U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the Quarterly Period Ended September 30, 1997
[ ] Transition Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the Transition Period from __________ to _________
Commission file number 0-21867
BISHOP CAPITAL CORPORATION
--------------------------
(Exact name of small business issuer as specified in its charter)
Wyoming 84-0901126
------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
716 College View Drive, Riverton, Wyoming 82501
------------------------------------------ --------
(Address of principal executive offices) (Zip Code)
(307) 856-3800
--------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
----- -----
The number of shares outstanding of the issuer's $.01 par value Common Stock as
of November 10, 1997 was 791,405.
Transitional Small Business Disclosure Format
(Check one):
Yes No X
---- -----
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
September 30, 1997
(Unaudited)
ASSETS
Current Assets:
Cash $ 135,912
Restricted cash 228,038
Marketable securities 559,884
Receivables:
Gas royalties 5,354
Interest and other 13,714
Prepaid expenses and other 6,544
-----------
Total current assets 949,446
Property and Equipment:
Building 212,157
Furniture and fixtures 63,162
Vehicles and equipment 91,380
-----------
366,699
Less accumulated depreciation (131,249)
-----------
Net property and equipment 235,450
Other Assets:
Land under development 607,060
Investment in limited partnership 194,391
Gas royalty interest, net of accumulated
amortization of $840,297 256,763
Notes receivable, including $25,000 from officers 62,031
Other assets, net 4,004
-----------
Total other assets 1,124,249
-----------
Total Assets $ 2,309,145
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 100,063
Payable to brokers 104,325
Customer deposit - related party 20,000
Deferred revenue 265,027
-----------
Total current liabilities 489,415
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 8,855
Additional paid-in capital 2,245,995
Accumulated deficit (334,555)
Less treasury stock, at cost, 94,043 shares (100,565)
-----------
Total stockholders' equity 1,819,730
-----------
$ 2,309,145
===========
See accompanying notes to these consolidated financial statements
-2-
<PAGE>
<TABLE>
<CAPTION>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months For the Six Months
Ended September 30, Ended September 30,
------------------- -------------------
1997 1996 1997 1996
--------- --------- --------- ---------
REVENUE:
<S> <C> <C> <C> <C>
Gross profit on real estate sold $ 410,451 $ -- $ 427,461 $ --
Gas royalties 19,053 13,469 37,036 29,643
--------- --------- --------- ---------
429,504 13,469 464,497 29,643
COSTS AND EXPENSES:
Gas processing and production taxes 6,335 3,426 12,365 9,811
General and administrative 104,694 102,283 243,279 218,030
Depreciation and amortization 9,812 38,047 19,550 76,030
--------- --------- --------- ---------
120,841 143,756 275,194 303,871
--------- --------- --------- ---------
INCOME (LOSS) FROM OPERATIONS 308,663 (130,287) 189,303 (274,228)
OTHER INCOME (EXPENSE):
Interest income 7,332 8,777 12,337 20,308
Dividend income 2,710 2,584 5,420 5,673
Rental income 3,435 3,535 6,870 6,070
Net gain on sale of marketable securities 5,339 432 6,519 25,593
Net unrealized gain on marketable securities 77,206 -- 97,520 --
Equity in limited partnership loss (16,982) (5,693) (20,198) (11,365)
Interest expense (3,098) (3,606) (8,429) (5,477)
--------- --------- --------- ---------
INCOME (LOSS) BEFORE INCOME
TAXES 384,605 (124,258) 289,342 (233,426)
PROVISION FOR INCOME TAXES (59,500) -- (59,500) --
--------- --------- --------- ---------
NET INCOME (LOSS) $ 325,105 $(124,258) $ 229,842 $(233,426)
========= ========= ========= =========
NET INCOME (LOSS) PER SHARE $ .39 $ (.14) $ .27 $ (.26)
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 842,480 885,481 863,863 885,481
========= ========= ========= =========
See accompanying notes to these consolidated financial statements.
