the general
partner (Powers Golf LLC). There is no affiliation between the Company and
Powers Golf LLC. The Company contributed an additional $250,000 when certain
financing requirements in the partnership consisting of $800,000 of debt
financing were fulfilled by the general partner. The Company is not a guarantor
of any debt in this partnership and the general partner cannot incur additional
debt without the prior written consent of the Company. The Company is not
required to make any further capital contributions to the partnership. The
Company also has the right of first refusal relating to the sale of partnership
assets. The general partner has entered a non-binding letter of intent with an
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unrelated third-party who has expressed an interest in purchasing the
improvements and personal property together with a long-term ground lease. The
partnership has incurred losses from operations since inception. There is no
assurance that the operations will become profitable in the near future. At
March 31, 1997, the net carrying value of the Company's 19% interest is
$215,000.
The undeveloped real estate is subject to local zoning laws and regulations. The
undeveloped real estate must be surveyed, designed and platted and then
submitted to the appropriate governmental authorities for approval, permits and
agreements before it can commence development. The ability of the Company to
obtain necessary approvals and permits for its planned development is often
beyond the Company's control. The length of time necessary to obtain permits and
approvals increases the carrying costs of unimproved land acquired for the
purpose of development. The western boundary of the undeveloped real estate
borders a drainage channel and appropriate governmental authorities will require
that certain improvements be made along the drainage channel as sections of the
undeveloped land are platted for development. The Company estimates that the
total drainage channel improvement costs will approximate $400,000.
The Company is currently developing 4.62 acres (5 lots) in Phase I of the 20
acre parcel. The Phase I Concept Plan was approved by the appropriate
governmental authorities in April 1997 with the Final Plat approved and recorded
in May 1997. The estimated costs for the Phase I site development work
consisting of grading, utilities, channel lining, storm sewer, paving and curb
and gutter are approximately $400,000. The Company anticipates completion of the
Phase I site development work by August 1997. The site development work will be
funded primarily by the proceeds from the expected closings of the three lots
sold. The Company, which is devoting all of its efforts to Phase I of the
development, is unable to project an estimated time frame for the commencement
and completion of Phases II and III.
The Company entered into sales agreements to sell the following tracts of land:
(i) 1.14 acre to Diamond Shamrock Refining and Marketing Company for $388,850
for a combination gasoline sales, convenience store and car wash facility; (ii)
1.04 acre to a Taco Bell franchisee for not less than $350,000 (purchase price
to be adjusted up if actual size of platted lot is greater than size stated in
Purchase Agreement) for a fast-food facility; and (iii) .92 acre to State Bank &
Trust for $330,627 (purchase price to be adjusted if actual size of platted lot
exceeds or is less than size stated in Purchase Agreement) for a branch bank
facility. The Taco Bell closing occurred on June 9, 1997. The State Bank & Trust
closing was scheduled 10 days following notice from the Company that the final
plat had been recorded; however, State Bank & Trust exercised their option to
extend the closing for a period of 45 days (July 7, 1997) by giving written
notice to the Company and providing an additional $25,000 non-refundable earnest
money deposit. The Diamond Shamrock closing will occur when the purchaser has
obtained all required permits necessary to construct the facility on the
property; however, if purchaser has not closed within 180 days after plat
recordation, the contract will terminate.
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In October 1995 the Company acquired approximately 5 acres of undeveloped real
estate located adjacent to a golf course in Riverton, Wyoming for $80,000 and
developed the parcel into a 15 lot subdivision. The improvements (utilities,
drainage, roadway, etc.) which were completed in September 1996 cost
approximately $154,000. The Company had a one year listing agreement which
expired in June 1997 with a real estate brokerage company to market at a 6%
commission rate the improved lots. Management is presently evaluating the
renewal of the listing agreement.
Under various federal, state and local laws, ordinances and regulations relating
to the protection of the environment, a current or previous owner of real estate
may be liable for the cost of removal or remediation of certain hazardous or
toxic substances disposed, stored, released, generated, manufactured or
discharged from, on, at, onto, under or in such property. Environmental laws
often impose such liability without regard to whether the owner knew of, or was
responsible for, the presence or release of such hazardous or toxic substances.
The Company engaged an independent environmental engineer to complete a Phase I
Environmental Assessment ("Assessment") on the 20 acre parcel being developed in
Colorado Springs, Colorado. The Assessment did not reveal any non-compliance
with environmental laws. The Company is not aware of any non-compliance with
environmental laws, environmental liability or other environmental claims on its
real estate properties that the Company believes would likely have a material
adverse effect on the Company.
The success of the Company depends, among other factors, upon national and local
trends of the economy, including interest rates, construction costs,
governmental regulations and legislation, including environmental requirements,
real estate fluctuations, retailing trends, population trends, zoning laws,
availability of financing and capital on satisfactory terms and the ability of
the Company to compete with other owners and developers with greater resources
and whose management may have more experience than the Company's officers.
Natural Gas Royalty Interest
In December 1990, the Company purchased a royalty interest in certain natural
gas properties located in Wyoming from an unrelated third-party. Since the
Company did not have access to reserve information, the Company engaged an
independent petroleum geologist to review available geologic, engineering and
production data and to estimate the value for the natural gas royalty interest.
Based on this study and other factors, the Company paid approximately $1,050,000
for the royalty interests. At March 31, 1997, the net carrying value of this
interest is $263,000. In connection with the purchase, the Company formed a tax
partnership (Bridger Creek Partnership) which allocates to the Company, as
general partner, the first $40,000 of annual net income (as defined) from the
partnership and 80% of annual net income in excess of $40,000. After the Company
has received cumulative net income of $1,050,000, plus interest at prime
adjusted semi-annually, the Company will receive 60% of the annual net income
thereafter.
The royalty interest is in the Madden Unit which produces natural gas from
producing horizons between 5,500 and 24,000 feet. A gas processing plant in
which the Company has no ownership interest treats the "sour gas" produced from
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the Madison formation (24,000 feet). The plant processes 50 MMCFD (million cubic
feet per day) from two completed Madison wells. The plant products include
methane, sulfur and carbon dioxide. The Company's royalty interest is only
subject to plant processing costs and severance and ad valorem taxes. The
Company and other royalty owners are currently negotiating with the plant
operator to eliminate the deduction of certain processing costs which may not be
in accordance with applicable state rules and regulations.
Item 2. Description of Property
-----------------------
The Company's principal properties consist of 55 acres of undeveloped real
estate in Colorado and an improved 15 lot subdivision and natural gas royalty
interest in Wyoming. None of the properties are held subject to any encumbrance.
Real Estate Investment Policies
Although the Company has no formal policy as to the allocation of assets among
its real estate investments, the Company has limited such investments to its
present real estate holdings which were acquired primarily for possible capital
gain.
The Company's major investment in real estate is 55 acres of undeveloped real
estate in Colorado Springs, Colorado which was acquired in October 1993 and
consists of separate 20 acre and 35 acre parcels. The Colorado Springs, Colorado
area has sustained a consistent growth in population over the past twenty-five
years. Population forecasts for the year 2000 project a 20% increase over 1990
which is a conservative 2% annualized growth rate. Several new retail
development centers and residential areas north and east of the Company's
property have been constructed or are in the planning stages. Demographic and
marketing studies by independent third-parties project higher retail sales and
population growth over a five-year period within a one to five mile radius of
the Company's property which is zoned PBC-2 (Planned Business Center) and OC
(Office Complex). The PBC zoning allows most commercial and retail uses and the
OC zoning permits office uses as well as destination restaurants.
The Company is presently planning a three phase development of commercial pad
sites for the 20 acre parcel. Phase I of the development, consisting of
approximately 4.62 acres, has five lots of which the Company has entered into
sales agreements on three lots. Subsequent to March 31, 1997, the Phase I
Concept Plan and Final Plat were approved by the appropriate governmental
authorities. In June 1997, the Phase I site development work consisting of
grading, utilities, channel lining, storm sewer, paving and curb and gutter
commenced and is scheduled for completion in August 1997. The estimated costs of
$400,000 for this site development work is expected to be funded primarily by
proceeds from the expected closings of the three lots sold. The Company, which
is devoting all of its efforts to Phase I of the development, is unable to
project an estimated time frame for the commencement and completion of Phases II
and III.
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The Company's development plan for the remaining 35 acre parcel is presently
anticipated to be a combination of retail pad sites and an apartment complex.
The construction of an apartment complex will be based upon a variety of
factors, including (i) conditional use permit relating to the zoning; (ii)
external demographic studies; (iii) financial review as to the feasibility of
the proposed project, including projected profit margins, return on capital
employed and the capital payback period; (iv) competition for the proposed
project; (v) the ability to obtain financing on favorable terms; and (vi)
management's judgment as to the real estate market and economic trends. The
Company would also consider various financial resources such as a partnership,
joint venture or other financing arrangements to minimize risk. The Company has
not commenced any feasibility studies or financial reviews of the contemplated
usage of this parcel.
The Company does not anticipate any major investments in real estate mortgages
or securities of or interests in persons primarily engaged in real estate
activities.
Reserves
Reserve information relating to the natural gas royalty interest owned is not
included because the information is not made available to royalty interest
owners by Louisiana Land and Exploration Company, the operator of the
properties. The Company's share of production from the royalty interest for the
year ended March 31, 1997 was 45,837 mcf.
Item 3. Legal Proceedings
-----------------
The Company is not a party to any pending legal proceedings involving a claim
for damages which amount exceeds 10% of the current assets of the Company and
its subsidiaries on a consolidated basis and no such proceedings are known to be
contemplated.
Item 4. Submission of Matters to a Vote of Security Holders
----------------------------------------------------
No matters were submitted to a vote of the Company's sole security holder during
the fourth quarter of the fiscal year ended March 31, 1997.
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Part II
Item 5. Market for the Common Equity and Related Stockholder Matters
------------------------------------------------------------
Common Stock
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There currently is no public market for the Company's Common Stock. Since the
Company does not meet the entry standards to qualify for the Nasdaq SmallCap
Market listing, trading in the securities, if any, will be limited to the
over-the-counter "Bulletin Board" used by members of the National Association of
Securities Dealers, Inc. Management is having preliminary discussions with
several brokerage firms to be market makers for the Company's Common Stock.
As of June 20, 1997, there were approximately 2,000 holders of record of the
Company's common stock (which amount does not include the number of shareholders
whose shares are held of record by brokerage firms).
Dividends
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The Company has paid no dividends on its Common Stock and does not intend to pay
cash dividends in the foreseeable future. Payment of cash dividends, if any, in
the future, will be determined by the Company's Board of Directors in light of
the Company's earnings, financial condition and other relevant considerations.
There are no restrictions on the Company's present or future ability to pay
dividends.
Item 6. Management Discussion and Analysis of Financial Condition and Results of
Operations
------------------------------------------------------------------------
The Company believes that this report contains certain forward-looking
statements, as defined in the Private Securities Litigation Reform Act of 1995,
including, without limitation, statements containing the words "believes,"
"anticipates," "estimates," "expects," "may" and words of similar import, or
statements of management's opinion. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements.
The financial statements for the fiscal year ended March 31, 1996 include the
consolidated operating results and cash flows of Metro until December 8, 1995
when the change of control occurred in connection with the Metro/KTOC
Transaction described in Item 1. Beginning in December 1995, the financial
statements reflect only the operations of the Company.
The following discussion and analysis should be read in conjunction with the
Company's Consolidated Financial Statements and Notes thereto.
