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, 2001
Commission File No. 0-27160
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 78216-3634
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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: 8,340,444 shares as of
August 10, 2001.
Transitional Small Business Format: NO
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
As used herein, the term "Company" refers to Call Now Inc., a Nevada
corporation, and its subsidiaries unless otherwise indicated. Consolidated and
unaudited interim financial statements including a balance sheet for the
Company as of the quarter ended June 30, 2001, statement of operations, and
statement of cash flows for the interim period up to the date of such balance
sheet and the comparable period of the preceding year are attached as Pages 3
through 5 and are incorporated herein by this reference.
CALL NOW, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
As of June 30, 2001
(Unaudited)
A S S E T S
June 30 December 31
2001 2000
(Unaudited) (Audited)
Current Assets
Cash And Cash Equivalents $232,707 $174,559
Accounts Receivable 45,000 30,000
Accounts Receivable - Other 127,633 103,114
Marketable Securities, At Market Value 5,197,568 5,253,673
Note Receivable 243,700 293,700
Income Tax Refund Claim 0 528,035
Other 179,493 64,682
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Total Current Assets $6,026,101 $6,447,763
Furniture And Equipment (Less Accumulated
Depreciation of $32,458) 741 2,581
Land 2,417,476 2,369,075
Long-Term Notes and Loan Receivables 701,370 731,370
Deferred Tax Assets 394,591 251,522
Other 537,882 516,036
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Total Assets $10,078,161 $10,318,347
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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 $ - $36,939
Deferred Tax Payable - Bonds 700,324 700,324
Current Portion of Mortgage Payable 16,862 17,657
Note Payable - 52,905
Accrued Expenses 97,361 83,149
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Total Current Liabilities 814,547 890,974
Non-Current Liabilities
Deferred Income 283,990 283,990
Mortgage Payable, less current maturity 1,686,759 1,703,657
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Total Liabilities 2,785,296 2,878,621
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Commitment and Contingencies - -
Minority Interest in Consolidated Subsidiary 13,723 16,414
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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, 5,882,941 5,882,941
8,430,444 shares issued and 8,340,444 shares
outstanding
Retained Earnings 434,572 547,521
Accumulated other comprehensive loss 1,167,679 1,198,900
Treasury stock, at cost (206,050) (206,050)
Total Stockholders' Equity 7,279,142 7,423,312
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Total Liabilities and Stockholders'
Equity $10,078,161 $10,318,347
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Call Now, Inc. And Subsidiaries
Consolidated Statements of Operations
Three Months and Six Months Ended June 30
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
2001 2000 2001 2000
Income
Racetrack Operating Income $1,942,749 $1,748,840 $3,060,724 $2,789,808
Management Fees 45,000 45,000 90,000 90,000
Miscellaneous - - - -
--------- --------- --------- ---------
Total Income 1,987,749 1,793,840 3,150,724 2,879,808
--------- --------- --------- ---------
Costs and Expenses
Racetrack 2,002,794 1,748,841 3,172,059 2,789,808
General and Administrative 140,696 277,285 324,713 518,962
Interest 41,631 38,728 78,252 76,988
Depreciation and Amortization 920 920 1,840 1,860
--------- --------- --------- ---------
Total Cost and Expenses 2,186,041 2,065,774 3,576,864 3,387,618
--------- --------- --------- ---------
Income (Loss) from continuing operations before (198,292) (271,934) (426,140) (507,810)
other income and expenses, income taxes, and
minority interest
Other Income and Expenses 130,224 123,592 191,000 222,973
--------- --------- --------- ---------
Income (Loss) before income taxes and (68,068) (148,342) (235,140) (284,837)
minority interest
Income Tax Benefit (Expenses) 42,100 60,500 119,500 111,500
--------- --------- --------- ---------
Income (Loss) before minority interest (25,968) (87,842) (115,640) (173,337)
Minority Interest 1,898 3,809 2,691 2,612
--------- --------- --------- ---------
Net Income (Loss) $(24,070) $(84,033) $(112,949) $(170,725)
========= ========= ========= =========
Earnings Per Share - Basic and Diluted:
Net Income (0.003) (0.010) (0.013) (0.020)
CALL NOW, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flow
Six Months Ended June 30, 2001
(Unaudited)
Six Months Ended
June 30,
2001 2000
Cash Flows from Operating Activities:
Net Income (Loss) $(112,949) $(170,725)
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and Amortization 1,840 1,840
Changes in assets and liabilities: - -
(Increase) Decrease in Assets: - -
Accounts Receivable - Other (38,204) 281,488
Deferred Tax Asset (119,500) (112,000)
Notes Receivable 50,000 -
Income Tax Claim 528,035 -
Other Current Assets (114,811) (59,397)
Other Assets (21,846) (45,800)
Increase (Decrease) in Liabilities:
Accounts Payable (36,939) 56,469
Accrued Expenses 14,212 (636,943)
Accrued Expenses - Other - -
Minority Interest (2,691) (2,612)
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Net Cash provided from (used for) Operating
