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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: June 30, 2000
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Commission File No. 0-27160
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CALL NOW, INC.
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(Exact name of small business issuer in its charter)
NEVADA 65-0337175
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(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 August 3,
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.
Marketable Securities. The market value of the Company's RDC municipal
bonds has not changed materially from December 31, 1999 to June 30,
2000 and accordingly no change has been recorded at June 30, 2000. The
Company plans to review the market valuation again at September 30,
2000.
The consolidated financial statements included herein have been
subjected to a limited review by Clyde Bailey P.C., independent auditor
for the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND LIQUIDITY AND CAPITAL RESOURCES
Three and Six Months Ended June 30, 2000 Compared to 1999
o RESULTS OF OPERATIONS:
a. REVENUES
The Company's revenues for the three months ended June 30,
2000 were $1,793,840 as compared to $1,790,136 for the three
months ended June 30, 1999.
For the six months ended June 30, 2000, revenues were
$2,879,808 compared to $2,835,914 for the six months ended
June 30, 1999. The increase was due to increased attendance
and wagering.
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Other income and expense was $123,592 for the three months
ended June 30, 2000 compared to a net expense of $93,258 for
the three months ended June 30, 1999. The increase was due to
interest income from the RDC Bonds and the elimination of a
loss from the sale of securities for the three months ended
June 30, 1999.
For the six months ended June 30, 2000, other income and
expense was $222,973 compared to $39,157 for the six months
ended June 30, 1999.
b. EXPENSES
(1) Racetrack expenses for the three months ended June 30,
2000 were $1,748,841 compared to $1,745,265 for the
three months ended June 30, 1999.
For the six months ended June 30, 2000, Racetrack
expense was $2,789,808 compared to $2,803,198 for the
six months ended June 30, 1999.
(2) GENERAL AND ADMINISTRATIVE
Expense for the quarter ended June 30, 2000 was $277,285
compared to $462,668 for the June 30, 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.
For the six months ended June 30, 2000, expense was
$518,962 compared to $856,855 for the six months ended
June 30, 1999.
(3) INTEREST
Interest expense for the quarter ended June 30, 2000 was
$38,728 compared to $96,118 for the June 30, 1999
quarter. The decrease was due to a reduction of debt.
For the six months ended June 30, 2000, interest expense
was $76,988 compared to $170,224 for the six months
ended June 30, 1999.
(4) INCOME TAX
For the quarter ended June 30, 2000, the Company
recorded income tax benefit of $60,500 compared to
$191,000 for the three months ended June 30, 1999. The
decrease was due to the decrease in net operating loss.
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For the six months ended June 30, 2000, the income tax
benefit was $111,500 compared to $311,000 for the six
months ended June 30, 1999.
c. NET LOSS
The Company had a net loss of $84,033 for the quarter ended
June 30, 2000 compared to a net loss of $416,668 for the
quarter ended June 30, 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.
For the six months ended June 30, 2000, the net loss was
$170,725 compared to $715,355 for the six months ended June
30, 1999.
d. EARNINGS PER SHARE
For the three months ended June 30, 2000, the Company recorded
a net loss of $0.01 per share compared to a net loss of $0.05
per share for the June 30, 1999 quarter.
For the six months ended June 30, 2000, the Company recorded a
net loss of $0.02 per share compared to $0.08 per share for
the six months ended June 30, 1999.
o LIQUIDITY AND CAPITAL RESOURCES:
For the six months ended June 30, 2000, the Company used $667,680
for operating activities compared to cash provided from operating
activities of $592,372 for the six months ended June 30, 1999. The
decrease was due primarily to lake repair expenses during the six
months ended June 30, 2000 and the collection of the income tax
refund in the six months ended June 30, 1999.
Cash used from investing activities for the six months ended June
30, 2000, was $109,533 compared to cash provided of $2,463,574 for
the six months ended June 30, 1999. The decrease was due to net
proceeds from the sale and purchase of Marketable Securities in the
six months ended June 30, 2000.
For the six months ended June 30, 2000, cash used for financing
activities was $7,907 compared to $2,007,240 for the six months
ended June 30, 1999. The decrease was due to the payment of a note
during the six months ended June 30, 1999.
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The Company has investments primarily in Retama Development
Corporation Bonds. The fair market value of the securities at June
30, 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 August 2000 for
approximately $566,442.
Based on the above information, management of the Company believes
that it has adequate financial resources to fund its operation 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 percent 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.
(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
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Selma, Texas. The bonds are secured by a lien on real estate
which included the Retama Park Racetrack in suburban San
Antonio, Texas.
(5) The balance of the Company's holdings in Compressent were
registered by Compressent in its recent 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, 1998.
(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
August 7, 2000 Principal Accounting Officer
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CALL NOW, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
As of June 30, 2000
A S S E T S
CURRENT ASSETS
Cash And Cash Equivalents $ 158,775
Accounts Receivable 45,000
Accounts Receivable - Other 89,937
Marketable Securities, At Market Value 4,499,971
Income Tax Refund Claim 566,442
Notes Receivable 866,949
Other 157,577
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Total Current Assets 6,384,651
Furniture And Equipment
(Less Accumulated Depreciation of $28,778) 4,421
Land 2,369,075
Long-Term Notes and Loan Receivables 731,370
Deferred Tax Assets 179,095
Other 269,599
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Total Assets $9,938,211
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See accompanying summary of accounting policies and notes to consolidated
financial statements.
