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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.20549
FORM 1O-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: March 31, 2000
Commission File No. 0-27160
CALL NOW, INC.
----------------------------------------------------
(Exact name of small business issuer in its charter)
NEVADA 65-0337175
----------------------------------- ---------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
10803 GULFDALE, SUITE 222, SAN ANTONIO, TX 78216
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(Address of principal executive offices)
(210) 349-4141
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(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 8,495,444 shares as of June 1, 2000.
Transitional Small Business Format: NO
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Registrant's Financial Statements are filed herewith following the
signature page.
The financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with the generally accepted accounting principles have
been omitted. However, in the opinion of management, all adjustments
(which include only normal recurring accruals) necessary to present
fairly the financial position and results of operations for the
period presented have been made. The results for interim periods are
not necessarily indicative of trends or of results to be expected for
the full year. These financial statements should be read in
conjunction with the financial statements and notes thereto included
in the Company's registration statement on Form 10-KSB, as amended.
The Company plans to adjust the value of its Retama Development
Corporation Bonds on a semi-annual basis and accordingly, the value
was not adjusted at March 31, 2000.
The consolidated financial statements included herein have been
subjected to a limited review by Clyde Bailey P.C., independent
auditor for the Company, whose report is included herein.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND LIQUIDITY AND CAPITAL RESOURCES
Three Months Ended March 31, 2000 Compared to 1999.
o RESULTS OF OPERATIONS:
a. REVENUES
The Company's revenues for the three months ended March 31,
2000 were $1,085,968 as compared to $1,045,778 for the three
months ended March 31, 1999. The increase was due primarily
to increased racetrack attendance and the improvement of
simulcast betting facilities.
Interest income for the three months ended March 31, 2000
was $87,625 as compared to $54,101 for the three months
ended March 31, 1999. The increase was due to the investment
of income tax refunds and interest on the RDC Bonds.
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o RESULTS OF OPERATIONS (CONTINUATION):
b. EXPENSES
(1) Racetrack expenses for the three months ended March 31,
2000 were $1,076,478 compared to $1,057,933 for the
three months ended September 30, 1999. The increase was
due to increased racetrack activity.
(2) GENERAL AND ADMINISTRATIVE
Expense for the quarter ended March 31, 2000 was
$206,166 compared to $394,187 for the March 31, 1999
quarter. The decrease was due to the principal officer
not taking a salary for 2000, payroll contributions by
the Trust Companies and reduction of consulting and
legal fees.
(3) INTEREST
Interest expense for the quarter ended March 31, 2000
was $38,760 compared to $74,106 for the March 31, 1999
quarter. The decrease was due to a reduction of debt.
(4) INCOME TAX
For the quarter ended March 31, 2000 the Company
recorded income tax benefit of $51,000 compared to
$120,000 for the three months ended March 31, 1999.
The decrease was due to the decrease in net
operating loss.
c. NET LOSS
The Company had a net loss of $87,192 for the quarter ended
March 31, 2000 compared to a net loss of $298,687 for the
quarter ended March 31, 1999. The decrease in net loss
resulted primarily from an increase in racetrack operations,
a reduction of general and administrative expenses and the
loss on the sale of RDC Bonds in 1999.
d. EARNINGS PER SHARE
For the three months ended March 31, 2000, the Company
recorded a net loss of $0.012 per share compared to a net
loss of $0.04 per share for the March 31, 1999 quarter.
o LIQUIDITY AND CAPITAL RESOURCES:
For the three months ended March 31, 2000, the Company used
$439,950 for operating activities compared to $422,684 for the
three months ended March 31, 1999. The increase was due primarily
to the increase in operations activities of Retama Entertainment
Group, Inc.
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o LIQUIDITY AND CAPITAL RESOURCES (CONTINUATION):
Cash used from investing activities for the three months ended
March 31, 2000, was $111,163 compared to $15,448 for the three
months ended March 31, 1999. The increase was due to net proceeds
from the sale and purchase of Marketable Securities.
For the three months ended March 31, 2000, cash used for
financing activities was $7,908 compared to $7,240 for the three
months ended March 31, 1999. The increase was for the payment of
a long-term note.
