U. S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-KSB

              Annual Report Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934
                    For the Fiscal Year Ended March 31, 1998

Commission file number:  0-21867

                           BISHOP CAPITAL CORPORATION
                           --------------------------
                 (Name of small business issuer 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)

Issuer's telephone number:  (307) 856-3800

Securities registered under Section 12(b) of the Act:  None

Securities registered under Section 12(g) of the Act:
                          Common Stock, $.01 Par Value

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months and (2) has
been subject to such filing requirements for the past 90 days.   Yes X   No __

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendments to this Form 10-KSB. [ ]

Issuer's revenues for fiscal year ended March 31, 1998 were $1,103,553.

The aggregate market value of the voting stock held by non-affiliates as of June
22, 1998 was $585,720.

The number of shares  outstanding  of the  issuer's  Common Stock as of June 22,
1998 was 838,365.

Documents incorporated by reference:  None

Transitional Small Business Disclosure Format (Check one):  Yes __  No X

<PAGE>

                                   Part I


Item 1.   Description of Business
          -----------------------

Bishop  Capital  Corporation  (the  "Company),  formerly  known as Bishop  Cable
Communications  Corporation,  was originally  incorporated under the laws of the
State of Colorado on February 22, 1983 and reincorporated  under the laws of the
State of Wyoming on June 2, 1992. On November 22, 1995, the Company  changed its
name.  The  Company is  primarily  engaged in the  development  and sale of real
estate and has a royalty  interest in a natural gas property.  The Company was a
wholly-owned subsidiary of a public company (see "Metro/KTOC Transaction") until
its shares were distributed as a partial  liquidating  dividend on June 20, 1997
(see "Distribution").

Metro/KTOC Transaction

In December 1995, the Company's parent corporation,  then known as Metro Capital
Corporation   ("Metro"),   upon  approval  of  its  shareholders,   completed  a
transaction  with Karlton Terry Oil Company and its affiliates  ("KTOC") whereby
KTOC  exchanged  certain oil and gas  properties  for 80% of the then issued and
outstanding  voting securities of Metro (the  "Transaction").  The only class of
securities of Metro issued and  outstanding  prior to the Transaction was Common
Stock.  Under terms of the  Transaction,  Metro issued  shares of newly  created
Class B Common  Stock to KTOC in order to exclude KTOC from  participation  in a
distribution of the Company's  Common Stock.  Metro and KTOC previously were not
affiliated.  Prior to and in connection with the Transaction,  Metro transferred
all of its assets to the Company (a  wholly-owned  subsidiary of Metro),  except
for $700,000 cash and an insignificant oil property.  These transferred  assets,
together  with the  Company's  previously  owned  assets,  were  being  operated
autonomously by the prior  management of Metro who became officers and directors
of the Company pursuant to the terms of separate five-year  Operating and Voting
Agreements.  Upon  completion  of the  Transaction,  Metro's name was changed to
American Rivers Oil Company ("AROC").  Management of KTOC succeeded to the board
of directors and serve as officers of AROC  operating the oil and gas properties
previously owned by KTOC. As a result,  AROC and the Company  operated  separate
businesses under separate management.

The  Company's  operations,  prior to the  transfer of assets  from Metro,  were
primarily related to the development and sale of real estate. Liabilities of the
Company, consisting of trade accounts payable, were insignificant. In connection
with the Transaction, Metro transferred assets of $1,731,000 (excluding $700,000
cash and an  insignificant  oil property) and related  liabilities of $41,000 to
the Company.  The assets transferred  included $1,055,000 in cash and marketable
securities,  net  property  and  equipment  of  $200,000  and a net gas  royalty
interest of $400,000.

                                       2

<PAGE>


Distribution

Pursuant to the terms of the Transaction,  AROC's Board of Directors on November
8, 1996 authorized a spin-off  distribution  of the Company's  Common Stock as a
partial liquidating dividend to AROC's Common shareholders of record on November
18, 1996 on the basis of one share of the Company's Common Stock for four shares
of AROC's Common Stock.  AROC's Class B Common  shareholders did not participate
in the Distribution. The Distribution occurred on June 20, 1997 and the separate
Operating and Voting Agreements previously discussed were terminated. Subsequent
to the  termination  of these  agreements,  the  officers  and  directors of the
Company continued in their present positions.

The Company had four full-time employees as of March 31, 1998.

Real Estate Operations

In October 1993, the Company entered into two limited partnership  agreements to
purchase  approximately  90  contiguous  acres  of  land  in  Colorado  Springs,
Colorado.  The property  surrounding the acreage is primarily retail development
(restaurants,  major grocery chains, gas stations,  convenience stores and small
retailers) to serve nearby residential developments.  A summary of the Company's
participation in each partnership is as follows:

     (1) The Company contributed  $250,000 cash to the first partnership (Bishop
Powers,  Ltd.)  which  purchased  approximately  55  acres  of land  (comprising
separate 20 and 35 acre parcels) for  commercial  development.  The Company,  as
general partner, has an 81% interest with the remaining 19% interest held by the
limited  partner  (Powers  Golf LLC) who is the  general  partner  in the second
partnership  discussed  below.  The Company will be allocated 100% of the income
and losses until it has been paid $600,000 plus interest thereon at 8% per annum
(not to exceed $100,000) after which the income and losses will be allocated 81%
to the Company and 19% to the limited partner.  The Company, as general partner,
has exclusive management of the partnership. Any transfer of a limited partner's
interest  requires the written consent of the general  partner.  The Company has
commenced  a three phase  development  of  commercial  pad sites for the 20 acre
parcel. The development plan for the 35 acre parcel is presently  anticipated to
be a combination of commercial pad sites on 17 acres and an apartment complex on
the remaining 18 acres.

     (2) The Company  contributed  $100,000 cash to the second partnership (Z-H,
Ltd.)  which  purchased  approximately  35  acres  of land on  which  Z-H,  Ltd.
constructed  a  recreational  facility  consisting  of a 60 station golf driving
range, 36 holes of miniature golf, 9 baseball/softball  batting machines,  and a
1,200 square foot clubhouse. This facility, which encompasses all of the acreage
purchased,  commenced  operations  in July 1994.  The  Company,  as the  limited
partner,  has a 19% interest with the remaining 81% interest held by the general

                                       3

<PAGE>


partner  (Powers  Golf LLC).  There is no  affiliation  between  the Company and
Powers Golf LLC. The Company  contributed  an  additional  $250,000 when certain
financing  requirements  in the  partnership  consisting  of  $800,000  of  debt
financing were fulfilled by the general partner.  The Company is not a guarantor
of any debt in this  partnership and the general partner cannot incur additional
debt  without  the prior  written  consent of the  Company.  The  Company is not
required to make any  further  capital  contributions  to the  partnership.  The
Company also has the right of first refusal  relating to the sale of partnership
assets. In July 1997, the general partner  ("Seller")  entered into an Agreement
of Purchase and Sale of Leasehold with an unrelated  third- party  ("Purchaser")
for the sale of all  improvements,  buildings  and  fixtures  for $71,500  cash,
$100,000 of Purchaser's  restricted  common stock and assumption by Purchaser of
approximately  $887,000  debt.  The  transaction  closed  in  October  1997.  In
connection  with the real  property,  the parties  entered into a 25 year Ground
Lease (the  "Lease")  whereby the Purchaser  will pay monthly rents  aggregating
$3,909,000 over the Lease term. The Lease provides for a termination fee payable
to the Purchaser if the Lease is cancelled by the Seller after the expiration of
the second  lease year of  $1,000,000  in lease  years 3 through 5,  $750,000 in
lease  years 6 through 10,  $500,000  in lease years 11 through 15,  $300,000 in
lease years 16 through 20 and $-0- thereafter. In connection with the Lease, the
Purchaser  agreed to have the Seller released from liability on the assumed debt
by the third anniversary of the Lease  commencement date. If this event does not
occur,  the termination fee previously  discussed will be waived.  The Seller is
also  responsible  for the  payment  of real  estate  taxes  on the  land or any
improvements  up to a maximum  amount of $18,000 per lease  year.  Any amount in
excess of  $18,000  per lease year will be paid by the  Purchaser.  At March 31,
1998, the net carrying value of the Company's 19% interest is $210,600.

The undeveloped real estate is subject to local zoning laws and regulations. The
undeveloped  real  estate  must be  surveyed,  designed  and  platted  and  then
submitted to the appropriate governmental authorities for approval,  permits and
agreements  before it can  commence  development.  The ability of the Company to
obtain  necessary  approvals  and permits for its planned  development  is often
beyond the Company's control. The length of time necessary to obtain permits and
approvals  increases  the carrying  costs of  unimproved  land  acquired for the
purpose of  development.  The western  boundary of the  undeveloped  real estate
borders a drainage channel and appropriate governmental authorities will require
that certain  improvements be made along the drainage channel as sections of the
undeveloped  land are platted for  development.  The Company  estimates that the
remaining drainage channel improvement costs will approximate $400,000.

The Company  developed  approximately 5 acres  (comprising 5 lots) in Phase I of
the 20 acre parcel.  The costs for the Phase I site  development work consisting
of grading,  utilities,  channel lining, storm sewer, paving and curb and gutter
were approximately  $446,000.  These costs were funded primarily by net proceeds
from the  closings  of three  lot  sales as  follows:  (i) Lot 1 (1.14  acre) to
Diamond Shamrock  Refining and Marketing  Company for $388,850 for a combination
gasoline sales,  convenience store and car wash facility;  (ii) Lot 2 (.92 acre)
to State Bank & Trust for  $329,703  for a branch bank  facility and (iii) Lot 4
(1.04 acre) to a Taco Bell franchisee for $350,000 for a fast-food facility. The
Company entered into a sales agreement to sell Lot 3 (.69 acre) to Grease Monkey
International,  Inc. for $258,026 and closed the  transaction  on June 11, 1998.
The remaining Lot 5 (.48 acre) in Phase I is currently unsold.

