U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A
Amendment No. 4
General Form For Registration of Securities of
Small Business Issuers
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
BISHOP CAPITAL CORPORATION
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(Name of Small Business Issuer in its charter)
Wyoming 84-0901126
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
716 College View Drive, Riverton, WY 82501
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(Address of principal executive offices) (Zip Code)
(307) 856-3800
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(Issuer's telephone number)
Securities to be registered under Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
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(Title of Class)
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Part I
Item 1. Description of Business
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The Company
Background
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Bishop Capital Corporation, formerly known as Bishop Cable Communications
Corporation, (the "Company" or "Bishop") 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. Since inception, the Company has been a wholly-owned subsidiary
of a public company listed on Nasdaq.
Karlton Terry Oil Company Transaction and Bishop Spin-off
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In December 1995, Bishop's parent corporation, then known as Metro Capital
Corporation ("Metro"), upon approval of its shareholders, completed a
transaction (the "Transaction" or the "Metro/KTOC Transaction") with Karlton
Terry Oil Company and its affiliates, Karlton and Jubal Terry("KTOC"). Metro and
KTOC previously were not affiliated. Upon completion of the Transaction, Metro's
name was changed to American Rivers Oil Company ("AROC"). The Transaction is
illustrated in the following diagram and described below:
(Diagram)
(1) Prior to and in connection with the Transaction, Metro transferred all
of its assets to Bishop, except for $700,000 cash and an insignificant oil
property. These transferred assets, together with Bishop's previously owned
assets, are being operated autonomously by the prior management of Metro who
became officers and directors of Bishop pursuant to the terms of separate
five-year Operating and Voting Agreements (as discussed in Item 7).
(2) In the Transaction, KTOC exchanged certain oil and gas properties for
80% of the voting securities of Metro. The securities issued to KTOC were 7.7
million shares of newly created Class B Common Stock of Metro. The only class of
securities of Metro issued and outstanding prior to the Transaction was Common
Stock. Under the terms of the Transaction, Metro issued Class B Common Stock to
KTOC in order to exclude KTOC from participation in a distribution of Bishop
Common Stock to the holders of Metro Common stock (See paragraph (3) below). The
holders of Class B Common Stock possess the same rights as the holders of Common
Stock except that the Class B Common Stock is not entitled to participate in any
distribution of shares or assets of Bishop. The Class B Common Stock is
convertible on a one-for-one share basis into Common Stock commencing 36 months
from December 1995. Management of KTOC succeeded to the board of directors and
serve as officers of AROC (formerly Metro) operating the oil and gas properties
previously owned by KTOC.
(3) As a result of the Transaction, AROC and Bishop have separate
businesses under separate management. Pursuant to the terms of the Transaction,
AROC is distributing the shares of Bishop as a partial liquidating dividend to
holders of AROC Common Stock (the "spin-off"), but not to holders of Class B
Common Stock (See paragraph (2) above). The spin-off record date is November 18,
1996, and it is anticipated that the spin-off will occur in the second quarter
of 1997.
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All of the Class B Common Stock was issued to KTOC in the Transaction, 95% of
which is beneficially owned by AROC's officers and directors. The beneficial
owners of more than 5% of AROC Common Stock other than Class B Common stock as
of the spin-off record date of November 18, 1996 are as follows (see Item 4(a)):
Amount of
Name of Beneficial Owner Beneficial Ownership Percent
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Haddon, Inc. 375,000 10.6%
Robert E. Thrailkill 314,880 8.9%
Consult & Assist 275,000 7.8%
Francarep, Inc. 275,000 7.8
Haddon, Inc. ("Haddon") and Francarep, Inc. ("Francarep") acquired shares of
AROC Common Stock as follows:
During the negotiations concerning the Transaction, KTOC and Metro determined
that it would be desirable to increase KTOC's working interest ownership in
certain of the oil and gas properties that Metro would be acquiring in the
Transaction. KTOC, with the consent of Metro, negotiated the purchase of working
interests from, among others, Haddon and Francarep. Neither Haddon nor Francarep
were affiliated with KTOC or Metro. The purchase agreements, which were
originally entered into by KTOC, were assigned to AROC upon closing of the
Transaction. The terms of the purchase agreements were the result of
arm's-length negotiations among the parties and were approved by the Metro
shareholders at a Special Meeting of Shareholders held in November, 1995.
The purchase agreements provided that Haddon and Francarep would receive in
exchange for their property interests shares of AROC Class B Common Stock to be
transferred by KTOC and cash. The purchase agreements further provided that
Haddon and Francarep could convert approximately 45% of their Class B Common
Stock (which represents 6% of Class B Common Stock issued and outstanding) to
Common Stock at any time. Francarep was paid $350,000 cash and 605,000 shares of
Class B Common Stock, of which 275,000 shares were converted into Common Stock
(as reflected in the table above). Haddon was paid $175,000 cash and 367,945
share of Class B Common Stock, of which 175,000 shares were converted into
Common Stock.
Subsequent to the purchase agreements discussed above, Haddon purchased an
additional 200,000 shares of AROC Common Stock in an arms-length private
placement of shares of Common Stock to a number of investors. As a result,
Haddon currently owns a total of 375,000 shares of Common Stock (as is reflected
in the table above).
The working interests purchased and the private placement proceeds were received
by and remain in AROC. Bishop is a wholly-owned subsidiary of AROC. As a reult
of the spin-off of Bishop, all owners of AROC Common Stock, including Haddon and
Francarep, will receive shares of Bishop Common Stock as a dividend in
proportion to their ownership of AROC Common Stock. Upon completion of the
spin-off, Haddon will be the largest principal shareholder of Bishop. Denis
Bell, who became a director of AROC after closing of the Transaction, is the
sole shareholder of Haddon.
Open Development Company Transaction
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In February 1997, AROC announced that it anticipated executing an agreement to
merge with Opon Development Company (ODC) in the near future. The transaction
was previously announced in November 1996. ODC's only asset is a 4.55% working
interest in and to the Opon oil and gas field in Colombia, South America which
is operated by Amoco Colombia Petroleum Corp., with Hondo Magdalena Oil & Gas
Company being the other partner. Completion of the merger would be subject to,
among other conditions, obtaining project financing for ODC's Colombian project
and shareholder approval of both companies. The companies intend to merge into a
new company whose shares are to be registered with the Securities and Exchange
Commission and issued to acquire all outstanding AROC and ODC shares. Upon
conclusion of the merger, ODC shareholders would own 90 - 95% of the new company
and ODC management would operate the company. AROC's current oil and gas
operations are expected to continue in a subsidiary of the new company. The
merger is expected to be completed in the second quarter of 1997 but there is no
assurance that the transaction will be completed. This transaction, which is
unrelated to the Metro/KTOC Transaction, will have no effect on the spin-off nor
will any assets of AROC be contributed to the Company.