The Company has investments primarily in Retama Development
Corporation Bonds. The fair market value of the securities at
March 31, 2000 was $4,403,330. The Bonds produce 140,000 in
non-taxable interest income.
In addition, the Company renewed a demand note payable to Barron
Chase in the amount of $750,000. The note pays the company $7,500
per month which the Company utilizes as working capital. The note
matures in August 2000.
The Company will file an income tax claim in June 2000 for
approximately $566,442.
Based on the above information, management of the Company
believes that it has adequate financial resources to fund its
operations for the current fiscal year.
The Company has been advised by the Securities and Exchange
Commission that it may be considered an investment company and
therefore subject to certain provisions of the Investment Company
Act of 1940. The Company does not believe it is an investment
company and has taken the following actions:
(1) On July 15, 1996 the Company acquired 118.34 acres of land
for development for $2,363,060. Such land is located in
Williamson County, Texas. The Company executed a purchase
money mortgage in connection with the purchase which is
payable in semiannual installments of $85,721 beginning
January 15, 1997, including interest at 9% with the entire
unpaid balance of $1,655,056 due on July 15, 2003. The
Company paid $593,060 at closing from its working capital.
The land is currently vacant and a study is in progress to
determine the best use of the property.
(2) The Company disposed of most of its shares of Intermedia
Communications, Inc. in 1996, which it received in December
1994 in connection with disposition of Phone One, Inc.
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(3) In August 1996 the Company disposed of its remaining long
distance telephone business for 100,000 shares of the
Company's common stock, plus assumption by Buyer of certain
liabilities of the Company. The business was sold to a
former employee and officer of the Company.
(4) In September and October 1996 the Company acquired certain
secured bonds issued by Retama Development Corporation of
Selma, Texas. The bonds are secured by a lien on real estate
which included the Retama Park Racetrack in Selma, Texas.
(5) The balance of the Company's holdings in Compressent were
registered by Compressent in its registration statement on
Form 9-1. In November 1997 the Company disposed of 76,000
of such shares.
(6) On December 1, 1997, the Company's 80% owned subsidiary,
Retama Entertainment Group Inc. was engaged as the manager
of the Retama Park Racetrack effective January 1, 1999.
(7) In December 1999 the Company disposed of 200,000 shares of
Compressent common stock.
(8) In April 1999, the Company disposed of the balance of its
investment in the common stock of Intermedia Communications,
Inc.
(9) In May 1999, the Company reduced its investment in the
Series A Retama Development Bonds to $2,000,000 and sold
one-half of the Series B bonds (face amount of $42,462,500).
In the event the Company is deemed to be an investment company, the
Company may become subject to certain restrictions relating to the
Company's activities including restrictions on the nature of its
investments and issuance of securities. In addition, the Investment
Company Act imposes certain requirements on companies deemed to be
within its regulatory scope, including registration as an investment
company, adoption of a specific form of corporate structure and
compliance with certain burdensome reporting, record keeping, voting,
proxy, disclosure and other rules and regulations. In the event of
characterization of the Company as an investment company, the failure
of the Company to satisfy regulatory requirements whether on a timely
basis or at all, would, under certain circumstances, have a
materially adverse effect on the Company.
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PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit 27. Financial Data Schedule
(b) REPORTS ON FORM 8-K
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CALL NOW, INC.