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Results of Operations
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The Company's net loss for the fiscal year ended March 31, 1997 was $524,000
compared to a net loss of $144,000 for fiscal 1996. The net loss increase of
$380,000 in fiscal 1997 is primarily due to a decrease of $626,000 or 91% in the
net gain on sale of marketable securities offset by a $150,000 or 100% decrease
in professional fees related to the Metro/KTOC Transaction and a $64,700 or 11%
decrease in general and administrative expenses.
The fiscal 1996 net loss of $144,000 decreased by $442,000 or 79% over the net
loss for fiscal 1995 primarily due to a gain on the sale of marketable
securities of $688,400 offset by $150,000 of professional fees relating to the
Metro/KTOC Transaction.
Fiscal 1997 Compared to Fiscal 1996
The Company's gas royalty revenue increased $20,500 or 29% in fiscal 1997
compared to fiscal 1996. Although natural gas production decreased 7% (45,837
mcf in 1997 compared to 49,184 mcf in 1996), the average sales price of natural
gas increased 43% ($1.94 per mcf in 1997 compared to $1.36 per mcf in 1996).
Although gas processing and production taxes related to the natural gas royalty
interest remained comparable between the two years, the current fiscal year
reflects a decrease in ad valorem taxes paid over the prior fiscal year. (Ad
valorem taxes are assessed and payable in the current year based on the prior
calendar year's production revenue.)
General and administrative expenses decreased $64,700 or 11% in fiscal 1997
compared to fiscal 1996 primarily due to a general reduction in overhead
expenses.
Depreciation and amortization decreased $31,400 or 20% in the current year
primarily due to a change in the estimated remaining life of the gas royalty
interest to 20 years, effective January 1, 1997, based on management's review
and evaluation of new data.
Interest and dividend income decreased $27,000 or 38% in fiscal 1997 from fiscal
1996 due to the sale of marketable equity and fixed income securities.
Rental income increased $1,300 or 10% in the current year primarily due to the
short-term rental of office space to a non-affiliated third party.
The net gain on sale of marketable securities decreased $626,400 or 91% in the
current year. In the prior year, the Company sold equity securities with a low
cost basis to generate cash in connection with the Metro/KTOC Transaction.
The net unrealized loss on marketable securities of $26,000 in the current
fiscal year results from all marketable securities being reclassified from
available-for-sale securities to trading securities, effective January 1, 1997,
based on management's re-evaluation of the Company's investment policies.
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Equity in limited partnership loss decreased $15,000 or 28% in fiscal 1997
compared to fiscal 1996. The limited partnership's operations in fiscal 1997
reflected a 6% increase in revenues with a corresponding decrease of 12% in
costs and expenses when compared to the prior year. Although the loss in the
current year decreased compared to the prior year, there is no assurance that
the operations will continue to improve or become profitable in the near future.
Interest expense of $10,800 in fiscal 1997 related to the margin account payable
to broker.
Fiscal 1996 Compared to Fiscal 1995
Gas royalty revenue increased by $1,800 or 3% from fiscal 1995 to fiscal 1996.
Natural gas production was 49,148 mcf in fiscal 1996, or a 25% increase compared
to 1995 (39,383 mcf) and was primarily due to the "sour" gas treatment plant
becoming operational in March 1995. The production increase, however, was offset
by a 21% decrease in the average sales price of natural gas ($1.36/mcf in 1996
compared to $1.72/mcf in 1995).
The only costs incurred in connection with the Company's natural gas royalty
interests are for gas plant processing charges and severance and ad valorem
taxes. These costs increased by $9,600 or 100% in fiscal 1996 compared to fiscal
1995 due primarily to the gas plant, which processes "sour gas", becoming
operational in March 1995. The Company and other royalty owners are presently
negotiating with the plant operator to decrease the plant processing cost per
mcf being charged to the royalty owners.
General and administrative expenses increased $234,000 or 17% in fiscal 1996
compared to fiscal 1995 resulting primarily from legal and consulting fees
incurred in connection with the December 1995 Metro/KTOC Transaction and
compensation expense being recorded in connection with the issuance of common
stock to employees from the Company's stock bonus plan and two outside directors
receiving common stock as compensation for services.
Depreciation and amortization decreased $6,500 or 4% in fiscal 1996 compared to
fiscal 1995 as a result of a decrease in depreciable assets.
Interest and dividend income decreased $19,000 or 21% in fiscal 1996 from fiscal
1995 due to the sale of marketable equity and fixed income securities.
Rental income decreased $6,000 or 32% in fiscal 1996 from fiscal 1995 due to the
nonrenewal of an office lease in fiscal 1995.
The gain on sale of marketable securities in fiscal 1996 of $688,000 resulted
primarily from the sale of equity securities with a low cost basis in
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connection with the Metro/KTOC Transaction. The Company does not anticipate
having a gain of this magnitude in the near future.
The equity in limited partnership loss represents the Company's share of losses
as a 19% limited partner in a golf driving range, miniature golf and
baseball/softball batting cage recreational facility which commenced operations
in July 1994.
The discontinued operations of an oil property relates to the oil property which
was not transferred to the Company in connection with the December 1995
Metro/KTOC Transaction.
Financial Condition
At March 31, 1997, the Company had working capital of $409,400.
The following summary table reflects comparative cash flows for the Company for
the two years ended March 31, 1997:
Years Ended
March 31,
------------------------
1997 1996
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Net cash used in operating activities $ (71,600) $(321,200)
Net cash used provided by investing activities 51,600 262,700
Net cash used in financing activities -- --
Net cash used in operating activities decreased $249,600 in fiscal 1997 compared
to fiscal 1996 primarily due to net proceeds realized from the sale of trading
securities.
Net cash provided by investing activities was $51,600 for the year ended March
31, 1997 as compared to $262,700 in the prior year. The Company utilized net
cash proceeds of $188,100 from the purchase and sale of marketable securities in
the current fiscal year for land development costs of $153,600, purchase of
equipment for $9,500 and funding of operating activities. The land development
costs primarily relate to improvements on the 15 lot subdivision in Wyoming. The
Company loaned $100,000 to its parent company which was subsequently repaid
during the current year. In fiscal 1996, net cash proceeds of $1,095,500 from
the purchase and sale of marketable securities were primarily utilized for
capital expenditures of $154,700, the transfer of $700,000 cash in the
Metro/KTOC Transaction and funding of operating activities.
There were no cash flows from financing activities for the year ended March 31,
1997. The Company had short-term borrowings and repayments of $60,000 in fiscal
1996.
The Company's material commitments for capital expenditures in the next twelve
months will be in conjunction with the development of a 20 acre parcel located
in Colorado Springs, Colorado. The Company plans to develop this parcel in three
phases. The Concept Plan and Final Plat relating to Phase I of the development
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(consisting of approximately 4.62 acres) have been approved by the appropriate
governmental authorities. The Company has entered into sales contracts for three
of five lots and closings are scheduled to occur in June, July and August 1997.
The Company engaged outside consultants to develop specifications and bid
packages for roadway, drainage channel and on-site (grading, utilities, etc.)
improvements related to Phase I. The Company has awarded a contract in the
amount of $400,000 for site improvements which are to commence in June 1997 with
a scheduled completion date in August 1997. The Company expects that such
expenditures will be funded primarily by proceeds realized from the closings of
the 3 lots sold.
Impact of Inflation
The Company cannot determine the precise effects of inflation. However, the
impact of general price inflation has not had a material adverse effect on the
results of the Company's operations.
Item 7. Financial Statements
Information with respect to this item appears on page F-1 of this report. Such
information is incorporated herein by reference.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
----------------------------------------------------------------------
None
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Part III
Item 9. Directors and Executive Officers of the Registrant
--------------------------------------------------
a. Identification of Directors and Executive Officers
Name Age Office
---- --- ------
Robert E. Thrailkill 66 Chairman of the Board, President
and Chief Executive Officer
John A. Alsko 56 Secretary/Treasurer and Director
Robert J. Thrailkill 38 Vice President and Director
Robert E. Thrailkill. Mr. Thrailkill has been President, Chief Executive
Officer and Director of the Company since its inception in February 1983. Mr.
Thrailkill previously served as Chairman of the Board, President and Chief
Executive Officer of Metro Capital Corporation, the Company's former parent
corporation, from February 1981 to December 1995 at which time there was a
change in control. Mr. Thrailkill's business background spans over 32 years of
management responsibility in privately and publicly-held companies. Mr.
Thrailkill devotes full time to the business of the Company.
John A. Alsko. Mr. Alsko was appointed as Secretary/Treasurer and a
Director of the Company in November 1995. Previously, Mr. Alsko served as Vice
President - Finance of Metro Capital Corporation from February 1987 to December
1995. Prior to joining Metro Capital Corporation, he was employed in various
financial positions with other privately and publicly-held companies and public
accounting firms. Mr. Alsko is a Certified Public Accountant.
Robert J. Thrailkill. Mr. Thrailkill was appointed as Vice President -
Operations and a Director of the Company in November 1995. Previously, Mr.
Thrailkill served as Director of Operations of Metro Capital Corporation from
January 1989 to December 1995. Prior to joining Metro Capital Corporation, he
was employed in various supervisory and managerial positions with other
companies.
The directors of the Company are elected to hold office until the next annual
meeting of shareholders or until a successor has been elected and qualified.
Officers of the Company are elected annually by the Board of Directors and hold
office until their successors are duly elected and qualified.
No arrangement or understanding exists between any of the above directors and
officers pursuant to which any one of those persons were selected to such office
or position. None of the directors hold directorships in other companies.
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b. Identification of Certain Significant Employees
Not applicable.
c. Family Relationships
Robert J. Thrailkill is the son of Robert E. Thrailkill.
d. Involvement in Certain Legal Proceedings
Not applicable.
e. Compliance with Section 16(a) of the Securities Exchange Act of 1934
Not applicable.
Item 10. Executive Compensation
-----------------------
a. Summary Compensation Table
The following table sets forth the compensation received by the Chief Executive
Officer for the years ended March 31, 1997, 1996 and 1995. No other executive
officer had total annual salary and bonus exceeding $100,000 for the year ended
March 31, 1997.
<TABLE>
<CAPTION>
Long Term
Name Annual Compensation Compensation Awards
and -------------------------------------------- ----------------------------------
Principal Other Annual Restricted Options
Position Year Salary Bonus Compensation Stock Award ($) SARS (#)
-------- ---- ------ ----- ------------ --------------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert E. Thrailkill 1997 $145,000 $ -- $ 46,200 (2) $ -- 45,000 (3)
President, Chief 1996 145,000 -- -- 22,500 (4) 25,000 (5)
Executive Officer 1995 145,000 -- -- 15,500 (6) 50,000 (7)
and Director (1)
</TABLE>
- --------------
(1) Robert E. Thrailkill was the Chief Executive Officer of Metro Capital
Corporation ("Metro") from February 1981 to December 1995 when a change in
control occurred. In December 1995, Mr. Thrailkill became Chief Executive
Officer of Bishop Capital Corporation, a wholly-owned subsidiary of Metro, into
which the majority of assets of Metro were transferred when the change in
control occurred. Metro subsequently changed its name to American Rivers Oil
Company ("AROC"). On June 20, 1997, the Company's Common Stock was distributed
to AROC's Common shareholders as a partial liquidating dividend.
(2) Consists of 40,300 registered shares allocated and issued from AROC's
1987 Stock Bonus Plan with a fair market value of $1.31 per share (22,000
shares) and $.94 per share (18,300 shares) on the award dates.
-14-
<PAGE>
(3) Consists of AROC's securities underlying options exercisable on date of
grant (July 31, 1996) at a per share exercise price of $1.38 and expires two
years thereafter.
(4) Consists of 15,000 shares allocated and issued from AROC's 1987 Stock
Bonus Plan with a fair market value of $1.50 per share on the award date.