-3-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
September 30,
--------------------------------
1997 1996
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) $ 229,842 $(233,426)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization 19,550 76,030
Net gain on sale of marketable securities (6,519) (25,593)
Net unrealized gain on marketable securities (97,520) --
Land development costs (41,724) --
Changes in operating assets and liabilities:
(Increase) decrease in:
Restricted cash (228,038) --
Marketable securities (5,929) --
Gas royalties receivable 10,135 2,895
Interest and other receivables (2,674) 9,890
Prepaid expenses and other 2,782 7,349
Increase (decrease) in:
Accounts payable and accrued expenses 57,019 (41,548)
Payable to broker 19,219 (1,871)
Deferred revenue 265,027 --
--------- ---------
Net cash provided by (used in) operating activities 241,368 (194,909)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities -- (223,387)
Proceeds from sale of marketable securities -- 555,765
Funds advanced under notes receivable -- (100,000)
Proceeds from collection of notes receivable 688 20,988
Land development costs -- (105,581)
Purchase of property and equipment (52,314) (2,043)
--------- ---------
Net cash provided by (used in) investing activities (51,626) 145,742
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 110,000 --
Repayments of borrowings (110,000) --
Treasury stock acquired (100,565) --
--------- ---------
Net cash used in financing activities (100,565) --
--------- ---------
Net increase (decrease) in cash 89,177 (49,167)
Cash, beginning of period 46,735 66,770
--------- ---------
Cash, end of period $ 135,912 $ 17,603
========= =========
See accompanying notes to these consolidated financial statements.
-4-
</TABLE>
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
In the opinion of management, all adjustments, consisting of normal
recurring accruals, have been made which are necessary for a fair
presentation of the financial position of the Company at September 30, 1997
and the results of operations and cash flows for the three and six month
periods ended September 30, 1997 and 1996. For a more complete
understanding of the Company's operations and financial position, reference
is made to the consolidated financial statements of the Company, and
related notes thereto, filed with the Company's annual report on Form
10-KSB for the year ended March 31, 1997, previously filed with the U. S.
Securities and Exchange Commission.
2. Change in Capital Structure and Spin-off
Prior to June 20, 1997, the Company was a wholly-owned subsidiary of
American Rivers Oil Company ("AROC"). In November 1996, the Board of
Directors of AROC (the Company's sole stockholder of 4,500,000 common
shares outstanding) 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.
3. Sales of Real Estate
Sales of real estate generally are accounted for under the full accrual
method. Under that method, gain is not recognized until the collectibility
of the sales price is reasonably assured and the earnings process is
virtually complete. When a sale does not meet the requirements for income
recognition, gain is deferred until those requirements are met. Sales of
real estate are accounted for under the percentage-of-completion method
when the Company has material obligations under sales contracts to provide
improvements after the property is sold. Under the percentage-of-completion
method, the gain on sale is recognized as the related obligations are
fulfilled.
The Company is presently developing five commercial pad sites on
approximately 4.62 acres ("Phase I") of a 20 acre parcel for which the
Company entered into sale agreements on three lots. The Company is
obligated and entered into a contract for approximately $410,000 of Phase I
site development work consisting of grading, utilities, channel lining,
storm sewer, paving, curb and gutter with a scheduled completion date in
November 1997. The Company was also required to furnish a bank letter of
credit for $36,000 to the City of Colorado Springs to provide assurance
that the paving, curb and gutter improvements would be completed.
-5-
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
As of September 30, 1997, approximately 60% of the contract work had been
completed. On the first lot closing, the Company was required to furnish
the purchaser a bank letter of credit to provide assurance that the site
development work would be completed. The net proceeds of $321,025 received
at this closing were used as collateral for the bank letter of credit. On
the second lot closing, the purchaser required the Company to deposit with
an escrow agent $182,470 from the net proceeds of $372,830 which would be
disbursed for completed on-site improvements. As a result of the additional
escrow amount, the Company decreased the total commitment on outstanding
letters of credit to $160,000. The cash collateral of $160,000 and the
balance of $68,038 remaining in the escrow account are reflected as
restricted cash on the Company's balance sheet at September 30, 1997. On
the third lot closing, the Company received the total net proceeds of
$353,173.