3
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Real Estate Operations
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The Company's operations, prior to the transfer of assets from Metro, were
primarily related to real estate development and sales (see Item 1 "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 from the sale of marketable
securities 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 net gas
royalty interests of $400,000.
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.
The Company's undeveloped real estate is in Colorado Springs, Colorado which 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 for individual pad sites for general commercial uses.
The Company's improved 15 lot subdividion in Riverton, Wyoming is located
adjacent to a golf course. This area has sustained a stady growth rate for
residential construction the last two years. The Company believes its
subdivision location and lot prices are competitive with other local developers.
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 Company also has a royalty interest in a natural gas property. As such, the
Company receives a specified portion of the gas produced less related state
severance or production taxes.
The Company had four full-time employees as of February 28, 1997.
Real Estate
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 the 20 acre parcel as discussed in Item 3. The remaining 35 of the
55 acres is 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
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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 is having preliminary discussions with an unrelated
third-party who has expressed an interest in leasing the facility. The
partnership has incurred losses from operations since inception. There is no
assurance that the operations will become profitable in the near future. At
December 31, 1996, the net carrying value of the Company's 19% interest is
$224,000.
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 entered into Purchase 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 Company has submitted the concept plan for Phase I of
the development to the appropriate governmental authorities for review and
approval. Upon approval of this concept plan, a final plat will be submitted for
approval and recordation. The Company expects the approvals and recordation to
be completed on or before April 30, 1997. The Taco Bell closing will occur 20
days after final approval of the plat by the appropriate governmental
authorities. The State Bank & Trust closing will occur 10 days following notice
from the Company that the final plat has been recorded; however, State Bank &
Trust can extend the closing for a period of 45 days by giving written notice to
the Company on or before the date set for closing and providing an additional
$25,000 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 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. In June 1996 the
Company entered into a one year listing agreement with a real estate brokerage
company to market at a 6% commission rate the improved lots.
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's engaged an
independent petroleum geologist to review available geologic, engineering and
production data and to estimate the value for the natural gas royalty interests.
Based on this study and other factors, the Company paid approximately $1,050,000
for the royalty interests. At December 31, 1996, the net carrying value of this
interest, which is being amortized over 8 years, is $267,000. 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 interests are 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
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 interests are 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.
Reserve information relating to the natural gas royalty interests 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.
Item 2. Management Discussion and Analysis of Financial Condition and Results of
Operations
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In connection with the Metro/KTOC Transaction discussed in Item 1, the Company
is being operated autonomously by the prior management of Metro pursuant to the
terms of separate five-year Operating and Voting Agreements. (Please refer to
Item 7 for a discussion of these Agreements.) 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 Company's consolidated operating results include the
operations associated with the assets and liabilities transferred from Metro.
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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 following discussion and analysis should be read in conjunction with the
Company's Consolidated Financial Statements and Notes thereto.
Results of Operations for the Years Ended March 31, 1996 and 1995
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.
Revenue
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).
Costs and Expenses
The only production 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.
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Other
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 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 reverse
acquisition.
Results of Operations for the Nine Months Ended December 31, 1996 and 1995
The net loss for the nine months ended December 31, 1996 increased by $377,000
over the net loss of $27,000 for the nine months ended December 31, 1995. The
increase is primarily due to a decrease in the gain on sale of marketable
securities of $634,000 (1996 compared to 1995) offset by professional fees of
$150,000 related to the Metro/KTOC Transaction in December 1995.
Revenue
Gas royalty revenue for the nine months ended December 31, 1996 decreased $400
or less than 1% over the comparable period in 1995. The decrease in revenue
resulted from the gas processing plant incurring a shutdown in August 1996 for
normal repairs and maintenance and a mechanical breakdown in September 1996. As
a result, natural gas production decreased 10% for the nine months ended
December 31, 1996 (32,723 mcf) compared to the comparable period in 1995 (36,488
mcf). However, the average sales price per mcf increased to $1.44 for the nine
months ended December 31, 1996 compared to $1.28 in the comparable period in
1995.
Costs and Expenses
Gas processing and production taxes decreased $300 or 2% for the nine months
ended December 31, 1996 compared to the same period in 1995. Although the gas
processing plant was shut down for repairs and maintenance in 1996, the decrease
in plant processing costs was offset by the plant operator recovering from the
Company, in equal monthly amounts in 1996, the difference between the actual and
estimated annual plant processing charges for the period April 1995 through
December 1995.
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General and administrative expenses for the nine months ended December 31, 1996
decreased $241,000 or 38% compared to the comparable period in 1995. The
decrease reflects a reduction in professional fees which were higher in 1995 due
to the Metro/KTOC Transaction.
Depreciation and amortization for the nine month periods in 1996 and 1995
remained comparable.
Other
Interest and dividend income decreased $19,000 or 35% for the nine months ended
December 31, 1996 compared to 1995 due to the sale of marketable securities.
Gain on sale of marketable securities decreased $634,000 or 92% for the nine
months ended December 31, 1996 compared to 1995. In 1995, the Company sold
equity securities with a low cost basis to generate cash in connection with the
Metro/KTOC Transaction.
Equity in limited partnership loss decreased $8,000 or 21% for the nine months
ended December 31, 1996 compared to 1995. The limited partnership's operations
for the nine months ended December 31, 1996 reflected a 7% increase in revenues
with a corresponding decrease of 6% in costs and expenses when compared to the
comparable period in 1995. Although the loss in the current period decreased
compared to the prior period, there is no assurance that the operations will
continue to improve or become profitable in the near future.
Financial Condition
At December 31, 1996, the Company had working capital of $482,000.