(5) Consists of AROC's securities underlying options exercisable on date of
grant (October 11, 1995) at a per share exercise price of $1.65 and expires five
years thereafter.
(6) Consists of 25,000 shares allocated and issued from AROC's 1987 Stock
Bonus Plan with a fair market value of $.62 per share on the award date.
(7) Consists of AROC's securities underlying options exercisable on date of
grant (September 6, 1994) at a per share exercise price of $.68 and expires five
years thereafter.
The columns for "Long-Term Incentive Plan Payouts" and "All Other Compensation"
were omitted from the Summary Compensation Table since there was no information
reportable for the three years ended March 31, 1997.
b. Option/SAR Grants Table
The Company does not have any stock option plans or outstanding Stock
Appreciation Rights ("SARs").
c. Aggregated Option Exercise and Fiscal Year-End Option Value Table
The Company does not have any stock options nor any SARs outstanding at
March 31, 1997.
d. Compensation of Directors
There are no current arrangements for the compensation of directors for
services rendered since the current directors are employees of the Company.
There are no other arrangements whereby any of the Company's directors received
compensation for services as a director during fiscal 1997.
e. Employment Contracts and Termination of Employment and Change-in-Control
Arrangements.
In November 1995, a Management Agreement (the "Agreement") was entered into
between the Company, Robert E. Thrailkill, the Company's President, and the
Company's previous parent company. The Agreement is for a five year term and is
renewable from year to year thereafter unless terminated previously by either
party. Under the Agreement, Mr. Thrailkill is paid an annual salary of $145,000,
which salary may be increased by the Board of Directors from time to time in
accordance with normal business practices of the Company; his expenses are
reimbursed in accordance with the Company's policies and procedures; he
-15-
<PAGE>
participates in and receives established employee benefits and he is entitled to
participate in any future benefit made available by the Company to its
executives. The Agreement terminates upon death or disability and may be
terminated by the Company for cause (as defined in the Agreement). The Agreement
may also be terminated upon a breach of the Agreement, and in the event there is
a change in control of the Company (as defined in the Agreement). If the
Agreement is terminated because of a breach of the Agreement by the Company or a
change in control, the Company shall pay severance pay equal to the product of
(a) the annual salary rate in effect multiplied by (b) the greater of the number
of years (including partial years) remaining in the term of employment or the
number three. The Agreement provides that upon death, the Company shall pay an
amount equal to the annual salary; upon disability, the Company shall pay salary
for the balance of the term of the Agreement (less amounts paid by insurance) or
until the executive becomes gainfully employed, whichever is sooner; and, upon
termination for cause, the Company shall pay any salary due up to the
termination date.
Item 11. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
a. Security Ownership of Certain Beneficial Owners
The following table shows, as of June 20, 1997, those persons known by the
Company to be the beneficial owners of more than 5% of the Company's Common
Stock:
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of Beneficial Percent
Title of Class of Beneficial Owner Ownership of Class
- -------------- ------------------- --------- --------
<S> <C> <C> <C>
Common Stock Haddon, Inc. 93,750 10.6%
c/o Coal Contractors
Gowen Mine
Fern Glen, PA 18241-2145 (1)
Common Stock Robert E. Thrailkill 78,720 8.9%
716 College View Drive
Riverton, WY 82501
Common Stock Consult & Assist 68,750 7.8%
P.O. Box 9856
Rancho Santa Fe, CA 92067 (2)
Common Stock Francarep, Inc. 68,750 7.8%
50 Av. des Champs-Elysees
75008 Paris, France (3)
</TABLE>
-16-
<PAGE>
- -----------------
(1) Haddon, Inc. ("Haddon") is wholly-owned by Denis Bell, a director of
AROC. Haddon owned working interests in the oil and gas properties exchanged by
KTOC in the Metro/KTOC Transaction which were acquired on the closing date for
$175,000 cash and 367,945 shares of Class B Common Stock of which 175,000 shares
were converted into Common Stock in accordance with the terms of the
Transaction. Haddon also purchased 200,000 shares of AROC Common Stock from AROC
in a subsequent and separate private placement transaction. Mr. Bell was
nominated as a director by KTOC management and elected in conjunction with the
Metro/KTOC Transaction. There was no affiliation between Metro and Haddon/Bell
prior to the Metro/KTOC Transaction.
(2) All shares are beneficially owned by Georg Ligenbrink.
(3) All shares are beneficially owned by Georges Babinet.
b. Security Ownership of Management
The following table shows, as of June 20, 1997, management's ownership of the
Company's Common Stock:
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of Beneficial Percent
Title of Class of Beneficial Owner Ownership of Class
-------------- ------------------- ----------------- --------
<S> <C> <C> <C>
Common Stock Robert E. Thrailkill 78,720 8.9%
716 College View Drive
Riverton, WY 82501
Common Stock John A. Alsko 19,563 2.2%
716 College View Drive
Riverton, WY 82501
Common Stock Robert J. Thrailkill 15,938 1.8%
716 College View Drive
Riverton, WY 82501
Common Stock All officers and directors
as a group (three persons) 114,221 12.9%
</TABLE>
Item 12. Certain Relationships and Related Transactions
----------------------------------------------
a. Certain Relationships
There were no transactions during the last two fiscal years, or proposed
transactions, in which the Company was or is to be a party with any director,
executive officer or any member of the immediate family of any director or
executive officer having a direct or indirect material interest of more than 10%
in any business or professional entity involved in such transactions.
-17-
<PAGE>
b. Indebtedness of Management
No officer or director of the Company has been indebted to the Company
directly or indirectly during fiscal year 1997 in an amount exceeding $60,000.
c. Transactions with Parent of Issuer
In connection with the Metro/KTOC Transaction in December 1995, the assets
of Metro which were transferred to the Company were operated autonomously by the
prior management of Metro pursuant to the terms of separate five-year Operating
and Voting Agreements which were terminated on June 20, 1997.
d. Transactions with Promoters
Not applicable
-18-
<PAGE>
Part IV
Item 13. Exhibits and Reports on Form 8-K
--------------------------------
a. Exhibits
3.1 Articles of Incorporation and Bylaws (incorporated by reference
to Exhibits 3.1 and 3.2 of the Registrant's Form 10-SB
Registration Statement filed December 11, 1996). (1)
10.1 Management Agreement dated December 8, 1995 between American
Rivers Oil Company (formerly Metro Capital Corporation), Bishop
Capital Corporation (formerly Bishop Cable Communications
Corporation) and Robert E. Thrailkill (incorporated by reference
to Exhibit 10.1 of the Registrant's Form 10-SB Registration
Statement filed December 11, 1996). (1)
10.2 Purchase Option Agreement dated August 28, 1996 between Bishop
Powers, Ltd., a Colorado Limited Partnership, Bishop Capital
Corporation as General Partner and Diamond Shamrock Refining and
Marketing Company (incorporated by reference to Exhibit 10.2 of
the Registrant's Form 10-SB Registration Statement filed December
11, 1996). (1)
10.3 Contract to Sell Real Estate dated November 14, 1996 between
Bishop Powers, Ltd., a Colorado Limited Partnership, Bishop
Capital Corporation as General Partner and 123 Cascade Associates
LLC (incorporated by reference to Exhibit 10.3 of the
Registrant's Form 10-SB Registration Statement filed December 11,
1996). (1)
10.4 Agreement for the Purchase and Sale of Commercial Real Estate
dated March 3, 1997 between Bishop Powers, Ltd., a Colorado
Limited Partnership, Bishop Capital Corporation as General
Partner and State Bank & Trust of Colorado Springs (incorporated
by reference to Exhibit 10.4 of the Registrant's Form 10-SB/A
Registration Statement filed March 17, 1997). (1)
10.5 Operating Agreement dated December 8, 1995 between American
Rivers Oil Company (formerly Metro Capital Corporation), Karlton
Terry Oil Company and Bishop Capital Corporation (formerly Bishop
Cable Communications Corporation) (incorporated by reference to
Exhibit 10.5 of the Registrant's Form 10-SB/A Registration
Statement filed March 17, 1997). (1)
10.6 Voting Agreement dated December 8, 1995 between American Rivers
Oil Company (formerly Metro Capital Corporation), Karlton Terry
Oil Company and Bishop Capital Corporation (formerly Bishop Cable
-19-
<PAGE>
Communications Corporation) (incorporated by reference to Exhibit
10.6 of the Registrant's Form 10-SB/A Registration Statement
filed March 17, 1997). (1)
10.7 Bishop Powers, Ltd. Limited Partnership Agreement dated October
15, 1993 between Bishop Capital Corporation (formerly Bishop
Cable Communications Corporation) as General Partner and Powers
Golf LLC as Limited Partner (incorporated by reference to Exhibit
10.7 of the Registrant's Form 10-SB/A Registration Statement
filed March 17, 1997). (1)
10.8 Z-H, Ltd. Limited Partnership Agreement dated October 15, 1993
between Powers Golf LLC as General Partner and Bishop Capital
Corporation (formerly Bishop Cable Communications Corporation) as
Limited Partner (incorporated by reference to Exhibit 10.8 of the
Registrant's Form 10-SB/A Registration Statement filed March 17,
1997). (1)
10.9 Agreement of Bridger Creek Partnership dated December 31, 1990
between Bishop Capital Corporation (successor to interest of
Metro Capital Corporation) and Mr. and Mrs. William N. Spratt
(incorporated by reference to Exhibit 10.9 of the Registrant's
Form 10-SB/A Registration Statement filed March 17, 1997). (1)
10.10 Construction Contract dated June 5, 1997 between Bishop Capital
Corporation as General Partner of Bishop Powers, Ltd. and Pioneer
Sand Company, Inc.
21 Subsidiaries of the Registrant (incorporated by reference to
Exhibit 21 of the Registrant's Form 10-SB/A Registration
Statement filed March 17, 1997). (1)
27 Financial Data Schedule (submitted only in electronic format).
- ------------------
(1) Not filed herewith. In accordance with Rule 12b-32 of the General
Rules and Regulations under the Securities Exchange Act of 1934,
reference is made to a document previously filed with the
Commission.
b. Reports on Form 8-K
None
-20-
<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
BISHOP CAPITAL CORPORATION
(Registrant)
Date: June 20, 1997 By: /s/ Robert E. Thrailkill
--------------------------
Robert E. Thrailkill
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date indicated.
Date: June 20, 1997 /s/ Robert E. Thrailkill
---------------------------
Robert E. Thrailkill
Chairman of the Board of
Directors
(Principal Executive Officer)
Date: June 20, 1997 /s/ John A. Alsko
----------------------------
John A. Alsko
Treasurer/Director
(Principal Financial and
Accounting Officer)
Date: June 20, 1997 /s/ Robert J. Thrailkill
---------------------------
Robert J. Thrailkill
Vice President/Director
-21-
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
PAGE
----
Independent Auditor's Report............................................F-2
Consolidated Balance Sheet - March 31, 1997.............................F-3
Consolidated Statements of Operations - For the Years
Ended March 31, 1997 and 1996.......................................F-4
Consolidated Statements of Changes in Stockholders'
Equity - For the Years Ended March 31, 1997 and 1996................F-5
Consolidated Statements of Cash Flows - For the Years
Ended March 31, 1997 and 1996.......................................F-6
Notes to Consolidated Financial Statements..............................F-7
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Bishop Capital Corporation
Riverton, Wyoming
We have audited the accompanying consolidated balance sheet of Bishop Capital
Corporation and subsidiaries as of March 31, 1997, and the related consolidated
statements of operations, changes in stockholders' equity, and cash flows for
the years ended March 31, 1997 and 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Bishop Capital
Corporation and subsidiaries as of March 31, 1997, and the results of their
operations and their cash flows for the years ended March 31, 1997 and 1996, in
conformity with generally accepted accounting principles.
