10KSB/A 1 call10k.htm

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM 10-KSB/A

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED: DECEMBER 31, 2000

COMMISSION FILE NO. 0-27160

CALL NOW, INC.

(Exact name of small business issuer in its charter)

NEVADA 65-0337175
(State of Incorporation) (IRS Employer Identification No.)10803

GULFDALE, SUITE 222
78216-3634 SAN ANTONIO, TX
(zip code) (Address of principal executive offices)

Issuer's Telephone No. (210) 349-4141

Securities registered pursuant to Section 12(b) of the Act:

NONE

Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK

Check whether the Registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or 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 [ ]

Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not 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 amendment to
this Form 10-KSB. [X]

State issuer's revenues for twelve months ended December 31, 2000:
$6,218,399.

The aggregate market value of the voting stock held by non-affiliates of the
Registrant based upon the average bid and asked prices of such stock, at March
31, 2001 was $3,002,560.

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 of common
stock, as of April 2, 2001.

Documents Incorporated by Reference:

NONE

Transitional Small Business Disclosure Format: NO

PART I

ITEM 1. DESCRIPTION OF BUSINESS.

HISTORY AND DEVELOPMENTS DURING THE LAST THREE YEARS

Call Now, Inc. (the Company) was organized under the laws of the State of
Florida on September 24, 1990 under the name Rad San, Inc. It changed its name
to Phone One International, Inc. in January 1994 and to Call Now, Inc. in
December 1994. We changed our domicile to the state of Nevada in 1999.

Our primary operations are the management of Retama Park Racetrack in Selma,
Texas, through our 80% owned subsidiary. Under the Management Agreement, we
are reimbursed for the expenses of operating the track from revenues generated
at the track.

On July 15, 1996, Andice Development Co. (a wholly-owned subsidiary of Call
Now, Inc.) acquired 118 acres of development property in Williamson County,
Texas for a purchase price of $2,363,060. Under the terms of the purchase, we
paid $589,310 and executed a seven year, 9% note in the amount of $1,770,000.
The note requires us to make semi-annual principal and interest payments of
$85,721 commencing on January 15, 1997 and ending July 15, 2003, at which
time, the entire remaining balance of $1,655,056 is due and payable. On
February 15, 2001, we signed a contract with the Georgetown Independent School
District to sell fourteen acres of the tract for a total of $328,300. Closing
of the contract is currently planned to close on September 13, 2001. The
balance of the property is being marketed for commercial development.

In August 1996 we decided to exit the long distance telephone business due to
the competitive environment and its inability to develop its business to the
point of profitability. The business was sold to Alan Niederhoffer, formerly
our Vice President and President of our ARN subsidiary for 100,000 shares of
our common stock owned by Niederhoffer and assumption of substantially all of
the liabilities of ARN.

On September 29, 1996 we acquired $52,274,000 of $54,040,000, 8.75%, term
bonds of the Retama Development Corporation Special Facilities Revenue Bonds,
Series 1993 for a purchase price of $10,300,000. The bonds are secured by a
first mortgage on the Retama Park Horse Racing facility. In a simultaneous
closing, we sold 50% of the bonds to a broker/dealer for a down payment of
$1,740,000 and future payments of $1,950,000. The broker/dealer also agreed to
pay $7,600 for stock purchase options granting the right to acquire 760,000
shares of Call Now, Inc. common stock at a purchase price of $2.60 per share.

In November 1996 we purchased from Retama Partners, Ltd. the principal amount
of $39,275,000 of a Retama Development Corporation Series A note and $500,000
of a Retama Development Corporation Series 1993B note. We issued 385,700
shares of our common stock in exchange for such notes. These notes were
secured by a second lien on the Retama Park Racetrack facilities, including
real and personal property.

HISTORY AND DEVELOPMENTS DURING THE LAST THREE YEARS (continuation)

The 1997 bonds were valued by an independent third party at the same value as
the carrying value of the 1993 bonds.

On April 7, 1997, the Company acquired the balance of the RDC bonds in
exchange for 60,000 shares of the Company's common stock, 15,000 shares of
Compressent Corporation (Compressent) common stock, and $2,150,000 in cash.
The cost of the remaining bonds purchased by the Company, including
acquisition costs, was $3,187,728. At December 31, 1997 the Company's total
holdings of RDC bonds were: (a) 1997 Series A 7% bonds- $7,000,000 and (b)
1997 Series B 8% bonds- $86,925,000.

Due to unanticipated difficulty in securing complete financing for the bond
transaction and the possibility of losing a three million dollar
non-refundable deposit, the Company decided to approach the second bidder for
the RDC bonds. As a result, Howe, Solomon and Hall (HSH) agreed to purchase
50% of the bonds for $3.69 million which resulted in a loss of $1.7 million.
This business decision was made in order to complete the acquisition of the
bonds, which the Company considered to be a valuable asset and to preserve the
three million dollar non-refundable deposit.

The Company was able to acquire bonds at a cost of $10.34 million which are
secured by Retama Park Racetrack that has been appraised at over twenty-two
million dollars by an independent appraisal group.

As part of the transaction, the Company received notes from HSH in the amount
of $1,950,000. Of this amount $1,100,000 was received on a timely manner. The
remaining $850,000 was received in a subsequent transaction in which the
Company acquired the balance of the defeased bonds. Constant negotiations with
HSH during this period assured the Company that the $850,000 would be
collected and it was collected in the April 1997 transaction.