The following summary table reflects comparative cash flows for the Company for
the nine months ended December 31, 1996 and 1995 and for the two years ended
March 31, 1996:
<TABLE>
<CAPTION>
Nine Months Ended Years Ended
December 31, March 31,
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1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net cash used in operating activities $(249,800) $(286,600) $(321,200) $(307,900)
Net cash provided by investing activities 216,500 396,500 262,700 439,300
Net cash used in financing activities -- -- -- (46,500)
</TABLE>
Net cash used in operating activities of $249,800 for the nine months ended
December 31, 1996 compared to $286,600 for the comparative period in 1995
reflects reduced operating expenses and the discontinued operations of an oil
property. Net cash used in operating activities increased from $307,900 in
fiscal 1995 to $321,200 in fiscal 1996 primarily due to decreased oil revenue
accompanied by increased production costs.
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Net cash provided by investing activities totaled $216,500 and $396,500 for the
nine months ended December 31, 1996 and 1995, respectively. The Company utilized
net cash proceeds of $330,500 from the sale of marketable securities for the
period ended December 31, 1996 for capital expenditures of $138,000, advancing
funds of $120,000 under notes receivable offset by $121,300 of proceeds from
notes receivable and funding of operating activities. The capital expenditures
primarily relate to improvements on undeveloped land in Wyoming. The Company
loaned $100,000 to its parent company which was subsequently repaid during the
nine months ended December 31, 1996. During the nine months ended December 31,
1995, the Company utilized net cash proceeds of $1,140,000 from the sale of
marketable securities primarily for capital expenditures of $96,000, the
transfer of $700,000 cash in the Metro/KTOC Transaction and funding of operating
activities. In fiscal 1996, net cash proceeds of $1,095,500 from the sale of
marketable securities were primarily utilized for capital expenditures of
$155,000, the transfer of $700,000 cash in the Metro/KTOC Transaction and
funding of operating activities. In fiscal 1995, net cash proceeds of $461,300
from the sale of marketable securities were utilized primarily for the funding
of operating activities.
There were no cash flows from financing activities for the nine months ended
December 31, 1996. The Company had short-term borrowings and repayments of
$60,000 in fiscal 1996 and $40,000 for the nine months ended December 31, 1995.
Net cash used in financing activities of $46,500 in fiscal 1995 related to the
acquisition of treasury stock.
The Company's material commitments for capital expenditures in the next twelve
months will be in conjunction with the development of Phase I of the real estate
located in Colorado Springs, Colorado. The Company has entered into contracts to
sell three lots. The Company has engaged outside consultants to develop
specifications and bid packages for roadway, drainage channel and on-site
(grading, utilities, etc.) improvements related to Phase I consisting of
approximately 5 acres. The amount of such commitment is estimated to be in the
range of $400,000 to $500,000. The Company expects that such expenditures will
be funded through the proceeds realized from the sale of lots, working capital
and/or letters of credit collateralized by real estate.
Item 3. Description of Property
The Company's principal properties consist of 55 acres of undeveloped real
estate in Colorado and a 15 lot subdivision and natural gas royalty interests in
Wyoming. None of the properties are held subject to any major encumbrance.
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Real Estate Investment Policies
The Company's major investment in real estate is the 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 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 183,000 square
feet, includes 5 lots of which the Company has entered into Purchase Agreements
on three lots. The Company has engaged outside consultants to prepare the
necessary Phase I documentation (surveys, designs and plats) for submission to
the appropriate governmental authorities for approval and permits. The Company
will be required to make improvements to the drainage channel on the western
boundary of the land in Phase I as discussed in Item 1. The Company has
submitted the Phase I concept plan for approval by the appropriate governmental
authorities after which the final plat will be submitted for approval and
recordation. The Company expects the approvals and recordation to be completed
on or before April 30, 1997. The Company is working with various consultants in
the preparation of design plans, cost estimates and bid documents for the site
development work. The Company expects the site development work to be completed
in the third quarter of 1997. 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 anticipates that the costs incurred in developing the land (grading,
utility extensions, etc.) in Phase I will be funded primarily by the escrow of
the sales proceeds from the sale of lots. The Company anticipates providing a
Letter of Credit to the appropriate governmental authorities to ensure that the
necessary improvements to the drainage channel will be completed.
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) external demographic studies; (ii) financial review as to
the feasibility of the proposed project, including projected profit margins,
return on capital employed and the capital payback period; (iii) competition for
the proposed project, the ability to obtain financing on favorable terms and
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 interests 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 interests for the
nine months ended December 31, 1996 was 32,723 mcf.
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Item 4. Security Ownership of Certain Beneficial Owners and Management
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a. Security Ownership of Certain Beneficial Owners
All of the issued and outstanding securities of the Company are currently owned
by AROC. The following table gives effect, on a pro forma basis, to the spin-off
of the Company to holders of AROC common stock and shows those persons known by
the Company who will 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 (2)
Common Stock Consult & Assist 68,750 7.8%
P.O. Box 9856
Rancho Santa Fe, CA 92067 (3)
Common Stock Francarep, Inc. 68,750 7.8%
50 Av. des Champs-Elysees
75008 Paris, France (4)
</TABLE>
- ----------------
(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 of 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) In connection with the December 1995 Metro/KTOC Transaction, the
Company entered into a five-year Voting Agreement with AROC which appointed the
Company's president, Mr. Thrailkill, or such person he shall designate 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 the Company owned by
them with respect to any matter brought before the shareholders of AROC and/or
the Company relating to or involving exclusively the Company. Accordingly, Mr.
Thrailkill may be deemed the beneficial owner of 4,500,000 shares of the
Company's common stock owned by AROC prior to the effective date of the
spin-off. Upon the effective date of the spin-off, the Voting Agreement will
terminate. (See Item 7.)
(3) All shares are beneficially owned by Georg Ligenbrink.
(4) All shares are beneficially owned by Georges Babinet.
-12-
<PAGE>
b. Security Ownership of Management
The following table shows, on a pro forma basis giving effect to the spin-off of
the Company to holders of AROC common stock, management's expected 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>
c. Changes in Control
The Company is not aware of any arrangement which may, at a subsequent date,
result in a change of control of the Company.
Item 5. Directors and Executive Officers
--------------------------------
a. Identification of Directors and Executive Officers
Name Age Office
---- --- ------
Robert E. Thrailkill 65 Chairman of the Board, President
and Chief Executive Officer
John A. Alsko 55 Secretary/Treasurer and Director
Robert J. Thrailkill 37 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
-13-
<PAGE>
Executive Officer of Metro Capital 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 positions with American Rivers Oil
Company or directorships in other companies.
