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
September 30, 2000 0-21867
BISHOP CAPITAL CORPORATION
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(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
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(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, 2000 was 898,351.
Transitional Small Business Disclosure Format
(Check one): Yes No X
----- -----
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<CAPTION>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000
(Unaudited)
ASSETS
Current Assets:
<S> <C>
Cash and equivalents $ 7,069
Restricted cash 343,445
Marketable securities 625,063
Receivables:
Gas royalties 55,187
Interest and other 14,068
Prepaid expenses and other 18,495
-----------
Total current assets 1,063,327
Property and Equipment:
Building 231,699
Furniture and fixtures 70,546
-----------
302,245
Less accumulated depreciation (139,310)
-----------
Net property and equipment 162,935
-----------
Other Assets:
Land under development 954,976
Investment in limited partnership 278,505
Gas royalty interest, net of accumulated
amortization of $836,975 216,731
Deferred income taxes 175,000
Notes receivable 34,107
Other assets 9,477
-----------
Total other assets 1,668,796
-----------
Total Assets $ 2,895,058
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 215,115
Current maturities of long-term debt 10,830
Deferred income taxes 175,000
Deferred revenue 507,368
Payable to broker 121,899
-----------
Total current liabilities 1,030,212
Long-term debt, less current maturities 219,014
Minority interest 43,213
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;
898,351 shares issued 8,983
Treasury stock, 1,000 shares (2,828)
Capital in excess of par value 2,244,999
Accumulated deficit (648,535)
-----------
Total stockholders' equity 1,602,619
-----------
Total Liabilities and Stockholders' Equity $ 2,895,058
===========
See accompanying notes to these consolidated financial statements.
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<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,
2000 1999 2000 1999
--------------------- ----------------------
REVENUES
<S> <C> <C> <C> <C>
Sales of real estate $ 151,552 $ -- $ 151,552 $ 21,244
COSTS AND EXPENSES:
Cost of real estate sold 65,882 -- 65,882 18,270
General and administration 155,147 112,704 265,304 223,489
Depreciation and amortization 6,055 4,808 12,025 11,353
--------- --------- --------- ---------
227,084 117,512 343,211 253,112
--------- --------- --------- ---------
LOSS FROM OPERATIONS (75,532) (117,512) (191,659) (231,868)
OTHER INCOME (EXPENSE):
Net gas royalties 80,261 63,172 128,139 75,834
Interest income 1,865 2,956 3,121 7,197
Dividend income 4,524 4,375 9,049 9,385
Easement income 8,333 -- 8,333 --
Rental income 6,936 6,460 13,872 12,220
Net gain (loss) on sale of marketable securities 30,511 (31,752) 30,511 (15,103)
Net unrealized gain (loss) on marketable securities (107,006) (76,139) (306,049) 10,216
Net gain on sale of equipment -- 3,852 -- 3,852
Equity in limited partnership income 9,923 3,040 9,923 5,700
Minority interest in earnings of consolidated
subsidiary (11,608) (12,826) (19,706) (12,826)
Interest expense (7,421) (11,456) (14,217) (21,172)
--------- --------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES (59,214) (165,830) (328,683) (156,565)
INCOME TAX BENEFIT (EXPENSE) -- 59,000 -- 55,700
--------- --------- --------- ---------
NET INCOME (LOSS) $ (59,214) $(106,830) $(328,683) $(100,865)
========= ========= ========= =========
EARNINGS (LOSS) PER SHARE $ (.07) $ (.12) $ (.37) $ (.12)
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 877,403 877,355 876,105 877,355
========= ========= ========= =========
See accompanying notes to these consolidated financial statements.
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<CAPTION>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
September 30,
----------------------
2000 1999
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) $(328,683) $(100,865)
Adjustments to reconcile net income to net cash
used in operating activities:
Common stock issued to employees for compensation 27,599 --
Depreciation and amortization 12,026 18,025
Equity in limited partnership income (9,923) (5,700)
Net (gain) loss on sale of marketable securities (30,511) 15,103
Net unrealized (gain) loss on marketable securities 306,049 (10,216)
Net gain on sale of equipment -- (3,852)
Minority interest in earnings of consolidated subsidiary 19,706 12,826
Deferred income taxes -- (55,700)
Changes in operating assets and liabilities:
(Increase) decrease in:
Restricted cash (343,445) --
Marketable securities (104,965) (14,554)
Gas royalties receivable (37,327) (4,035)
Interest and other receivables (12,341) 6,495
Prepaid expenses and other 5,167 4,217
Land under development (145,361) 18,153
Increase (decrease) in:
Accounts payable and accrued expenses 49,650 (1,864)
Income taxes payable -- --
Payable to broker 39,780 89,080
Deferred revenue 507,368 --
--------- ---------
Net cash used in operating activities (45,211) (32,887)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of marketable securities 36,574 --
Proceeds from collection of notes receivable 2,956 2,640
Proceeds from sale of equipment (2,544 6,916
Other 7,705 --
--------- ---------
Net cash provided by investing activities 44,691 9,556
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings -- 24,000
Principal payments on borrowings (5,094) (5,227)
Treasury stock acquired (8) --
Distributions to minority shareholder (9,415) --
--------- ---------
Net cash used in financing activities (14,517) 18,773
--------- ---------
Net increase (decrease) in cash and equivalents (15,037) (4,558)
Cash and equivalents, beginning of period 22,106 17,626
--------- ---------
Cash and equivalents, end of period $ 7,069 $ 13,068
========= =========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 14,217 $ 21,172
========= =========
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 September 30, 2000 and results of operations for the interim
periods ended September 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. These financial
statements should be read in conjunction with the audited financial
statements and related notes included in the Company's Form 10-KSB for the
year ended March 31, 2000.