In connection with the completed lot sales, the Company used the
percentage-of-completion method to determine the amount of gross profit to
be recognized at September 30, 1997 as follows:
Three Months Six Months
Ended Ended
September 30, September 30,
1997 1997
------------- -------------
Sales of real estate $ 718,554 $ 1,068,554
Previously revenue deferred 177,016 --
Deferred revenue (174,175) (265,027)
--------- -----------
721,395 803,527
Cost of real estate sold 310,944 376,066
--------- -----------
Gross profit on sale of real estate $ 410,451 $ 427,461
========= ===========
The deferred revenue of $265,027 is reflected as a liability in the
Company's balance sheet at September 30, 1997. The revenue will be
recognized subsequent to September 30, 1997 as the remaining site
development work obligations are completed.
-6-
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANICAL STATEMENTS
(Unaudited)
4. Income Taxes
The provision for income taxes is based on management's estimate of the
effective tax rate expected to be applicable for the fiscal year net of the
utilization of the net operating loss carryforward which is subject to
limitations under IRS Section 382. The tax rate may be revised at the end
of each successive interim period during the fiscal year to reflect
management's current estimate of the annual effective tax rate.
5. Supplemental Disclosures to Consolidated Statements of Cash Flows
Net cash provided by (used in) operating activities reflects cash payments
for interest and income taxes as follows:
Three Months Ended Six Months Ended
September 30, September 30,
------------- -------------
1997 1996 1997 1996
---- ---- ---- ----
Interest paid $ 2,300 $ -- $ 2,900 $ --
Income taxes paid 20,000 -- 20,000 --
6. Subsequent Event
The Company is a limited partner with a 19% partnership interest in Z-H,
Ltd. which constructed and operated a golf driving range, miniature golf
and batting cage facility in Colorado Springs, Colorado. In July 1997, the
general partner ("Seller") entered into an Agreement of Purchase and Sale
of Leasehold (the "Leasehold Agreement") with an unrelated third-party
("Purchaser") for the sale of all improvements, buildings and fixtures for
$89,000 cash, $100,000 of Purchaser's restricted common stock and
assumption by Purchaser of approximately $911,000 debt. The closing of the
transaction occurred in October 1997. In connection with the real property,
the parties entered into a 25 year Ground Lease (the "Lease") whereby the
Purchaser will pay annual rents aggregating $1,302,000 over the Lease term.
The Lease provides for a termination fee payable to the Purchaser if the
Lease is cancelled by the Seller after the expiration of the second lease
year of $1,000,000 in lease years 3 through 5 and declining thereafter to
$-0- in lease year 21.
In conjunction with the Leasehold Agreement, the parties entered into a
Management Agreement whereby the Purchaser assumed the management of the
day-to-day operations of the facility commencing in July 1997 until the
closing of the Leasehold Agreement which occurred in October 1997. During
this period of time, the Purchaser received 100% of all gross receipts and
paid 100% of all operating expenses except for certain expenses payable by
the Seller. The Company recorded its equity in the limited partnership
operations only for those expenses paid by the partnership for the three
months ended September 30, 1997.
-7-
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
Company's unaudited consolidated financial statements and notes thereto.
Forward-Looking Statements
- --------------------------
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.
Results of Operations
- ---------------------
Three Months Ended September 30, 1997 and 1996
----------------------------------------------
The Company's net income for the three months ended September 30, 1997 was
$325,105 compared to a net loss of $124,258 for the comparable period in 1996.
The improved results for the 1997 period were attributable primarily to the
closing of real estate sales.
The Company closed on two lot sales related to the development of five
commercial pad sites consisting of approximately 5 acres in a 20 acre parcel in
Colorado Springs, Colorado. Since the Company had obligations to complete
certain site improvements at September 30, 1997, the gross profit of $410,451
recognized by the Company on the sale was accounted for under the
percentage-of-completion method (see Note 3).