                                       4

<PAGE>


Subsequent  to March 31,  1998,  the Company  submitted  a Concept  Plan for the
remaining 15 acres for Phases II and III along with a Final Plat  consisting  of
one lot in  Phase  II to the  appropriate  governmental  authorities  for  their
approval  which  occurred  on June 4, 1998.  The  Company  entered  into a sales
agreement to sell for  $300,000  the one lot (1.65 acre)  platted in Phase II to
PCRO Limited  Liability Company for a retail automotive and tire service center.
The closing was to occur on or before June 1, 1998;  however,  since the Concept
Plan and Final  Plat were not  approved  until June 4, 1998,  the  parties  have
agreed to close on June 26,  1998.  Upon  closing,  $200,000 of the net proceeds
will be  escrowed  for the  payment  of  on-site  improvements  which  are to be
completed by the Company.  The estimated Phase II development costs for grading,
utilities,  channel lining,  storm sewer and paving are approximately  $327,000.
The Company is presently working on contract  specifications  for the work which
is anticipated to commence in July 1998.

Subsequent to March 31, 1998, the Company entered into a sales agreement to sell
for  $400,000  one lot (1.0 acre) in Phase III.  The Concept  Plan for Phase III
will be revised and resubmitted  along with a one lot Final Plat for approval by
the  appropriate  governmental  authorities.  The  closing  will  occur ten (10)
business days following notice to Purchaser from the Company that the Final Plat
was approved.  In the event the closing has not occurred on or before  September
10,  1998,  then either party may elect to terminate  the  agreement.  Since the
location of the lot is adjacent to the Phase II on-site  improvements  which are
to be completed,  the Company does not anticipate incurring any additional major
development costs.

In October 1995 the Company  acquired  approximately 5 acres of undeveloped real
estate  located  adjacent to a golf course in Riverton,  Wyoming for $80,000 and
expended approximately $154,000 for improvements (utilities,  drainage, roadway,
etc.) in  developing  a 15 lot  subdivision.  The Company had a one year listing
agreement  with  a  local  real  estate  brokerage  company  to  market  at a 6%
commission  rate the improved lots. The listing  agreement  expired in June 1997
and the Company commenced marketing the improved lots. As of March 31, 1998, one
lot sale was closed to an officer  of the  Company.  The  Company  currently  is
having preliminary  discussions with a local construction  contractor  regarding
the building of "spec" homes on several of the lots.

Under various federal, state and local laws, ordinances and regulations relating
to the protection of the environment, a current or previous owner of real estate
may be liable for the cost of removal or  remediation  of certain  hazardous  or
toxic  substances  disposed,  stored,  released,   generated,   manufactured  or
discharged  from, on, at, onto,  under or in such property.  Environmental  laws

                                       5

<PAGE>


often impose such liability  without regard to whether the owner knew of, or was
responsible for, the presence or release of such hazardous or toxic  substances.
The  Company  engaged  an  independent  environmental  engineer  to do a Phase I
Environmental Assessment ("Assessment") on the 20 acre parcel being developed in
Colorado  Springs,  Colorado.  The Assessment did not reveal any  non-compliance
with  environmental  laws. The Company is not aware of any  non-compliance  with
environmental laws, environmental liability or other environmental claims on its
real estate  properties  that the Company  believes would likely have a material
adverse effect on the Company.

The success of the Company depends, among other factors, upon national and local
trends  of  the  economy,   including   interest  rates,   construction   costs,
governmental regulations and legislation,  including environmental requirements,
real estate  fluctuations,  retailing trends,  population  trends,  zoning laws,
availability of financing and capital on  satisfactory  terms and the ability of
the Company to compete with other owners and developers  with greater  resources
and whose management may have more experience than the Company's officers.

Natural Gas Royalty Interest

In December 1990, the Company  purchased a royalty  interest in certain  natural
gas  properties  located in Wyoming  from an  unrelated  third-party.  Since the
Company  did not have  access to reserve  information,  the  Company  engaged an
independent  petroleum geologist to review available  geologic,  engineering and
production data and to estimate the value for the natural gas royalty  interest.
Based on this study and other factors, the Company paid approximately $1,067,000
for the royalty  interests.  At March 31, 1998,  the net carrying  value of this
interest is $250,000. In connection with the purchase,  the Company formed a tax
partnership  (Bridger  Creek  Partnership)  which  allocates to the Company,  as
general  partner,  the first  $40,000 of annual net income (as defined) from the
partnership and 80% of annual net income in excess of $40,000. After the Company
has  received  cumulative  net  income of  $1,050,000,  plus  interest  at prime
adjusted  semi-annually,  the Company  will receive 60% of the annual net income
thereafter.

The royalty  interest is in the Madden Unit (the "Unit") which produces  natural
gas from  producing  horizons  between  5,500 and 24,000 feet. A gas  processing
plant in which the  Company  has no  ownership  interest  treats  the "sour gas"
produced from the Madison  formation (24,000 feet). The plant processes 50 MMCFD
(million cubic feet per day) from two completed  Madison wells.  The operator of
the Unit recently  commenced  modification  plans to increase the plant capacity
from 50 MMCFD to 66 MMCFD and is expected to be completed  by September  1998. A
third Madison well was completed in June 1997 and is currently  shut-in awaiting
construction of a second "sour gas" processing  plant to be located north of the
existing plant.  The new plant will have the capacity to process 66 MMCFD and is
estimated to be  completed in July 1999.  The plant  products  include  methane,
sulfur and carbon  dioxide.  The Company's  royalty  interest is only subject to
plant processing costs and severance and ad valorem taxes. The Company and other
royalty  owners  are  negotiating  with the  plant  operator  to  eliminate  the
deduction  of  certain  processing  costs  which may not be in  accordance  with
applicable state rules and regulations.

                                       6

<PAGE>



Item 2.   Description of Property
          -----------------------

The  Company's  principal  properties  consist  of  approximately  50  acres  of
undeveloped  real estate in Colorado  and an  improved  14 lot  subdivision  and
natural gas royalty interest in Wyoming. None of the properties are held subject
to any encumbrance.

Real Estate Investment Policies

Although the Company has no formal  policy as to the  allocation of assets among
its real estate  investments,  the Company has limited such  investments  to its
present real estate holdings which were acquired  primarily for possible capital
gain.

The  Company's  major  investment  in real estate is  approximately  50 acres of
undeveloped  real estate in Colorado  Springs,  Colorado  which was  acquired in
October 1993 and consists of separate 15 acre and 35 acre parcels.  The Colorado
Springs,  Colorado area has sustained a consistent growth in population over the
past  twenty-five  years.  Population  forecasts for the year 2000 reflect a 20%
increase over 1990 which is a conservative  2% annualized  growth rate.  Several
new retail  development  centers  and  residential  areas  north and east of the
Company's  property  have  been  constructed  or  are in  the  planning  stages.
Demographic and marketing  studies by independent  third-parties  project higher
retail sales and population  growth over a five-year period within a one to five
mile radius of the Company's  property  which is zoned PBC-2  (Planned  Business
Center)  and OC (Office  Complex).  The PBC zoning  allows most  commercial  and
retail  uses  and the OC  zoning  permits  office  uses  as well as  destination
restaurants.

The Company is presently  planning the  development  of commercial pad sites for
Phases II and III on the 15 acre parcel. Phase I of the development,  consisting
of 5 lots (approximately 5 acres of the original 20 acre parcel),  was completed
and the Company  closed sales on four lots.  Subsequent  to March 31, 1998,  the
Concept Plan for Phases II and III and a Final Plat for Phase II were  submitted
to the appropriate  governmental authorities for approval which occurred on June
4, 1998. The estimated Phase II site development  costs for grading,  utilities,
channel lining,  storm sewer and paving are  approximately  $327,000.  The costs
will be funded  primarily  by the net  proceeds  from the  closing of lot sales.
Subsequent  to March  31,  1998,  the  Company  established  two lines of credit
($150,000 and  $250,000)  with a bank to ensure that funds would be available to
commence  the  Phase  II site  improvements.  The  $150,000  line of  credit  is
collateralized  by $160,000 of U. S. Treasury  securities.  The $250,000 line of
credit will be used for the  issuance of letters of credit which may be required
by the governmental authorities and is collateralized by the Company's executive
office building.  The Company has furnished a bank letter of credit for $164,310

                                       7

<PAGE>



to the City of  Colorado  Springs  (the  "City") to provide  assurance  that the
channel  work in Phases I and II will be  completed.  Since the channel  work in
Phase I has been completed,  the City released  $52,710 which decreased the bank
letter of credit to $111,600.

The  Company's  development  plan for the  remaining 35 acre parcel is presently
anticipated to be a combination of retail pad sites on 17 acres and an apartment
complex on the remaining 18 acres. The construction of an apartment complex will
be based upon a variety of factors,  including  (i) applying for a zoning change
from PBC-2 to R-5 (ii) external demographic  studies;  (iii) financial review as
to the feasibility of the proposed project,  including projected profit margins,
return on capital employed and the capital payback period;  (iv) competition for
the proposed  project;  (v) the ability to obtain  financing on favorable terms;
and (vi) management's judgment as to the real estate market and economic trends.
The  Company  would  also  consider  various  financial   resources  such  as  a
partnership, joint venture or other financing arrangements to minimize risk. The
Company had market and feasibility studies completed by independent  consultants
for the proposed  apartment  complex.  The studies  concluded  that the proposed
apartment complex would be a viable project within certain  parameters  relating
to construction costs, types of units, financing,  etc. The Company is currently
having  preliminary  discussions  with a  company  involved  in  the  financing,
construction,  leasing and managing of apartment  complexes  which has expressed
interest in participating  with the Company in developing the proposed apartment
complex.

The Company does not anticipate any major  investments in real estate  mortgages
or securities  of, or interests  in,  persons  primarily  engaged in real estate
activities.

Reserves

Reserve  information  relating to the natural gas royalty  interest owned is not
included  because the  information  is not made  available  to royalty  interest
owners  by  Louisiana  Land  and  Exploration   Company,  the  operator  of  the
properties.  The Company's share of production from the royalty interest for the
year ended March 31, 1998 was 53,000 mcf.


Item 3.   Legal Proceedings
          -----------------

The Company is not a party to any pending  legal  proceedings  involving a claim
for damages  which amount  exceeds 10% of the current  assets of the Company and
its subsidiaries on a consolidated basis and no such proceedings are known to be
contemplated.

Item 4.   Submission of Matters to a Vote of Security Holders
          ---------------------------------------------------

No matters were submitted to a vote of the Company's security holders during the
fourth quarter of the fiscal year ended March 31, 1998.

