U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report under Section 13 or 15(d)
Of the Securities Exchange Act of 1934
For the Quarterly Period Ended Commission File Number
June 30, 1998 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 August 10, 1998 was 838,365.
Transitional Small Business Disclosure Format
(Check one): Yes ---- No --X--
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
(Unaudited)
ASSETS
Current Assets:
Cash and equivalents $ 148,798
Restricted cash 200,000
Marketable securities 700,649
Receivables:
Gas royalties 15,696
Interest and other 10,218
Prepaid expenses and other 6,108
-----------
Total current assets 1,081,469
Property and Equipment:
Building 212,157
Furniture and fixtures 66,887
Vehicles and equipment 91,380
-----------
370,424
Less accumulated depreciation (150,840)
-----------
Net property and equipment 219,584
-----------
Other Assets:
Land under development 601,617
Investment in limited partnership 213,204
Gas royalty interest, net of accumulated
amortization of $820,295 246,756
Deferred income taxes 23,000
Notes receivable 75,522
-----------
Total other assets 1,160,099
-----------
Total Assets $ 2,461,152
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 51,612
Income taxes payable 38,000
Deferred income taxes 75,000
Payable to broker 156,915
Deferred revenue 300,000
-----------
Total current liabilities 621,527
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; 838,365 shares
issued and outstanding 8,384
Capital in excess of par value 2,195,609
Accumulated deficit (364,368)
-----------
Total stockholders' equity 1,839,625
-----------
Total Liabilities and Stockholders' Equity $ 2,461,152
===========
See accompanying notes to these consolidated financial statements.
2
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months
Ended June 30,
-----------------------
1998 1997
---- ----
REVENUES -
Sales of real estate $ 274,026 $ 82,132
COSTS AND EXPENSES:
Cost of real estate sold 167,883 65,122
General and administrative 115,683 138,585
Depreciation and amortization 6,488 6,402
--------- ---------
290,054 210,109
--------- ---------
LOSS FROM OPERATIONS (16,028) (127,977)
OTHER INCOME (EXPENSE):
Gas royalties, net of amortization of $3,336
in 1998 and 1997 23,338 8,617
Interest income 4,925 5,005
Dividend income 2,710 2,710
Rental income 2,610 3,435
Net unrealized gain on marketable securities 29,725 21,494
Equity in limited partnership income (loss) 2,590 (3,216)
Interest expense (4,653) (5,331)
--------- ---------
INCOME (LOSS) BEFORE INCOME TAXES 45,217 (95,263)
PROVISION FOR INCOME TAXES 15,000 --
--------- ---------
NET INCOME (LOSS) $ 30,217 $ (95,263)
========= =========
EARNINGS (LOSS) PER SHARE $ .04 $ (.11)
========= =========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 838,365 885,481
========= =========
See accompanying notes to these consolidated financial statements.
3
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<TABLE>
<CAPTION>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
June 30,
--------------------------
1998 1997
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) $ 30,217 $ (95,263)
Adjustments to reconcile net income (loss)
to net cash provided by (used
in) operating activities:
Depreciation and amortization 9,824 9,738
Equity in limited partnership (income) loss (2,590) 3,216
Net unrealized gain on marketable securities (29,725) (21,494)
Deferred income taxes 10,000 --
Changes in operating assets and liabilities:
(Increase) decrease in:
Restricted cash (145,690) (321,025)
Marketable securities (37,630) (8,795)
Gas royalties receivable (3,973) 5,078
Interest and other receivables 42,527 838
Prepaid expenses and other 1,805 844
Land under development 70,591 (51,200)
Notes receivable (15,000) --
Increase (decrease) in:
Accounts payable and accrued expenses (120,764) 98,761
Income taxes payable 5,000 --
Payable to broker 1,632 67,859
Deferred revenue 300,000 267,868
--------- ---------
Net cash provided by (used in) operating activities 116,224 (43,575)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from collection of notes receivable 783 339
Purchase of property and equipment (3,725) (38,153)
--------- ---------
Net cash used in investing activities (2,942) (37,814)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 62,000 50,000
Principal payments on borrowings (62,000) --
--------- ---------
Net cash provided by financing activities -- 50,000
--------- ---------
Net increase (decrease) in cash and equivalents 113,282 (31,389)
Cash and equivalents, beginning of period 35,516 46,735
--------- ---------
Cash and equivalents, end of period $ 148,798 $ 15,346
========= =========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 1,805 $ 2,756
========= =========
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
The consolidated financial statements reflect all adjustments which are, in
the opinion of management, necessary for a fair presentation of financial
position at June 30, 1998 and results of operations for the interim periods
ended June 30, 1998 and 1997. Such adjustments are of a normal and
recurring nature. The interim results presented are not necessarily
indicative of results that can be expected for a full year. The
accompanying consolidated financial statements should be read in
conjunction with the audited financial statements and related notes
appearing in the Company's March 31, 1998 Annual Report on Form 10-KSB
filed with the Securities and Exchange Commission.
Statement of Financial Accounting Standards (SFAS) No. 130, Reporting
Comprehensive Income was issued in June 1997 and adopted by the Company in
the three months ended June 30, 1998. This statement establishes standards
for the reporting and display of comprehensive income in financial
statements. Comprehensive income is generally defined as the change in
equity of a business enterprise during the period from transactions and
other events and circumstances from nonowner sources. SFAS No. 130 divides
comprehensive income into net income and other comprehensive income. The
Company did not have any items of other comprehensive income for the three
months ended June 30, 1998 and 1997.
Certain previously reported amounts have been reclassified to conform with
the current financial statement presentation.
