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: September 30, 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
(Address of principal executive offices)
(210) 349-4141
(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
November 14, 2000.
Transitional Small Business Format: No
PART I B 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. As of September 1, 2000, certain RDC Series B bonds
in the amount of $920,000 were upgraded to Series A bonds in accordance with
the Trust Agreement dated March 1997. As a result, the fair value of all of
the bonds has been increased by $713,586 less an income tax provision of
$263,813. The net gain of $449,773 has been included in the balance sheet as
accumulated other comprehensive income.
Other Assets. In addition to the above mentioned upgrading of
Series B bonds, the Company is entitled to accumulated interest from March
1997 on the upgraded bonds in the amount of $283,390 payable over the life of
the Series A bonds and bears interest at seven percent per annum. As a
result of the term of collection, the $283,390 has been recorded as
non-current interest receivable and deferred interest income in the same
amount.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
LIQUIDITY AND CAPITAL RESOURCES.
Three and Nine Months Ended September 30, 2000 Compared to 1999
- RESULTS OF OPERATIONS:
a. REVENUES
The Company's revenues for the three months ended September 30, 2000 were
$1,823,294 as compared to $1,727,204 for the three months ended September 30,
1999.
For the nine months ended September 30, 2000, revenues were $4,673,102
compared to $4,563,118 for the nine months ended September 30, 1999. The
increase was due to increased attendance and wagering.
Other income and expense was $60,357 for the three months ended September 30,
2000 compared to $92,401 for the three months ended September 30, 1999. The
decrease was due to a loss from the sale of securities for the three months
ended September 30, 1999.
For the nine months ended September 30, 2000, other income and expense was
$283,330 compared to $53,244 for the nine months ended September 30, 1999.
The increase was due to an increase in interest income for the nine months
ended September 30, 2000 of approximately $50,000 and a loss from the sale of
securities during the nine months ended September 30, 1999 of approximately
$150,000.
b. EXPENSES
(1) Racetrack expenses for the three months ended September 30, 2000 were
$1,778,294 compared to $1,682,979 for the three months ended September 30,
1999. The increase was due to increased racetrack activity.
For the nine months ended September 30, 2000, Racetrack expense was $4,568,102
compared to $4,486,177 for the nine months ended September 30, 1999.
(2) GENERAL AND ADMINISTRATIVE
Expense for the quarter ended September 30, 2000 was $175,874 compared to
$351,372 for the September 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 nine months ended September 30, 2000, expense was $694,836 compared to
$1,205,793 for the nine months ended September 30, 1999.
(3) INTEREST
Interest expense for the quarter ended September 30, 2000 was $50,899 compared
to $38,998 for the September 30, 1999 quarter. The increase was due to
additional borrowings.
For the nine months ended September 30, 2000, interest expense was $127,887
compared to $209,221 for the nine months ended September 30, 1999. The
reduction was due to reductions of debt from the nine months ended September
30, 1999.
(4) INCOME TAX
For the quarter ended September 30, 2000, the Company recorded income tax
benefit of $16,500 compared to $98,300 for the three months ended September
30, 1999. The decrease was due to the decrease in net operating loss.
For the nine months ended September 30, 2000, the income tax benefit was
$128,000 compared to $409,300 for the nine months ended September 30, 1999.
c. NET LOSS
The Company had a net loss of $106,866 for the quarter ended September 30,
2000 compared to a net loss of $154,379 for the quarter ended September 30,
1999. The decrease in net loss resulted primarily from a reduction of general
and administrative expenses and the loss on the sale of RDC Bonds in 1999.
For the nine months ended September 30, 2000, the net loss was $277,591
compared to $871,409 for the nine months ended September 30, 1999.
d. EARNINGS PER SHARE
For the three months ended September 30, 2000, the Company recorded a net loss
of $.01 per share compared to a net loss of $.02 per share for the September
30, 1999 quarter.