HEIN + ASSOCIATES LLP
Denver, Colorado
May 15, 1997, except for the last two sentences of
Note 1, as to which the date is June 20, 1997
F-2
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
ASSETS
------
CURRENT ASSETS:
Cash and equivalents $ 46,735
Marketable securities 449,917
Receivables:
Gas royalties 15,489
Interest and other 8,985
Notes receivable - officers 25,000
Prepaid expenses and other 11,380
-----------
Total current assets 557,506
PROPERTY AND EQUIPMENT:
Building 212,157
Furniture and fixtures 63,162
Vehicles and equipment 41,846
-----------
317,165
Less accumulated depreciation (121,436)
-----------
Net property and equipment 195,729
-----------
OTHER ASSETS:
Land under development 565,336
Investment in limited partnership 214,589
Gas royalty interest, net of accumulated amortization
of $803,617 263,434
Notes receivable 37,719
Other assets, net 4,290
-----------
Total other assets 1,085,368
-----------
TOTAL ASSETS $ 1,838,603
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 43,044
Payable to broker 85,106
Customer deposit - related party 20,000
-----------
Total current liabilities 148,150
COMMITMENTS (Notes 5 and 7)
STOCKHOLDERS' EQUITY:
Preferred stock, no par value; 5,000,000 shares
authorized, no shares issued --
Common stock, $.01 par value; 15,000,000 shares
authorized; 885,481 shares issued and outstanding 8,855
Capital in excess of par value 2,245,995
Accumulated deficit (564,397)
-----------
Total stockholders' equity 1,690,453
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,838,603
===========
See accompanying notes to these consolidated financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED
MARCH 31,
----------------------------------
1997 1996
--------- ---------
REVENUE -
<S> <C> <C>
Gas royalties $ 90,411 $ 69,931
COSTS AND EXPENSES:
Gas processing and production taxes 19,129 19,192
General and administrative 517,285 581,936
Professional fees related to reverse acquisition -- 150,000
Depreciation and amortization 121,339 152,718
--------- ---------
657,753 903,846
--------- ---------
LOSS FROM OPERATIONS (567,342) (833,915)
OTHER INCOME (EXPENSE):
Interest income 33,006 51,094
Dividend income 11,092 20,061
Rental income 13,963 12,686
Net gain on sale of marketable securities 62,005 688,400
Net unrealized loss on marketable securities (25,992) --
Equity in limited partnership loss (39,523) (54,606)
Interest expense (10,789) --
Other, net (720) (1,745)
Discontinued operations of oil property -- (25,850)
--------- ---------
NET LOSS $(524,300) $(143,875)
========= =========
NET LOSS PER SHARE $ (.59) $ (.16)
========= =========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 885,481 885,481
========= =========
See accompanying notes to these consolidated financial statements.
F-4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
Common Stock Treasury Stock
----------------------- ----------------------- Capital in Unrealized Retained
Number of Number of Excess of Holding Earnings
Shares Amount Shares Amount Par Value Gain (Deficit) Total
--------- ---------- --------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCES, April 1, 1995 2,700,689 $ 27,007 1,101,234 $(1,736,062) $ 3,030,711 $ 528,936 $ 1,584,498 $ 3,435,090
Commitment to
issue common
stock for services 150,000 1,500 -- -- 223,500 -- -- 225,000
Net change in
unrealized
holding gain -- -- -- -- -- (462,052) -- (462,052)
Consummation of
reverse acquisition
and reflect capital
structure of Bishop (1,965,208) (19,652) (1,101,234) 1,736,062 (1,088,187) -- (1,480,720) (852,497)
Net loss -- -- -- -- -- -- (143,875) (143,875)
----------- --------- ----------- ----------- ----------- ----------- ---------- ---------
BALANCES, March 31, 1996 885,481 8,855 -- -- 2,166,024 66,884 (40,097) 2,201,666
Issuance of AROC
common stock for
employee
compensation -- -- -- -- 79,971 -- -- 79,971
Net change in
unrealized
holding gain -- -- -- -- -- (66,884) -- (66,884)
Net loss -- -- -- -- -- -- (524,300) (524,300)
----------- --------- ----------- ----------- ----------- ----------- ----------- -----------
BALANCES, March 31, 1997 885,481 $ 8,855 -- $ -- $ 2,245,995 $ -- $ (564,397) $ 1,690,453
=========== ========= =========== =========== =========== =========== =========== ===========
See accompanying notes to these consolidated financial statements.
F-5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Years Ended
March 31,
---------------------------------
1997 1996
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $ (524,300) $ (143,875)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization 121,339 155,185
Issuance of common stock for services -- 225,000
Issuance of AROC common stock for employee
compensation 79,971 --
Equity in limited partnership loss 39,523 54,606
Write-down of investment -- 25,000
Net gain on sale of marketable securities (62,005) (688,400)
Net unrealized loss on marketable securities 25,992 --
Changes in operating assets and liabilities:
(Increase) decrease in:
Marketable securities 175,891 --
Gas royalties receivable (6,090) 3,655
Interest and other receivables 4,273 8,003
Receivables from AROC 21,524 (23,579)
Prepaid expenses 8,634 (1,680)
Other assets (1,000) 14,126
Increase (decrease) in:
Accounts payable and accrued expenses (40,498) 30,770
Customer deposit -- 20,000
Payable to broker 85,106 --
----------- ----------
Net cash used in operating activities (71,640) (321,189)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities (477,837) (169,979)
Proceeds from sale of marketable securities 665,894 1,265,512
Funds advanced under notes receivable (120,000) (42,522)
Proceeds from collection of notes receivable 146,639 64,461
Land acquisition and development costs (153,627) (133,473)
Purchase of property and equipment (9,464) (21,274)
Transfer of cash in reverse acquisition -- (700,000)
----------- -----------
Net cash provided by investing activities 51,605 262,725
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings -- 60,000
Principal payments on borrowings -- (60,000)
----------- -----------
Net cash used in financing activities -- --
----------- -----------
NET DECREASE IN CASH AND EQUIVALENTS (20,035) (58,464)
CASH AND EQUIVALENTS, beginning of year 66,770 125,234
----------- -----------
CASH AND EQUIVALENTS, end of year $ 46,735 $ 66,770
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION -
Cash paid for interest $ 10,089 $ 830
=========== ===========
See accompanying notes to these consolidated financial statements.
F-6
</TABLE>
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION:
----------------------
Reverse Acquisition - In October 1995, Metro Capital Corporation (Metro)
and Karlton Terry Oil Company (KTOC) entered into an Asset Purchase
Agreement whereby KTOC agreed to exchange certain oil and gas properties
(the "Contributed Properties") for a total of 7,717,820 shares of Class B
common stock of Metro, which represented 80% of the issued and outstanding
voting securities of Metro. On November 29, 1995, the shareholders of Metro
approved this transaction and the closing occurred on December 8, 1995. The
shareholders also approved changing the name of the Company from Metro to
American Rivers Oil Company (AROC).
Metro's assets, except for $700,000 cash and an insignificant oil property,
were transferred at their historical carrying value to a wholly-owned
subsidiary, Bishop Capital Corporation, formerly Bishop Cable
Communications Corporation ("Bishop" or the "Company"), where they are
being operated autonomously by the prior management of Metro pursuant to
the terms of separate five-year Operating and Voting Agreements. The
Operating Agreement provides that Bishop's management will have sole
authority and discretion with respect to the business, operations, and
assets of Bishop. The Voting Agreement appoints Bishop's president as
attorney and proxy to vote in his sole and absolute discretion, all of the
shares of all classes of the common stock of AROC and/or Bishop owned by
them with respect to any matter brought before the shareholders of AROC
and/or Bishop relating to or involving exclusively Bishop.
Accordingly, the accompanying financial statements include the consolidated
operating results and cash flows of Metro until December 8, 1995 when the
change of control occurred. Beginning in December 1995, the accompanying
financial statements reflect only the operations of Bishop.
Change in Capital Structure and Spinoff - Since inception of the Company
there have been 4,500,000 shares of common stock outstanding. In November
1996, the Board of Directors of AROC (the Company's sole stockholder)
agreed to make a pro rata distribution of 885,481 shares of the Company's
common stock to AROC's common stockholders (excluding holders of Class B
common stock) of record on November 18, 1996. The pro rata distribution of
shares occurred on June 20, 1997, and the remaining 3,614,519 shares of the
Company's common stock owned by AROC were canceled. Accordingly, all share
and per share amounts in the accompanying financial statements have been
retroactively restated to give effect to the change in capital structure.
2. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
--------------------------------------------------------------------
Nature of Operations - The Company is primarily engaged in the development
and sale of real estate and also has a royalty interest in a natural gas
property.
Principles of Consolidation - The Company's subsidiaries consist of Bishop
Powers, Ltd. and Bridger Creek Partnership in which the Company holds
general partner interests of 81% and 80%, respectively. The accompanying
financial statements include the accounts of the Company and both
majority-owned partnerships. All material intercompany transactions and
accounts have been eliminated in consolidation.
F-7
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Property and Equipment - Property and equipment is stated at cost.
Depreciation is provided by the straight-line method over estimated useful
lives of three to thirty-one years.
Maintenance and repairs are charged to expense as incurred, and
expenditures for major improvements are capitalized. When assets are
retired or otherwise disposed of, the property accounts are relieved of
costs and accumulated depreciation, and a gain or loss is recognized.
Land Under Development - Land under development is stated at cost and
approximately $331,000 relates to acquisition costs at March 31, 1997.
Impairment of Long-lived Assets - The Company periodically compares the net
carrying value of long-lived assets to the related estimates of
undiscounted future cash flows for such assets. If the net carrying value
exceeds the estimated cash flows, then impairment will be recognized to
reduce the carrying value to the estimated fair value.
Gas Royalty Interest - Through December 31, 1996, the gas royalty interest
was being amortized utilizing the straight-line method over an estimated
life of eight years. Effective January 1, 1997, management determined that
the estimated remaining life of the gas royalty interest was 20 years,
based upon information that the operator released publicly. As a result of
this change in estimate, amortization expense for the year ended March 31,
1997, was reduced by approximately $30,000 (approximately $.03 per share).
Cash Equivalents - The Company considers all highly liquid debt instruments
purchased with an original maturity of three months or less to be cash
equivalents.
Marketable Securities - Management determines the appropriate
classification of its investments at the time of acquisition and
reevaluates such determination at each balance sheet date. Trading
securities are carried at fair value, with unrealized holding gains and
losses included in earnings. Available-for- sale securities are carried at
fair value, with unrealized holding gains and losses, net of tax, reported
as a separate component of stockholders' equity. Realized gains and losses
on all securities are computed based on average cost.
Through December 31, 1996, all securities were classified as available for
sale. Effective January 1, 1997, management reevaluated the Company's
investment policies and began classifying all securities as trading since
management's intent is to hold the securities principally for the purpose
of selling them in the near term. This reclassification had no effect on
earnings.
Investments - The Company's 19% ownership interest in a limited partnership
(Z-H, LTD.) is stated at cost, adjusted for its share of losses incurred.
Income Taxes - The Company accounts for income taxes under the liability
method, which requires recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been included
in the financial statements or tax returns. Under this method, deferred tax
assets and liabilities are determined based on the difference between the
financial statement and tax bases of assets and liabilities using enacted
tax rates.
F-8
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AROC includes the Company's operations in its consolidated income tax
return. Income taxes are allocated between AROC and the Company as if the
Company was a separate taxpayer.