                                       8

<PAGE>


                                     Part II


Item 5.   Market for Common Equity and Related Stockholder Matters
          --------------------------------------------------------

Common Stock

The  Company's  common  stock  (trading  symbol  "BPCC")  is  traded  on the OTC
(non-NASDAQ)  Bulletin Board Service used by members of the National Association
of Securities Dealers, Inc. ("NASD"). The following table shows the high and low
bid prices for the common stock of the Company,  which was  distributed  on June
20,  1997 as a  partial  liquidating  dividend,  for the  periods  indicated  as
reported by the NASD. The quotations represent prices between dealers and do not
include retail  mark-up,  markdown,  or commission and may not represent  actual
transactions.

           Quarter Ended                 High Bid                   Low Bid
           -------------                 --------                   -------

               6/30/97                 $    --   (1)              $   --   (1)
               9/30/97                      --   (1)                  --   (1)
              12/31/97                      --   (1)                  --   (1)
               3/31/98                     .875                      .125

           (1) The NASD form  required for the  initiation  of quotations on the
               OTC  Bulletin  Board  Service was  submitted by a market maker in
               July 1997 and approved by the NASD in February 1998.

As of June 22, 1998,  there were  approximately  2,000  holders of record of the
Company's common stock (which number does not include  shareholders whose shares
are held of record by brokerage firms).

Dividends

The Company has paid no dividends on its Common Stock and does not intend to pay
cash dividends in the foreseeable future. Payment of cash dividends,  if any, in
the future,  will be determined by the Company's  Board of Directors in light of
the Company's earnings,  financial condition and other relevant  considerations.
There are no  restrictions  on the  Company's  present or future  ability to pay
dividends.


Item 6.   Management Discussion and Analysis of  Financial Condition and Results
          of Operations
         -----------------------------------------------------------------------

Certain statements contained herein are "forward-looking  statements" within the
meaning  of the  Private  Securities  Litigation  Reform  Act of  1995,  such as
statements   relating  to  financial  results  and  plans  for  future  business
development   activities,   and  are  thus  prospective.   Such  forward-looking
statements  are subject to risks,  uncertainties  and other  factors which could

                                       9

<PAGE>


cause  actual  results to differ  materially  from future  results  expressed or
implied by such  forward-looking  statements.  Potential risks and uncertainties
include,  but are not limited to,  economic  conditions,  competition  and other
uncertainties  detailed from time to time in the Company's  Securities  Exchange
Act filings.

The following  discussion and analysis  should be read in  conjunction  with the
Company's Consolidated Financial Statements and Notes thereto.

Results of Operations
---------------------

The  Company's  net income for the fiscal year ended March 31, 1998 was $169,800
compared to a net loss of $524,300  for fiscal 1997.  The  improved  results for
fiscal year 1998 were attributable primarily to sales of improved real estate.

Fiscal 1998 Compared to Fiscal 1997

Gross profit on real estate sold of $524,622 in fiscal 1998  resulted  primarily
from the sale of improved real estate in Colorado Springs, Colorado. Real estate
sales of $1,103,553 were offset by costs of real estate sold of $578,931.  There
were no real estate sales in fiscal 1997.

General  and  administrative  expenses  decreased  $29,300 or 6% in fiscal  1998
primarily due to a general reduction in overhead costs and expenses.

Depreciation and amortization  increased  $10,400 or 58% in fiscal 1998 compared
to fiscal 1997 due to the purchase of vehicles and equipment in fiscal 1998.

Gas royalties, net of amortization, increased $93,500 in fiscal 1998 compared to
fiscal 1997  primarily  due to a decrease in  amortization  of $90,000 or 87% in
fiscal 1998 which resulted from a change in the estimated  remaining life of the
gas  royalty  interest  to  20  years,  effective  January  1,  1997,  based  on
management's  review and evaluation of new public data released by the operator.
Natural gas production  increased 16% (53,000 mcf in 1998 compared to 45,837 mcf
in 1997) and was offset by a 9% decrease  in the average  sales price of natural
gas ($1.76 per mcf in 1998  compared to $1.94 per mcf in 1997) and a 7% increase
in gas  processing  costs and  production  taxes  ($20,514  in 1998  compared to
$19,129 in 1997).

                                       10
<PAGE>


Interest  income  decreased  $8,800  or 21% in  fiscal  1998  from  fiscal  1997
primarily due to the sale of fixed income securities in fiscal 1997.

The net loss on sale of marketable securities of $31,700 in fiscal 1998 resulted
from the sale of equity securities for other investment opportunities.

The net  unrealized  gain on  marketable  securities  of $199,600 in fiscal 1998
represents  the net change in the fair value of trading  securities  from fiscal
1997.

Equity in limited  partnership loss decreased $35,500 or 90% in fiscal 1998 from
fiscal  1997  primarily  due to the  sale  of all  improvements  related  to the
operations  (exclusive  of  real  property)  in  October  1997  to an  unrelated
third-party.  In connection with the real property, the purchaser entered into a
25 year  ground  lease which  provides  for the  payment of monthly  rents.  The
Company's  share of the gain  from the sale of  improvements  was  approximately
$50,000. The gain, which was deferred, will be recognized proportionately by the
installment method.

Interest expense  increased $4,000 or 37% in fiscal 1998 compared to fiscal 1997
primarily  due to bank fees  incurred  for the issuance of letters of credit for
the real estate project in Colorado Springs, Colorado.

Financial Condition

At March 31, 1998, the Company had working capital of $369,800.

The following summary table reflects  comparative cash flows for the Company for
the two years ended March 31, 1998:

                                                           Years Ended
                                                            March 31,
                                                     ---------------------
                                                        1998        1997
                                                        ----        ----
           Net cash provided by (used in):
                  Operating activities               $ 90,500    $(71,600)
                  Investing activities                (50,900)     51,600
                  Financing activities                (50,900)       --

Net cash provided by operating activities increased $162,000 in fiscal 1998 from
fiscal 1997  primarily  due to sales of improved  real estate.  Net cash used in
operating  activities of $71,600 in fiscal 1997 resulted  primarily from the net
loss incurred.

Net cash used in investing activities in fiscal 1998 resulted primarily from the
purchase  of  vehicles  and  equipment.  In fiscal  1997,  net cash  provided by
investing  activities  resulted  from net cash  proceeds  of  $188,100  from the
purchase and sale of  marketable  securities  and $146,600 from  collections  of
notes  receivable  being offset by land  development  costs of  $153,600,  funds
advanced  under notes  receivable  of $120,000  and  purchase of  equipment  for
$9,500.

                                       11

<PAGE>


Net cash used in financing  activities in fiscal 1998 resulted from the purchase
of treasury  stock.  The Company also had borrowings of $50,000 and repayment of
borrowings of $50,000.  There were no cash flows from  financing  activities for
the year ended March 31, 1997.

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 a 15 acre
parcel located in Colorado Springs, Colorado. The Concept Plan for Phases II and
III and the  Final  Plat  relating  to Phase  II of the  development  have  been
submitted to the appropriate  governmental authorities and were approved on June
4, 1998.  The Company has entered into a sales  contract for the one lot platted
in  Phase  II.  The  estimated  costs  for the  Phase II site  improvements  are
approximately  $327,000.  The Company  expects  that such  expenditures  will be
funded primarily by the net proceeds from the sale of lots.  Subsequent to March
31, 1998, the Company  established  two lines of credit  ($150,000 and $250,000)
with a bank to ensure that funds  would be  available  to commence  the Phase II
site improvement work which is anticipated to commence in July 1998.

Impact of Inflation

The Company  cannot  determine the precise  effects of inflation.  However,  the
impact of general price  inflation has not had a material  adverse effect on the
results of the Company's operations.

The Year 2000 Issue

The Year 2000 Issue is the result of computer  programs  using two digits rather
than  four  to  define  the  applicable  year.   Computer   programs  that  have
date-sensitive  software may recognize a date using "00" as the year 1900 rather
than the year 2000.  This could  result in system  failures  or  miscalculations
leading to disruptions in a company's operations. The Company has begun a review
of its computer  system to assess the potential costs and scope of the Year 2000
Issue.  The  Company's  goal  is to  complete  all  relevant  internal  software
remediation  and  testing by March 31,  1999.  The total cost to the  Company of
these  Year 2000 Issue  activities  is not  anticipated  to be  material  to its
financial  position or results of  operations.  Any  purchased  hardware  and/or
software will be capitalized in accordance  with normal policy.  All other costs
related to the project  will be expensed  as  incurred.  The Year 2000 Issue may
impact other entities with which the Company transacts business, and the Company
cannot  predict  the  effect  of the  Year  2000  Issue on such  entities.  This
discussion  is based  upon  management's  best  estimates  and  there  can be no
guarantee that these  estimates will be achieved and actual results could differ
materially from those anticipated.

                                       12

<PAGE>


Recent Accounting Pronouncements

In June 1997,  the Financial  Accounting  Standards  Board issued  Statements of
Financial Accounting Standards No. 130, "Reporting  Comprehensive  Income" (FASB
No. 130) and No. 131,  "Disclosures  About Segments of an Enterprise and Related
Information"  (FASB No. 131),  effective for years  beginning after December 15,
1997.  FASB  No.  130  establishes   standards  for  reporting  and  display  of
comprehensive  income  and  its  components  in a full  set  of  general-purpose
financial   statements.   FASB  No.  131  establishes  standards  for  reporting
information about operating segments and the methods by which such segments were
determined.  The Company has not completed its  evaluation of these  statements,
but  does  not  anticipate  a  material  impact  on the  consolidated  financial
statements from the adoption of the additional disclosure  requirements of these
accounting standards.

Item 7.   Financial Statements
          --------------------

Information  with respect to this item appears on page F-1 of this report.  Such
information is incorporated herein by reference.