For the nine months ended September 30, 2000, the Company recorded a net loss
of $.03 per share compared to $.10 per share for the nine months ended
September 30, 1999.
- LIQUIDITY AND CAPITAL RESOURCES:
For the nine months ended September 30, 2000, the Company used $807,040 for
operating activities compared to cash provided from operating activities of
$277,609 for the nine months ended September 30, 1999. The decrease was due
primarily to lake repair expenses during the nine months ended September 30,
2000 and the collection of the income tax refund in the nine months ended
September 30, 1999.
Cash provided by investing activities for the nine months ended September 30,
2000, was $141,064 compared to cash provided of $2,473,573 for the nine months
ended September 30, 1999. The decrease was due to primarily to a reduction in
net proceeds from the sale and purchase of Marketable Securities for the nine
months ended September 30, 2000.
For the nine months ended September 30, 2000, cash provided by financing
activities was $43,589 compared to cash used of $2,014,806 for the nine months
ended September 30, 1999. The decrease was due to the payment of a note
during the nine months ended September 30, 1999.
The Company has investments primarily in Retama Development Corporation
Bonds. The fair market value of the securities at September 30, 2000 was
$5,101,926. The bonds will produce $202,650 in non-taxable interest income
per year.
In addition, the Company holds a demand note receivable from Barron Chase in
the amount of $600,000. The note pays the Company $6,000 per month which the
Company utilizes as working capital. The note matures in August 2001.
The Company has filed a Federal income tax claim in the amount of $528,035.
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.
<PAGE>
CALL NOW, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
As of September 30, 2000
Unaudited
A S S E T S
Current Assets
Cash And Cash Equivalents $341,508
Accounts Receivable 45,000
Accounts Receivable - Other 84,364
Marketable Securities, At Market Value (Restricted) 51,496
Marketable Securities, At Market Value (Unrestricted) 5,050,430
Income Tax Refund Claim 528,035
Notes Receivable 716,949
Other 71,342
--------
Total Current Assets 6,889,124
Furniture And Equipment
(Less Accumulated Depreciation of $29,698) 3,501
Land 2,369,075
Long-Term Notes and Loan Receivables 731,370
Other 560,426
--------
Total Assets $10,553,496
========
<PAGE>
CALL NOW, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
As of September 30, 2000
Unaudited
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
Margin Note Payable $51,496
Deferred Income Taxes Payable 526,351
Current Portion of Mortgage Payable 17,657
Accrued Expenses 122,142
--------
Total Current Liabilities 717,646
Non-Current Liabilities
Mortgage Payable, less current maturity 1,703,657
--------
Total Liabilities 2,421,303
--------
Deferred Interest Income 283,390
--------
Commitment and Contingencies -
Minority Interest in Consolidated Subsidiary 13,700
--------
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 783,428
Less subscription notes receivable
for 115,000 shares of common stock (230,000)
Accumlulated other comprehensive income 1,281,947
Treasury stock, at cost (206,050)
--------
Total Stockholders' Equity 7,835,103
--------
Total Liabilities and Stockholders' Equity $10,553,496
========
<PAGE>
Call Now, Inc. And Subsidiaries
Consolidated Statements of Operations
Three Months and Nine Months Ended September 30
Unaudited
Three Months Ended Nine Months Ended
September 30 September 30
2000 1999 2000 1999
Income
Race Track Operating Income $1,778,294 $1,682,204 $4,568,102 $4,428,118
Management Fees 45,000 45,000 135,000 135,000
-------- -------- -------- --------
Total Income 1,823,294 1,727,204 4,703,102 4,563,118
-------- -------- -------- --------
Costs and Expenses
Racetrack 1,778,294 1,682,979 4,568,102 4,486,177