2. Change in Capital Structure and Spinoff
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 AROC's 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. Revenue Recognition
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
5
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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 development of Phase I (approximately 4.6 acres) consisting of four
commercial pad sites in The Crossings at Palmer Park was completed in the
fiscal year ended March 31, 1998. Three of the improved lots were sold and
closed in the prior fiscal year. The sale of the remaining improved lot
occurred in June 1998.
The Company has commenced Phase II (approximately 6.1 acres) of its 20 acre
development of The Crossings at Palmer Park in Colorado Springs, Colorado.
The Phase II development plan consists of four commercial pad sites and the
Company entered into sale agreements on two of the lots. The Company
entered into a contract subsequent to June 30, 1998 for approximately
$350,000 of Phase II site development work consisting of grading,
utilities, channel lining, storm sewer and paving with a scheduled
completion date in November 1998. The Company was also required to furnish
a bank letter of credit for $111,600 to the City of Colorado Springs to
provide assurance that the channel lining improvements would be completed.
The Company closed on one Phase II lot sale in June 1998 and $200,000 of
the net proceeds of $268,802 were escrowed for on-site development work.
The escrow amount is reflected as restricted cash on the Company's balance
sheet at June 30, 1998. The Company anticipates closing on the other Phase
II lot sale in August 1998.
In connection with the real estate sales, the Company used the
percentage-of- completion method to determine the amount of gross profit to
be recognized for the three months ended June 30, 1998 and 1997 as follows:
Three Months Ended
June 30,
----------------------
1998 1997
---- ----
Sales of real estate $ 574,026 $ 350,000
Deferred revenue (300,000) (267,868)
--------- ---------
274,026 82,132
Cost of real estate sold 167,883 65,122
--------- ---------
Gross profit on sale of real estate $ 106,143 $ 17,010
========= =========
6
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The deferred revenue of $300,000 is reflected as a liability in the
Company's balance sheet at June 30, 1998 and will be recognized as the
related site development work obligations are completed.
7
<PAGE>
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 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
The Company's results of operations are dependent primarily on the sale of real
estate which is affected by national and local economic and competitive
conditions, including interest rates, construction costs, governmental
regulations and legislation, availability of financing and other factors. In
addition, the Company competes with other owners and developers with greater
resources and experience.
The Company's net income for the three months ended June 30, 1998 was $30,200
compared to a net loss of $95,300 for the comparable period in 1997. The
improved results for the current quarter are primarily attributable to an
increase in gross profit on real estate sold, an increase in net gas royalty
income and a decrease in general and administrative expenses.
The Company's remaining lot in Phase I of its development in Colorado Springs,
Colorado was sold in June 1998 and gross profit of $106,100 was realized on the
sale (see Note 3).
General and administrative expenses decreased $22,900 or 16% for the three
months ended June 30, 1998 compared to the same period in 1997. The decrease is
primarily due to the non-recurring expenses associated with the June 1997
spin-off from American Rivers Oil Company.
Net gas royalty income increased $14,700 in the current quarter compared to the
corresponding quarter in 1997. Natural gas production for the three months ended
June 30, 1998 was 15,281 mcf compared to 12,017 mcf for the comparable period in
1997. The average sales price of natural gas increased 36% ($1.96 per mcf
compared to $1.44 mcf) for the three months ended June 30, 1998 compared to the
same period in 1997.
8
<PAGE>
The net unrealized gain on marketable securities of $29,700 for the three months
ended June 30, 1998 represents the net change in the market value of the trading
securities portfolio.
Equity in partnership income of $2,600 for the three months ended June 30, 1998
primarily represents the Company's share of the net rental income from a ground
lease. In October 1997, all improvements related to the partnership operations
were sold to an unrelated third-party and the purchaser entered into a 25 year
ground lease on the real property. The equity in partnership loss of $3,200 for
the three months ended June 30, 1997 represents the Company's share of the loss
from operations.
Financial Condition
At June 30, 1998, the Company had working capital of $459,900.
The following summary table reflects comparative quarterly cash flows for the
Company as follows:
Three Months Ended
June 30,
----------------------
1998 1997
---- ----
Net cash provided by (used in):
Operating activities $ 116,200 $ (43,600)
Investing activities (2,900) (37,800)
Financing activities -- 50,000
Net cash provided by operating activities of $116,200 for the three months ended
June 30, 1998 resulted primarily from the sale of real estate. Net cash used in
operating activities of $43,600 for the comparable period in 1997 resulted
primarily from the net loss incurred.
Net cash used in investing activities of $2,900 for the three months ended June
30, 1998 and $37,800 for the comparable period in 1997 resulted primarily from
the purchase of property and equipment.
The Company had bank borrowings of $62,000 and repayment of bank borrowings of
$62,000 from financing activities for the three months ended June 30, 1998. Net
cash provided by financing activities of $50,000 for the three months ended June
30, 1997 resulted from bank borrowings.
The Company's material commitments for capital expenditures in the next twelve
months will be in conjunction with the Phase II and III development of The
Crossings at Palmer Park in Colorado Springs, Colorado. The Concept Plan for
Phases II and III and the Plat relating to one lot in Phase II of the
9
<PAGE>
development were approved by the City of Colorado Springs (the "City"). The
Company closed on one Phase II lot sale in June 1998 and $200,000 of the net
proceeds were escrowed for on-site development costs (see Note 3). The Company
has also submitted another Plat for a second lot sale in Phase II to the City
for approval. The Company anticipates closing this lot sale in August 1998.