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.
Item 6. 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, 1996, 1995 and 1994. No other
executive officer had total annual salary and bonus exceeding $100,000 for the
year ended March 31, 1996.
-14-
<PAGE>
<TABLE>
<CAPTION>
Long Term
Name Annual Compensation Compensation Awards
and ------------------------------------------- ------------------------------
Principal Other Annual Restricted Options
Position Year Salary Bonus Compensation Stock Award ($) SARS (#)
-------- ---- ------ ----- ------------ --------------- --------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Thrailkill 1996 $145,000 $ -- $ -- $ 22,500 (2) 25,000 (3)
President, Chief 1995 145,000 -- -- 15,500 (4) 50,000 (5)
Executive Officer 1994 145,000 3,000 -- -- --
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").
(2) 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.
(3) 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.
(4) 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.
(5) Consists of AROC's securities underlying options exercisable on date of
grant (September 6, 1994) at a per share exercise price of $.68 and expires
five years thereafter.
The columns for "Long-Term Incentive Plan Payouts" and "All Other Compensation"
were omitted from the Summary Compensation Table since there was no information
reportable for the three years ended March 31, 1996.
b. Option/SAR Grants Table
The following table provides information with respect to the grant of stock
options pursuant to American Rivers Oil Company's ("AROC") 1992 Stock Option
Plan to the Chief Executive Officer in fiscal 1996 (See footnote (1) under Item
6(a)). There are no outstanding Stock Appreciation Rights ("SARs").
-15-
<PAGE>
<TABLE>
<CAPTION>
Potential Realizable
Number of % of Total Value at Assumed
Securities Options Exercise Annual Rates of Stock
Underlying Granted to or Base Price Appreciation for
Options Employees Price Expiration Option Term (1)
Name Granted (#) in Fiscal 1996 ($/Share) Date 5% 10%
---- ----------- -------------- --------- ----------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Robert E. Thrailkill 25,000 50.0% $ 1.65 10/11/2000 $11,500 $25,250
</TABLE>
- ------------
(1) The dollar amounts under these columns represent the potential realizable
value of the grant of option assuming that the market price of AROC's
common stock appreciates in value from the date of grant at the 5% and 10%
annual rates prescribed by the SEC and therefore are not intended to
forecast possible future appreciation, if any, of the price of AROC's
common stock.
c. Aggregated Option Exercise and Fiscal Year-End Option Value Table
There were no exercises of AROC stock options by the Chief Executive
Officer in fiscal 1996 (See footnote (1) under Item 6(a)). The following table
shows the number of shares covered by both exercisable and non-exercisable AROC
stock options as of March 31, 1996 and their values at such date. There are no
AROC SARs outstanding at March 31, 1996.
<TABLE>
<CAPTION>
Number of Securities Value of
Underlying Unexercised Unexercised In-the-Money
Options at FY-End (#) Options at FY-End ($)(1)
--------------------- ------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Robert E. Thrailkill 120,000 -- $43,700 --
</TABLE>
- -------------
(1) On March 31, 1996, the last reported bid price of AROC's common stock as
quoted on NASDAQ was $1.50 per share. Value is calculated on the basis of
the difference between the option price and $1.50 multiplied by the number
of shares of Common Stock granted at that option price. The exercise prices
for the various options granted are $1.65 (25,000 options), $.68 (50,000
options) and $1.44 (45,000 options). At March 31, 1996, the last reported
bid price was lower than the exercise price of $1.65 for the 25,000 options
and, therefore, no value is ascribed to those options in the above table.
Subsequent to March 31, 1996, the 45,000 options with an exercise price of
$1.44 expired and Mr. Thrailkill was granted 45,000 options at an exercise
price of $1.38 from AROC's 1995 Stock Option and Stock Compensation Plan.
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.
During fiscal 1996, two prior non-employee directors were each paid $3,300 for
services as directors and reimbursed for their travel expenses in connection
-16-
<PAGE>
with meetings. There are no other arrangements whereby any of the Company's
directors received compensation for services as a director during fiscal 1996 in
addition to or in lieu of the amounts stated above.
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
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 7. 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.
b. Parent of Issuer
In connection with the Metro/KTOC Transaction in December 1995, the assets
of Metro which were transferred to the Company are being operated autonomously
by the prior management of Metro pursuant to the terms of separate five-year
Operating and Voting Agreements.
-17-
<PAGE>
The Operating Agreement provides that the Company's management will have
sole authority and discretion with respect to the business, operations and
assets of the Company. American Rivers Oil Company ("AROC") shall not take any
action with respect to the business, operation or assets of the Company without
first obtaining the written consent of the Board of Directors of the Company.
AROC shall not incur any indebtedness on behalf of the Company or take any
action, directly or indirectly, to encumber, or cause any claims to be made with
respect to, any or all of the assets of the Company. The Company shall not incur
any indebtedness or take any action, directly or indirectly, to encumber, or
cause any claims to be made with respect to, any or all of the assets of AROC.
The Company agrees to indemnify and hold harmless AROC, its officers, directors,
employees and agents from any and all liabilities, actions and suits incurred by
any such party by reason of or arising out of any actions or omissions by the
Company's management. AROC agrees at all times during the term of this Operating
Agreement to be bound by the terms of the Voting Agreement.
The Voting Agreement appoints the Company's president or such person as he
shall designate ("Designated Attorney-In-Fact") as attorney and proxy to vote
all of the shares of all classes of the common stock of AROC and/or the Company
owned by them with respect to any matter brought before the shareholders of AROC
and/or the Company relating to or involving exclusively the Company. The Company
shall indemnify and hold harmless AROC, its officers, directors, employees and
agents from any and all liabilities, actions and suits incurred by any such
party by reason of or arising out of any actions or omissions by the Designated
Attorney-In-Fact, including without limitation any liability arising from a suit
by the holders of common stock of AROC based upon allegations of improper
behavior by the Designated Attorney-In-Fact or the management of the Company.
The Operating and Voting Agreements will terminate on the effective date of
the spin-off.
c. Transactions with Promoters
Not applicable
Item 8. Description of Securities
-------------------------
General
The Company is authorized to issue 15,000,000 shares of common stock, par value
$.01 per share, and 5,000,000 shares of preferred stock, no par value per share.
