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, 2000 0-21867
BISHOP CAPITAL CORPORATION
--------------------------
(Exact name of small business issuer as specified 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, Wyoming 82501
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(Address of principal executive offices) (Zip Code)
(307) 856-3800
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(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, 2000 was 878,355.
Transitional Small Business Disclosure Format
(Check one): Yes No X
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BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 2000
(Unaudited)
ASSETS
Current Assets:
Cash and equivalents $ 84,991
Restricted Cash 360,000
Marketable securities 724,587
Receivables:
Gas royalties 28,146
Interest and other 1,684
Prepaid expenses and other 18,549
-----------
Total current assets 1,217,957
Property and Equipment:
Building 231,699
Furniture 70,546
Vehicles and equipment 1,925
-----------
304,170
Less accumulated depreciation (138,516)
-----------
Net property and equipment 165,654
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Other Assets:
Land under development 891,071
Investment in limited partnership 268,582
Gas royalty interest, net of accumulated
amortization of $846,983 220,068
Deferred income taxes 175,000
Notes receivable 35,599
Other assets, net 17,575
-----------
Total other assets 1,607,895
-----------
Total Assets $ 2,991,506
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 108,447
Current maturities of long-term debt 10,344
Deferred income taxes 175,000
Deferred revenue 658,920
Payable to broker 141,462
-----------
Total current liabilities 1,094,173
Long-term debt, less current maturities 222,073
Minority interest 41,020
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;
878,355 shares issued and outstanding 8,784
Treasury stock, 3,561 shares (2,820)
Capital in excess of par value 2,217,599
Accumulated deficit (589,323)
-----------
Total stockholders' equity 1,634,240
-----------
Total Liabilities and Stockholders' Equity $ 2,991,506
===========
See accompanying notes to these consolidated
financial statements.
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<TABLE>
<CAPTION>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months
Ended June 30,
2000 1999
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<S> <C> <C>
REVENUES -
Sales of real estate $ -- $ 21,244
COSTS AND EXPENSES:
Cost of real estate sold -- 18,270
General and administrative 110,159 110,785
Depreciation and amortization 5,970 6,545
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116,129 135,600
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LOSS FROM OPERATIONS (116,129) (114,356)
OTHER INCOME (EXPENSE):
Gas royalties, net of amortization of $3,336
and $3,336, respectively 47,878 12,662
Interest income 1,256 4,241
Dividend income 4,525 5,010
Rental income 6,936 5,760
Net gain on sale of marketable securities -- 16,649
Net unrealized gain (loss) on marketable securities (199,043) 86,355
Equity in limited partnership income -- 2,660
Interest expense (6,796) (9,716)
--------- ---------
INCOME (LOSS) BEFORE INCOME TAXES $(261,373) $ 9,265
PROVISION FOR INCOME TAXES -- (3,300)
MINORITY INTEREST IN INCOME OF PARTNERSHIP (8,098) --
--------- ---------
NET INCOME (LOSS) $(269,471) $ 5,965
========= =========
EARNINGS (LOSS) PER SHARE $ (.31) $ .01
========= =========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 878,355 878,355
========= =========
See accompanying notes to these consolidated
financial statements.