Stock-Based Compensation - The Company accounts for stock-based
compensation using the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees," and related interpretations. Accordingly, compensation cost for
stock options granted to employees is measured as the excess, if any, of
the quoted market price of the Company's (or AROC's) common stock at the
measurement date (generally, the date of grant) over the amount an employee
must pay to acquire the stock.
In October 1995, the Financial Accounting Standards Board issued a new
statement titled "Accounting for Stock-Based Compensation" (FAS 123). The
new statement is effective for fiscal years beginning after December 15,
1995. FAS 123 encourages, but does not require, companies to recognize
compensation expense for grants of stock, stock options, and other equity
instruments to employees based on fair value. Companies that do not adopt
the fair value accounting rules must disclose the impact of adopting the
new method in the notes to the financial statements. Transactions in equity
instruments with non-employees for goods or services must be accounted for
by the fair value method. The Company has elected not to adopt the fair
value accounting prescribed by FAS 123 for employees, and will be subject
only to the disclosure requirements prescribed by FAS 123.
Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and the accompanying notes. The actual
results could differ from those estimates.
The Company's financial statements are based on a number of significant
estimates, including the amortization period for the gas royalty interest,
realizability of the carrying value of land under development and the
limited partnership investment discussed in Note 5, and the determination
of other than temporary impairment of marketable securities. The Company's
estimates are expected to change as additional information becomes
available and it is reasonably possible that such estimates will materially
change in the forthcoming year.
Net Loss Per Share - The net loss per share calculation is based on the
weighted average number of shares outstanding during each year, as
retroactively restated for the changes in capital structure due to the
reverse acquisition and spin-off as discussed in Note 1.
Reclassifications - Certain reclassifications have been made to the 1996
financial statements to conform to the presentation in 1997. The
reclassifications had no effect on the 1996 net loss.
F-9
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. MARKETABLE SECURITIES:
----------------------
The cost and estimated fair market value of trading securities at March 31,
1997 were as follows:
Net
Fair Unrealized
Market Gains
Cost Value (Losses)
---- ----- --------
U.S. Treasury securities $172,758 $163,525 $ (9,233)
Redeemable preferred
securities 89,500 92,000 2,500
Equity securities 213,651 194,392 (19,259)
-------- -------- --------
$475,909 $449,917 $(25,992)
======== ======== ========
Cash proceeds from the sale of available-for-sale securities during the
years ended March 31, 1997 and 1996 were $665,894 and $1,265,512,
respectively. Net gains from available-for-sale securities sold during the
year ended March 31, 1997 amounted to $51,340 (gross gains of $69,511 and
gross losses of $18,171). Net gains from available-for-sale securities sold
during the year ended March 31, 1996 amounted to $688,400 (gross gains of
$701,152 and gross losses of $12,752).
4. GAS ROYALTY INTEREST:
---------------------
In December 1990, the Company purchased a royalty interest in certain gas
properties located in Wyoming for approximately $1,067,000. At March 31,
1997, the net carrying value of this interest amounts to $263,434. Revenues
related to this royalty interest are affected by local gas transportation,
processing, and marketing arrangements. Reserve disclosures related to the
gas royalty interest are not presented because the information is
unavailable from the operator of the properties.
In connection with the purchase, the Company formed a tax partnership
(Bridger Creek Partnership), which allocates to the Company the first
$40,000 of annual net income from the partnership and 80% of annual net
income in excess of $40,000. After the Company receives cumulative net
income of $1,050,000 plus interest at prime adjusted semi-annually, the
Company will be entitled to 60% of the annual net income of the
partnership. Through March 31, 1997, the minority interest's share of the
partnership's profits and cash flows has not been material.
5. PARTNERSHIPS:
-------------
In October 1993, the Company became the general partner of a limited
partnership to develop or sell 55 acres of undeveloped real estate. The
Company contributed $250,000 cash for its 81% general partnership interest.
The remaining 19% interest is held by the limited partner who is the
general partner in the partnership described below. The Company will be
allocated 100% of the income and losses until it has been paid $700,000,
F-10
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
after which the allocation will be apportioned according to ownership
interests. Through March 31, 1997, this partnership has not recognized any
profits and there have not been any cash distributions to the partners.
However, at March 31, 1997, the Company had entered into three contracts
with unrelated parties for the sale of approximately three acres of land
for an aggregate sales price of $1,070,000. The closings are contingent
upon certain regulatory approvals and the Company is required to make
additional capital improvements to the properties at an estimated cost of
approximately $400,000.
The Company also became a limited partner in a limited partnership, which
purchased approximately 35 acres of undeveloped land adjacent to the land
mentioned above. The partnership constructed a golf driving range,
miniature golf, and batting facility which was completed in July 1994. The
Company contributed $350,000 cash for its 19% partnership interest, which
is reported under the equity method of accounting.
Following is a summary of condensed financial information pertaining to
this limited partnership:
Balance sheet data at March 31, 1997:
Current assets $ 11,700
Noncurrent assets 962,800
Current liabilities 43,700
Noncurrent liabilities 1,193,400
YEARS ENDED MARCH 31,
-----------------------
1997 1996
--------- ---------
Operations data:
Revenue $ 276,000 $ 262,000
Costs and expenses 484,000 549,000
--------- ---------
Net loss $(208,000) $(287,000)
========= =========
Company's equity in limited partnership loss $ (40,000) $ (55,000)
========= =========
The land owned by the partnerships discussed above is located in Colorado
Springs, Colorado and, accordingly, the value of these properties is
directly affected by local economic and operating conditions. At March 31,
1997, there is a difference of approximately $265,000 between the carrying
value of the Company's investment and its 19% interest in the assets and
liabilities of the limited partnership. This difference is primarily
attributable to the value of the land.
F-11
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. INCOME TAXES:
-------------
The items that give rise to the components of the net long-term deferred
tax asset as of March 31, 1997, are as follows:
Gas royalty interest $ 265,000
Net operating loss carryforward 168,000
Other (23,000)
--------
Deferred tax asset 410,000
Less valuation allowance (410,000)
---------
Net deferred tax asset $ --
========
For the year ended March 31, 1997, the valuation allowance related to
deferred tax assets increased by approximately $190,000. As of March 31,
1997, Bishop has a net operating loss carryforward for Federal income tax
purposes of approximately $450,000. Due to the spin-off discussed in Note
1, utilization of this carryforward will be subject to limitations under
IRS Section 382. If not previously utilized, this carryforward will expire
primarily in 2012.
7. COMMITMENTS:
------------
Effective December 1995, a five-year management agreement (the "Agreement")
was entered into between the Company, the Company's president (the
"Executive") and AROC. The Agreement, which supersedes a previous
employment agreement, provides for minimum annual compensation of $145,000
plus employee benefits. On the last day of September of each year
thereafter, the term of the Agreement shall be automatically extended an
additional year unless, prior to such last day of September, the Company or
the Executive shall have delivered written notice that the term of
employment will not be extended. The Agreement may be terminated by the
Company only upon the death or disability of the Executive or for cause. If
the Executive is terminated without cause, the Company would be required to
pay as severance pay an amount equal to the Executive's salary in effect as
of the date of termination multiplied by the greater number of years
remaining in the term of employment or the number three.
The Company also entered into a three-year employment agreement in December
1995 with two other officers which provide for aggregate annual
compensation of $85,000 plus employee benefits. The agreements shall be
automatically extended an additional year on September 30 of each year
thereafter unless written notice is given by either party that the term of
employment will not be extended. The agreements may be terminated upon the
death or disability of the individual officer or for cause.
F-12
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. FINANCIAL INSTRUMENTS:
----------------------
Statement of Financial Accounting Standards No. 107 requires the Company to
disclose the fair value of certain financial instruments in its financial
statements. Accordingly, at March 31, 1997, management's best estimate is
that the carrying amount of cash and equivalents, notes and other
receivables, accounts payable, accrued expenses, payable to broker and
customer deposits, approximates fair value due to the short maturity of
these instruments. Due to the short operating history of the business owned
by the limited partnership discussed in Note 5, management is unable to
estimate the fair value of the Company's 19% limited partner interest.
However, management believes that fair value exceeds the carrying value at
March 31, 1997.
9. RELATED PARTY TRANSACTIONS:
---------------------------
During the year ended March 31, 1997, the Company loaned an additional
$100,000 to AROC which was subsequently collected during the year. The note
provided for interest at 10% and was collateralized by oil and gas
properties in Louisiana. During the year ended March 31, 1996, an officer
paid a $20,000 cash deposit to the Company for the sale of land. The
purchase price for the land is estimated to be $45,000, but closing has not
yet occurred and the deposit is included in current liabilities at March
31, 1997.
The Company has notes receivable for a total of $25,000 from two officers
of the Company. The officers pledged 25,000 shares of AROC common stock as
collateral for the notes.
10. STOCK-BASED COMPENSATION:
------------------------
Stock Grants - The Company has never issued any stock options, warrants or
similar instruments. However, in connection with the reverse acquisition
discussed in Note 1, 150,000 shares of AROC common stock were issued to
consultants in 1996 for services provided to the Company, resulting in a
charge to operations for $225,000. Additionally, during the year ended
March 31, 1997, AROC issued 70,000 shares of its common stock to certain
employees of the Company for services performed on behalf of the Company.
The Company recognized a charge to operations for the fair value of these
shares of $79,971.
Pro Forma Stock-Based Compensation Disclosures - The Company applies APB
Opinion 25 and related interpretations in accounting for stock options
which were granted to its employees by AROC. Accordingly, the Company did
not recognize any compensation cost for options granted to employees in
1997 and 1996 since the market prices of AROC's common stock did not exceed
the exercise prices on the dates of grant. In July 1996, AROC granted a
two-year option to an officer to purchase 45,000 shares of its common stock
at an exercise price of $1.38 per share. During the year ended March 31,
1996, AROC granted ten-year options to officers to purchase 25,000 shares
of its common stock for $1.50 per share and a five-year option to an
officer to purchase 25,000 shares of its common stock for $1.65 per share.
F-13
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
If compensation cost had been recognized using the fair value method
prescribed by FAS 123 rather than the intrinsic value method under APB 25,
the Company's net loss and net loss per share would have been changed to
the pro forma amounts indicated below.
Year Ended March 31,
------------------------------
1997 1996
----------- ----------
Net loss:
As reported $(524,300) $(143,875)
Pro forma $(551,300) $(203,875)
Net loss per share:
As reported $ (.59) $ (.16)
Pro forma $ (.62) $ (.23)
The fair value of each employee option granted in 1997 and 1996 was
estimated on the date of grant using the Black-Scholes option-pricing model
with the following weighted average assumptions:
Year Ended March 31,
------------------------
1997 1996
------ ------
Expected volatility 75.0% 75.0%
Risk-free interest rate 6.5% 6.2%
Expected dividends - -
Expected terms (in years) 1.8 3.7
F-14
EXHIBIT 10.10
CONSTRUCTION CONTRACT
Grading, Utilities, Channel Lining, Storm Sewer, Curb & Cutter, Paving
AGREEMENT made this 5th, day of June, 1997, by and between Bishop Capital
Corporation, a Wyoming Corporation, General Partner of Bishop Powers Ltd., a
Colorado Limited Partnership, 716 College View Dr., Riverton, County of Fremont,
State of Wyoming, hereinafter referred to as Owner and Pioneer Sand Company,
Inc., a Colorado Corporation, Box 7650, City of Colorado Springs, County of El
Paso, State of Colorado, hereinafter referred to as Contractor a Company duly
licensed as a contractor in the State of Colorado as follows:
SECTION ONE
DESCRIPTION OF WORK
Contractor shall perform overlot grading, installation of utility lines
including water and sewer mains and taps ( but excluding gas, electrical, phone
and CATV lines), road base preparation including compaction; curb and gutter
installation, asphalt paving, installation of riprap lining in Sand Creek
channel, as well as public storm sewer piping at the The Crossing at Palmer Park
Sub., Fil. 1, Colorado Springs, El Paso County, Colorado pursuant to the
attached Exhibits, to wit:
A. Plans prepared by Kiowa Engineering, Inc. and Land Development
Consultants, Inc. consisting of 7 ( Seven ) Pages attached hereto and
incorporated by this reference as Exhibit "A-1" through "A-7" as well as
sanitary sewer plan and profiles and channel lining profiles which shall be
attached to this Contract following execution.