The estimated costs for the Phase II site improvements are approximately
$350,000 and will be funded primarily by the $200,000 of net proceeds placed in
escrow in June 1998 and from the other lot sale anticipated to close in August
1998. In addition, the Company obtained two lines-of-credit with a bank. A
$150,000 line-of-credit is available for cash advances and is collateralized by
$160,000 of U. S. government securities. There are no outstanding borrowings
under this line-of-credit. A $250,000 line-of-credit collateralized by the
Company's building is available for the issuance of letters of credit and a
letter of credit for $111,600 was issued to the City (see Note 3).
The Company believes that existing working capital, together with current
sources of available financing, will be sufficient to fund the Company's
operations during the next twelve months.
The Company is working to resolve the potential impact of the year 2000 on the
ability of the Company's computerized accounting system to accurately process
information that may be date-sensitive. The Company, which utilizes a minimal
number of computer programs in its operations, has not completed its assessment,
but presently believes that costs of addressing this issue will not have a
material adverse impact on the Company's financial position. However, if third
parties upon which it relies are unable to address this issue in a timely
manner, it could result in a material financial risk to the Company. In order to
assure that this does not occur, the Company plans to communicate with the third
parties to resolve any significant year 2000 issues in a timely manner.
10
<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
10.14 Construction Contract dated July 24, 1998 between Bishop Powers,
Ltd. and Pioneer Sand Company, Inc.
27 Financial Data Schedule (submitted only in electronic format)
b. Reports on Form 8-K
None
11
<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: August 10, 1998 By: /s/ Robert E. Thrailkill
--------------------------------
Robert E. Thrailkill
President
(Principal Executive Officer)
Date: August 10, 1998 By: /s/ John A. Alsko
--------------------------------
John A. Alsko
Treasurer and Chief Financial
Officer
(Principal Financial Officer)
Exhibit 10.14
CONSTRUCTION CONTRACT
---------------------
Grading, Utilities, Channel Lining, Storm Sewer, Paving
-------------------------------------------------------
AGREEMENT made this 24th day of July, 1998, by and between Bishop Powers
Ltd., a Colorado Limited Partnership, 716 College View Dr., Riverton, County of
Fremont, State of Wyoming, hereinafter referred to as Owner, and Pioneer Sand
Company, Inc., a Colorado Corporation, P.O. Box 7650, City of Colorado Springs,
County of El Paso, State of Colorado, hereinafter referred to as Contractor. a
Company duly licensed as a contractor in the State of Colorado as follows:
SECTION ONE
DESCRIPTION OF WORK
Contractor shall perform overlot grading, installation of utility lines
including water and sewer mains and taps ( but excluding gas, electricaL phone
and CATV lines), road base preparation including compaction, asphalt paving,
installation of rip-rap lining in Sand Creek channeL as well as public storm
sewer piping at the The Crossing at Palmer Park Sub., Fil. 2, Colorado Springs,
El Paso County, Colorado pursuant to the attached Exhibits, to wit:
A. Plans prepared by HMS Group and Land Development Consultants, Inc.
consisting of Twelve - ( 12 ) Pages attached hereto and incorporated by this
reference as Exhibit "A- I" through "A- 12".
B. Project Bid Tabulation form and General Conditions as prepared by Tigre
Development Services for the Owner, consisting of Five ( 5 ) Pages, attached
hereto, and incorporated by this reference as Exhibit "B".
C. In the event of any inconsistency between the contents of Exhibits "A"
and "B", the unit prices contained within Exhibit "B" shall control.
SECTION TWO
CONTRACT PRICE
A. Owner agrees to pay Contractor, for the work described: Three Hundred
Fifty Thousand Two Hundred Sixty Nine Dollars and Fifty Five Cents ($350,269.55)
Payment of the Performance and Maintenance Bonds referred to in Section 18 of
this contract will be paid in full by the Owner at the time the Notice to
Proceed is issued to the Contractor.
B. Payment of this amount is subject to additions or deduction in
accordance with the provisions of this contract and of the other documents to
which this contract is subject.
<PAGE>
C. Payment on the total contract price is to be made in the form of monthly
progress payments as herein after set forth in Section Three and a Final Payment
as set forth in Section Four.
SECTION THREE
PROGRESS PAYMENTS
A. Owner shall make progress payments on account of the contract price to
Contractor, on the basis of monthly applications for payment submitted to
Owner's Construction Manager by Contractor as the work progresses. Such progress
payments shall be submitted by the 10th day of each succeeding month and shall
be paid, in full, no later than the 20th day of such month for the prior month's
billings for labor and materials. All such progress payments shall be subject to
a retainage by the Owner of Ten Percent (10%) of such amount which amount shall
be paid to Contractor as part of the Final Payment as hereinafter set forth. All
work on the Project shall be performed in accordance with the latest revised
edition of the City of Colorado Specifications applicable to each type of work
being performed.
B. Progress payments may be withheld if -
(1) Work is found defective by Owner and/or the Construction Manager
and not remedied by the time any Progress Payment is due;
(2) Contractor does not make prompt and proper payments to
subcontractors
(3) Contractor does not make prompt and proper payments for labor,
materials or equipment furnished by third parties;
(4) Another contractor on the project is damaged by an act for which
contractor is responsible;
(5) Claims or hens are filed on the job.
SECTION FOUR
FINAL INSPECTION, ACCEPTANCE AND SETTLEMENT
When the work is complete and ready for final inspection, the Contractor
shall file a written notice with the Owner that the work, in the opinion of the
Contractor, is complete under the terms of this Contract. Within ten (10) days
after the contractor files the written notice, the Owner, the Construction
Manager, and the Contractor shall make a final inspection of the project to
determine whether the work has been completed in accordance with the Contract
Documents.