Activities $147,147 $(687,680)
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Cash flows from Investing Activities:
Proceeds from the sale of marketable securities $ - $ -
Capital Expenditures (48,401) -
Purchase of marketable securities - (102,500)
Notes and Loans Receivable:
Advances - 109,916
Collections 30,000 (116,949)
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Net Cash used for Investing Activities $(18,401) $(109,533)
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Cash flows from Financing Activities
Proceeds from Loans - -
Payment of Short Term Debt (52,905) -
Payment of Long Term Debt (17,693) (7,907)
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Net Cash (used for) provided by Financing
Activities $(70,598) $(7,907)
------- --------
Net Increase (Decrease) in Cash 58,148 (805,120)
Cash Balance, Begin of Year 174,559 963,895
------- --------
Cash Balance, End of Year $232,707 $158,775
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CALL NOW, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1- BASIS OF PRESENTATION
General
The unaudited interim consolidated balance sheet of the Company as of June 30,
2001 and the consolidated statement of operation for the three and six months
ended June 30, 2001, included herein have been prepared in accordance with the
instructions for Form 10-QSB under the Securities Exchange Act of 1934, as
amended, and Article 10 of Regulation S-X under the Securities Act of 1933, as
amended. The December 31, 2000 Consolidated Balance Sheet was derived from
audited financial statements, but does not include all disclosures required by
generally accepted accounting principles. Certain information and note
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations relating to interim consolidated
financial statements.
In the opinion of management, the accompanying unaudited interim consolidated
financial statements reflect all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the financial position of
the Company at June 30, 2001, and the results of their operations for the
three and six months ended June 30, 2001 and 2000, and their cash flows for
the three and six months ended June 30, 2001 and 2000.
The results of operations for such periods are not necessarily indicative of
results expected for the full year or for any future period. These
consolidated financial statements should be read in conjunction with the
audited consolidated financial statements as of December 31, 2000, and for the
two years then ended December 31, 2000 and 1999 and related notes included in
the Company's Form 10-KSB filed with the Securities and Exchange Commission.
Nature of Business
After exiting the long distance telephone business in 1996, the Company has
redeployed its assets primarily in acquiring $93,925,000 face amount bonds and
notes collateralized by a lien on the Retama Park Horse Racing Facility
("Facility") in Selma, Texas, and into real estate by the acquisition of 118
acres of land in Williamson County, Texas which it may develop. In addition,
the Company entered into a contract to manage the Facility commencing January
1998. In 1999, the Company and its shareholders approved articles of merger
with a Nevada corporation by the same name to effectively change the Company's
domicile from Florida to Nevada.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
Call Now, Inc. and its wholly owned subsidiaries Andice Development Co., ARN
Communications Corp., National Communications Network, Inc., and Retama
Entertainment Group Inc. (collectively "the Company"). Investments in which
the Company does not have a majority voting or financial controlling interest
are accounted for under the equity method of accounting unless its ownership
constitutes less than a 20% interest in such entity for which such investment
would then be included in the consolidated financial statements on the cost
method. All significant inter-company transactions and balances have been
eliminated in consolidation.
Marketable Securities
In accordance with Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," (SFAS
115), the Company classifies its investment portfolio according to the
provisions of SFAS 115 as either held to maturity, trading, or available for
sale. At June 30, 2001, the Company classified its investment portfolio as
available for sale and held to maturity. Securities available for sale are
carried at fair value with unrealized gains and losses included in
stockholders' equity.
Gain or losses from the sale or redemption of the investments are determined
using the specific identification method.
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CALL NOW, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1- BASIS OF PRESENTATION (CONTINUATION)
Earnings Per Common Share
Effective December 31, 1997, the Company adopted Financial Accounting
Standards (SFAS) No. 128, "Earnings Per Share," which simplifies the
computation of earnings per share requiring the restatement of all prior
periods.
Basic earnings per share are computed on the basis of the weighted average
number of common shares outstanding during each year.
Diluted earnings per share are computed on the basis of the weighted average
number of common shares and dilutive securities outstanding. Dilutive
securities having an anti-dilutive effect on diluted earnings per share are
excluded from the calculation.