Item 8.   Changes  in and  Disagreements  with  Accountants  on  Accounting  and
          Financial Disclosure
          ----------------------------------------------------------------------

None


                                       13

<PAGE>


                                    Part III
                                    --------


Item 9.   Directors and Executive Officers of the Registrant
          --------------------------------------------------

     a. Identification of Directors and Executive Officers

                  Name                Age                  Office
                  ----                ---                  ------

        Robert E. Thrailkill           66      Chairman of the Board, President
                                               and Chief Executive Officer

        John A. Alsko                  57      Secretary/Treasurer and Director

        Robert J. Thrailkill           39      Vice President and Director

     Robert E. Thrailkill.  Mr.  Thrailkill has been President,  Chief Executive
Officer and Director of the Company  since its inception in February  1983.  Mr.
Thrailkill  previously  served as  Chairman  of the Board,  President  and Chief
Executive  Officer of Metro Capital  Corporation,  the  Company's  former parent
corporation,  from  February  1981 to  December  1995 at which  time there was a
change in control.  Mr. Thrailkill's  business background spans over 33 years of
management responsibility in privately and publicly-held companies.

     John A.  Alsko.  Mr.  Alsko  was  appointed  as  Secretary/Treasurer  and a
Director of the Company in November 1995.  Previously,  Mr. Alsko served as Vice
President - Finance of Metro Capital  Corporation from February 1987 to December
1995.  Prior to joining  Metro Capital  Corporation,  he was employed in various
financial  positions with other companies and public accounting firms. Mr. Alsko
is a Certified Public Accountant.

     Robert J.  Thrailkill.  Mr.  Thrailkill  was appointed as Vice  President -
Operations  and a Director  of the  Company in November  1995.  Previously,  Mr.
Thrailkill  served as Director of Operations of Metro Capital  Corporation  from
January 1989 to December 1995.  Prior to joining Metro Capital  Corporation,  he
was  employed  in  various  supervisory  and  managerial  positions  with  other
companies.

The  directors  of the Company are elected to hold office  until the next annual
meeting of  shareholders  or until a successor  has been elected and  qualified.
Officers of the Company are elected  annually by the Board of Directors and hold
office  until  their  successors  are duly  elected  and  qualified.  All of the
officers and directors devote full time to the business of the Company.

No arrangement or  understanding  exists between any of the above  directors and
officers pursuant to which any one of those persons were selected to such office
or position. None of the directors hold directorships in other companies.

                                       14

<PAGE>


     b. Identification of Certain Significant Employees

     Not applicable.

     c. Family Relationships

     Robert J. Thrailkill is the son of Robert E. Thrailkill.

     d. Involvement in Certain Legal Proceedings

     Not applicable.

     e. Compliance with Section 16(a) of the Securities Exchange Act of 1934

     Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
     Directors,  certain  officers  and persons who own more than ten percent of
     the  outstanding  Common Stock of the Company,  to file with the Securities
     and Exchange Commission reports of changes in ownership of the Common Stock
     of the Company held by such persons.  Officers,  directors and greater than
     ten percent  shareholders  are also  required  to furnish the Company  with
     copies of all forms  they file  under  this  regulation.  To the  Company's
     knowledge, based solely on a review of the copies of such reports furnished
     to the Company and representations that no other reports were required, all
     Section  16(a) filing  requirements  applicable  to all of its officers and
     directors  were  complied  with during  fiscal  1998,  except one filing by
     Robert E. Thrailkill,  President,  who  inadvertently  filed late due to an
     administrative oversight.

Item 10.   Executive Compensation
           ----------------------

     a. Summary Compensation Table

The following table sets forth the compensation  received by the Chief Executive
Officer for the years ended March 31, 1998,  1997 and 1996.  No other  executive
officer had total annual salary and bonus exceeding  $100,000 for the year ended
March 31, 1998.
<TABLE>
<CAPTION>

                                                                          Long Term
     Name                          Annual Compensation                  Compensation Awards
      and                 ----------------------------------------   --------------------------
   Principal                                          Other Annual     Restricted      Options
   Position               Year     Salary     Bonus   Compensation   Stock Award ($)   SARS (#)
   --------               ----     ------     -----   ------------   ---------------   --------
<S>                       <C>      <C>         <C>      <C>            <C>             <C>     
Robert E. Thrailkill      1998    $145,000     $--      $   --         $   --             --
President, Chief          1997     145,000      --        46,200(2)        --          45,000(3)
Executive Officer         1996     145,000      --          --           22,500(4)     25,000(5)
and Director (1)
----------


                                       15
</TABLE>
<PAGE>


     (1) Robert E. Thrailkill was the Chief  Executive  Officer of Metro Capital
Corporation  ("Metro")  from  February  1981 to  December  1995 when a change in
control  occurred.  In December  1995,  Mr.  Thrailkill  became Chief  Executive
Officer of Bishop Capital Corporation,  a wholly-owned subsidiary of Metro, into
which the  majority  of  assets of Metro  were  transferred  when the  change in
control  occurred.  Metro  subsequently  changed its name to American Rivers Oil
Company  ("AROC").  On June 20, 1997, the Company's Common Stock was distributed
to AROC's Common shareholders as a partial liquidating dividend.
     (2) Consists of 40,300  registered  shares allocated and issued from AROC's
1987  Stock  Bonus  Plan with a fair  market  value of $1.31  per share  (22,000
shares) and $.94 per share (18,300 shares) on the award dates.
     (3) Consists of AROC's securities underlying options exercisable on date of
grant  (July 31,  1996) at a per share  exercise  price of $1.38 and expires two
years thereafter.
     (4) Consists of 15,000  shares  allocated and issued from AROC's 1987 Stock
Bonus Plan with a fair market value of $1.50 per share on the award date.
     (5) Consists of AROC's securities underlying options exercisable on date of
grant (October 11, 1995) at a per share exercise price of $1.65 and expires five
years thereafter.

The columns for "Long-Term  Incentive Plan Payouts" and "All Other Compensation"
were omitted from the Summary  Compensation Table since there was no information
reportable for the three years ended March 31, 1998.

     b. Option/SAR Grants Table

     The  Company  does not have any stock  option  plans or  outstanding  Stock
Appreciation Rights ("SARs").

     c. Aggregated Option Exercise and Fiscal Year-End Option Value Table

     The Company  does not have any stock  options nor any SARs  outstanding  at
March 31, 1998.

     d. Compensation of Directors

     There are no current  arrangements  for the  compensation  of directors for
services  rendered  since the current  directors  are  employees of the Company.
There are no other arrangements  whereby any of the Company's directors received
compensation for services as a director during fiscal 1998.

     e. Employment Contracts and Termination of Employment and Change-in-Control
Arrangements.

                                       16


<PAGE>


     In November 1995, a Management Agreement (the "Agreement") was entered into
between the Company,  Robert E.  Thrailkill,  the Company's  President,  and the
Company's previous parent company.  The Agreement is for a five year term and is
renewable from year to year thereafter  unless  terminated  previously by either
party. Under the Agreement, Mr. Thrailkill is paid an annual salary of $145,000,
which salary may be  increased  by the Board of  Directors  from time to time in
accordance  with normal  business  practices  of the  Company;  his expenses are
reimbursed  in  accordance  with  the  Company's  policies  and  procedures;  he
participates in and receives established employee benefits and he is entitled to
participate  in  any  future  benefit  made  available  by  the  Company  to its
executives.  The  Agreement  terminates  upon  death  or  disability  and may be
terminated by the Company for cause (as defined in the Agreement). The Agreement
may also be terminated upon a breach of the Agreement, and in the event there is
a change in  control  of the  Company  (as  defined  in the  Agreement).  If the
Agreement is terminated because of a breach of the Agreement by the Company or a
change in control,  the Company  shall pay severance pay equal to the product of
(a) the annual salary rate in effect multiplied by (b) the greater of the number
of years  (including  partial years)  remaining in the term of employment or the
number three.  The Agreement  provides that upon death, the Company shall pay an
amount equal to the annual salary; upon disability, the Company shall pay salary
for the balance of the term of the Agreement (less amounts paid by insurance) or
until the executive becomes gainfully  employed,  whichever is sooner; and, upon
termination  for  cause,  the  Company  shall  pay  any  salary  due  up to  the
termination date.

Item 11.  Security Ownership of Certain Beneficial Owners and Management
          --------------------------------------------------------------

     a. Security Ownership of Certain Beneficial Owners

The  following  table shows,  as of June 22, 1998,  those  persons  known by the
Company  to be the  beneficial  owners of more than 5% of the  Company's  Common
Stock:

                                                  Amount and Nature
                       Name and Address             of Beneficial      Percent
Title of Class        of Beneficial Owner             Ownership        of Class
--------------        -------------------             ---------        --------
Common Stock         Robert E. Thrailkill (1)          133,470           15.9%
                     716 College View Drive
                     Riverton, WY 82501

Common Stock         Consult & Assist (2)               68,750            8.2%
                     P.O. Box 9856
                     Rancho Santa Fe, CA 92067

Common Stock         Francarep, Inc. (3)                68,750            8.2%
                     50 Av. des Champs-Elysees
                     75008 Paris, France
----------

                                       17
<PAGE>

     (1)  On January 20, 1998,  Mr.  Thrailkill  purchased  47,000 shares of the
          Registrant's Common Stock, which shares are restricted, for a purchase
          price of $49,820.
     (2)  All shares are beneficially owned by Georg Ligenbrink.
     (3)  All shares are beneficially owned by Georges Babinet.

     b. Security Ownership of Management

The following  table shows, as of June 22, 1998,  management's  ownership of the
Company's Common Stock:

                                                 Amount and Nature
                      Name and Address             of Beneficial      Percent
Title of Class       of Beneficial Owner             Ownership        of Class
--------------       -------------------             ---------        --------
Common Stock        Robert E. Thrailkill (1)          133,470          15.9%
                    716 College View Drive
                    Riverton, WY 82501

Common Stock        John A. Alsko                      19,563           2.3%
                    716 College View Drive
                    Riverton, WY 82501

Common Stock        Robert J. Thrailkill               15,938           1.9%
                    716 College View Drive
                    Riverton, WY 82501

Common Stock        All officers and directors
                    as a group (three persons)        168,971          20.1%

----------

     (1)  On January 20, 1998,  Mr.  Thrailkill  purchased  47,000 shares of the
          Registrant's Common Stock, which shares are restricted, for a purchase
          price of $49,820.