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CALL NOW, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
As of June 30, 2000
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 $ 90,828
Deferred Tax Payable - Bonds 493,873
Current Portion of Mortgage Payable 16,896
Accrued Expenses 132,614
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Total Current Liabilities 734,211
NON-CURRENT LIABILITIES
Mortgage Payable, less current maturity 1,704,418
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Total Liabilities 2,438,629
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Commitment and Contingencies --
Minority Interest in Consolidated Subsidiary 14,158
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STOCKHOLDERS' EQUITY
Preferred stock, no par shares
authorized 800,000 shares
none outstanding --
Common Stock, no par shares
authorized 50,000,000,
8,585,444 shares issued
and 8,495,444 shares outstanding 6,205,778
Retained Earnings 887,224
Less subscription notes receivable
for 115,000 shares of common stock (230,000)
Accumulated other comprehensive income 828,472
Treasury stock, at cost (206,050)
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Total Stockholders' Equity 7,485,424
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Total Liabilities and Stockholders' Equity $ 9,938,211
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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 and Six Months Ended June 30
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
----------------------------- -----------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INCOME
Racetrack Operating Income $ 1,748,840 $ 1,745,136 $ 2,789,808 $ 2,745,914
Management Fees 45,000 45,000 90,000 90,000
----------- ----------- ----------- -----------
Total Income 1,793,840 1,790,136 2,879,808 2,835,914
----------- ----------- ----------- -----------
COSTS AND EXPENSES
Racetrack 1,748,841 1,745,265 2,789,808 2,803,198
General and Administrative 277,285 462,668 518,962 856,855
Interest 38,728 96,118 76,988 170,224
Depreciation and Amortization 920 1,210 1,860 2,200
----------- ----------- ----------- -----------
Total Cost and Expenses 2,065,774 2,305,261 3,387,618 3,832,477
----------- ----------- ----------- -----------
(Loss) from continuing operations before (271,934) (515,125) (507,810) (996,563)
other income and expense, income taxes, and
minority interest
Other Income and Expense 123,592 (93,258) 222,973 (39,157)
----------- ----------- ----------- -----------
(Loss) before income taxes and (148,342) (608,383) (284,837) (1,035,720)
minority interest
Income Tax Benefit 60,500 191,000 111,500 311,000
----------- ----------- ----------- -----------
(Loss) before minority interest (87,842) (417,383) (173,337) (724,720)
Minority Interest 3,809 715 2,612 9,365
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Net (Loss) $ (84,033) $ (416,668) $ (170,725) $ (715,355)
=========== =========== =========== ===========
Earnings Per Share - Basic and Diluted:
Net (Loss) $ (0.01) $ (0.05) $ (0.02) $ (0.08)
</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 CASH FLOWS
Six Months Ended June 30
<TABLE>
<CAPTION>
2000 1999
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<S> <C> <C>
Cash Flows from Operating Activities:
Net (Loss) $ (170,725) $ (715,355)
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Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and Amortization 1,840 3,626
Income Tax Refund Claim -- 1,871,787
Loss on sale of marketable securities -- 150,159
Changes in assets and liabilities:
(Increase) Decrease in Assets:
Accounts Receivable 281,488 33,999
Deferred Tax Asset (112,000) (311,000)
Other Current Assets (59,397) (361,227)
Other Assets (45,800) (34,054)
Increase (Decrease) in Liabilities:
Accounts Payable 56,469 100,865
Accrued Expenses (636,943) (137,063)
Income Tax Payable
Minority Interest (2,612) (9,365)
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Total Adjustments (516,955) 1,307,727
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Net Cash (used for) Provided By Operating Activities (687,680) 592,372
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Cash Flows from Investing Activities:
Proceeds from the sale of marketable securities 4,429,022
Purchase of marketable securities (102,500) (2,000,000)
Notes and Loans Receivable: 109,916
Advances (116,949) (15,448)
Collections 50,000
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Net Cash provided by (used for) Investing Activities (109,533) 2,463,574
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Cash Flows from Financing Activities
Payment of Note (2,000,000)
Payment of Long Term Debt (7,907) (7,240)
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Net Cash (used for) Financing Activities (7,907) (2,007,240)
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Net Increase (Decrease) in Cash (805,120) 1,048,706
Cash Balance, Beginning of Period 963,895 545,222
----------- -----------
Cash Balance, End of Period $ 158,775 $ 1,593,928
=========== ===========
</TABLE>
See accompanying summary of accounting policies and notes to consolidated
financial statements.
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CALL NOW, INC. AND SUBSIDIARIES
NOTE TO FINANCIAL STATEMENTS
Note 1. Marketable Securities. The market value of the Company's
RDC municipal bonds has not changed materially from December
31, 1999 to June 30, 2000, and accordingly, no change has been
recorded at June 30, 2000. The Company plans to review the
market valuation again at September 30, 2000.
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