NOTE 2 - COMMITMENT AND CONTINGENCIES
On February 15, 2001, the Company signed a contract with the Georgetown
Independent School District to sell fourteen acres of the 118 acre tract for a
total of $328,300. Closing of the contract is currently planned for September
13, 2001. The balance of the property is being marketed for commercial and
residential development.
The Company plans to adjust the value of its Retama Development Corporation
Bonds on an annual basis and accordingly, the value of the RDC bonds was not
adjusted at June 30, 2001.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND LIQUIDITY AND CAPITAL RESOURCES
Three and Six Months Ended June 30, 2001 compared to 2000.
l RESULTS OF OPERATIONS:
a. REVENUES
The Company's revenues for the three months ended June 30, 2001 were
$1,942,749 as compared to $1,748,840 for the three months ended June 30, 2000.
The increase was due primarily to increased racetrack attendance and the
improvement of simulcast betting facilities.
For the six months ended June 30, 2001, revenues were $3,060,724 compared to
$2,789,808 for the six months ended June 30, 2000. The increase was due to
increased attendance and wagering.
Interest income for the three months ended June 30, 2001 was $130,224 as
compared to $123,592 for the three months ended June 30, 2000. The increase
was due to the receipt of a refund from the Internal Revenue Service that
contained interest income in the amount of $63,478.
For the six months ended June 30, 2001, other income and expenses were
$191,000 compared to $222,973 for the six months ended June 30, 2000.
b. EXPENSES
(1) Racetrack expenses for the three months ended June 30, 2001 were
$2,002,794 compared to $1,748,841 for the three months ended June 30, 2000.
The increase was due to increased racetrack activity.
For the six months ended June 30, 2001, Racetrack expenses were $3,172,059
compared to $2,789,808 for the six months ended June 30, 2000.
(2) GENERAL AND ADMINISTRATIVE
Expense for the quarter ended June 30, 2001 was $140,696 compared to
$324,713 for the June 30, 2000 quarter. The decrease was due to the principal
officer not taking a salary for 2001, payroll contributions by the Trust
companies and reduction of consulting and legal fees.
For the six months ended June 30, 2001, expenses were $324,713 compared to
$518,962 for the six months ended June 30, 2000.
(3) INTEREST
Interest expense for the quarter ended June 30, 2001 was $41,631 compared to
$38,728 for the June 30, 2000 quarter. The increase was due to an increase of
debt.
For the six months ended June 30, 2001, interest was $78,252 compared to
$76,988 for the six months ended June 30, 2000.
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(4) INCOME TAX
For the quarter ended June 30, 2001 the Company recorded income tax benefit of
$42,100 compared to $60,500 for the three months ended June 30, 2000. The
decrease was due to the decrease in net operating loss.
For the six months ended June 30, 2001, the income tax benefit was $119,500
compared to $111,500 for the six months ended June 30, 2000
c. NET LOSS
The Company had a net loss of $24,070 for the quarter ended June 30, 2001
compared to a net loss of $112,949 for the quarter ended June 30, 2000. The
decrease in net loss resulted primarily from an increase in racetrack
operations and a reduction of general and administrative expenses.
d. EARNINGS PER SHARE
For the three months ended June 30, 2001, the Company recorded a net loss of
$0.003 per share compared to a net loss of $0.012 per share for the June 30,
2000 quarter.
l LIQUIDITY AND CAPITAL RESOURCES
For the six months ended June 30, 2001, the Company was provided $147,147 from
operating activities compared to using $687,680 for the six months ended June
30, 2000. The decrease was due primarily to the increase in operations
activities of Retama Entertainment Group, Inc. and receiving the income tax
refund claim from the Internal Revenue Service.
Cash used in investing activities for the six months ended June 30, 2001, was
$18,401 compared to cash used of $109,533 for the six months ended June 30,
2000. The decrease was due to net proceeds from the sale and purchase of
Marketable Securities and collections of Notes Receivable.
For the six months ended June 30, 2001, cash used in financing activities was
$70,598 compared to cash used of $7,907 for the six months ended June 30,
2000. The increase was due to a repayment of short and long term loans.
The Company has investments primarily in Retama Development Corporation Bonds.
The fair market value of the securities at June 30, 2001 was $4,947,373. The
Bonds produce $204,000 in non-taxable interest income.
The Company received an income tax refund in June 2001 of $564,620.
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.
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PART II - OTHER INFORMATION
ITEM 3. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
None
(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/ ROBERT C. BUFFKIN
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Robert C. Buffkin
President
August 10, 2001
(Principal Accounting Officer)
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