Item 12.  Certain Relationships and Related Transactions
          ----------------------------------------------

     a. Certain Relationships

     There were no  transactions  during the last two fiscal years,  or proposed
transactions,  in which the Company  was or is to be a party with any  director,
executive  officer  or any member of the  immediate  family of any  director  or
executive officer having a direct or indirect material interest of more than 10%
in any business or professional entity involved in such transactions.

     b. Indebtedness of Management

     No officer or  director  of the  Company  has been  indebted to the Company
directly or indirectly during fiscal year 1998 in an amount exceeding $60,000.

                                       18

<PAGE>


     c. Transactions with Parent of Issuer

     In connection with the Metro/KTOC  Transaction in December 1995, the assets
of Metro which were transferred to the Company were operated autonomously by the
prior management of Metro pursuant to the terms of separate five-year  Operating
and Voting Agreements which terminated on June 20, 1997.

     d. Transactions with Promoters

     Not applicable


                                       19
  

<PAGE>

                                     Part IV


Item 13.  Exhibits and Reports on Form 8-K
          --------------------------------

     a. Exhibits

          3.1  Articles of Incorporation  and Bylaws  (incorporated by reference
               to  Exhibits  3.1  and  3.2  of  the   Registrant's   Form  10-SB
               Registration Statement filed December 11, 1996). (1)

          10.1 Management  Agreement  dated  December 8, 1995  between  American
               Rivers Oil Company (formerly Metro Capital  Corporation),  Bishop
               Capital   Corporation   (formerly  Bishop  Cable   Communications
               Corporation) and Robert E. Thrailkill  (incorporated by reference
               to  Exhibit  10.1 of the  Registrant's  Form  10-SB  Registration
               Statement filed December 11, 1996). (1)

          10.2 Purchase  Option  Agreement  dated August 28, 1996 between Bishop
               Powers,  Ltd., a Colorado  limited  partnership,  Bishop  Capital
               Corporation as General Partner and Diamond Shamrock  Refining and
               Marketing  Company  (incorporated by reference to Exhibit 10.2 of
               the Registrant's Form 10-SB Registration Statement filed December
               11, 1996). (1)

          10.3 Contract  to Sell Real Estate  dated  November  14, 1996  between
               Powers  Ltd.,  a Colorado  limited  partnership,  Bishop  Capital
               Corporation  as General  Partner and 123 Cascade  Associates  LLC
               (incorporated  by reference  to Exhibit 10.3 of the  Registrant's
               Form 10-SB Registration Statement filed December 11, 1996). (1)

          10.4 Agreement  for the  Purchase and Sale of  Commercial  Real Estate
               dated  March 3, 1997  between  Bishop  Powers,  Ltd.,  a Colorado
               limited  partnership,   Bishop  Capital  Corporation  as  General
               Partner and State Bank & Trust of Colorado Springs  (incorporated
               by  reference to Exhibit  10.4 of the  Registrant's  Form 10-SB/A
               Registration Statement filed March 17, 1997). (1)

          10.5 Operating  Agreement  dated  December  8, 1995  between  American
               Rivers Oil Company (formerly Metro Capital Corporation),  Karlton
               Terry Oil Company and Bishop Capital Corporation (formerly Bishop
               Cable Communications  Corporation)  (incorporated by reference to
               Exhibit  10.5  of  the  Registrant's  Form  10-SB/A  Registration
               Statement filed March 17, 1997). (1)

                                       20

<PAGE>


          10.6 Voting  Agreement dated December 8, 1995 between  American Rivers
               Oil Company (formerly Metro Capital  Corporation),  Karlton Terry
               Oil Company and Bishop Capital Corporation (formerly Bishop Cable
               Communications Corporation) (incorporated by reference to Exhibit
               10.6 of the  Registrant's  Form  10-SB/A  Registration  Statement
               filed March 17, 1997). (1)

          10.7 Bishop Powers, Ltd. Limited  Partnership  Agreement dated October
               15, 1993 between  Bishop  Capital  Corporation  (formerly  Bishop
               Cable  Communications  Corporation) as General Partner and Powers
               Golf LLC as Limited Partner (incorporated by reference to Exhibit
               10.7 of the  Registrant's  Form  10-SB/A  Registration  Statement
               filed March 17, 1997). (1)

          10.8 Z-H, Ltd.  Limited  Partnership  Agreement dated October 15, 1993
               between  Powers Golf LLC as General  Partner  and Bishop  Capital
               Corporation (formerly Bishop Cable Communications Corporation) as
               Limited Partner (incorporated by reference to Exhibit 10.8 of the
               Registrant's Form 10-SB/A Registration  Statement filed March 17,
               1997). (1)

          10.9 Agreement of Bridger Creek  Partnership  dated  December 31, 1990
               between  Bishop  Capital  Corporation  (successor  to interest of
               Metro  Capital  Corporation)  and Mr. and Mrs.  William N. Spratt
               (incorporated  by reference  to Exhibit 10.9 of the  Registrant's
               Form 10-SB/A Registration Statement filed March 17, 1997). (1)

         10.10 Construction  Contract  dated June 5, 1997 between Bishop Capital
               Corporation as General Partner of Bishop Powers, Ltd. and Pioneer
               Sand Company, Inc. (1)

         10.11 Agreement  for the  Purchase and Sale of  Commercial  Real Estate
               dated January 27, 1998 between  Bishop  Powers,  Ltd., a Colorado
               limited  partnership,   Bishop  Capital  Corporation  as  General
               Partner and Grease Monkey International, Inc.

         10.12 Agreement  for the  Purchase and Sale of  Commercial  Real Estate
               dated March 20, 1998  between  Bishop  Powers,  Ltd.,  a Colorado
               limited  partnership,   Bishop  Capital  Corporation  as  General
               Partner and PCRO Limited Liability Company.

         10.13 Agreement  for the  Purchase and Sale of  Commercial  Real Estate
               dated June 10,  1998  between  Bishop  Powers,  Ltd.,  a Colorado
               limited  partnership,   Bishop  Capital  Corporation  as  General
               Partner and Sam Khanfar.

          21   Subsidiaries  of the  Registrant  (incorporated  by  reference to
               Exhibit  21  of  the  Registrant's   Form  10-SB/A   Registration
               Statement filed March 17, 1997). (1)

                                       21

<PAGE>


          27   Financial Data Schedule (submitted only in electronic format).

----------

          (1)  Not filed herewith. In accordance with Rule 12b-32 of the General
               Rules and Regulations under the Securities  Exchange Act of 1934,
               reference  is  made  to a  document  previously  filed  with  the
               Commission.

     b. Reports on Form 8-K

     None

                                       22
<PAGE>



                                   Signatures



Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                       BISHOP CAPITAL CORPORATION
                                       (Registrant)


Date: June 22, 1998                      By: /s/ Robert E. Thrailkill
                                            ------------------------------------
                                            Robert E. Thrailkill
                                            President


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the date indicated.


Date: June 22, 1998                         /s/ Robert E. Thrailkill
                                            ------------------------------------

                                            Robert E. Thrailkill
                                            Chairman of the Board of Directors
                                            (Principal Executive Officer)


Date: June 22, 1998                         /s/ John A. Alsko
                                            ------------------------------------
                                            John A. Alsko
                                            Treasurer/Director
                                            (Principal Financial and Accounting
                                            Officer)


Date: June 22, 1998                         /s/ Robert J. Thrailkill
                                            ------------------------------------
                                            Robert J. Thrailkill
                                            Vice President/Director

                                       23


<PAGE>


                   BISHOP CAPITAL CORPORATION AND SUBSIDIARIES

                          INDEX TO FINANCIAL STATEMENTS


                                                                           PAGE
                                                                           ----

Independent Auditor's Report................................................F-2

Consolidated Balance Sheet - March 31, 1998.................................F-3

Consolidated Statements of Operations - 
    For the Years Ended March 31, 1998 and 1997.............................F-4

Consolidated Statements of Changes in Stockholders' Equity - 
    For the Years Ended March 31, 1998 and 1997.............................F-5

Consolidated Statements of Cash Flows -
    For the Years Ended March 31, 1998 and 1997.............................F-6

Notes to Consolidated Financial Statements..................................F-7



                                       F-1

<PAGE>



                          INDEPENDENT AUDITOR'S REPORT



Board of Directors
Bishop Capital Corporation
Riverton, Wyoming


We have audited the  accompanying  consolidated  balance sheet of Bishop Capital
Corporation and subsidiaries as of March 31, 1998, and the related  consolidated
statements of operations,  changes in stockholders'  equity,  and cash flows for
the years ended  March 31, 1998 and 1997.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the  financial  position of Bishop  Capital
Corporation  and  subsidiaries  as of March 31,  1998,  and the results of their
operations  and their cash flows for the years ended March 31, 1998 and 1997, in
conformity with generally accepted accounting principles.




HEIN + ASSOCIATES LLP

Denver, Colorado
May 15, 1998



                                       F-2

<PAGE>



                   BISHOP CAPITAL CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                                 MARCH 31, 1998



                                     ASSETS
                                     ------
CURRENT ASSETS:
    Cash and equivalents                                            $    35,516
    Restricted cash                                                      54,310
    Marketable securities                                               633,294
    Receivables:
         Sale of marketable securities                                   38,316
         Gas royalties                                                   11,723
         Interest and other                                              14,429
    Prepaid expenses and other                                            7,913
                                                                    -----------
             Total current assets                                       795,501

PROPERTY AND EQUIPMENT:
    Building                                                            212,157
    Furniture and fixtures                                               63,162
    Vehicles and equipment                                               91,380
                                                                    -----------
                                                                        366,699
    Less accumulated depreciation                                      (144,494)
                                                                    -----------
             Net property and equipment                                 222,205
                                                                    -----------

OTHER ASSETS:
    Land under development                                              669,632
    Investment in limited partnership                                   210,614
    Gas royalty interest, net of accumulated
         amortization of $816,959                                       250,092
    Deferred income taxes                                                23,000
    Notes receivable                                                     61,305
    Other assets, net                                                     2,718
                                                                    -----------
             Total other assets                                       1,217,361
                                                                    -----------

TOTAL ASSETS                                                        $ 2,235,067
                                                                    ===========


                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

CURRENT LIABILITIES:
    Accounts payable and accrued expenses                           $   172,376
    Income taxes payable                                                 33,000
    Deferred income taxes                                                65,000
    Payable to broker                                                   155,283
                                                                    -----------
         Total current liabilities                                      425,659

COMMITMENTS (Notes 5 and 7)

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                                                (394,585)
                                                                    -----------
             Total stockholders' equity                               1,809,408
                                                                    -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                          $ 2,235,067
                                                                    ===========



       See accompanying notes to these consolidated financial statements.