A final list shall be made by the Construction Manager in sufficient detail to
fully outline to the Contractor:
<PAGE>
1. Work to be completed, if any.
2. Work not in compliance with the Plans or Specifications, if any.
3. Unsatisfactory work for any reason, if any.
The Owner shall not be required to make final payment until all items noted
above, if any, have been completed and the Construction Manager has issued a
Certificate of Completion which the Construction Manager shall issue within 10
working days of completion of the Project. Final payment shall be made within
fifteen (15) days of issuance of the Certificate of Completion by the
Construction Manager. Final payment amount shall include all retainages held by
the Owner pursuant to Section Three (A) herein. Fully executed Lien Waivers from
all subcontractors employed by Contractor must be filed with the Construction
Manager prior to processing of the Final Payment by the Owner.
If any unpaid claim for labor, materials, supplies, equipment, or damages
to third parties is filed before payment of the sums due and owing to Contractor
are paid, the Owner may withhold from the Contractor sufficient sums to insure
the full payment of such claims until such claim are withdrawn or paid with such
payment or withdrawal evidenced by a receipt for payment in full or a Notice of
Withdrawal of Claim signed by the claimant or its duly authorized agent or
assignee.
Owner by making payment, waives all claims except those arising out of
(1) Faulty work appearing after issuance of the Certificate of
Completion;
(2) Work that does not comply with the contract documents; or
(3) Outstanding claims of lien.
Contractor, by accepting final payment, waives all claims except those that
it has previously made in writing, and which remain unsettled at the time of
acceptance.
SECTION FIVE
STARTING AND COMPLETION DATES
Construction under this contract will begin when the Construction Manager, on
behalf of the Owner, has obtained the issuance of any and all required permits
or authorizations from local authorities and/or the Contractor, but in no event
later than July 22, 1998. The work herein set forth shall be completed no later
than November 1, 1998 for the on-site grading utilities, and paving and January
1, 1999 for the completion of the Sand Creek channel improvements.
<PAGE>
SECTION SIX
CONTRACT DOCUMENTS
A. The contract documents on which the agreement between Owner and
Contractor is based contain the plans and specifications in accordance with
which the work is to be done and that provide for the method of payment of the
contract price are as follows:
(1) This agreement with Exhibits "A" through "B" hereto which details
the work and materials to be provided by contractor;
(2) The plans and specifications attached hereto as Exhibit "A" and
any amendments made after the effective date of this agreement; and
(3) Written work change orders issued, or to be issued.
B. The contract documents together form the contract for the work described
in this agreement. The parties intend that the documents include provisions for
all labor, materials, equipment, supplies, and other items necessary for the
execution and completion of the work, and all terms and conditions of payment.
C. The contract document is to be separately executed in triplicate by
owner and contractor. Contractor, by executing the documents, represents that it
has inspected and is familiar with the work site and the local conditions under
which the work is to be performed.
SECTION SEVEN
DESIGNATION OF CONSTRUCTION MANAGER;
DUTIES AND AUTHORITY
A. The Construction Manager for above-described project is TIGRE
DEVELOPMENT SERVICES, INC., 6661 Gambol Quail Drive W., Colorado Springs,
Colorado [hereinafter "Construction Manager"-, State of Colorado.
B. The duties and authority of the Construction Manager are as follows:
(a) General Administration of Contract. The primary function of the
Construction Manager is to provide the general administration of the contract.
In performing these duties he is the owner's representative during the entire
period of construction.
(b) Inspections, Opinions, and Progress Reports. Construction Manager
shall keep familiar with the progress and quality of the work by making periodic
visits to the work site. Construction Manager will make general determinations
as to whether the work is proceeding in accordance with the contract.
Construction Manager will keep the owner informed of such progress, and will use
it's best efforts to protect the owner from defects and deficiencies in the
work. Construction Manager will not be responsible for the means of
construction, or for the sequences, methods, and procedures used in such
construction, or for contractor's failure to perform the work in accordance with
the contract documents.
<PAGE>
(c) Access to Work Site for Inspections. Construction Manager shall be
given free access to the work at all times during its preparation and progress.
However Construction Manager is not required to make exhaustive or continuous
on-site inspections to perform it's duties of checking and reporting on work
progress.
(d) Interpretation of Contract Documents; Decisions on Disputes.
Construction Manager will be the initial interpreter of the contract document
requirements, and make primary decisions on claims and disputes between
Contractor and Owner.
(e) Rejection and Stoppage of Work. Construction Manager shall have
authority to reject work that in it's opinion does not conform to the contract
documents, and in this connection to stop the work or a portion of such work,
when necessary.
(f) Payment Certificates. Construction Manager will determine the
amounts owing to contractor as the work progresses, based on contractor's
applications and it's inspections and observations, and will issue certificates
for progress payments and final payment in accordance with the terms of the
contract documents.
SECTION EIGHT
RESPONSIBILITIES OF OWNER
A. Owner shall give all instructions to contractor through the Construction
Manager, shall furnish all necessary soils testing and materials testing
necessary for the work, and shall secure and pay for easements for permanent
structures on the work site, if required, or which are necessary for its proper
completion.
B. Owner reserves the right to let other contracts in connection with the
project. Contractor shall cooperate with all other contractors to the effect
that their work shall not be impeded by it's construction, and shall give such
other contractors access to the work site necessary to perform their contracts,
with the understanding that other contractors are to cooperate fully with
Pioneer Sand Co., Inc. construction schedule.