Certain previously reported amounts have been reclassified to conform with
the current financial statement presentation.
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 and six months ended September 30, 2000 and
1999 as follows:
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<CAPTION>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Three Months Ended Six Months Ended
September 30, September 30,
------------------------- -----------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Sales of real estate $ -- $ -- $ -- $ 21,244
Revenue previously deferred (658,920) -- (658,920) --
Deferred revenue 507,368 -- 507,368 --
---------- ---------- ----------- ----------
151,552 -- 151,552 21,244
Cost of real estate sold 65,882 -- 65,882 18,270
---------- ---------- ----------- ----------
Gross profit on sale of real estate $ 85,670 $ -- $ 85,670 $ 2,974
========== ========== =========== ==========
At September 30, 2000, approximately 23 % of the development work for real
estate sale contracts closed had been completed and, accordingly, 23% of the
previously deferred profit was recognized.
3. Gas Royalty Income
Gas royalty income is net of amortization of $3,336 for the three months
ended September 30, 2000 and 1999 and $6,672 for the six months ended
September 30, 2000 and 1999.
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. Subsequent Events
In October 2000, the Company closed on the sale to JH Foods, Ltd. of a
retail pad site (.81 acre) in the Creekside Center at Galley in Colorado
Springs, Colorado for $367,000. $126,000 of the proceeds from this sale
were added to the Dillon Escrow for the site development costs.
6
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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.
Three Months Ended September 30, 2000 and 1999
The Company incurred a net loss of $59,214 for the three months ended September
30, 2000 compared to a net loss of $106,830 for the comparable period in 1999.
The Company, in the current quarter, did not have any closings of real estate
sale contracts, although it did recognize 23% of deferred sales and costs.
General and administrative expenses increased $42,000 or 37% for the three
months ended September 30, 2000 compared to the same period in 1999 and is
attributable to costs related to the sale of water line easements and general
increases in overhead costs and expenses.
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Net gas royalty income increased $17,000 in the current quarter compared to the
corresponding quarter in 1999. (The unit operator is experiencing system
problems and was unable to make royalty payments on a timely basis. The Company
had accrued estimates of gas royalty income of $32,900 for August and September
based on prior months' actual income.) Natural gas production for the three
months ended September 30, 2000 was 24,000 mcf compared to 35,000 mcf for the
comparable period in 1999. The average sales price of natural gas increased 86%
($3.56 per mcf compared to $1.91 per mcf) and gas processing costs increased
$2,000 for the three months ended September 30, 2000 compared to the same period
in 1999.
Interest income for the three months ended September 30, 2000 decreased $1,000
or 37% compared to the same period in 1999 due to the sale of U.S. Treasury
obligations. Dividend income for the three months ended September 30, 2000, was
comparable to the same period in 1999.
Easement income increased $8,000 for the three months ended September 30, 2000
compared to the same period for 1999 due to the sale of water line easements.
Rental income for the three months ended September 30, 2000 was comparable to
the same period in 1999.
The net unrealized loss on marketable securities of $107,000 for the three
months ended September 30, 2000 represents the net change from June 30, 2000 in
the market value of the trading securities portfolio.
Equity in limited partnership income of $9,900 for the three months ended
September 30, 1999 represents the Company's share of the net income from
operation.
Minority interest in earnings of consolidated subsidiary of $11,600 for the
three months ended September 30, 2000 represents the limited partner's share of
the net income in Bridger Creek Partnership.
Interest expense decreased $4,000 for the three months ended September 30, 2000
compared to the same period in 1999 primarily due to reduced borrowings under
the bank line of credit.
Six Months Ended September 30, 2000 and 1999
The Company's net loss for the six months ended September 30, 2000 was $328,700
compared to net loss of $100,865 for the comparable period in 1999. During the
current period, the Company recognized $86,000 net profit from a deferred lot
sale in Colorado Springs, Colorado.
General and administrative expenses increased $41,800 or 19% for the six months
ended September 30, 2000 compared to the same period in 1999 and is attributable
to costs relating to the sale of water line easements and general increases in
overhead costs and expenses.