The Company's gas royalty revenue increased $5,600 or 41% for the three months
ended September 30, 1997 compared to the same period in 1996. Natural gas
production for the three months ended September 30, 1997 was 12,138 mcf compared
to 10,996 mcf for the comparable period in 1996. The average sales price of
natural gas increased 28% ($1.53 per mcf compared to $1.20 per mcf ) for the
three months ended September 30, 1997 over the comparable period in 1996.
Gas processing and production taxes increased $2,900 or 85% in the 1997 period
compared to the 1996 period due to the gas processing plant being shut-down in
the 1996 period for repairs and maintenance.
General and administrative expenses increased by $2,400 or 2% for the three
months ended September 30, 1997 compared to the same period in 1996 and is
attributable to minor fluctuations in overhead costs and expenses.
-8-
<PAGE>
Depreciation and amortization expense decreased $28,200 or 74% in the current
quarter compared to the corresponding quarter in 1996 primarily due to a change
in the estimated remaining life of the gas royalty interest effective January 1,
1997.
Interest and dividend income decreased $1,300 or 12% for the three months ended
September 30, 1997 compared to the same period in 1996 due to the sale of
marketable equity and fixed income securities in the prior fiscal year.
The net unrealized gain on marketable securities of $77,200 for the three months
ended September 30, 1997 represents the net change in the market value of the
trading securities portfolio.
The net gain on sale of marketable securities increased $4,900 in the current
period and resulted from the sale of marketable securities from the Company's
trading securities portfolio.
Equity in partnership loss increased $11,200 for the three months ended
September 30, 1997 compared to the 1996 period due to expenses being incurred
without any offsetting revenue from operations as discussed in Note 4 to the
consolidated financial statements.
Interest expense remained comparable for the three months ended September 30,
1997 and 1996.
Six Months Ended September 30, 1997 and 1996
--------------------------------------------
The Company's net income for the six months ended September 30, 1997 was
$229,842 compared to a net loss of $233,426 for the comparable period in 1996.
The improved results for the six months ended September 30, 1997 were
attributable primarily to the closing of real estate sales.
The Company closed on three lot sales related to the development of five
commercial pad sites consisting of approximately 5 acres in a 20 acre parcel in
Colorado Springs, Colorado. Since the Company had obligations to complete
certain site improvements at September 30, 1997, the gross profit of $427,461
recognized by the Company on the sales was accounted for under the
percentage-of-completion method (see Note 3).
The Company's gas royalty revenue increased $7,400 or 25% for the six months
ended September 30, 1997 compared to the same period in 1996. Natural gas
production for the six months ended September 30, 1997 was 24,155 mcf compared
to 22,987 mcf for the comparable period in 1996. The average sales price of
natural gas increased 19% ($1.49 per mcf compared to $1.25 per mcf) for the 1997
period over the 1996 period.
Gas processing and production taxes increased $2,600 or 26% in the 1997 period
compared to the 1996 period due to the gas processing plant being shut-down in
the 1996 period for repairs and maintenance.
-9-
<PAGE>
General and administrative expenses increased $25,200 or 12% for the six months
ended September 30, 1997 compared to the same period in 1996. The increase is
primarily due to legal, accounting and other expenses incurred in connection
with the spin-off from American Rivers Oil Company in June 1997.
Depreciation and amortization expense decreased $56,500 or 74% in the current
six months compared to the 1996 period primarily due to a change in the
estimated remaining life of the gas royalty interest effective January 1, 1997.
Interest and dividend income decreased $8,200 or 32% for the six months ended
September 30, 1997 compared to the 1996 period due to the sale of marketable
securities in the prior fiscal year.
The net gain on sale of marketable securities decreased $19,000 or 74% for the
current period compared to the 1996 period due to a decrease in portfolio
trading activity.
The net unrealized gain on marketable securities of $97,500 for the current
period represents the net change in the market value of the trading securities
portfolio.
The equity in partnership loss increased $8,800 or 78% in the current period
compared to the 1996 period due to expenses being incurred without any
offsetting revenue from operations as discussed in Note 4 to the consolidated
financial statements.
Interest expense increased $3,000 or 54% in the 1997 period compared to the 1996
period due to a higher average amount of debt outstanding.