By: /s/ WILLIAM M. ALLEN
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William M. Allen
Chairman (Chief Executive Officer)
By: /s/ JAMES D. GRAINGER
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James D. Grainger
Vice President-Finance
June 1, 2000 Principal Accounting Officer
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CALL NOW, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
As of March 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>
A S S E T S
CURRENT ASSETS
Cash And Cash Equivalents $ 388,122
Accounts Receivable 45,000
Accounts Receivable - Other 97,854
Marketable Securities, At Market Value 4,599,799
Note Receivable 750,000
Income Tax Refund Claim 566,442
Other 124,604
------------
Total Current Assets $ 6,571,821
Furniture And Equipment (Less Accumulated
Depreciation of $27,858) 5,341
Land 2,369,075
Long-Term Notes and Loan Receivables 849,949
Deferred Tax Assets 81,229
Other 246,054
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Total Assets $ 10,123,469
============
L I A B I L I T I E S A N D S T O C K H O L D E R S' E Q U I T Y
CURRENT LIABILITIES
Accounts Payable $ 128,401
Deferred Tax Payable Bonds 493,873
Current Portion of Mortgage Payable 16,896
Accrued Expenses 130,353
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Total Current Liabilities $ 769,523
NON-CURRENT LIABILITIES
Mortgage Payable, less current maturity 1,704,418
------------
Total Liabilities 2,473,941
------------
Commitment and Contingencies 0
Minority Interest in Consolidated Subsidiary 17,967
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STOCKHOLDERS' EQUITY
Preferred stock, no par, shares authorized 800,000 shares 0
none outstanding
Common Stock, no par shares authorized 50,000,000, 6,205,778
8,585,444 shares issued and 8,495,444 shares outstanding
Retained Earnings 970,400
Less subscriptions notes receivable for 115,000 shares of common stock (230,000)
Accumlulated other comprehensive loss 891,433
Treasury stock, at cost (206,050)
------------
Total Stockholders' Equity 7,631,561
------------
Total Liabilities and Stockholders' Equity 10,123,469
============
</TABLE>
See accompanying summary of accounting policies and notes
to consolidated financial statements.
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CALL NOW, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended March 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------------
2000 1999
----------- -----------
<S> <C> <C>
INCOME
Race Track Operating Income $ 1,040,968 $ 1,000,778
Management Fees 45,000 45,000
Miscellaneous 0 --
----------- -----------
Total Income $ 1,085,968 $ 1,045,778
----------- -----------
COSTS AND EXPENSES
Racetrack $ 1,076,478 $ 1,057,933
General and Administrative 206,166 394,187
Interest 38,760 74,106
Depreciation and Amortization 940 990
----------- -----------
Total Cost and Expenses $ 1,322,344 $ 1,527,216
----------- -----------
(Loss) from continuing operations before
other income and expenses, income
taxes and minority interest (236,376) (481,438)
Other Income and Expenses $ 99,381 $ 54,101
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(Loss) before income taxes and
minority interest (136,995) (427,337)
Income Tax Benefit $ 51,000 $ 120,000
----------- -----------
(Loss) before minority interest (85,995) (307,337)
Minority Interest (1,197) 8,650
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Net (Loss) $ (87,192) $ (298,687)
=========== ===========
Earnings Per Share - Basic and Diluted:
Net (Loss) (0.01) (0.04)
</TABLE>
See accompanying summary of accounting policies and notes
to consolidated financial statements.
7
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CALL NOW, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------
2000 1999
--------- ---------
<S> <C> <C>
Cash Flows from Operating Activities:
Net (Loss) $ (87,192) $(298,687)
--------- ---------
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and Amortization 920 920
Changes in assets and liabilities:
(Increase) Decrease in Assets:
Accounts Receivable - Other 273,571 18,999
Deferred Tax Asset (51,000) (120,000)
Other Current Assets (26,424) (37,297)
Other Assets (22,255) (7,800)
Increase (Decrease) in Liabilities:
Accounts Payable 93,685 6,814
Accrued Expenses (639,204) 23,007
Minority Interest 1,197 (8,650)
--------- ---------
Net Cash (used for) Operating Activities $(456,702) $(422,694)
--------- ---------
Cash flows from Investing Activities:
Purchase of marketable securities $(102,500) $ --
Notes and Loans Receivable:
Advances (8,663) (15,448)
--------- ---------
Net Cash used for Investing Activities $(111,163) $ (15,448)
--------- ---------
Cash flows from Financing Activities
Payment of Long Term Debt (7,908) (7,240)
--------- ---------
Net Cash (used for) provided by Financing Activities $ (7,908) $ (7,240)
--------- ---------
Net (Decrease) in Cash (575,773) (445,382)
Cash Balance, Begin of Year 963,895 545,222
--------- ---------
Cash Balance, End of Year $ 388,122 $ 99,840
========= =========
</TABLE>
See accompanying summary of accounting policies and notes
to consolidated financial statements.
8
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CALL NOW, INC. AND SUBSIDIARIES
NOTE TO FINANCIAL STATEMENTS
Note 1. The Company plans to adjust the value of its Retama Development
Corporation Bonds on a semi-annual basis and accordingly, the
value of the RDC bonds was not adjusted at March 31, 2000.