Net gas royalties increased $52,300 in the current six months compared to the
corresponding six months in 1999. (The unit operator is experiencing system
problems and was unable to make royalty payments on a timely basis. The Company
8
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accrued estimates of gas royalty income for August and September based on prior
months' actual income.) Natural gas production for the six months ended
September 30, 2000 was 43,000 mcf compared to 49,000 mcf for the comparable
period in 1999. The average sales price of natural gas increased 69% ($3.14 per
mcf compared to $1.86 per mcf) and gas processing costs were comparable for the
six months ended September 30, 2000 compared to the same period in 1999.
Interest income decreased $4,100 or 57% for the six months ended September 30,
2000 compared to the same period in 1999 primarily due to the sale of U.S.
Treasury obligations. Dividend income was comparable to the prior year.
Easement income increased $8,000 for the six months ended September 30, 2000
compared to the same period in 1999 due to the sale of a water line easement.
Rental income increased $1,700 for the six months ended September 30, 2000
compared to the comparable period in 1999.
Net unrealized loss on marketable securities of $306,000 for the six months
ended September 30, 2000 represents the net change from March 31, 2000 in the
market value of the trading securities portfolio.
Equity in limited partnership income of $9,900 for the six months ended
September 30, 2000 represents the Company's share of the net operating income.
Minority interest in earnings of consolidated subsidiary of $19,700 for the six
months ended September 30, 2000 represents the limited partner's share of the
net income in Bridger Creek Partnership.
Interest expense decreased $7,000 for the six months ended September 30, 2000
compared to the same period in 1999 primarily due to reduced borrowings under
the bank line of credit.
Financial Condition
At September 30, 2000, the Company had working capital of $33,000.
The following summary table reflects comparative cash flows for the Company as
follows:
Six Months Ended
September 30,
----------------------
2000 1999
--------- ---------
Net cash provided by (used in):
Operating activities $ (54,600) $ (32,900)
Investing activities 44,700 (9,600)
Financing activities (5,100) 18,800
The Company had negative cash flows from operating activities of $54,600 and
$32,900 for the six months ended September 30, 2000 and 1999, respectively. The
decrease in cash flows was due primarily to site development work of real estate
in Colorado Springs, Colorado.
9
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Net cash provided by investing activities of $44,700 for the six months ended
September 30, 2000 resulted from proceeds from sales of marketable securities
and collection of notes receivable.
Net cash used by financing activities of $5,100 for the six months ended
September 30, 1999 resulted from principal payments on bank borrowings.
The Company's material commitments for capital expenditures in the next twelve
months will 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 Phase I development ("Creekside Center at Galley") of
three retail pad sites on approximately 5 acres of a 17 acre parcel.
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. The Company has one lot
under contract to AutoZone, Inc. for $440,000, but has not yet closed on the
sale.
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 in Creekside Center at Galley and
has two lots under contract, Lot 3 to Waffle House for $350,000 and Lot 4 to JH
Foods, Ltd., for $367,000. The Company has commenced site development of the
Phase I off-site and on-site improvements (grading, utilities, storm sewer, curb
and gutter, and paving) with an approximate cost of $405,000. With the closing
of the first lot sale the Company escrowed $360,000 toward site development
costs. With the closing on the sale to JH Foods, Ltd., the Company will escrow
an additional $126,000 from the proceeds to cover the site development costs.
The Company is aggressively marketing the remaining lot in Phase I and the
undeveloped 12 acre parcel.
The Company entered into an Agreement For Conveyance of Easement with the City
of Colorado Springs, a Home Rule City and Municipal Corporation on behalf of its
enterprise, Colorado Springs Utilities (collectively, the "City") in September
2000. The agreement for the sale of water line easements to the City is a
two-phase agreement due to budget shortages by the City in the current fiscal
year. Phase I, which closed in September, was a sale for $8,332.50. Phase II,
will close no later than January 31, 2001, with a sale price of $117,200.50.
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.
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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
10.20 Agreement for the Purchase and Sale of Commercial Real
Estate dated September 12, 2000 between Bishop Powers, Ltd.,
a Colorado limited partnership, Bishop Capital Corporation
as General Partner and Waffle House.
10.21 Agreement for the Conveyance of Easement between Bishop
Powers, Ltd. A Colorado limited partnership, Bishop Capital
Corporation as General Partner and the City of Colorado
Springs, Colorado, a Home Rule City and Municipal
Corporation on behalf of its enterprise, Colorado Springs
Utilities dated September 29, 2000.
27 Financial Data Schedule (submitted only in electronic
format)
b. Reports on Form 8-K
None
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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, 2000 By: /s/ Robert E. Thrailkill
-------------------------------
Robert E. Thrailkill
President
(Principal Executive Officer)
Date: November 10, 2000 By: /s/ Sherry L. Moore
-------------------------------
Sherry L. Moore
Chief Financial Officer
(Principal Financial Officer)
12