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BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
June 30,
-------------------------------
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES: --------- ---------
Net income (loss) $(269,471) $ 5,965
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Minority Interest 8,098 --
Depreciation and amortization 5,970 9,881
Deferred income taxes -- 3,300
Equity in limited partnership income -- (2,660)
Net gain on sale of marketable securities -- (16,649)
Net unrealized (gain) loss on marketable securities 199,043 (86,355)
Changes in operating assets and liabilities:
(Increase) decrease in:
Restricted cash (360,000) --
Marketable securities (91,420) (107,235)
Gas royalties receivable (10,286) 16,986
Interest and other receivables 43 657
Prepaid expenses and other 5,113 2,503
Land under development (81,456) 33,178
Increase (decrease) in:
Accounts payable and accrued expenses (57,018) 1,743
Income taxes payable -- --
Payable to broker 59,343 124,231
Deferred revenue 658,920 --
--------- ---------
Net cash provided by (used in) operating activities 66,879 (14,455)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from collection of notes receivable 1,464 1,257
Purchase of property and equipment (2,545) --
Other (393) --
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Net cash provided by (used in) investing activities (1,473) 1,257
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings -- 12,000
Principal payments on borrowings (2,521) (2,614)
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Net cash provided by (used in) financing activities (2,521) 9,386
--------- ---------
Net increase (decrease) in cash and equivalents 62,885 (3,812)
Cash and equivalents, beginning of period 22,106 17,626
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Cash and equivalents, end of period $ 84,991 $ 13,814
========= =========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 6,796 $ 9,716
========= =========
See accompanying notes to these consolidated
financial statements.
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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, 2000 and results of operations for the interim periods
ended June 30, 2000 and 1999. 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. Although the Company believes
that the disclosures in the accompanying financial statements are adequate to
make the information presented not misleading, certain information and
footnote information normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed
or omitted pursuant to the rules and regulations of the Securities and
Exchange Commission, and these financial statements should be read in
conjunction with the Company's audited consolidated financial statements
included in the Company's Form 10-KSB for the year ended March 31, 2000.
2. 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 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.
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, 2000 and 1999 as follows:
Three Months Ended
June 30,
--------------------------
2000 1999
--------- ---------
Sales of real estate $ 658,920 $ 21,244
Deferred revenue (658,920) --
--------- ---------
-- 21,244
Cost of real estate sold -- 18,270
--------- ---------
Gross profit on sale of real estate $ -- $ 2,974
========= =========
The deferred revenue of $658,920 is reflected as a liability in the Company's
balance sheet at June 30, 2000 and will be recognized as the related site
development work obligations are completed.
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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 following discussion of this report may contain certain forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995, Section 21E of the Securities Exchange Act of 1934, as amended, and
Section 27A of the Securities Act of 1933, as amended, and is subject to the
safe harbors created by those sections. Such forward-looking statements are
subject to risks, uncertainties and other factors, which could cause actual
results to differ materially from future results expressed or implied by such
forward-looking statements. The forward-looking statements within this report
are identified by words such as "believes," "anticipates," "expects,"
"intends," "may" and other similar expressions. However, these words are not
the exclusive means of identifying such statements. In addition, any
statements that refer to expectations, projections or other characterizations
of future events or circumstances are forward-looking statements. The
following discussion and analysis should be read in conjunction with the
Company's unaudited consolidated financial statements and notes included
elsewhere herein.
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 loss for the three months ended June 30, 2000 was $269,500
compared to net income of $6,000 for the comparable period in 1999. The
decrease in the current quarter is primarily attributable to a decrease in
real estate sales. The Company, in the current quarter, sold one lot in its
Creekside Center at Galley, but deferred the revenue until development
obligations are completed.
General and administrative expenses decreased $600 or less than 1% for the
three months ended June 30, 2000 compared to the same period in 1999. The
decrease is due to a general reduction in overhead expenses.
Net gas royalty income increased $31,900 or 252% for the three months ended
June 30, 2000 compared to the same period in 1999. Natural gas production for
the three months ended June 30, 2000 was 18,000 mcf compared to 12,300 mcf
for the comparable period in 1999. The 252% increase in production is
primarily due to additional wells producing and a second gas processing plant
going on-line combined with an increase in natural gas prices. The average
sales price of natural gas increased 40% ($2.37 per mcf compared to $1.69 per
mcf) for the three months ended June 30, 2000 compared to the same period in
1999. Gas processing costs and production taxes decreased 55% ($2300 for the
current quarter compared to $5,100 in the comparable 1999 quarter).