Financial Condition
At September 30, 1997, the Company had working capital of $460,000.
The following summary table reflects the Company's cash flows for the six months
ended September 30, 1997 and 1996:
Six Months Ended
September 30,
-------------
1997 1996
---- ----
Net cash provided by (used in) operating activities $241,400 $(194,900)
Net cash provided by (used in) investing activities (51,600) 145,700
Net cash used in financing activities (100,600) --
Net cash provided by operating activities increased to $241,400 for the six
months ended September 30, 1997 compared to a net use of cash for operating
activities of $194,900 for the comparable period in 1996 due primarily to the
closing of real estate sales.
Net cash used in investing activities of $51,600 for the six months ended
September 30, 1997 resulted primarily from the purchase of equipment. Net cash
provided by investing activities of $145,700 for the six months ended September
-10-
<PAGE>
30, 1996 resulted primarily from net cash proceeds of $332,400 from the purchase
and sale of marketable securities being utilized for $100,000 advanced under a
note receivable, land development costs of $105,600 and funding of operating
activities.
Net cash used in financing activities of $100,600 for the six months ended
September 30, 1997 resulted from the Company acquiring 94,043 shares of treasury
stock. The Company also had borrowings of $110,000 and repayment of borrowings
of $110,000 for the 1997 period.
The Company's material commitments for capital expenditures in the next twelve
months will be in conjunction with the three phase development of a 20 acre
parcel in Colorado Springs, Colorado. Phase I consisting of five commercial pad
sites (approximately 4.62 acres) is currently being developed. The Company
entered into a contract for $410,000 related to on-site and off-site
improvements in Phase I. These improvements were approximately 60% completed at
September 30, 1997 and the Company anticipates completion by November 1997. The
Company entered into and closed sales contracts for three of the five lots. The
Company is utilizing the net proceeds from the closings to fund the Phase I
improvements. Management, 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 related to the 20 acre parcel.
The Company anticipates that working capital will be sufficient to fund the
remaining Phase I capital expenditures. The Company will not commence
development of Phases II and III until sales agreements are entered into for the
sale of commercial pad sites. The capital expenditures related to Phases II and
III are anticipated to be funded from working capital and net proceeds from the
sale of commercial pad sites.
The future profitability and operating cash flows of the Company may be volatile
due to the significance and nature of real estate activities.
-11-
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
None
Item 2. Changes in Securities
---------------------
None
Item 3. Default Upon Senior Securities
------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None
Item 5. Other Information
-----------------
None
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a. Exhibits
Exhibit 27. Financial Data Schedule (submitted only in
electronic format)
b. Reports on Form 8-K
None
-12-
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
BISHOP CAPITAL CORPORATION
(Registrant)
Date: November 10, 1997 By: /s/ Robert E. Thrailkill
------------------------------
Robert E. Thrailkill
President
(Principal Executive Officer)
Date: November 10, 1997 By: /s/ John A. Alsko
-----------------------------
John A. Alsko
Treasurer and Chief
Financial Officer
(Principal Financial Officer)
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Article 5 FDS for 2nd Quarter 10-QSB
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> SEP-30-1997
<CASH> 363,950
<SECURITIES> 559,884
<RECEIVABLES> 19,068
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 949,446
<PP&E> 366,699
<DEPRECIATION> 131,249
<TOTAL-ASSETS> 2,309,145
<CURRENT-LIABILITIES> 489,415
<BONDS> 0
0
0
<COMMON> 8,855
<OTHER-SE> 1,810,875
<TOTAL-LIABILITY-AND-EQUITY> 2,309,145
<SALES> 464,497
<TOTAL-REVENUES> 464,497
<CGS> 12,365
<TOTAL-COSTS> 275,194
<OTHER-EXPENSES> 20,198
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,429
<INCOME-PRETAX> 289,342
<INCOME-TAX> 59,500
<INCOME-CONTINUING> 229,842
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 229,842
<EPS-PRIMARY> .27
<EPS-DILUTED> .27
</TABLE>