C. Owner shall have free and unencumbered access to the job site during
completion of the Work herein set forth.
<PAGE>
SECTION NINE
RESPONSIBILITIES OF CONTRACTOR
Contractor's duties and rights in connection with the above-described
project are as follows:
A. Responsibility for and Supervision of Construction. Contractor shall be
solely responsible for all construction under this contract, including the
techniques, sequences, procedures, and means, and for coordination of all work.
Contractor shall supervise and direct the work to the best of its ability, and
give it all attention necessary for such proper supervision and direction.
B. Discipline and Employment. Contractor shall maintain at all times strict
discipline among its employees, and contractor agrees not to employ for work on
the project any person unfit or without sufficient skill to perform the job for
which he or she was employed.
C. Furnishing of Labor, Materials, etc. Contractor shall provide and pay
for all labor, materials, and equipment, including tools, construction
equipment, and machinery, including water, transportation, and all other
facilities and services necessary for the proper completion of work on the
project in accordance with the contract documents including payment of utilities
provided at the site by Owner. All work shall be performed in accordance with
City of Colorado Springs Specifications.
D. Payment of Taxes; Procurement of Licenses and Permits. Contractor shall
pay all taxes required by law in connection with work on the project in
accordance with this agreement including sales, use, and similar taxes.
Contractor shall obtain, at his expense, all necessary licenses and permits to
do the project, in accordance with applicable Federal, State and local laws,
regulations and ordinances. However, owner will pay all service fine development
tap fees due to any City, County, or State entity relating to the project.
E. Compliance with Construction Laws and Regulations. Contractor shall
comply with all laws and ordinances, and the rules, regulations, or orders of
all public authorities relating to the performance of the work under and
pursuant to this agreement. If any of the contract documents are at variance
with any such laws, ordinances, rules, regulations, or orders it shall notify
the Engineer, in writing, promptly on discovery of such variance.
F. Responsibility for Negligence of Employees and Subcontractors.
Contractor assumes full responsibility for acts, negligence, or omissions of all
its employees on the project, for those of its subcontractors and their
employees, and for those of all other persons doing work under a contract with
it.
G. Warranty of Fitness of Equipment and Materials. Contractor represents
and warrants to owner that all equipment and materials used in the work, and
made a part of the structures on such work, or placed permanently in connection
with such work, will be new unless otherwise specified in the contract
documents, of good quality, free of defects, and in conformity with the contract
documents. It is understood and agreed between the parties to this agreement
that all equipment and materials not so in conformity will be considered
defective.
<PAGE>
H. Clean-up. Contractor agrees to keep the work location and adjoining ways
free of waste material and rubbish caused by its work or that of its
subcontractors. Contractor further agrees to remove all such waste material and
rubbish on termination of the project, together with all its tools, equipment,
machinery, and surplus materials. Contractor agrees, on terminating its work at
the site, to conduct general clean-up operations, including the cleaning of
paved streets and walks, if applicable.
I. Indemnity and Hold Harmless Agreement. Contractor agrees to indemnify
and hold harmless Owner and Tigre Development Services, their agents and
employees, from and against any and all claims, damages, losses, and expenses,
including reasonable attorney's fees in case it shall be necessary to file an
action, arising out of performance of the work herein, that is (a) for bodily
injury, illness, or death, or for property damage, including loss of use, and
(b) caused in whole or in party by contractor's negligent act or omission, or
that of a subcontractor, or that of anyone employed by them or for whose acts
contractor or subcontractor may be liable
J. Safety Precautions and Programs. Contractor has the duty of providing
for and overseeing all safety orders, precautions, and programs necessary to the
reasonable safety of the work. In this connection, contractor shall take
reasonable precautions for the safety of all employees and other persons whom
the work might affect, all work and materials incorporated in the project, and
all property and improvements on the construction site and adjacent to the
construction site, complying with all applicable laws, ordinances, rules,
regulations and orders.
SECTION TEN
TIME OF ESSENCE, EXTENSION OF TIME
A. All times stated in this agreement or in the contract documents are of
the essence hereof.
B. The time frames and/or dates stated in this agreement or in the contract
documents may be extended by a change order prepared by the Construction Manager
and signed by Owner for such reasonable time as it may determine, when in it's
opinion contractor is delayed in work progress by changes ordered, inclement
weather, labor disputes, fire, prolonged transportation delays, injuries, or
other causes beyond contractor control or which justify the delay including any
delays caused by Owner. Time extensions granted the Contractor for any or all of
the reasons mentioned above, will not include any payment by the Owner for
office or field costs, overhead, or lost profit resulting from such a time
extension.
<PAGE>
SECTION ELEVEN
SUBCONTRACTORS
A. A subcontractor, for the purposes of this agreement, shall be a person
with whom contractor has a direct contract for work at the project site.
B. All contracts between contractor and subcontractors shall conform to the
provisions of the contract documents, and shall incorporate in them the relevant
provisions of this agreement.
SECTION TWELVE
INSURANCE
A. Contractor's Liability Insurance. Contractor agrees to keep in force at
its own expense during the entire period of construction on the project such
liability insurance as will protect it from claims, under workers' compensation
and other employee benefit laws, for bodily injury and death, and for property
damage, that may arise out of work under this agreement, whether directly or
indirectly by contractor, or directly or indirectly by a subcontractor. The
minimum liability limits of such insurance shall not be less than the limits
specified in the contract documents or by law for that type of damage claim Such
insurance shall include contractual liability insurance applicable to
contractor's obligations under this agreement. Proof of such insurance shall be
filed by contractor with owner within a reasonable time after execution of this
agreement. Contractor agrees to include the Owner and Construction Manager as
additional insured parties on each policy for the Project except Worker's
Compensation Coverage.