The Company will distribute 885,443 shares of the Company's common stock
pro-ratably (one share of Bishop for every four shares of American Rivers) to
American Rivers Oil Company's common shareholders of record at November 18,
1996. American Rivers Oil Company's Class B common shareholders will not
participate in the distribution.
-18-
<PAGE>
Company Common Stock
Each share of the Company's common stock entitles the holder to one vote on each
matter to be voted upon by the holders of the Company's common stock. The
holders of the Company's common stock are not entitled to any preemptive rights.
The holders of the Company's common stock are entitled to receive such dividends
of cash or assets, if any, as are declared by the Company's Board of Directors
out of funds legally available for that purpose, subject to the preferential
rights, if any, of the holders of preferred stock. The Board of Directors of the
Company will determine its dividend policy with respect to the Company's common
stock based on the Company's results of operations, financial condition, capital
requirements and other circumstances. It is the Board of Directors' present
intention to retain cash for the operations of the Company and it is not
anticipated that cash dividends will be paid on the Company's common stock in
the foreseeable future.
-19-
<PAGE>
Part II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters
--------------------------------------------------------------------
a. Market Information
The common shares to be issued under this registration statement have no
established public trading market. None of the common shares will be listed on a
national securities exchange or NASDAQ. The common shares will likely be traded
in the over-the-counter market by certain dealers who from time to time may make
a market in such securities.
There are no outstanding options or warrants to purchase, or securities
convertible into, common stock of the Company. There are no common shares that
could be sold pursuant to Rule 144 under the Securities Act or that the Company
has agreed to register under the Securities Act for sale by security holders.
b. Holders
Upon distribution of the shares, there will be 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).
c. Dividends
There have been no cash dividends declared on the common stock for the last
two fiscal years or for the nine months ended December 31, 1996. 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 2. Legal Proceedings
-----------------
There are no pending legal proceedings to which the Company is a party or
to which any of its property is subject.
Item 3. Changes in and Disagreements with Accountants
----------------------------------------------
None.
-20-
<PAGE>
Item 4. Recent Sales of Unregistered Securities
---------------------------------------
None.
Item 5. Indemnification of Directors and Executive Officers
---------------------------------------------------
The Company's Articles of Incorporation provide that the Company shall
indemnify any person who is or was a director to the maximum extent provided by
statute. Pursuant to Wyoming Business Corporation Act ("WBCA") Section
17-16-851, a corporation may indemnify a person made a party to a proceeding
because he is or was a director against liability incurred in the proceeding if:
(i) he conducted himself in good faith and reasonably believed that his conduct
was in or at least not opposed to the corporation's best interests; and, (ii) in
the case of a criminal proceeding, he had no reasonable cause to believe his
conduct was unlawful. A corporation may not indemnify a director: (i) in
connection with a proceeding by or in the right of the corporation in which the
director was adjudged liable to the corporation; or, (ii) in connection with any
other proceeding charging improper personal benefit to him, whether or not
involving action in his official capacity, in which he was adjudged liable on
the basis that personal benefit was improperly received by him.
The Company's Articles of Incorporation provide that the Company shall
indemnify any person who is or was an officer and not a director to the maximum
extent provided by law, or to a greater extent if consistent with law and if
provided by resolution of the Company's shareholders or directors, or in a
contract. Pursuant to WBCA Section 17-16-856, a corporation may indemnify a
current or former officer who is not a director to the extent, consistent with
public policy, that may be provided by its articles of incorporation, bylaws,
general or specific action of its board of directors or contract.
-21-
<PAGE>
Part III
Item 1. Index to Exhibits Attachment
----------------- ----------
3.1 Articles of Incorporation (1) A
3.2 By-laws (1) B
10.1 Management Agreement (1) C
10.2 Purchase Option Agreement (1) D
10.3 Contract to Sell Real Estate (1) E
10.4 Agreement for the Purchase and
Sale of Commercial Real Estate (1) F
10.5 Operating Agreement (1) G
10.6 Voting Agreement (1) H
10.7 Limited Partnership Agreement of
Bishop Powers, Ltd. (1) I
10.8 Limited Partnership Agreement of Z-H, Ltd. (1) J
10.9 Bridger Creek Partnership (1) K
21 Subsidiaries of the Registrant (1) L
27 Financial Data Schedule (submitted only in electronic format).
(1) Previously filed with original filing on December 11, 1996 or
Amendment No. 1 filing on March 17, 1997.
Item 2. Description of Exhibits
-------------------------
3.1 Articles of Incorporation dated May 27, 1992 and Amendment
thereto dated November 20, 1995.
3.2 By-laws.
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.
-22-
<PAGE>
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.
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.
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.
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.
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
Communications Corporation.
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.
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.
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.
21 Subsidiaries of the Registrant.
-23-
<PAGE>
Signatures
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
BISHOP CAPITAL CORPORATION
(Registrant)
Date: April 23, 1997
By: /s/ Robert E. Thrailkill
----------------------------------
Robert E. Thrailkill
President
-24-
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
PAGE
Independent Auditor's Report F-2
Consolidated Balance Sheets - December 31, 1996 (Unaudited)
and March 31, 1996 F-3
Consolidated Statements of Operations - For the Nine Months
Ended December 31, 1996 and 1995 (Unaudited), and the
Years Ended March 31, 1996 and 1995 F-4
Consolidated Statement of Changes in Stockholder's Equity -
For the Years Ended March 31, 1995 and 1996, and the
Nine Months Ended December 31, 1996 (Unaudited) F-5
Consolidated Statements of Cash Flows - For the Nine Months
Ended December 31, 1996 and 1995 (Unaudited), and the
Years Ended March 31, 1996 and 1995 F-6
Notes to Consolidated Financial Statements F-7
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Stockholders and
Board of Directors
Bishop Capital Corporation
We have audited the accompanying consolidated balance sheet of Bishop Capital
Corporation and subsidiaries as of March 31, 1996 and the related consolidated
statements of operations, changes in stockholder's equity and cash flows for the
years ended March 31, 1996. These consolidated 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, 1996, and the results of their
operations and their cash flows for the years ended March 31, 1996 and 1995, in
conformity with generally accepted accounting principles.