                                       F-3

<PAGE>



                   BISHOP CAPITAL CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS



                                                           FOR THE YEARS ENDED
                                                                MARCH 31,
                                                         ----------------------
                                                            1998         1997
                                                         ---------    ---------

REVENUES -
   Gross profit on real estate sold                      $ 524,622    $    --

COSTS AND EXPENSES:
   General and administrative                              488,669      518,005
   Depreciation and amortization                            26,411       17,967
                                                         ---------    ---------
                                                           515,080      535,972
                                                         ---------    ---------

INCOME (LOSS) FROM OPERATIONS                                9,542     (535,972)

OTHER INCOME (EXPENSE):
   Gas royalties, net of amortization of $13,342
       and $103,372, respectively                           61,375      (32,090)
   Interest income                                          24,175       33,006
   Dividend income                                          10,839       11,092
   Rental income                                            14,716       13,963
   Net gain (loss) on sale of marketable securities        (31,705)      62,005
   Net unrealized gain (loss) on marketable securities     199,611      (25,992)
   Equity in limited partnership loss                       (3,975)     (39,523)
   Interest expense                                        (14,766)     (10,789)
                                                         ---------    ---------

INCOME (LOSS) BEFORE INCOME TAXES                          269,812     (524,300)
   Provision for income taxes:
       Current                                             (58,000)        --
       Deferred                                            (42,000)        --
                                                         ---------    ---------

NET INCOME (LOSS)                                        $ 169,812    $(524,300)
                                                         =========    =========

EARNINGS PER SHARE                                       $     .20    $    (.59)
                                                         =========    =========

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING              836,000      885,000
                                                         =========    =========



       See accompanying notes to these consolidated financial statements.

                                       F-4

<PAGE>
<TABLE>
<CAPTION>
                                                       
                            BISHOP CAPITAL CORPORATION AND SUBSIDIARIES

                    CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                            FOR THE YEARS ENDED MARCH 31, 1998 AND 1997


                                                  Common Stock                Treasury Stock        
                                          --------------------------    --------------------------        
                                           Number of                     Number of                  
                                            Shares         Amount         Shares         Amount     
                                          -----------    -----------    -----------    -----------  

<S>                                       <C>           <C>             <C>            <C>  
BALANCES, April 1, 1996                       885,481    $     8,855           --      $      --   

  Issuance of AROC common stock for
      employee compensation                      --             --             --             --   
  Net change in unrealized holding gain          --             --             --             --   
  Net loss                                       --             --             --             --   
                                          -----------    -----------    -----------    -----------

BALANCES, March 31, 1997                      885,481          8,855           --             --   

  Purchase of treasury stock                     --             --           94,116       (100,677)
  Sale of treasury stock to officer              --             --          (47,000)        49,820
  Retirement of treasury stock                (47,116)          (471)       (47,116)        50,857
  Net income                                     --             --             --             --   
                                          -----------    -----------    -----------    -----------

BALANCES, March 31, 1998                      838,365    $     8,384           --      $      --   
                                          ===========    ===========    ===========    ===========


                    CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                            FOR THE YEARS ENDED MARCH 31, 1998 AND 1997

                                           (Continued)


                                           Capital in     Unrealized                                           
                                           Excess of       Holding      Accumulated                     
                                           Par Value        Gain          Deficit         Total   
                                          -----------    -----------    -----------    -----------  

BALANCES, April 1, 1996                   $ 2,166,024    $    66,884    $   (40,097)   $ 2,201,666

  Issuance of AROC common stock for
      employee compensation                    79,971           --             --           79,971
  Net change in unrealized holding gain          --          (66,884)          --          (66,884)
  Net loss                                       --             --         (524,300)      (524,300)
                                          -----------    -----------    -----------    -----------

BALANCES, March 31, 1997                    2,245,995           --         (564,397)     1,690,453

  Purchase of treasury stock                     --             --             --         (100,677)
  Sale of treasury stock to officer              --             --             --           49,820
  Retirement of treasury stock                (50,386)          --             --             --
  Net income                                     --             --          169,812        169,812
                                          -----------    -----------    -----------    -----------

BALANCES, March 31, 1998                  $ 2,195,609    $      --      $  (394,585)   $ 1,809,408
                                          ===========    ===========    ===========    ===========

                See accompanying notes to these consolidated financial statements.

                                                F-5
</TABLE>

<PAGE>
<TABLE>
<CAPTION>



                            BISHOP CAPITAL CORPORATION AND SUBSIDIARIES

                               CONSOLIDATED STATEMENTS OF CASH FLOWS



                                                                            FOR THE YEARS ENDED
                                                                                  MARCH 31,
                                                                         -------------------------
                                                                            1998            1997
                                                                         ---------       ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                      <C>             <C>       
    Net income (loss)                                                    $ 169,812       $(524,300)
    Adjustments to reconcile net income (loss) to net cash
        provided by (used in) operating activities:
            Depreciation                                                    25,837          17,397
            Amortization                                                    13,916         103,942
            Deferred income taxes                                           42,000            --
            Issuance of AROC common stock for employee
                compensation                                                  --            79,971
            Equity in limited partnership loss                               3,975          39,523
            Net (gain) loss on sale of marketable securities                31,705         (62,005)
            Net unrealized (gain) loss on marketable securities           (199,611)         25,992
            Changes in operating assets and liabilities:
               (Increase) decrease in:
                   Restricted cash                                         (54,310)           --
                   Marketable securities                                   (15,471)        175,891
                   Gas royalties receivable                                  3,766          (6,090)
                   Interest other receivables                              (43,760)          4,273
                   Receivables from AROC                                     2,055          21,524
                   Prepaid expenses                                          1,413           8,634
                   Other assets                                                999          (1,000)
                   Land under development                                 (104,296)           --   
               Increase (decrease) in:
                   Accounts payable and accrued expenses                   129,332         (40,498)
                   Income taxes payable                                     33,000            --   
                   Customer deposit                                        (20,000)           --   
                   Payable to broker                                        70,177          85,106
                                                                         ---------       ---------
            Net cash provided by (used in) operating activities             90,539         (71,640)

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of marketable securities                                         --          (477,837)
    Proceeds from sale of marketable securities                               --           665,894
    Funds advanced under notes receivable                                     --          (120,000)
    Proceeds from collection of notes receivable                             1,414         146,639
    Land acquisition and development costs                                    --          (153,627)
    Purchase of property and equipment                                     (52,315)         (9,464)
                                                                         ---------       ---------
            Net cash provided by (used in) investing activities            (50,901)         51,605

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from borrowings                                                50,000            --
    Principal payments on borrowings                                       (50,000)           --
    Treasury stock acquired                                               (100,677)           --
    Proceeds from sale of treasury stock to officer                         49,820            --
                                                                         ---------       ---------
            Net cash used in financing activities                          (50,857)           --
                                                                         ---------       ---------

NET DECREASE IN CASH AND EQUIVALENTS                                       (11,219)        (20,035)

CASH AND EQUIVALENTS, beginning of year                                     46,735          66,770
                                                                         ---------       ---------

CASH AND EQUIVALENTS, end of year                                        $  35,516       $  46,735
                                                                         =========       =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
    Cash paid for interest                                               $  14,766       $  10,089
                                                                         =========       =========

    Cash paid for income taxes                                           $  25,000       $    --
                                                                         =========       =========




                See accompanying notes to these consolidated financial statements.

                                                F-6
</TABLE>

<PAGE>


                   BISHOP CAPITAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1. BASIS OF PRESENTATION:
   ----------------------

     Reverse  Acquisition - In October 1995, Metro Capital  Corporation  (Metro)
     and  Karlton  Terry  Oil  Company  (KTOC)  entered  into an Asset  Purchase
     Agreement  whereby KTOC agreed to exchange  certain oil and gas  properties
     (the  "Contributed  Properties") for a total of 7,717,820 shares of Class B
     common stock of Metro,  which represented 80% of the issued and outstanding
     voting securities of Metro. On November 29, 1995, the shareholders of Metro
     approved this transaction and the closing occurred on December 8, 1995. The
     shareholders  also approved  changing the name of the Company from Metro to
     American Rivers Oil Company (AROC).

     Metro's assets, except for $700,000 cash and an insignificant oil property,
     were  transferred  at their  historical  carrying  value to a  wholly-owned
     subsidiary,    Bishop   Capital   Corporation,    formerly   Bishop   Cable
     Communications  Corporation  ("Bishop" or the  "Company"),  where they were
     operated  autonomously  by the prior  management  of Metro  pursuant to the
     terms of separate five-year Operating and Voting Agreements.  The Operating
     Agreement  provided  that  Bishop's   management  had  sole  authority  and
     discretion with respect to the business,  operations, and assets of Bishop.
     The Voting Agreement  appointed Bishop's president as attorney and proxy to
     vote in his sole and absolute discretion,  all of the shares of all classes
     of the common stock of AROC and/or Bishop owned by them with respect to any
     matter brought before the shareholders of AROC and/or Bishop relating to or
     involving exclusively Bishop.

     Change in Capital  Structure  and Spinoff - Since  inception of the Company
     there have been 4,500,000 shares of common stock  outstanding.  In November
     1996,  the Board of  Directors  of AROC (the  Company's  sole  stockholder)
     agreed to make a pro rata  distribution  of 885,481 shares of the Company's
     common stock to AROC's common  stockholders  (excluding  holders of Class B
     common stock) of record on November 18, 1996. The pro rata  distribution of
     shares occurred on June 20, 1997, and the remaining 3,614,519 shares of the
     Company's common stock owned by AROC were canceled.  Accordingly, all share
     and per share amounts in the  accompanying  financial  statements have been
     retroactively restated to give effect to the change in capital structure.


2. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
   --------------------------------------------------------------------

     Nature of Operations - The Company is primarily  engaged in the development
     and sale of real estate.