B. Owner's Liability Insurance. Owner agrees to maintain in force his own
liability insurance during the construction on this project, and reserves the
right to purchase such additional insurance as in its opinion is necessary to
protect it against claims arising out of the contractor's operation, without
diminishing contractor's obligation to carry the insurance specified in this
agreement on contractor's part to be carried.
C. Waiver of Work Site Property Damage Claims to Extent or Insurance
Coverage. Owner and contractor hereby waive all claims against each other for
fire damage or damages from other perils. Contractor agrees to obtain waivers of
such claims by all subcontractors.
SECTION THIRTEEN
CORRECTING WORK
When it appears to contractor during the course of construction that any
work does not conform to the provisions of the contract documents, contractor
shall make necessary corrections so that such work will so conform, and in
addition shall correct any defects caused by faulty materials, equipment, or
quality of performance in work supervised by it or by a subcontractor, appearing
within one year from the date of issuance of a certificate of substantial
completion, or within such longer period as may be prescribed by law or as may
be provided for by applicable special guaranties in the contract documents.
<PAGE>
The Contractor shall promptly correct any work rejected by the Owner
whether such work has been performed by Contractor or a subcontractor of
Contractor. Promptly correct shall mean within such time as may reasonably be
required to correct such work as determined by the Construction Manager.
SECTION FOURTEEN
WORK CHANGES
A. Owner reserves the right to order work changes in the nature of
additions, deletions, or modifications, without invalidating this agreement, and
agrees to make corresponding adjustments in the contract price and time for
completion.
B. All changes will be authorized by a written change order signed by
Owner, Contractor, and by the Construction Manager. The change order will
include conforming changes in the agreement contract price and completion time
as appropriate.
C. Work shall be changed, and the contract price and completion time shall
be modified, only as set out in the written change order.
D. Any adjustment in the contract price not covered by unit bid prices
resulting in a charge to owner shall be determined by mutual agreement of the
parties before starting the work involved in the change. In the event a mutual
agreement cannot be met, the latest revised version of the CDOT Cost Data book
will be used by both parties to facilitate the determination of the adjusted
cost.
SECTION FIFTEEN
TERMINATION
A. Contractor's Termination. Contractor may, on seven days written notice
to owner and Construction Manager, terminate this agreement before the
completion date specified in this agreement when for a period of ten (10) days
after a progress payment is due, through no fault of contractor, construction
manager fails to process a certificate of payment thereof, or owner fails to
make the payment. On such termination, contractor may recover from owner payment
for all work completed and for any loss sustained by contractor for materials,
equipment, tools, or machinery to the extent of actual loss thereon plus loss of
a reasonable profit, provided it can prove such loss and damages.
<PAGE>
B. Owner's Termination. Owner may, on seven days notice to contractor,
terminate this agreement before the completion date specified in this agreement,
and without prejudice to any other remedy it may have, when contractor defaults
in performance of any provision in this agreement, or fails to carry out the
construction in accordance with the provisions of the contract documents.
SECTION SIXTEEN
GOVERNING LAW
It is agreed that this agreement shall be governed by, construed, and
enforced in accordance with the laws of the State of Colorado.
SECTION SEVENTEEN
ATTORNEY FEES, COSTS AND INTEREST
In the event that any action is filed in relation to this agreement, the
unsuccessful party in the action shall pay to the successful party, in addition
to all the sums that either party may be called on to pay, a reasonable sum for
the successful party's attorney's fees, costs and expert witness fees. Further,
any award obtained shall bear interest from date of default until payment at an
interest rate of Ten Percent (10%). Venue for any such action shall be the
District Court in and for the County of El Paso and State of Colorado.
SECTION EIGHTEEN
BONDS
The Contractor shall be required to secure and maintain a Performance Bond
as well as a one year Maintenance Bond. It is agreed that the costs for such
Bonds shall be paid for by the Owner. The cost of the Performance and
Maintenance Bond is hereby agreed to be 2.25 Percent of the Contract Amount at
time of Award or $7,707.00.
SECTION NINETEEN
ENTIRE AGREEMENT
This agreement shall constitute the entire agreement between the parties
and any prior understanding or representation of any kind preceding the date of
this agreement shall not be binding upon either party except to the extent
incorporated in this agreement.
<PAGE>
SECTION TWENTY
MODIFICATION OF AGREEMENT
Any modification of this agreement or additional obligation assumed by
either party in connection with this agreement shall be binding only if
evidenced in writing signed by each party or an authorized representative of
each party.
SECTION TWENTY-ONE
NOTICES
Any notice provided for or concerning this agreement shall be in writing
and be deemed sufficiently given when sent by certified or registered mail if
sent to the respective addresses of each party as set forth at the beginning of
this agreement.
SECTION TWENTY-TWO
ASSIGNMENT OF RIGHTS
The rights of each party under this agreement are personal to that
party and may not be assigned or transferred to any other person, firm,
corporation, or other entity without the prior, express, and written consent of
the other party.
SECTION TWENTY-THREE
PARAGRAPH HEADINGS
The titles to the paragraphs of this agreement are solely for the
convenience of the parties and shall not be used to explain, modify, simplify,
or aid in the interpretation of the provisions of this agreement.
<PAGE>
IN WITNESS WHEREOF, each party to this agreement has caused it to be
executed on the date indicated below.