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Interest and dividend income decreased $3,500 or 38% for the three months
ended June 30, 2000 compared to the same period in 1999 due to the sale of
U.S. Treasury obligations.
Rental income increased $1,200 in the current quarter compared to the same
period in 1999 due to annual increases in the leases of offices in the
Company's office building.
The net unrealized loss on marketable securities of $199,000 for the three
months ended June 30, 2000 represents the net change in the market value of
the trading securities portfolio from March 31, 2000.
Equity in limited partnership income decreased $2,600 for the three months
ended June 30, 2000 compared to the same period in 1999, due to the
termination of the ground lease in March 2000.
Interest expense decreased $2,900 for the three months ended June 30, 2000
compared to the same period in 1999 due to decreased borrowings under the
bank line of credit and a decrease in the margin balance payable to a broker.
Financial Condition
At June 30, 2000, the Company had working capital of $123,784.
The following summary table reflects comparative quarterly cash flows for the
Company as follows:
Three Months Ended
June 30,
------------------------
2000 1999
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Net cash provided by (used in):
Operating activities $ 66,900 $ (14,500)
Investing activities (1,500) 1,300
Financing activities (2,500) 9,400
The Company had positive cash flows from operating activities of $66,900 for
the three months ended June 30, 2000 compared to net cash used in operating
activities of $(14,500) for the comparable period in 1999. The increase in
operating cash flows was due primarily to the sale of real estate property in
Colorado Springs in the current period.
Net cash used in investing activities of $1,500 for the three months ended
June 30, 2000 resulted primarily from the purchase of property and equipment
of $2,500 and the proceeds from collection of notes receivable. For the three
months ended June 30, 1999, net cash provided by investing activities of
$1,300 resulted from proceeds from collection of notes receivable.
7
<PAGE>
For the three months ended June 30, 2000, the Company made bank payments of
$2,500. The Company had bank borrowings of $12,000 and repayment of bank
borrowings of $2,600 from financing activities for the three months ended
June 30, 1999.
The Company's material commitments for capital expenditures in the next
twelve months may be in conjunction with undeveloped land in Colorado
Springs, Colorado related to (1) the Phase III development of approximately 9
acres in The Crossings at Palmer Park Center, (2) a proposed 350 unit
apartment complex on 18 acres and (3) the development work consisting of
grading, utilities, storm sewers, and paving and curb and gutter of Phase I
of Creekside Center.
When the Company develops Phase III in The Crossing at Palmer Park Center, it
will incur development costs for utilities, storm sewer, paving and
additional drainage channel improvements. The Company will not commence this
development until it has closed on a Phase III lot sale to fund the estimated
on-site and off-site development costs of approximately $250,000.
In connection with the proposed apartment complex, the Company may have to
loan Creekside Apartments, LLLP, under terms of the partnership agreement, up
to $85,000 for costs associated with the rezoning process and other
partnership matters. The Company anticipates that the loan advances, if any,
will be funded from either working capital or cash proceeds that may be
available from lot sales.
The Company has closed on the sale of one lot and has a second lot under
contract in the Creekside Center at Galley, Phase I. The Company will
commence site development of Phase I off-site and on-site improvements
(grading, utilities, storm sewer and paving) with an approximate cost of
$400,000. The Company is aggressively marketing the remaining lots in Phase I
and the undeveloped 12 acre parcel.
The Company believes that existing working capital will be sufficient to fund
the Company's operations, exclusive of real estate development expenditures,
during the next twelve months. Real estate development expenditures will be
funded by proceeds from retail lot sales.
8
<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
27 Financial Data Schedule (submitted only in
electronic format)
b. Reports on Form 8-K
None
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<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, 2000 By: /s/ Robert E. Thrailkill
-------------------------------
Robert E. Thrailkill
President
(Principal Executive Officer)
Date: August 10, 2000 By: /s/ Sherry L. Moore
-------------------------------
Sherry L. Moore
Chief Financial Officer
(Principal Financial Officer)
10