     Principles of Consolidation - The Company's  subsidiaries consist of Bishop
     Powers,  Ltd.  and Bridger  Creek  Partnership  in which the Company  holds
     general partner  interests of 81% and 80%,  respectively.  The accompanying
     financial   statements  include  the  accounts  of  the  Company  and  both
     majority-owned  partnerships.  All material  intercompany  transactions and
     accounts have been eliminated in consolidation.

     Property  and  Equipment  -  Property  and  equipment  is  stated  at cost.
     Depreciation is provided by the straight-line  method over estimated useful
     lives of three to thirty-one years.


                                       F-7

<PAGE>


                   BISHOP CAPITAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



     Maintenance   and  repairs  are  charged  to  expense  as   incurred,   and
     expenditures  for major  improvements  are  capitalized.  When  assets  are
     retired or otherwise  disposed  of, the  property  accounts are relieved of
     costs and accumulated depreciation, and a gain or loss is recognized.

     Land Under  Development  - Costs that  clearly  relate to land  development
     projects are capitalized.  Costs are allocated to project components by the
     specific  identification method whenever possible.  Otherwise,  acquisition
     costs are allocated based on their relative fair value before  development,
     and development costs are allocated based on their relative sales value.

     Impairment of Long-lived Assets - The Company periodically compares the net
     carrying   value  of  long-lived   assets  to  the  related   estimates  of
     undiscounted  future cash flows for such assets.  If the net carrying value
     exceeds the estimated  cash flows,  then  impairment  will be recognized to
     reduce the carrying value to the estimated fair value.

     Gas Royalty  Interest - Through December 31, 1996, the gas royalty interest
     was being amortized  utilizing the  straight-line  method over an estimated
     life of eight years.  Effective January 1, 1997, management determined that
     the  estimated  remaining  life of the gas royalty  interest  was 20 years,
     based upon information that the operator released publicly.  As a result of
     this change in estimate,  amortization expense for the year ended March 31,
     1997, was reduced by approximately $30,000 (approximately $.03 per share).

     Cash Equivalents - The Company considers all highly liquid debt instruments
     purchased  with an  original  maturity  of three  months or less to be cash
     equivalents.

     Marketable    Securities   -   Management    determines   the   appropriate
     classification   of  its   investments  at  the  time  of  acquisition  and
     reevaluates  such   determination  at  each  balance  sheet  date.  Trading
     securities  are carried at fair value,  with  unrealized  holding gains and
     losses included in earnings.  Available-for-sale  securities are carried at
     fair value, with unrealized  holding gains and losses, net of tax, reported
     as a separate component of stockholders' equity.  Realized gains and losses
     on all securities are computed based on average cost.

     Through  December 31, 1996, all securities were classified as available for
     sale.  Effective  January 1, 1997,  management  reevaluated  the  Company's
     investment  policies and began  classifying all securities as trading since
     management's  intent is to hold the securities  principally for the purpose
     of selling them in the near term.  This  reclassification  had no effect on
     earnings.

     Investments - The Company's 19% ownership interest in a limited partnership
     (Z-H, LTD.) is stated at cost, adjusted for its share of losses incurred.

     Income Taxes - The Company  accounts  for income taxes under the  liability
     method,  which requires  recognition of deferred tax assets and liabilities
     for the expected future tax  consequences of events that have been included
     in the financial statements or tax returns. Under this method, deferred tax
     assets and liabilities are determined  based on the difference  between the
     financial  statement and tax bases of assets and liabilities  using enacted
     tax rates.

                                       F-8

<PAGE>


                   BISHOP CAPITAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



     AROC  included the  Company's  operations  in its  consolidated  income tax
     return through June 20, 1997, when the spin-off was effected.  Income taxes
     were  allocated  between  AROC  and the  Company  as if the  Company  was a
     separate taxpayer.

     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.

     Stock-Based   Compensation   -  The  Company   accounts   for   stock-based
     compensation   issued  to  employees   using  the  intrinsic  value  method
     prescribed in Accounting  Principles  Board Opinion No. 25,  Accounting for
     Stock  Issued  to  Employees,  and  related  interpretations.  Accordingly,
     compensation cost for stock options granted to employees is measured as the
     excess,  if any, of the quoted  market price of the  Company's  (or AROC's)
     common stock at the measurement  date  (generally,  the date of grant) over
     the amount an employee must pay to acquire the stock.

     Stock-based  compensation  issued to  non-employees is accounted for by the
     fair value method as prescribed by Accounting for Stock-Based  Compensation
     (FAS 123). FAS 123 encourages, but does not require, companies to recognize
     compensation  expense for grants of stock, stock options,  and other equity
     instruments to employees  based on fair value.  Companies that do not adopt
     the fair value  accounting  rules must  disclose the impact of adopting the
     new method in the notes to the financial statements. Transactions in equity
     instruments with  non-employees for goods or services must be accounted for
     by the fair value  method.  The  Company  has elected not to adopt the fair
     value accounting  prescribed by FAS 123 for employees,  and will be subject
     only to the disclosure requirements prescribed by FAS 123.

     Accounting   Estimates  -  The  preparation  of  financial   statements  in
     conformity  with  generally   accepted   accounting   principles   requires
     management  to make  estimates  and  assumptions  that  affect the  amounts
     reported in the financial statements and the accompanying notes. The actual
     results could differ from those estimates.

     The Company's  financial  statements  are based on a number of  significant
     estimates,  including the amortization period for the gas royalty interest,
     realizability  of the  carrying  value of land  under  development  and the
     limited partnership investment discussed in Note 5. The Company's estimates
     are expected to change as additional information becomes available.

     Earnings Per Share - The net loss per share  calculation  for 1997 is based
     on the weighted  average number of shares  outstanding  during the year, as
     retroactively  restated  for the  changes in capital  structure  due to the
     spin-off as discussed in Note 1.

     In February 1997,  the Financial  Accounting  Standards  Board issued a new
     statement titled Earnings Per Share (FAS 128) which specifies new standards
     to simplify the existing  computational  guidelines,  revise the disclosure
     

                                       F-9

<PAGE>


                   BISHOP CAPITAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     requirements  and increase the  comparability of earnings per share data on
     an international basis. Since FAS 128 is effective for financial statements
     issued for periods  ending after  December 15, 1997,  the  provisions  were
     adopted  in the  current  period.  Since  the  Company  does  not  have any
     outstanding common stock equivalents,  the adoption of SFAS No. 128 did not
     have any impact on previously  reported  earnings per share information and
     there is no difference between basic and diluted earnings per share.

     Reclassifications  - Certain  reclassifications  have been made to the 1997
     financial   statements  to  conform  to  the   presentation  in  1998.  The
     reclassifications had no effect on the 1997 net loss.


3. MARKETABLE SECURITIES:
   ----------------------

     The cost and estimated fair market value of trading securities at March 31,
     1998, are as follows:


                                                      Fair        Net
                                                      Market   Unrealized
                                            Cost      Value      Gains
                                          --------   --------   --------

        U.S. Treasury securities          $172,758   $173,741   $    983
        Redeemable preferred securities     89,500    101,500     12,000
        Equity securities                  197,418    358,053    160,635
                                          --------   --------   --------

                                          $459,676   $633,294   $173,618
                                          ========   ========   ========


     Cash proceeds  from the sale of  available-for-sale  securities  during the
     year ended March 31, 1997 were $665,894. Net gains from  available-for-sale
     securities  sold during the year ended  March 31, 1997  amounted to $51,340
     (gross gains of $69,511 and gross losses of $18,171).


4. GAS ROYALTY INTEREST:
   ---------------------

     In December 1990, the Company  purchased a royalty  interest in certain gas
     properties  located in Wyoming for approximately  $1,067,000.  At March 31,
     1998, the net carrying value of this interest amounts to $250,092. Revenues
     related to this royalty interest are affected by local gas  transportation,
     processing, and marketing arrangements.  Reserve disclosures related to the
     gas  royalty  interest  are  not  presented   because  the  information  is
     unavailable from the operator of the properties.

     In  connection  with the  purchase,  the Company  formed a tax  partnership
     (Bridger  Creek  Partnership),  which  allocates  to the  Company the first
     $40,000  of annual net income  from the  partnership  and 80% of annual net
     income in excess of $40,000.  After the  Company  receives  cumulative  net
     income of $1,050,000  plus interest at prime  adjusted  semi-annually,  the
     Company  will  be  entitled  to  60%  of  the  annual  net  income  of  the
     partnership.  Through March 31, 1998, the minority  interest's share of the
     partnership's profits and cash flows has not been material.

                                      F-10

<PAGE>


                   BISHOP CAPITAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



5. LAND DEVELOPMENT PARTNERSHIPS:
   ------------------------------

     General  Partnership  Interest - In October  1993,  the Company  became the
     general  partner  of a limited  partnership  to develop or sell 55 acres of
     undeveloped real estate. The Company contributed  $250,000 cash for its 81%
     general  partnership  interest.  The  remaining 19% interest is held by the
     limited  partner who is the general  partner in the  partnership  described
     below. The Company will be allocated 100% of the income and losses until it
     has been paid  $700,000,  after which the  allocation  will be  apportioned
     according to ownership interests. Through March 31, 1998, the Partnership's
     activities  have been focused on the  development  of five  commercial  pad
     sites on approximately  4.62 acres (Phase I) of a 20-acre parcel.  Three of
     the pad sites were sold during the year ended March 31,  1998,  and one was
     sold subsequent to year-end.

     As of March 31, 1998, the Company had furnished a bank letter of credit for
     approximately  $164,000 to the City of Colorado  Springs  (City) to provide
     assurance  that the channel work relating to the  remaining  acreage in the
     20-acre parcel would be completed. The Company also has available an unused
     line-of-credit  for $50,000 with the bank. The  outstanding  bank letter of
     credit and the line-of-credit are collateralized by cash of $54,310,  which
     is  reflected  as  restricted   cash,  and  $160,000  of  U.S.   government
     securities.

     In April 1998,  the  Company  obtained a $250,000  line-of-credit  which is
     collateralized by the Company's building.  This line-of-credit is available
     for the  issuance  of letters of credit and the  $164,000  letter of credit
     discussed above was reissued under this line-of-credit.  In April 1998, the
     Company also obtained a $150,000 line-of-credit which is available for cash
     advances.  This  line-of-credit  is  collateralized  by  $160,000  of  U.S.
     government securities.