OWNER: Bishop Powers, Ltd., a Colorado limited partnership
By Bishop Capital Corporation
Its General Partner
/s/ Robert E. Thrailkill
-----------------------------------
Title: President
-----------------------------------
Dated: July 31, 1998
-----------------------------------
CONTRACTOR: Pioneer Sand Company, Inc.
/s/ Joe Johnson
-----------------------------------
Title: Excavation Manager
-----------------------------------
Dated: July 24, 1998
-----------------------------------
<PAGE>
EXHIBIT "A"
Pages "A-1" through "A-12" not included with contract.
<PAGE>
EXHIBIT "B"
July, 1998
PROJECT: Crossing at Palmer Park Subdivision, Filing No. 2
Location: Northwest Corner of Powers Blvd. and Palmer Park Blvd.
Project Engineer:
HMS Group - Mr. Mark Heine
2835 Downhill Dr.
Colorado Springs, CO 80918
Phone: 528-8554
Construction Management:
Tigre Development Services, Inc.- Mr. Chris Smith
6661 Gambol Quail Dr. W.
Colorado Springs, CO 80918
Phone: 262-0578
FAX: 262-0579
Cell: 661-1218
Owner:
Bishop Powers, Ltd.
716 College View Dr.
Riverton, Wyoming 82501
Warranty Required: Public Facilities - 1 year warranty from inspection/ prelim.
acceptance by appropriate Utility and/or General City entity involved. Private
on - site facilities - one year from final acceptance of work by owner. 10%
retainage will be held by the Owner on all progress payments and released as
part of the Final Payment.
A Performance Bond will be required for the Project. Bond will be in effect
until final acceptance of the project by the Owner.
Scope of Work
-------------
Contractor to provide all labor and materials necessary to construct paving,
storm sewer system, channel rip-rap, sanitary sewer, potable water, and overlot
grading in accordance with plans prepared by HMS Group. See attached Bid
Tabulation.
General Notes
-------------
Owner shall supply at his expense all necessary soils testing, and materials
testing.
1
<PAGE>
Owner to provide all necessary survey control and construction staking.
Any work performed within the Right-Of-Way of Palmer Park Blvd. or Powers Blvd.
shall be done in accordance with the latest edition of the City of Colorado
Springs Engineering Division Standard Specifications and requires an approved
Traffic Control Plan by the City Traffic Engineering Division.
The Contractor is responsible for locating and protecting from damage any
Public or private utilities, including service lines, within the project work
area. Any damage to such Utilities or service lines caused by the Contractor
shall be repaired at the expense of the Contractor.
It shall be the responsibility of the Contractor to obtain, at his expense, all
licenses and permits necessary to complete the project, in accordance with
applicable Federal, State and local laws, regulations and ordinances.
The Contractor shall at all times keep the site of the project and adjacent
areas free from accumulations of waste material or rubbish caused by
Contractors employees or work that is being done by subcontractors.
Contractor's Liability Insurance. Contractor will agree to keep in force, at
it's own expense during the entire period of construction on the project, such
liability insurance as will protect it from claims, under workers' compensation
and other employee benefit laws, for bodily injury and death, and for property
damage, that may arise out of work on this Project, whether directly or
indirectly by Contractor, or indirectly by a subcontractor. The minimum
liability of such insurance shall not be less than the limits specified by law
for that type of damage claim. Such insurance shall include contractual
liability insurance applicable to Contractor's obligations with respect to this
Project. Proof of insurance will be filed by the Contractor with the Owner
prior to commencing work. The Contractor will include Tigre Development
Services, Inc. and Bishop Powers Ltd. as "additional insured parties" on each
policy for the Project, except Worker's Compensation Coverage.
2
<PAGE>
Bid Proposal Detailed Notes
---------------------------
General: The attached plans prepared by HMS Group have not received final
approval by the City of Colorado Springs. Unit prices for the Bid Proposal
items listed will govern in the event that quantity changes occur after final
approval is obtained and /or construction commences on any or all portions of
the work involved prior to City approvaL Change Orders will be processed for
items not covered by the attached Bid Proposal.
Item Number I - Clear & Grub
Clear and Grub entire Fil. No. 2 area, access road, and designated on site
overlot grading areas. Stockpile topsoil material on-site for later use.
Item Number 2 - Tree removal
Removal and disposal of all trees remaining on entire site that were not removed
during Phase I construction. Owner will provide area onsite for bury of stumps
only, in the event on-site bury of stumps is not feasible see Item 33.
Item Number 3 - Overlot grading
Overlot grading using available acceptable on-site borrow as shown on the
attached grading plan. Compaction requirements per soils Engineer. As a minimum,
the City of Colorado Springs Specifications will be used for compaction
requirements unless modified by the soils Engineer.
Item Number 3 - Erosion Control
Consists of erection and maintenance of required erosion control measures
indicated on the Grading and Erosion Control Plan. Contractor will be
responsible for maintenance of the Erosion Control system up until the time
final payment has been made to the Contractor by the Owner.
Items Number 5 through 12 - Storm Sewer Piping and Channel Lining All items to
be constructed per City of Colorado Springs Engineering Div. Specifications. See
plans for details of drop structures, concrete ribbons, and dissipator basin.
See typical channel lining section attached.
Items Number 13 through 16 - Sanitary Sewer Piping and Services All items to be
constructed per City of Colorado Springs Wastewater Div.
Specifications.
Items Number 17 through 26 - Potable Water Piping and Services All items to be
constructed per City of Colorado Springs Water Div. Specifications. Prices for
bends, tees, plugs and blow off assembles shall include all necessary thrust
blocks, reverse anchors, and appurtenances, including materials and labor, for a
complete fitting. Hydrant assembly prices shall include thrust blocks, hydrant
valve, tee, and appurtenances, including materials and labor, for a complete
assembly.