HEIN + ASSOCIATES LLP
Denver, Colorado
May 23, 1996, except for the last two paragraphs
of Note 1 as to which the date is November 18, 1996
F-2
<PAGE>
<TABLE>
<CAPTION>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of American Rivers Oil Company)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, MARCH 31,
1996 1996
----------- -----------
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and equivalents $ 33,425 $ 66,770
Marketable securities 641,133 844,734
Receivables:
Gas royalties 12,433 9,399
Interest and other 6,513 13,258
Receivables from parent:
Note -- 17,522
Other 1,770 23,579
Notes receivable - officers 25,000 25,000
Prepaid expenses 7,500 17,960
----------- -----------
Total current assets 727,774 1,018,222
PROPERTY AND EQUIPMENT:
Building 212,157 212,157
Furniture and fixtures 63,162 63,969
Vehicles and equipment 41,846 38,581
----------- -----------
317,165 314,707
Less accumulated depreciation (117,264) (111,045)
----------- -----------
Net property and equipment 199,901 203,662
----------- -----------
OTHER ASSETS:
Undeveloped land 540,134 411,709
Investment in limited partnership 224,366 254,112
Gas royalty interest, net of accumulated
amortization of $800,280 (unaudited)
and $700,245, respectively 266,771 366,806
Notes receivable 63,049 46,836
Other assets, net 4,433 3,860
----------- -----------
Total other assets 1,098,753 1,083,323
----------- -----------
TOTAL ASSETS $ 2,026,428 $ 2,305,207
=========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 80,687 $ 103,541
Payable to broker 165,009 --
----------- -----------
Total current liabilities 245,696 103,541
COMMITMENTS (Note 7)
STOCKHOLDER'S EQUITY:
Preferred stock, no par value; 5,000,000 shares
authorized, no shares issued -- --
Common stock, $.01 par value; 15,000,000 shares
authorized; 885,443 shares issued and outstanding 8,854 8,854
Capital in excess of par value 2,216,198 2,166,025
Unrealized holding gain -- 66,884
Accumulated deficit (444,320) (40,097)
----------- -----------
Total stockholder's equity 1,780,732 2,201,666
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 2,026,428 $ 2,305,207
=========== ===========
See accompanying notes to these consolidated financial statements.
F-3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of American Rivers Oil Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS
ENDED FOR THE YEARS ENDED
DECEMBER 31, MARCH 31,
-------------------- --------------------
1996 1995 1996 1995
---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C>
REVENUE -
Gas royalties $ 48,497 $ 48,881 $ 69,931 $ 68,176
COSTS AND EXPENSES:
Gas processing and production taxes 14,142 14,480 19,192 9,549
General and administrative 392,476 633,926 731,936 497,694
Depreciation and amortization 113,689 114,621 152,718 159,181
--------- --------- --------- ---------
520,307 763,027 903,846 666,424
--------- --------- --------- ---------
LOSS FROM OPERATIONS (471,810) (714,146) (833,915) (598,248)
OTHER INCOME (EXPENSE):
Interest income 27,383 39,132 51,094 61,010
Dividend income 8,382 15,652 20,061 29,229
Rental income 10,228 10,151 12,686 18,692
Gain (loss) on sale of marketable securities 51,340 685,632 688,400 (3,222)
Equity in limited partnership loss (29,746) (37,840) (54,606) (41,282)
Discontinued operations of oil property -- (25,850) (25,850) (24,720)
Other -- -- (1,745) 1,588
--------- --------- --------- ---------
NET LOSS $(404,223) $ (27,269) $(143,875) $(556,953)
========= ========= ========= =========
NET LOSS PER COMMON SHARE $ (.46) $ (.03) $ (.17) $ (.65)
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 885,000 859,000 867,000 856,000
========= ========= ========= =========
See accompanying notes to these consolidated financial statements.
F-4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of American Rivers Oil Company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED MARCH 31, 1995 AND 1996 AND THE
NINE MONTHS ENDED DECEMBER 31, 1996 (UNAUDITED)
COMMON SHARES TREASURY STOCK
----------------- ------------------- CAPITAL IN UNREALIZED RETAINED
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, 1994 523,530 $ 5,235 206,707 $(1,689,583) $3,027,683 $ 572,841 $2,141,451 $4,057,627
Net change in unrealized
holding gain -- -- -- -- -- (43,905) -- (43,905)
Stock bonus 7,871 79 -- -- 24,721 -- -- 24,800
Purchase of treasury stock -- -- 9,977 (46,479) -- -- -- (46,479)
Net loss -- -- -- -- -- -- (556,953) (556,953)
------ ------- ------- ----------- --------- -------- ---------- ----------
BALANCES, March 31, 1995 531,401 5,314 216,684 (1,736,062) 3,052,404 528,936 1,584,498 3,435,090
Commitment to issue common
stock for services 29,515 295 -- -- 224,705 -- -- 225,000
Net change in unrealized
holding gain -- -- -- -- -- (462,052) -- (462,052)
Consummation of reverse
acquisition and reflect capital
structure of Bishop 324,527 3,245 (216,684) 1,736,062 (1,111,084) -- (1,480,720) (852,497)
Net loss -- -- -- -- -- -- (143,875) (143,875)
------- ------- ------- ----------- ---------- -------- ----------- --------
BALANCES, March 31, 1996 885,443 8,854 -- -- 2,166,025 66,884 (40,097) 2,201,666
Net change in unrealized holding
gain (unaudited) -- -- -- -- -- (66,884) -- (66,884)
Stock bonus (unaudited) -- -- -- -- 50,173 -- -- 50,173
Net loss (unaudited) -- -- -- -- -- -- (404,223) (404,223)
------- ------- ------- ----------- ---------- -------- ---------- --------
(Unaudited) 885,443 $8,854 -- $ -- $2,216,198 $ -- $ (444,320)$1,780,732
======= ====== ======= =========== ========== ======== ========== ==========
See accompanying notes to these consolidated financial statements.