B. Project Bid Tabulation form, and Request For Proposal documents,
including Addendum's No. 1 and No.2 as prepared by Tigre Development Services
for the Owner, consisting of 4 ( Four ) Pages, attached hereto, and incorporated
by this reference as Exhibit "B".
C. In the event of any inconsistency between the contents of Exhibits "A"
and "B", the unit prices contained within Exhibit "B" shall control.
D. Time being of the essence incentive attached hereto and incorporated as
Exhibit C.
SECTION TWO
CONTRACT PRICE
A. Owner agree to pay (Contractor, for the work described: $370,235.41
(Three Hundred Seventy Thousand, Two Hundred Thirty Five Dollars and Forty One
Cents). Payment of the Performance and Maintenance Bonds referred to in Section
18 of this contract will be paid in full by the Owner at the time the Notice to
Proceed is issued to the Contractor.
<PAGE>
B. Payment of this amount is subject to additions or deduction in
accordance with the provisions of this contract and of the other documents to
which this contract is subject.
C. Payment on the total contract price is to be made in the form of monthly
progress payments as herein after set forth in Section Three and a Final Payment
as set forth in Section Four.
D. Payment with consideration of Exhibit C
SECTION THREE
PROGRESS PAYMENTS
A. Owner shall make progress payments on account of the contract price to
Contractor, on the basis of monthly applications for payment submitted to
Owner's Construction Manager by Contractor as the work progresses. Such progress
payments shall be submitted by the 10th day of each succeeding month and shall
be paid, in full, no later than the 20th day of such month for the prior month's
billings for labor and materials. All such progress payments shall be subject to
a retainage by the Owner of Ten Percent ( 10%) of such amount which amount shall
be paid to Contractor as part of the Final Payment as hereinafter set forth. All
work on the Project shall be performed in accordance with the latest revised
edition of the City of Colorado Specifications applicable to each type of work
being performed.
B. Progress payments may be withheld if
(1) Work is found defective by Owner and/or the Construction Manager
and not remedied by the time any Progress Payment is due;
(2) Contractor does not make prompt and proper payments to
subcontractors
(3) Contractor does not make prompt and proper payments for labor,
materials or equipment furnished by third parties;
(4) Another contractor on the project is damaged by an act for which
contractor is responsible;
(5) Claims or liens are filed on the job.
SECTION FOUR
FINAL INSPECTION, ACCEPTANCE AND SETTLEMENT
When the work is complete and ready for final inspection, the Contractor
shall file a written notice with the Owner that the work, in the opinion of the
Contractor, is complete under the terms of this Contract. Within ten (10) days
after the contractor files the written notice, the Owner, the Construction
Manager. and the Contractor shall make a final inspection of the project to
determine whether the work has been completed in accordance with the Contract
Documents.
<PAGE>
A final list shall be made by the Construction Manager in sufficient detail to
fully outline to the Contractor:
1. Work to be completed, if any.
2. Work not in compliance with the Plans or Specifications, if any.
3. Unsatisfactory work for any reason, if any.
The Owner shall not be required to make final payment until all items noted
above, if any, have been completed and the Construction Manager has issued a
Certificate of Completion which the Construction Manager shall issue within 10
working days of completion of the Project. Final payment shall be made within
fifteen (15) days of issuance of the Certificate of Completion by the
Construction Manager. Final payment amount shall include all retainages held by
the Owner pursuant to Section Three (A) herein. Fully executed Lien Waivers from
all subcontractors employed by Contractor must be filed with the Construction
Manager prior to processing of the Final Payment by the Owner.
If any unpaid claim for labor, materials, supplies, equipment, or damages
to third parties is filed before payment of the sums due and owing to Contractor
are paid, the Owner may withhold from the Contractor sufficient sums to insure
the full payment of such claims until such claims are withdrawn or paid with
such payment or withdrawal evidenced by a receipt for payment in full or a
Notice of Withdrawal of Claim signed by the claimant or its duly authorized
agent or assignee.
Owner by making payment, waives all claims except those arising out of-
(1) Faulty work appearing after issuance of the Certificate of
Completion;
(2) Work that does not comply with the contract documents; or
(3) Outstanding claims of lien.
Contractor, by accepting final payment, waives all claims except those that
it has previously made in writing, and which remain unsettled at the time of
acceptance.
SECTION FIVE
STARTING AND COMPLETION DATES
Construction under this contract will begin when the Construction Manager, on
behalf of the Owner, has obtained the issuance of any and all required permits
or authorizations from local authorities and /or the Contractor. but in no event
later than June 9, 1997. The work herein set forth shall be completed no later
than August 10, 1997.
SECTION SIX
CONTRACT DOCUMENTS
A. The contract documents on which the agreement between Owner and
Contractor is based contain the plans and specifications in accordance with
which the work is to be done and that provide for the method of payment of the
contract price are as follows:
(1) This agreement with Exhibits "A" through "C" hereto which details
the work and materials to he provided by contractor;
(2) The plans and specifications attached hereto as Exhibit "A" and
any amendments made after the effective date of this agreement; and
(3) Written work change orders issued, or to be issued.
B. The contract documents together form the contract for the work described
in this agreement. The parties intend that the documents include provisions for
all labor, materials, equipment, supplies, and other items necessary for the
execution and completion of the work, and all terms and conditions of payment.
C. The contract document is to be separately executed in triplicate by
owner and contractor. Contractor, by executing the documents, represents that it
has inspected and is familiar with the work site and the local conditions under
which the work is to be performed.
<PAGE>
SECTION SEVEN
DESIGNATION OF CONSTRUCTION MANAGER;
DUTIES AND AUTHORITY
A. The Construction Manager for above-described project is TIGRE
DEVELOPMENT SERVICES. INC., 6661 Gambol Quail Drive W., Colorado Springs,
Colorado [hereinafter "Construction Manager"], State of Colorado.
B. The duties and authority of the Construction Manager are as follows:
(a) General Administration of Contract. The primary function of the
Construction Manager is to provide the general administration of the contract.
In performing these duties he is the owner's representative during the entire
period of construction.
(b) Inspections, Opinions, and Progress Reports. Construction Manager
shall keep familiar with the progress and quality of the work by making periodic
visits to the work site. Construction Manager will make general determinations
as to whether the work is proceeding in accordance with the contract.
Construction Manager will keep the owner informed of such progress, and will use
it's best efforts to protect the owner from defects and deficiencies in the
work. Construction Manager will not be responsible for the means of
construction, or for the sequences, methods, and procedures used in such
construction or for contractor's failure to perform the work in accordance with
the contract documents.
(c) Access to Work Site for Inspections. Construction Manager shall be
given free access to the work at all times during its preparation and progress.
However Construction Manager is not required to make exhaustive or continuous
on-site inspections to perform it's duties of checking and reporting on work
progress.
(d) Interpretation of Contract Documents; Decisions on Disputes.
Construction Manager will be the initial interpreter of the contract document
requirements, and make primary decisions on claims and disputes between
Contractor and Owner.
(e) Rejection and Stoppage of Work. Construction Manager shall have
authority to reject work that in it's opinion does not conform to the contract
documents, and in this connection to stop the work or a portion of such work,
when necessary.
(f) Payment Certificates. Construction Manager will determine the
amounts owing to contractor as the work progresses, based on contractor's
applications and it's inspections and observations, and will issue certificates
for progress payments and final payment in accordance with the terms of the
contract documents.
SECTION EIGHT
RESPONSIBILITIES OF OWNER
A. Owner shall give all instructions to contractor through the Construction
Manager, shall furnish all necessary soils testing and materials testing
necessary for the work, and shall secure and pay for easements for permanent
structures on the work site, if required, or which are necessary for its proper
completion.
B. Owner reserves the right to let other contracts in connection with the
project. Contractor shall cooperate with all other contractors to the effect
that their work shall not be impeded by it's construction, and shall give such
other contractors access to the work site necessary to perform their contracts,
with the understanding that other contractors are to cooperate fully with
Pioneer Sand Co., Inc. construction schedule.
C. Owner shall have free and unencumbered access to the job site during
completion of the Work herein set forth.
<PAGE>
SECTION NINE
RESPONSIBILITIES OF CONTRACTOR
Contractor's duties and rights in connection with the above-described
project are as follows:
A. Responsibility for and Supervision of Construction. Contractor shall be
solely responsible for all construction under this contract, including the
techniques, sequences, procedures, and means, and for coordination of all work.
Contractor shall supervise and direct the work to the best of its ability, and
give it all attention necessary for such proper supervision and direction.
B. Discipline and Employment. Contractor shall maintain at all times strict
discipline among its employees, and contractor agrees not to employ for work on
the project any person unfit or without sufficient skill to perform the job for
which he or she was employed.
C. Furnishing of Labor, Materials, etc. Contractor shall provide and pay
for all labor, materials, and equipment, including tools, construction
equipment, and machinery, including water, transportation, and all other
facilities and services necessary for the proper completion of work on the
project in accordance with the contract documents including payment of utilities
provided at the site by Owner. All work shall be performed in accordance with
City of Colorado Springs Specifications.
D. Payment of Taxes; Procurement of Licenses and Permits. Contractor shall
pay all taxes required by law in connection with work on the project in
accordance with this agreement including sales, use, and similar taxes.
Contractor shall obtain, at his expense, all necessary licenses and permits to
do the project, in accordance with applicable Federal, State and local laws,
regulations and ordinances. However, owner will pay all service line development
tap fees due to any City, County, or State entity relating to the project.
E. Compliance with Construction Laws and Regulations. Contractor shall
comply with all laws and ordinances, and the rules, regulations, or orders of
all public authorities relating to the performance of the work under and
pursuant to this agreement. If any of the contract documents are at variance
with any such laws, ordinances, rules, regulations, or orders it shall
compliance with Construction Laws and Regulations. Contractor shall notify the
Engineer, in writing, promptly on discovery of such variance.
F. Responsibility for Negligence of Employees and Subcontractors.
Contractor assumes full responsibility for acts, negligence, or omissions of all
its employees on the project, for those of its subcontractors and their
employees, and for those of all other persons doing work under a contract with
it.
G. Warranty of Fitness of Equipment and Materials. Contractor represents
and warrants to owner that all equipment and materials used in the work,
and made a part of the structures on such work, or placed permanently in
<PAGE>
connection with such work, will be new unless otherwise specified in the
contract documents, of good quality, free of defects, and in conformity
with the contract documents. It is understood and agreed between the
parties to this agreement that all equipment and materials not so in
conformity will be considered defective.
H. Clean-up. Contractor agrees to keep the work location and adjoining ways
free of waste material and rubbish caused by its work or that of its
subcontractors. Contractor further agrees to remove all such waste material and
rubbish on termination of the project, together with all its tools, equipment,
machinery, and surplus materials. Contractor agrees, on terminating its work at
the site, to conduct general clean-up operations, including the cleaning of
paved streets and walks, if applicable.