3
<PAGE>
Items 27 through 29 - Asphaltic Concrete Paving and Patching All items to be
constructed per City of Colorado Springs Engineering Specifications. Interior
private street paving section: 3" full depth asphalt
Item 30 - Barricading
Per City of Colorado Springs Specifications. Approved Traffic Control plan
required prior to placement of barricades/traffic control devices.
Item 31 - Signage
Per City of Colorado Springs Specifications and Policies.
Material Specifications
-----------------------
Wastewater Pipe: SDR 35 or approved equal per City of Colorado Springs
Wastewater Div.
Potable Water: DR 14 or approved equal per City of Colorado Springs Water Div.
Potable Water Appurtenances: Per City of Colorado Springs Water Div.
Specifications
Storm Sewer: Minimum Class 111, RCP unless noted otherwise on plans
Base Course: City of Colorado Springs Class 5 or Class 6
Concrete curb and gutter/sidewalk:
City of Colorado Springs Specifications
Compressive Strength at 28 Days = 4000 psi
Max. Water/Cement Ratio by Weight = 0.45
Min. Cement Content/C.Y. of Concrete = 564 lbs.
Asphalt:
City Of Colorado Springs Class C or CX at 95% Max. density.
4
<PAGE>
<TABLE>
<CAPTION>
Drg.Basin: Sand Creek Partial approved plans
Bishop Capital Corp. June 13, 1998
Project No: 98/LDC/cpp Rev. 7/10/98
Rev. 7/14/98
CROSSING AT PALMER PARK - PHASE II
BID TABLUATION FORM
- -------------------------------------------------------------------------------------------------------------------
Item C Group Item Unit Unit Total Total
Code Code Description Meas. Price Quantity Cost
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 EXCAV Clear & Grub CY $ 2.00 1630 $ 3,260.00
2 TREE Tree Removal LS $4,500.00 1 $ 4,500.00
3* EMBANK Overlot Grading (in place
and compacted) CY $ 1.80 13750 $ 24,750.00
4 EROS Erosion Control LS $ 500.00 1 $ 500.00
5 STM 18" CMP (Extend Exist) LF $ 27.00 10 $ 270.00
6 STM 24" RCP (Extend Exist) LF $ 40.00 25 $ 1,000.00
7 STM 24" RCP Bend (Field Fabricate) EA $ 400.00 1 $ 400.00
8* STM Channel Lining, 12" Diam. LF $ 72.50 1470 $ 106,575.00
9* STM Channel Lining, 24" Diam. LF $ 108.00 170 $ 18,360.00
10 STM Drop Structure LF $ 128.80 340 $ 43,792.00
11 STM Conc. Channel Ribbons LF $ 128.80 140 $ 18,032.00
12 STM Dissipator Basin SF $ 5.40 3300 $ 17,820.00
13 SANSWR Connect to exist. MH LS $1,000.00 1 $ 1,000.00
14 SANSWR 8" San. Sewer LF $ 19.00 727 $ 13,813.00
15 SANSWR Manholes EA $1,000.00 2 $ 2,000.00
16 SANSWR 4" Services EA $1,750.00 4 $ 7,000.00
17 WATER 12" Water Line LF $ 26.65 860 $ 22,919.00
18 WATER 8" Water Line LF $ 17.30 681 $ 11,781.30
19 WATER 12" Valves EA $1,075.00 3 $ 3,225.00
20 WATER 8" Valves EA $ 550.00 1 $ 550.00
21 WATER 1 1/2" Services EA $ 850.00 4 $ 3,400.00
22 WATER 12" Bends/tees EA $ 295.00 3 $ 885.00
23 WATER 8" Tees/Tends EA $ 150.00 6 $ 900.00
24 WATER Tap Sleeve EA $8,550.00 1 $ 8,550.00
25 WATER 12" Blowoff EA $ 650.00 1 $ 650.00
26 WATER Hydrant Assembly EA $1,800.00 1 $ 1,800.00
27 PAV Paving-3" Full Dpth SY $ 8.80 2340 $ 20,592.00
28 PAV Saw Cut Asphalt LF $ 2.70 70 $ 189.00
29 PAV Patching TON $ 88.55 35 $ 3,099.25
30 BARR Barricading LS $ 800.00 1 $ 800.00
31 SIGN Signage LS $ 150.00 1 $ 150.00
32* BOND Performance Bond @ 2.25% LS $7,707.00 1 $ 7,707.00
33 ALT Alternate add
Expert tree stumps CY $ 12.00
*Revised quant. and/or unit prices 7/14/98
TOTAL $ 350,269.55
</TABLE>
Page 1
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> JUN-30-1998
<CASH> 348,798
<SECURITIES> 700,649
<RECEIVABLES> 25,914
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,081,469
<PP&E> 370,424
<DEPRECIATION> 150,840
<TOTAL-ASSETS> 2,461,152
<CURRENT-LIABILITIES> 621,527
<BONDS> 0
0
0
<COMMON> 8,384
<OTHER-SE> 1,841,241
<TOTAL-LIABILITY-AND-EQUITY> 2,461,152
<SALES> 274,026
<TOTAL-REVENUES> 274,026
<CGS> 167,883
<TOTAL-COSTS> 290,054
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,653
<INCOME-PRETAX> 45,217
<INCOME-TAX> 15,000
<INCOME-CONTINUING> 30,217
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 30,217
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