F-5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of American Rivers Oil Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE
MONTHS ENDED FOR THE YEARS ENDED
DECEMBER 31, MARCH 31,
-------------------- --------------------
1996 1995 1996 1995
----- ----- ----- ----
(Unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (404,223) $ (27,269) $ (143,875) $ (556,953)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 113,689 114,621 155,185 164,041
Issuance of common stock for services -- 225,000 225,000 --
Stock bonus compensation 50,173 -- -- 24,800
Equity in partnership losses 29,746 37,840 54,606 41,282
Write-down of investment -- 25,000 25,000 --
Abandoned leases -- -- -- 13,576
Loss (gain) on sale of
marketable securities (51,340) (685,632) (688,400) 3,222
Gain on sale of property
and equipment -- -- -- (917)
Changes in operating assets
and liabilities:
(Increase) decrease in:
Trade receivables (3,034) 11,636 3,655 (5,732)
Interest and other
receivables 6,745 (4,586) 8,003 15,239
Receivable from parent 21,809 -- (23,579) --
Prepaid expenses 10,460 6,518 (1,680) 2,432
Other assets (1,000) -- 14,126 --
Increase (decrease) in
accounts payable and
accrued expenses (22,856) 10,294 50,770 (8,917)
----------- ----------- ----------- -----------
Net cash used in
operating activities (249,831) (286,578) (321,189) (307,927)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities (312,828) (122,716) (169,979) (335,830)
Proceeds from sale of
marketable securities 665,894 1,262,744 1,265,512 797,108
Funds advanced under
notes receivable (120,000) (11,681) (42,522) (7,000)
Proceeds from notes receivable 121,309 64,165 64,461 8,104
Additions to undeveloped land (128,425) (96,051) (133,473) --
Proceeds from sale of propert
and equipment -- -- -- 2,000
Purchase of property and equipment (9,464) -- (21,274) (25,129)
Transfer of cash in reverse
acquisition -- (700,000) (700,000) --
----------- ----------- ----------- -----------
Net cash provided by
investing activities 216,486 396,461 262,725 439,253
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings -- 40,000 60,000 10,000
Principal payments on borrowings -- (40,000) (60,000) (10,000)
Treasury stock acquired -- -- -- (46,479)
----------- ----------- ----------- -----------
Net cash used in financing
activities -- -- -- (46,479)
----------- ----------- ----------- -----------
INCREASE (DECREASE) IN CASH AND EQUIVALENTS (33,345) 109,883 (58,464) 84,847
CASH AND EQUIVALENTS, beginning of period 66,770 125,234 125,234 40,387
----------- ----------- ----------- -----------
CASH AND EQUIVALENTS, end of period $ 33,425 $ 235,117 $ 66,770 $ 125,234
=========== =========== =========== ===========
SUPPLEMENTAL INFORMATION:
Cash paid for interest $ 8,551 $ 722 $ 830 $ --
=========== =========== =========== ===========
Non-cash equipment purchases $ -- $ -- $ -- $ 13,500
=========== =========== =========== ===========
Payable for purchase of
marketable securities $ 165,009 $ -- $ -- $ --
=========== =========== =========== ===========
See accompanying notes to these consolidated financial statements.
F-6
</TABLE>
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of American Rivers Oil Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information Subsequent to March 31, 1996 is Unaudited)
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.
Bishop's subsidiaries consist of Bishop Powers, Ltd. and Bridger Creek
Partnership in which the Company holds general partner interests of 81% and
80%, respectively.
Unaudited Information - The balance sheet as of December 31, 1996 and the
statements of operations and cash flows for the nine-month periods ended
December 31, 1996 and 1995 were taken from the Company's books and records
without audit. However, in the opinion of management, such information
includes all adjustments (consisting only of normal accruals), which are
necessary to properly reflect the financial position of the Company as of
December 31, 1996 and the results of operations and cash flows for the nine
months ended December 31, 1996 and 1995. The results of operations for the
interim periods presented are not necessarily indicative of those to be
expected for the year.
Change in Capital Structure and Spinoff - In November 1996, the Board of
Directors of AROC (the Company's sole stockholder) agreed to make a pro
rata distribution of 885,443 shares of the Company's common stock to AROC's
common stockholders of record on November 18, 1996. The remaining 3,614,557
shares of the Company's common stock owned by AROC were canceled on the
record date. AROC's Class B common stockholders did not participate in the
distribution. Accordingly, this change in capital structure has been given
retroactive effect in the accompanying financial statements as if it
occurred at the beginning of the earliest period presented.
F-7
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of American Rivers Oil Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information Subsequent to March 31, 1996 is Unaudited)
Net Loss Per Share - Net loss per share has been computed based on the
weighted average number of common shares outstanding for each period
presented. The weighted average shares have been retroactively restated for
the effects of the reverse acquisition and the spinoff discussed above.
2. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
--------------------------------------------------------------------
Nature of Operations - The Company is primarily engaged in the development
and/or sale of real estate and also has a royalty interest in a natural gas
property.
Principles of Consolidation - The accompanying financial statements include
the accounts of the Company and both majority-owned partnerships discussed
in Note 1. All material intercompany transactions and accounts have been
eliminated in consolidation.
Property, Equipment and Depreciation - Property and equipment are stated at
cost. Depreciation is being 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.
Undeveloped Land - Undeveloped land is stated at cost and consists solely
of acquisition costs at March 31, 1996.
Impairment of Long-lived Assets - In the event that facts and circumstances
indicate that the cost of property and equipment or other long-lived assets
may be impaired, an evaluation of recoverability of net carrying costs will
be performed. If an evaluation is required, the estimated future
undiscounted cash flows associated with the asset will be compared to the
asset's carrying amount to determine if a write-down to estimated fair
value is required.
Gas Royalty Interests - The Company amortizes gas royalty interests on a
straight-line basis over eight years.
Cash Equivalents - The Company considers highly liquid temporary
investments with an original maturity of three months or less to be cash
equivalents.
Marketable Securities - Marketable securities are accounted for in
accordance with Statement of Financial Accounting Standard (SFAS) No. 115
"Accounting for Certain Investments in Debt and Equity Securities."
Pursuant to SFAS No. 115, the Company's securities are classified as
available-for-sale based on management's intent. Investment securities
classified as available-for-sale are stated at market value, with
unrealized gains and losses, net of applicable income taxes, reported as a
separate component of stockholder's equity. If the decline in market value
of a security is determined to be other than temporary, the loss in value
is charged to earnings. Realized gains or losses are determined on a
specific identification method.
F-8
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of American Rivers Oil Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information Subsequent to March 31, 1996 is Unaudited)
Investments - The Company's 19% ownership in a limited partnership (Z-H,
LTD.) is stated at cost, adjusted for its equity in undistributed earnings
since acquisition.
Income Taxes - Income taxes are provided for in accordance with SFAS No.