I. Indemnity and Hold Harmless Agreement. Contractor agrees to indemnify
and hold harmless Owner and Tigre Development Services, their agents and
employees, from and against any and all claims, damages, losses, and expenses,
including reasonable attorney's fees in case it shall be necessary to file an
action, arising out of performance of the work herein, that is (a) for bodily
injury, illness, or death, or for property damage, including loss of use, and
(b) caused in whole or in party by contractor's negligent act or omission, or
that of a subcontractor, or that of anyone employed by them or for whose acts
contractor or subcontractor may be liable
J. Safety Precautions and Programs. Contractor has the duty of providing
for and overseeing all safety orders, precautions, and programs necessary to the
reasonable safety of the work. In this connection, contractor shall take
reasonable precautions for the safety of all employees and other persons whom
the work might affect, all work and materials incorporated in the project, and
all property and improvements on the construction site and adjacent to the
construction site, complying with all applicable laws, ordinances, rules,
regulations and orders.
SECTION TEN
TIME OF ESSENCE, EXTENSION OF TIME
A. All times stated in this agreement or in the contract documents are of
the essence hereof.
B. The time frames and/or dates stated in this agreement or in the contract
documents may be extended by a change order prepared by the Construction Manager
and signed by Owner for such reasonable time as it may determine, when in it's
opinion contractor is delayed in work progress by changes ordered, inclement
weather, labor disputes, fire, prolonged transportation delays, injuries, or
other causes beyond contractor control or which justify the delay including any
delays caused by Owner. Time extensions granted the Contractor for any or all of
the reasons mentioned above, will not include any payment by the Owner for
office or field costs, overhead, or lost profit resulting from such a time
extension.
<PAGE>
SECTION ELEVEN
SUBCONTRACTORS
A. A subcontractor. for the purposes of this agreement, shall be a person
with whom contractor has a direct contract for work at the project site.
B. All contracts between contractor and subcontractors shall conform to the
provisions of the contract documents and shall incorporate in them the relevant
provisions of this agreement.
SECTION TWELVE
INSURANCE
A. Contractor's liability Insurance. Contractor agrees to keep in force at
its own expense during the entire period of construction on the project such
liability insurance as will protect it from claims, under workers' compensation
and other employee benefit laws, for bodily injury and death, and for property
damage, that may arise out of work under this agreement, whether directly or
indirectly by contractor, or directly or indirectly by a subcontractor. The
minimum liability limits of such insurance shall not be less than the limits
specified in the contract documents or by law for that type of damage claim.
Such insurance shall include contractual liability insurance applicable to
contractor's obligations under this agreement. Proof of such insurance shall be
filed by contractor with owner within a reasonable time after execution of this
agreement. Contractor agrees to include the Owner and Construction Manager as
additional insured parties on each policy for the Project except Worker's
Compensation Coverage.
B. Owner's liability Insurance. Owner agrees to maintain in force his own
liability insurance during the construction on this project, and reserves the
right to purchase such additional insurance as in its opinion is necessary to
protect it against claims arising out of the contractor's operation, without
diminishing contractor's obligation to carry the insurance specified in this
agreement on contractor's part to be carried.
C. Waiver of Work Site Property Damage Claims to Extent or Insurance
Coverage. Owner and contractor hereby waive all claims against each other for
fire damage or damages from other perils. Contractor agrees to obtain waivers of
such claims by all subcontractors.
SECTION THIRTEEN
CORRECTING WORK
When it appears to contractor during the course of construction that any
work does not conform to the provisions of the contract documents, contractor
shall make necessary corrections so that such work will so conform, and in
addition shall correct any defects caused by faulty materials, equipment, or
quality of performance in work supervised by it or by a subcontractor, appearing
within one year from the date of issuance of a certificate of substantial
completion, or within such longer period as may be prescribed by law or as may
be provided for by applicable special guaranties in the contract documents.
<PAGE>
The Contractor shall promptly correct any work rejected by the Owner
whether such work has been performed by Contractor or a subcontractor of
contractor. Promptly correct shall mean within such time as may reasonably be
required to correct such work as determined by the Construction Manager.
SECTION FOURTEEN
WORK CHANGES
A. Owner reserves the right to order work changes in the nature of
additions, deletions, or modifications, without invalidating this agreement, and
agrees to make corresponding adjustments in the contract price and time for
completion.
B. All changes will be authorized by a written change order signed by
Owner, Contractor, and by the Construction Manager. The change order will
include conforming changes in the agreement contract price and completion time
as appropriate.
C. Work shall be changed, and the contract price and completion time shall
be modified, only as set out in the written change order.
D. Any adjustment in the contract price not covered by unit bid prices
resulting in a charge to owner shall be determined by mutual agreement of the
parties before starting the work involved in the change. In the event a mutual
agreement cannot be met, the latest revised version of the CDOT Cost Data book
will be used by both parties to facilitate the determination of the adjusted
cost.
SECTION FIFTEEN
TERMINATION
A. Contractor's Termination. Contractor may, on seven days written notice
to owner and Construction Manager, terminate this agreement before the
completion date specified in this agreement when for a period of ten (10) days
after a progress payment is due, through no fault of contractor, construction
manager fails to process a certificate of payment thereof, or owner fails to
make the payment. On such termination, contractor may recover from owner payment
for all work completed and for any loss sustained by contractor for materials,
equipment, tools, or machinery to the extent of actual loss thereon plus loss of
a reasonable profit, provided it can prove such loss and damages.
<PAGE>
B. Owner's Termination. Owner may, on seven days notice to contractor,
terminate this agreement before the completion date specified in this agreement,
and without prejudice to any other remedy it may have, when contractor defaults
in performance of any provision in this agreement, or fails to carry out the
construction in accordance with the provisions of the contract documents.
SECTION SIXTEEN
GOVERNING LAW
It is agreed that this agreement shall be governed by, construed. and
enforced in accordance with the laws of the State of Colorado.
SECTION SEVENTEEN
ATTORNEY FEES, COSTS AND INTEREST
In the event that any action is filed in relation to this agreement, the
unsuccessful party in the action shall pay to the successful party, in addition
to all the sums that either party may be called on to pay, a reasonable sum for
the successful party's attorney's fees, costs and expert witness fees. Further,
any award obtained shall bear interest from date of default until payment at an
interest rate of Ten Percent ( 10%). Venue for any such action shall be the
District Court in and for the County of El Paso and State of Colorado.
SECTION EIGHTEEN
BONDS
The Contractor shall be required to secure and maintain a Performance Bond
as well as a one year Maintenance Bond. It is agreed that the costs for such
Bonds shall be paid for by the Owner. The cost of the Performance and
Maintenance Bond is hereby agreed to be 2.25 Percent of the Contract Amount at
time of Award or $8,330.30 (Eight Thousand Three Hundred and Thirty Dollars and
Thirty Cents).
SECTION NINETEEN
ENTIRE AGREEMENT
This agreement shall constitute the entire agreement between the parties
and any prior understanding or representation of any kind preceding the date of
this agreement shall not be binding upon either party except to the extent
incorporated in this agreement.
<PAGE>
SECTION TWENTY
MODIFICATION OF AGREEMENT
Any modification of this agreement or additional obligation assumed by
either party in connection with this agreement shall be binding only if
evidenced in writing signed by each party or an authorized representative of
each party.
SECTION TWENTY-ONE
NOTICES
Any notice provided for or concerning this agreement shall be in writing
and be deemed sufficiently given when sent by certified or registered mail if
sent to the respective addresses of each party as set forth at the beginning of
this agreement.
SECTION TWENTY-TWO
ASSIGNMENT OF RIGHTS
The rights of each party under this agreement are personal to that party
and may not be assigned or transferred to any other person, firm, corporation,
or other entity without the prior. express, and written consent of the other
party.
SECTION TWENTY-THREE
PARAGRAPH HEADINGS
The titles to the paragraphs of this agreement are solely for the
convenience of the parties and shall not be used to explain, modify, simplify,
or aid in the interpretation of the provisions of this agreement.
<PAGE>
IN WITNESS WHEREOF, each party to this agreement has caused it to be
executed on the date indicated below.
OWNER: Bishop Powers, Ltd., a Colorado limited partnership
By Bishop Capital Corporation
Its General Partner
Robert E. Thrailkill
--------------------------------------------
Title: President
--------------------------------------------
Dated: 6/5/97
--------------------------------------------
CONTRACTOR: Pioneer Sand Company, Inc.
Joe Johnson
--------------------------------------------
Title: Excavation Manager
---------------------------------------------
Dated: 6/5/97
---------------------------------------------
Contract Contingent Upon All Conditions of Attached June 4, 1997 Letter
-----------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
Drg. Basin: Sand Creek April, 1997
Estimate No.: 2 BID TABLUATION FORM
Project No: 97/LDC/cpp Revised 5/6/97 - Addendum No. 1
Revised 5/22/96 - Addendum No. 2
CROSSING AT PALMER PARK - PHASE I
- ---------------------------------------------------------------------------------------------------------------------
Item Group Item Unit Unit Total Total
No. Code Description Meas. Price Quantity Cost
=====================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
1 EXCAV Clear & Grub CY $ 2.48 3727 $ 9,242.96
2 EMBANK Embankment CY $ 1.80 13701 $24,661,80
3 EROS Erosion Control LS $2,200.00 1 $ 2,200.00
4 PAN Cross Pan EA $6,325.00 2 $12,650.00
5 CURB Curb & Gutter LF $ 10.50 1185 $12,442.50
6 PED Ped. Ramps EA $ 675.00 7 $ 4,725.00
7 STM 5' D-10R Inlet EA $2,400.00 2 $ 4,800.00
8 STM Remove Exist. Inlet EA $ 600.00 1 $ 600.00
9 STM 10'x7' Junct. Box EA $7,750.00 1 $ 7,750.00
10 STM 48" RCP LF $ 64.00 152 $ 9,728.00
11 STM 42" RCP LF $ 53.00 674 $35,722.00
12 STM 18" RCP LF $ 27.00 40 $ 1,080.00
13 STM Outlet Structure EA $6,000.00 1 $ 6,000.00
14 STM Type M Rip-RaP CY $ 17.50 100 $ 1,750.00
15 STM 5" Diam. Manholes EA $3,300.00 2 $ 6,600.00
16 STM Channel Lining LF $ 72.50 420 $30,450.00
17 STM Grade Cntrl. Struct. LF $ 112.00 180 $20,160.00
18 SANSWR 8" San. Sewer LF $ 19.00 1183 $22,477.00
19 SANSWR Bends EA $ 40.00 10 $ 400.00
20 SANSWR Manholes EA $1,000.00 6 $ 6,000.00
21 SANSWR 4" Services EA $1,750.00 4 $ 7,000.00
22 WATER 8" Water Line LF $ 17.30 424 $ 7,335.20
23 WATER 8" Valves EA $ 550.00 3 $ 1,650.00
24 WATER 2" Services EA $ 900.00 1 $ 900.00
25 WATER 1 1/2" Services EA $ 850.00 3 $ 2,550.00
26 WATER Relocate Hydrant EA $ 800.00 1 $ 800.00
27 WATER 8" Bends/Tees EA $ 150.00 3 $ 450.00
28 WATER 8" Plugs EA $ 550.00 1 $ 550.00
29 WATER 8" Blow Off Assmly EA $ 550.00 1 $ 550.00
30 PAV Paving-6" Full Dpth TON $ 34.95 1246 $43,547.70
31 PAV Paving-3" Full Dpth TON $ 32.75 667 $21,844.25
32 PAV Patching TON $ 77.00 140 $10,780.00
33 SURV Const. Staking LS $7,500.00 1 $ 7,500.00
34 BARR Barricading LS $2,000.00 1 $ 2,000.00
- ---------------------------------------------------------------------------------------------------------------------
ADD Addendum #1
- ----------------------------------------------------------------------------------------------------------------------
35 PAV Saw Cut Asphalt LF $ 2.70 1310 $ 3,537.00
36 PAV 6" Asphalt Curb LF $ 4.40 440 $ 1,936.00
37 WATER Hydrant Assembly EA $1,800.00 2 $ 3,600.00
38 STRIP Pvmt. Striping, Cross Walks LS $3,850.00 1 $ 3,850.00
- ----------------------------------------------------------------------------------------------------------------------
ADD Addemdum #2
- ----------------------------------------------------------------------------------------------------------------------
39 WATER 12" DIP Water Main LF $ 26.65 340 $ 9,061.00
40 WATER 12" Diam Line Valves EA $1,075.00 3 $ 3,225.00
41 WATER 16"x12" Tapping Sleeve with Valve EA $6,250.00 1 $ 6,250.00
42 WATER 12" Diam. 22 1/2 Bend EA $ 295.00 1 $ 295.00
43 WATER 12" Diam. Plug & Blowoff Assembly EA $ 650.00 1 $ 650.00
44 WATER City Std. 12" Diam. Water Lowering EA $6,495.00 1 $ 6,495.00
45 SEWER Palmer Park Crossing LS $4,440.00 1 $ 4,440.00
- ----------------------------------------------------------------------------------------------------------------------
TOTAL $370,235.41
- ----------------------------------------------------------------------------------------------------------------------
Page 1
Exhibit B
</TABLE>
<PAGE>
RE: The Crossing at Palmer Park Sub May 6, 1997
To: All Contractors on Bid Proposal List
From: Chris Smith, Tigre Development Services
Please find attached Addendum No. 1 and associated revised Bid Tabulation Form
for the referenced Project. Please attach signed Addendum with Bid Proposal
submittal.