General and Administrative 175,874 351,372 694,836 1,205,793
Interest 50,899 38,998 127,887 209,221
Depreciation and Amortization 960 990 2,820 3,190
-------- -------- -------- --------
Total Cost and Expenses 2,006,027 2,074,339 5,393,645 5,904,381
-------- -------- -------- --------
(Loss) from continuing operations
before other income and expense,
income taxes, and minority interest (182,733) (347,135) (690,543)(1,341,263)
Other Income and Expense 60,357 92,401 283,330 53,244
-------- -------- -------- --------
(Loss) before income taxes and
minority interest (122,376) (254,734) (407,213)(1,288,019)
Income Tax Benefit 16,500 98,300 128,000 409,300
-------- -------- -------- --------
(Loss) before minority interest (105,876) (156,434) (279,213) (878,719)
Minority Interest (990) 2,055 1,622 7,310
-------- -------- -------- --------
Net (Loss) $(106,866) $(154,379) $(277,591) $(871,409)
======== ======== ======== ========
Earnings Per Share - Basic and
Diluted:
Net (Loss) ($0.01) ($0.02) ($0.03) ($0.10)
<PAGE>
Call Now, Inc. And Subsidiaries
Consolidated Statements of Cash Flows
Nine Months Ended September 30
Unaudited
2000 1999
Cash Flows from Operating Activities:
Net (Loss) $(277,591) $(871,409)
------- -------
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and Amortization 2,760 4,546
Loss on sale of marketable securities 16,903 150,159
Changes in assets and liabilities:
(Increase) Decrease in Assets:
Accounts Receivable - 18,999
Accounts Receivable - Other 287,061 -
Income Tax Refund Claim 38,407 1,871,787
Deferred Tax Asset 64,928 (409,300)
Other Current Assets 26,838 (338,543)
Other Assets (53,237) (57,811)
Increase (Decrease) in Liabilities:
Accounts Payable (31,289) 37,227
Accrued Expenses (647,415) (120,736)
Deferred Income Tax Payable (231,335) -
Minority Interest (3,070) (7,310)
------- -------
Total Adjustments (529,449) 1,149,018
------- -------
Net Cash (used for) provided by Operating
Activities (807,040) 277,609
------- -------
Cash Flows from Investing Activities:
Proceeds from the sale of marketable securities 100,597 4,439,021
Purchase of marketable securities (102,500) (2,000,000)
Notes and Loans Receivable:
Advances (8,663) (15,448)
Collections 151,630 50,000
------- -------
Net Cash provided by Investing Activities 141,064 2,473,573
------- -------
Cash Flows from Financing Activities:
Margin Loan - Advances 253,576 -
- Payments (202,080) -
Payment of Note - (2,000,000)
Payment of Long Term Debt (7,907) (14,806)
------- -------
Net Cash provided by (used for) Financing
Activities 43,589 (2,014,806)
------- -------
Net Increase (Decrease) in Cash (622,387) 736,376
Cash Balance, Beginning of Period 963,895 545,222
------- -------
Cash Balance, End of Period $341,508 $1,281,598
------- -------
<PAGE>
CALL NOW, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
Note 1. Marketable Securities. As of September 1, 2000, certain RDC
Series B bonds in the amount of $920,000 were upgraded to Series A bonds in
accordance with the Trust Agreement dated March 1997. As a result, the fair
value of all of the bonds has been increased by $713,586 less an income tax
provision of $263,813. The net gain of $449,773 has been included in the
balance sheet as accumulated other comprehensive income.
Note 2. Other Assets. In addition to the above mentioned upgrading of
Series B bonds, the Company is entitled to accumulated interest from March
1997 on the upgraded bonds in the amount of $283,390 payable over the life of
the Series A bonds and bears interest at seven percent per annum. As a result
of the term of collection, the $283,390 has been recorded as non-current
interest receivable and deferred interest income in the same amount.
<PAGE>
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
William M. Allen
Chairman (Chief Executive Officer)
By: s/ James D. Grainger
James D. Grainger
Vice President-Finance
November 14, 2000 Principal Accounting Officer