109, "Accounting for Income Taxes." SFAS No. 109 requires an asset and
liability approach in the recognition of deferred tax liabilities and
assets for the expected future tax consequences of temporary differences
between the carrying amounts and the tax bases of the Company's assets and
liabilities. 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.
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 undeveloped land 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.
3. MARKETABLE SECURITIES:
----------------------
The cost and estimated fair market value of available-for-sale securities
at March 31, 1996 were as follows:
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED FAIR
HOLDING HOLDING MARKET
COST GAINS LOSSES VALUE
---- ---------- ---------- ---------
<S> <C> <C> <C> <C>
U.S. Treasury securities $466,357 $ 6,078 $ (11,427) $ 461,008
Redeemable preferred
securities 136,955 8,297 - 145,252
Equity securities 174,538 89,057 (25,121) 238,474
-------- --------- --------- ---------
$777,850 $ 103,432 $ (36,548) $ 844,734
======== ========= ========= =========
</TABLE>
F-9
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of American Rivers Oil Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information Subsequent to March 31, 1996 is Unaudited)
The cost and estimated fair market value of available-for-sale securities
with contractual maturities (U.S. Treasury and redeemable preferred) at
March 31, 1996, by contractual maturity periods, were as follows:
FAIR
MARKET
COST VALUE
---- -----
Due in one year or less $ 232,105 $ 232,029
Due after one year through five years 210,902 211,679
Due after five years through ten years 90,953 97,031
Due after ten years 69,352 65,521
---------- --------
$ 603,312 $ 606,260
========== =========
Cash proceeds from the sale of available-for-sale securities during the
years ended March 31, 1996 and 1995 were $1,265,512 and $797,108,
respectively. Net gains from available-for-sale securities sold in the year
ended March 31, 1996 amounted to $688,400 (gross gains of $701,152 and
gross losses of $12,752). Net losses from securities sold in the year ended
March 31, 1995 were $3,222 (gross gains of $23,638 and gross losses of
$26,860).
At December 31, 1996, the Company has a margin account payable to a broker
for $165,009. This account provides for interest at approximately 8% at
December 31, 1996.
4. GAS ROYALTY INTERESTS:
----------------------
In December 1990, the Company purchased a royalty interest in certain gas
properties located in Wyoming for approximately $1,067,000. At March 31,
1996, the net carrying value of this interest amounts to $367,000. Revenues
related to this royalty interest are affected by local gas transportation,
processing, and marketing arrangements. Reserve disclosures relating to the
gas royalty interest are not included because the information is
unavailable from the operator of the properties.
In connection with the purchase, the Company formed a tax 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 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 in the partnership.
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 $600,000
plus interest at 8% per annum (not to exceed $100,000) after which the
allocation will be apportioned according to ownership.
F-10
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of American Rivers Oil Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information Subsequent to March 31, 1996 is Unaudited)
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 on the equity method of accounting.
Following is a summary of condensed financial information pertaining to
this limited partnership:
Balance sheet data at March 31, 1996:
Current assets $ 8,327
Noncurrent assets 1,129,394
Current liabilities 31,622
Noncurrent liabilities 1,160,774
Company's equity in net assets 254,112
YEARS ENDED MARCH 31,
-----------------------
1996 1995
---- ----
Operations data:
Revenue $ 261,526 $ 121,961
Costs and expenses 548,928 339,236
--------- ---------
Net loss $(287,402) $(217,275)
========= =========
Company's equity in limited
partnership loss $ 54,606) $ (41,282)
========== =========
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.
F-11
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of American Rivers Oil Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information Subsequent to March 31, 1996 is Unaudited)
6. INCOME TAXES:
-------------
The items that give rise to the components of the net deferred tax asset as
of March 31, 1996, are as follows:
Gas royalty interest $ 227,000
Net operating loss carryforward 231,000
----------
Deferred tax asset 458,000
Less valuation allowance (458,000)
----------
Net deferred tax asset $ -
==========
For the year ended March 31, 1996, the valuation allowance increased by
$43,000. As of March 31, 1996, AROC has net operating loss carryforwards
for Federal income tax purposes, of which approximately $500,000 is
attributable to the Company pursuant to the Asset Purchase Agreement and,
if not previously utilized, will expire in the years 2009 and 2010.
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 the parent company. 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.
8. FINANCIAL INSTRUMENTS:
----------------------
Statement of Financial Accounting Standards No. 107 requires all entities
to disclose the fair value of certain financial instruments in their
financial statements. Accordingly, at March 31, 1996, management's best
estimate is that the carrying amount of cash and equivalents, notes and
other receivables, accounts payable and accrued expenses approximates fair
F-12
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of American Rivers Oil Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information Subsequent to March 31, 1996 is Unaudited)
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, 1996.
9. STOCKHOLDER'S EQUITY (UNAUDITED):
----------------------------------
In November 1996, certain officers and employees of the Company were
allocated 38,300 shares of AROC's common stock from AROC's 1987 Stock Bonus
Plan as additional compensation. Compensation costs recorded in connection
with the issuance of these shares were approximately $50,000 with a
corresponding credit to paid-in capital.
F-13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 9-MOS YEAR
<FISCAL-YEAR-END> MAR-31-1997 MAR-31-1996
<PERIOD-END> DEC-31-1996 MAR-31-1996
<CASH> 33,425 66,770
<SECURITIES> 641,133 844,734
<RECEIVABLES> 45,716 88,758
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 727,774 1,018,222
<PP&E> 317,165 314,707
<DEPRECIATION> 117,264 111,045
<TOTAL-ASSETS> 2,026,428 2,305,207
<CURRENT-LIABILITIES> 245,696 103,541
<BONDS> 0 0
0 0
0 0
<COMMON> 8,854 8,854
<OTHER-SE> 1,771,878 2,192,812
<TOTAL-LIABILITY-AND-EQUITY> 2,026,428 2,305,207
<SALES> 48,497 69,931
<TOTAL-REVENUES> 48,497 69,931
<CGS> 14,142 19,192
<TOTAL-COSTS> 497,614 883,824
<OTHER-EXPENSES> 29,746 56,351
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 8,551 830
<INCOME-PRETAX> (404,223) (118,025)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 (118,025)
<DISCONTINUED> 0 (25,850)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (404,223) (143,875)
<EPS-PRIMARY> (.46) (.17)
<EPS-DILUTED> (.46) (.17)
</TABLE>