     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 year ended March 31, 1998 as follows:


             Sales of real estate                       $1,103,553
                                                        

             Less cost of real estate sold                 578,931
                                                        ----------

                 Gross profit on sales of real estate   $  524,622
                                                        ==========


     At March 31,  1998,  all required  development  work related to fiscal 1998
     sales had been  completed  and,  accordingly,  no profit was required to be
     deferred.

     Limited Partnership Interest - The Company also became a limited partner in
     a  limited   partnership,   which  purchased   approximately  35  acres  of
     undeveloped  land adjacent to the land  mentioned  above.  The  partnership
     constructed a golf driving  range,  miniature  golf,  and batting  facility
     which was completed in July 1994. The Company contributed $350,000 cash for
     its 19% partnership interest,  which is reported under the equity method of
     accounting.  In July 1997,  the general  partner  (Seller)  entered into an
     Agreement of Purchase and Sale of Leasehold  with an unrelated  third party
     (Purchaser) for the sale of all improvements,  buildings,  and fixtures for
    

                                      F-11

<PAGE>


                   BISHOP CAPITAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     $71,500  cash,   $100,000  of  Purchaser's   restricted  common  stock  and
     assumption by Purchaser of  approximately  $887,000 of debt. The closing of
     the  transaction  occurred in October  1997.  In  connection  with the real
     property,  the parties  entered into a 25-year  Ground Lease (the  "Lease")
     whereby the Purchaser will pay annual rents aggregating $3,909,000 over the
     Lease  term.  The Lease  provides  for a  termination  fee  payable  to the
     Purchaser  if the Lease is canceled by the Seller after the  expiration  of
     the  second  lease  year of  $1,000,000  in  lease  years 3  through  5 and
     declining  thereafter to $-0- in lease year 21. The Company's  share of the
     gain from the sale of the  improvements is  approximately  $45,000 of which
     $4,000 was recognized using the installment method of accounting during the
     year ended March 31, 1998.

     Following is a summary of condensed  financial  information  pertaining  to
     this limited partnership:


     Balance sheet data at March 31, 1998:
       Current assets                                 $ 147,000
       Noncurrent assets                                114,000
       Deferred profit                                 (242,000)
       Notes payable - general partners                (319,000)


                                                       YEARS ENDED MARCH 31,
                                                      ----------------------
                                                         1998         1997
                                                      ---------    ---------
     Operations data:
       Revenue                                        $ 100,000    $ 276,000
       Costs and expenses                              (121,000)    (484,000)
                                                      ---------    ---------

       Net loss                                       $ (21,000)   $(208,000)
                                                      =========    =========

       Company's equity in limited partnership loss   $  (3,975)   $ (39,523)
                                                      =========    =========


     The land owned by the  partnerships  discussed above is located in Colorado
     Springs,  Colorado  and,  accordingly,  the  value of these  properties  is
     directly affected by local economic and operating conditions.  At March 31,
     1998, there is a difference of approximately  $268,000 between the carrying
     value of the  Company's  investment  and its 19% interest in the net assets
     and  liabilities of the limited  partnership.  This difference is primarily
     attributable to the value of the lease and the residual value of the land.



                                      F-12

<PAGE>


                   BISHOP CAPITAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



6. INCOME TAXES:
   -------------

     Actual  income tax  expense  differs  from the amounts  computed  using the
     statutory rate of 34% as follows:


                                                         YEARS ENDED MARCH 31,
                                                        ----------------------
                                                           1998         1997
                                                        ---------    ---------

     Computed tax benefit (expense) at the expected         
        statutory rate                                  $ (92,000)    $ 178,000
     State income taxes, net of Federal benefit            (4,000)        9,000
     Non-deductible expenses                               (1,000)       (2,000)
     Change in valuation allowance                        (11,000)     (185,000)
     Surtax exemption                                       8,000          --
                                                        ---------     ---------

         Income tax expense                             $(100,000)    $    --
                                                        =========     =========

     The tax  effects of  temporary  differences  that give rise to  significant
     portions of the deferred tax assets and  liabilities  as of March 31, 1998,
     are presented below:


     Deferred tax assets:
         Gas royalty interest                           $ 251,000
         Net operating loss carryforward                   32,000
         Investment in limited partnership                 16,000
                                                        ---------
                Total deferred tax assets                 299,000
         Less valuation allowance                        (228,000)
                                                        ---------
                Net deferred tax asset                     71,000
                                                        ---------

     Deferred tax liabilities:
         Net unrealized gain on marketable securities     (62,000)
         Land under development                           (48,000)
         Other                                             (3,000)
                                                        ---------
                Total deferred tax liabilities           (113,000)
                                                        ---------

                Net deferred tax liabilities            $ (42,000)
                                                        =========


     The above balances are classified in the accompanying  consolidated balance
     sheet as follows:


                Net deferred tax asset, long-term       $  23,000
                Net deferred tax liability, current       (65,000)
                                                        ---------

                                                        $ (42,000)
                                                        =========



                                      F-13

<PAGE>


                   BISHOP CAPITAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



                                                                               
     As of March 31, 1998,  Bishop has a net  operating  loss  carryforward  for
     Federal income tax purposes of approximately $87,000, net of $534,000 which
     will not be available to the Company due to  limitations  under IRS Section
     382 as a  result  of  the  spin-off  discussed  in  Note  1.  In  addition,
     utilization  of the $87,000  loss  carryforward  is subject to  limitations
     under IRS Section 382. If not previously  utilized,  this carryforward will
     expire primarily in 2013.


7. COMMITMENTS:
   ------------
                                                                                
     Effective  December 1995, the Company  entered into a five-year  employment
     agreement (the "Agreement") with the Company's president (the "Executive"),
     which  provides for minimum annual  compensation  of $145,000 plus employee
     benefits. On the last day of September of each year thereafter, the term of
     the Agreement  shall be  automatically  extended an additional year unless,
     prior to such last day of  September,  the Company or the  Executive  shall
     have  delivered  written  notice  that the term of  employment  will not be
     extended.  The  Agreement  may be  terminated  by the Company only upon the
     death or  disability  of the  Executive or for cause.  If the  Executive is
     terminated without cause, the Company would be required to pay as severance
     pay an amount equal to the  Executive's  salary in effect as of the date of
     termination multiplied by the greater number of years remaining in the term
     of employment or the number three.

     The Company also entered into a three-year employment agreement in December
     1995  with  two  other   officers   which  provide  for  aggregate   annual
     compensation  of $95,000 plus employee  benefits.  The agreements  shall be
     automatically  extended an  additional  year on  September  30 of each year
     thereafter  unless written notice is given by either party that the term of
     employment will not be extended.  The agreements may be terminated upon the
     death or disability of the individual officer or for cause.


8. FINANCIAL INSTRUMENTS:
   ----------------------

     Statement of Financial Accounting Standards No. 107 requires the Company to
     disclose the fair value of certain  financial  instruments in its financial
     statements.  Accordingly,  at March 31, 1998, management's best estimate is
     that  the  carrying  amount  of  cash  and  equivalents,  notes  and  other
     receivables,  accounts payable,  accrued  expenses,  and payable to broker,
     approximates fair value due to the short maturity of these instruments. Due
     to the early stages of real estate development activities in the area where
     the limited partnership's land is located, management is unable to estimate
     the fair value of the Company's 19% limited partner  interest  discussed in
     Note 5. However,  management  believes that fair value exceeds the carrying
     value at March 31, 1998.


9. RELATED PARTY TRANSACTIONS:
   ---------------------------

     During the year ended  March 31,  1997,  the Company  loaned an  additional
     $100,000 to AROC which was subsequently collected during the year. The note
     provided  for  interest  at 10%  and  was  collateralized  by oil  and  gas
     properties in  Louisiana.  During the year ended March 31, 1996, an officer
     paid a $20,000 cash deposit to the Company for the sale of land. During the
     year ended March 31, 1998, the same officer traded a plot of land valued at
     $15,000 plus the $20,000 deposit for a different plot of land.

                                      F-14

<PAGE>


                   BISHOP CAPITAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



     The Company has notes  receivable  for a total of $25,000 from two officers
     of the  Company.  These notes  provide for interest at 6.25% and are due in
     April 1999.  The  officers  pledged  25,000  shares of AROC common stock as
     collateral for the notes.

     For the years ended March 31,  1998 and 1997,  the Company  billed AROC for
     accounting  services which amounted to  approximately  $14,000 and $26,000,
     respectively.


10. STOCK-BASED COMPENSATION:
    -------------------------
                                                                                
     Stock  Grants - During the year ended March 31,  1997,  AROC issued  70,000
     shares of its common stock to certain employees of the Company for services
     performed  on behalf of the  Company.  The Company  recognized  a charge to
     operations for the fair value of these shares of $79,971 for the year ended
     March 31, 1997.

     Pro Forma  Stock-Based  Compensation  Disclosures - The Company applies APB
     Opinion 25 and related  interpretations  in  accounting  for stock  options
     which were granted to its employees.  In July 1996, AROC granted a two-year
     option to an officer to purchase  45,000  shares of its common  stock at an
     exercise  price  of $1.38  per  share.  Accordingly,  the  Company  did not
     recognize any compensation cost for options to purchase AROC's common stock
     that were  granted  to  employees  of the  Company in 1997 since the market
     prices of AROC's  common  stock did not exceed the  exercise  prices on the
     dates of grant. The Company has never issued any stock options, warrants or
     similar instruments.

     If  compensation  cost had been  recognized  using  the fair  value  method
     prescribed by FAS 123 rather than the intrinsic  value method under APB 25,
     the  Company's  net loss and net loss per share would have been  changed to
     the pro forma amounts indicated below for the year ended March 31, 1997:


                       Net loss:
                            As reported      $  (524,300)
                            Pro forma        $  (551,300)

                       Net loss per share:
                            As reported      $      (.59)
                            Pro forma        $      (.62)



                                      F-15

<PAGE>


                   BISHOP CAPITAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     The fair value of each employee option granted in 1997 was estimated on the
     date of  grant  using  the  Black-Scholes  option-pricing  model  with  the
     following weighted average assumptions:


                       Expected volatility           75.0%
                       Risk-free interest rate        6.5%
                       Expected dividends              --
                       Expected terms (in years)      1.8





                                      F-16