New Line Items: Listed as Addendum #1 Items on Bid Tabulation form.
- -------------------------------------------------------------------
Item 36 - Add approximately 1310 LF of saw cutting of existing pavement and
removal of exist. asphalt curb along Powers Blvd. and Palmer Park Blvd.
Item 37 - Add approximately 440 LF of 6" asphalt curb. Curb to be installed
along North edge of access road which runs West to East along North Boundary of
Fill 1.
Item 38 - Add I (one) each hydrant. Hydrant location at West curb return of
access drive along East property line of Lot 1. Tee, valve and stub out under
Palmer Park Blvd. exists in this location. See Master Utility Plan, Page C-2,
for approximate location of exist. tee and valve.
Item 39 - Pavement Striping and Crosswalk striping. Per City Traffic Div.,
striping may be painted, crosswalks are to be Thermo-plastic or preformed
plastic panels.
Deletions:
- ----------
Item 19 ( Original Bid Tabulation Form )- 8" Sanitary sewer encasement - Deleted
in it's entirety.
Changes to existing (as renumbered) line items:
- -----------------------------------------------
Item 1: Number of CY remain the same. Revision - Cost to include removal and
disposal of total of approximately 24 EA 18" to 24" caliper trees in addition to
original 15 EA. 4" caliper trees as stated of Page 3 of original Bid Proposal
Detailed Notes paragraph.
Item 18: Added 350 LF of sanitary sewer. Main will outfall to Palmer Park Blvd.
Total revised length of sanitary sewer is 950LF.
Item 20: Added 1 EA. sanitary sewer manhole. Quantity changed from original 4
EA. to 5 EA.
Item 33: Added 43 Tons of patching to original quantity of 33 Tons. Revised
quantity for asphalt patching is 76 Tons.
Distribution: Acknowledgment of Addendum No. 1:
Blue Ridge Construction. Inc. Name of Firm: Pioneer Sand Company, Inc.
Frazee Construction Inc. -----------------------------
Pioneer Sand Co., Inc. Signed: Joe Johnson
XKE Contractors, Inc. ---------------------------------
Dated: 6/5/97
----------------------------------
Exhibit B
<PAGE>
Date: May 22, 1997
RE: The Crossing at Palmer Park Subdivision. Phase I
To: Pioneer Sand Company Inc
Attn.: Mr. Joe Johnson, Excavation Manager
From: Chris Smith, Tigre Development Services, Inc.
Please find attached Addendum No.2 and associated revised Bid Tabulation Form
for the referenced Project. Please sign and return Addendum with revised Bid
Tabulation sheet.
New Line Items: Listed as Addendum #2 Items on Bid Tabulation form.
- -------------------------------------------------------------------
Item 39 - Add approximately 340 LF 12" Diameter D.I.P. D.I.P, to be installed in
west access road and tie into 16" D.I.P in Palmer Park Blvd. See revised Utility
Plan.
Item 40 - Add 3 EA 12" Water Line Line Valves. See revised Utility Plan for
locations.
Item 41 - Add I EA 16"x12" Tapping Sleeve with Valve. See revised revised
Utility Plan for location.
Item 42 - Add 1 ESA 12" Diam. 22 1/2 Degree Bend. See Attached revised Utility
Plan for location.
Item 43 Add 1 EA 12" Diam. Plug and Blowoff Assembly Complete. See attached
revised Utility Plan for location.
Item 44 Add 1 EA Complete 12" Diam. City Standard Water Line Lowering. See
attached revised Utility Plan for location.
Deletions:
- ----------
Item 28 ( Original Bid Tabulation Form )- 2 EA 8" Diam. Tap Sleeves - Deleted in
it's entirety.
Changes to existing (as renumbered) line items:
- -----------------------------------------------
Item 18: Original LF was 950. Revised to 1183 L.F. Includes Palmer Park
connection and new line from Palmer Park to South near Golf World. See revised
Utility Plan.
Item 20: Original number of Manholes was 5 EA. Added 1 EA Manhole per revised
Utility Plan.
Exhibit B
<PAGE>
Item 22: Original LF of 8" Water line was 1190 LF. Revised to 424 LF. Deleted
766 LF per Revised Utility Plan.
Item 23: Original number of 8" Water Valves was 9. Revised number of Valves is 3
EA. Deleted 6 EA Valves per revised Utility Plan.
Item 27: Original number of 8" Bends/Tees was 6 EA. Revised to 3 EA. Deleted 3
EA Bends/Tees per revised Utility Plan.
Item 28: Original number of 8" Plugs was 2 EA. Revised to 1 EA. Deleted 1 EA per
revised Utility Plan.
Item 29: Original number of 8" Blow Off Assembly was 2 EA. Revised to 1 EA.
Deleted 1 EA per revised Utility Plan.
Item 32: Original Tons of Patching was 76 Tons. Revised to 140 Tons. Added 64
Tons per revised Utility Plan.
Item 37: Original number of Hydrants was 1 EA. Revised to 2 EA. Added 1 EA 1
Hydrant per revised Utility Plan.
Acknowledgment of Addendum No.2:
Name of Firm: Pioneer Sand Company Inc.
Signed: Joe Johnson
----------------------------------
Title: Excavation Manager
----------------------------------
Date: 6/5/97
----------------------------------
Exhibit B
<PAGE>
EXHIBIT C
With time being of essence of this contract an added incentive will be paid as a
bonus based upon the following considerations:
Attached construction schedule with target date of completion.
Any time extensions are to be granted by the Construction Manager in
writing as described in section 10, para. B and section 14, para. B and C -
adjusting above target date of completion when applicable.
Certificate of completion will be by Construction Manager in writing as
described in section 4 of contract.
Working days saved from target date of completion will be paid at the
amount of $1500.00 per day, not to exceed 10 days, and acknowledged in
writing and issued concurrently with the certificate of completion.
This written documentation will be invoiced with the request for retainage
and is to be paid by the owner upon payment of retainage as discussed
within Section 4 of the contract.
<PAGE>
BISHOP CAPITAL CORPORATION
716 College View Drive
Riverton, Wyoming 82501
(307) 856-3800
June 4, 1997
VIA FACSIMILE
Mr. Kevin Holmstrom
Pioneer Sand Company, Inc.
P.O. Box 765O
Colorado Springs, Colorado 80933
Re: The Crossing at Palmer Park
Dear Mr. Holmstrom:
In connection with the Construction Contract (the "Contract") between Bishop
Capital Corporation ("Bishop") and Pioneer Sand Company, Inc. ("Pioneer")
relating to work as described in the Contract with attached exhibits to be
completed by Pioneer at the Crossing at Palmer Park, Bishop can provide you the
following assurances that progress payments wi]I be disbursed in accordance with
the Contract terms as follows:
1. The first lot closing is scheduled for June 9, 1997 with 123 Cascade
Associates (a Taco Bell franchisee) in the amount of $350,000. The proceeds will
be wired to Riverton State Bank. Bishop will furnish to 123 Cascade Associates a
standby Letter of Credit issued by Riverton State Bank for the Contract amount
to provide them assurance that the offsite/onsite development work will be
completed by Pioneer. The Letter of Credit will reference Pioneer as the primary
contractor to be paid from this Letter of Credit and a copy will be furnished to
you.
2. The second lot closing is scheduled for July 7, 1997 with State Bank &
Trust for $330,000. The sales proceeds will be escrowed and disbursed for onsite
development work in accordance with the terms of the escrow agreement. The
escrow agent will disburse the funds upon receipt of a certificate and demand
for payment from Bishop. The certificate will indicate the onsite work done, the
extent to which each onsite item has been completed, and the amount of payment
requested. Bishop will have Pioneer referenced as the primary contractor in the
Escrow Agreement and request that the checks be issued jointly to Bishop and
Pioneer.
3. It is Bishop's intent to decrease the standby Letter of Credit issued to
123 Cascade Associates on the State Bank & Trust closing date by the amount of
the onsite development work referenced in Exhibit B to the State Bank & trust
sales agreement and any Letters of Credit issued to the City of Colorado Springs
for drainage and roadway work.
<PAGE>
Pioneer Sand Company, Inc.
June 4, 1997
Page 2
4. Bishop will request Riverton State Bank furnish you a letter stating
that the Letter of Credit issued to 123 Cascade Associates will not be reduced
until the State Bank & Trust sale is closed and the escrow is established.
5. The third lot closing is scheduled for August 15, 1997 with Diamond
Shamrock for $388,00. There are no escrows or restrictions associated with this
closing.
We will be happy to furnish you copies of the 123 Cascade Associates, State Bank
& Trust and Diamond Shamrock sales
agreements if you so request.
If you are in agreement with the above conditions, please sign the duplicate
copy of this letter and return it to me.
Very truly yours,
/s/ Robert E. Thrailkill
- ---------------------------
Robert E. Thrailkill
President
We are in agreement with the above conditions.
Date 6/5/97 Pioneer Sand Company, Inc.
By: /s/ Kevin Holmstrom
-------------------------
Title: Credit Manager
-----------------------
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 46,735
<SECURITIES> 449,917
<RECEIVABLES> 24,474
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 557,506
<PP&E> 317,165
<DEPRECIATION> 121,436
<TOTAL-ASSETS> 1,838,603
<CURRENT-LIABILITIES> 148,150
<BONDS> 0
0
0
<COMMON> 8,855
<OTHER-SE> 1,681,598
<TOTAL-LIABILITY-AND-EQUITY> 1,838,603
<SALES> 90,411
<TOTAL-REVENUES> 90,411
<CGS> 19,129
<TOTAL-COSTS> 657,753
<OTHER-EXPENSES> 66,235
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,789
<INCOME-PRETAX> (524,300)
<INCOME-TAX> 0
<INCOME-CONTINUING> (524,300)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (524,300)
<EPS-PRIMARY> (.59)
<EPS-DILUTED> (.59)
</TABLE>