On December 1, 1997 our 80% owned subsidiary, Retama Entertainment Group, Inc.
obtained a management agreement to operate and manage the Retama Park
Racetrack. Our then President, Bryan P. Brown, relocated to Texas to
personally supervise such activities. The management agreement extends to
December 31, 2003 subject to certain extension rights, and provides a monthly
management fee of $15,000 plus a variable fee equal to 25% of profits in
excess of $1,000,000.

In February 1998, we entered into a loan agreement with Compressent
Corporation in which the Company was obligated to lend, on or before July 31,
1998, upon the request of Compressent's Board of Directors, up to $10,000,000.
Amounts loaned were to be due one year from the date of the loan and would
bear interest at 15% per year. In addition, we were to receive a $400,000
commitment fee at the time of the first loan advance. In connection with the
loan agreement, we would receive warrants to acquire 500,000 shares of the
Compressent's common stock at $6.25 per share.

HISTORY AND DEVELOPMENTS DURING THE LAST THREE YEARS (continuation)

In addition, we agreed to exchange $3,500,000 face amount of its investment in
RDC, Series A Bonds for 56,000 shares of Compressent, 7.5% cumulative
convertible preferred stock, which would be convertible into 560,000 shares of
Compressent's common stock, and an option to acquire 500,000 shares of
Compressent common stock for $6.25 per share.

On May 20, 1998, the Company and Compressent terminated the loan agreement
before any loan was made thereunder. In addition, the parties rescinded the
preferred stock and warrant purchase by each party returning to the other the
securities originally exchanged. However, Compressent, upon the original
receipt of the RDC bonds borrowed approximately $2,000,000, pledging the bonds
as collateral. In this connection, upon termination of the Agreement, the
Company assumed the approximate $2,000,000 loan.

In July 1998, we agreed to purchase three thoroughbred racetracks, Louisiana
Downs in Louisiana, Remington Park in Oklahoma and Thistledown in Ohio. The
Company deposited $2,000,000 as a down payment. We terminated the Agreement
during the inspection period and obtained the return of our down payment.

In July 1998, we sold $3,500,000 face amount of its RDC, Series A Bonds for
$2,150,000, subject to certain repurchase rights.

In May 1999, we entered into an agreement with two unaffiliated trusts, Global
Trust and Hemisphere Trust, under which we exchanged $43,462,500 of the Series
B RDC Bonds for $2,000,000 of Series A RDC Bonds and the payment of the
Compressent debt assumed by the Company. After the next conversion date of
Series B Bonds into Series A Bonds, the parties will adjust their ownership of
the Bonds so that the Company owns 50% of the total Class A and B Bonds and
Global and Hemisphere own 25% each of such Bonds. Global and Hemisphere also
agreed to contribute up to $300,000 of the cost to repair the infield lake at
the Retama Park Racetrack which we have agreed to repair and one-half of the
annual salary and bonus of the chief executive officer of the track, currently
Bryan Brown, a director of the Company. A copy of the Agreement with Global
and Hemisphere is filed as an exhibit herein.

EMPLOYEES

The Company has about 210 full-time employees, including 4 executive
employees. This includes the employees of Retama Entertainment Group, Inc.

ITEM 2. DESCRIPTION OF PROPERTY

We lease 864 square feet of office space in Miami, Florida for $1,224.75 per
month on a month-to-month basis. We are provided office space is San Antonio,
Texas by a related party of the President of the Company.

ITEM 3. LEGAL PROCEEDINGS.

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.

None.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

The Company's Common Stock trades on the over-the-counter market under the
symbol CNOW.OB. The following sets forth the range of high and low bid
quotations for the periods indicated as reported by National Quotation Bureau,
Inc. Such quotations reflect prices between dealers, without retail mark-up,
markdown or commission and may not represent actual transactions.

HIGH BID LOW BID
March 31, 1999........................... $ 2.25 $ .69
June 30, 1999............................ 1.50 .75
September 30, 1999....................... 1.38 .88
December 31, 1999........................ 2.63 .88
March 31, 2000........................... 1.12 1.03
June 30, 2000............................ 1.00 1.00
September 30, 2000....................... .59 .59
December 31, 2000........................ .31 .28

The Company has not established a policy of payment of regular dividends on
its common stock. There are no restrictions on the payment of dividends. As of
April 2, 2001 there were approximately 368 registered holders of record of the
Company's common stock.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO 1999

Results of Operations

a. Revenues and Other Income

The Company's income for the year ended December 31, 2000 was $6,218,399
compared to $5,905,224 for the year ended December 31, 1999. The increase in
income for the current year is primarily attributable to the operations of
Retama Park Racetrack. Interest income for the year ended December 31, 2000
was $270,387 compared to $303,264 for the year ended December 31, 1999. The
decrease was due primarily to additional investment of cash received from the
income tax refund in 1999.

Results of Operations (continuation)

b. Expenses

Cost and Other Expenses of Revenues

Expense for the year ended December 31, 2000 was $7,108,403 compared to
$7,322,881 for the year ended December 31, 1999. The net decrease was due
primarily to a reduction in general and administrative expense.

Income Tax

The income tax benefit for 2000 was $134,043 compared to $447,814 in 1999. The
decrease is due to the reduction of the net operating loss to $644,470 from
$1,314,868 in 1999.

Liquidity and Capital Resources:

During the year ended December 31, 2000, the Company's operating activities
used cash of $1,016,414 compared to $110,686 used for the year ended December
31, 1999.

We have investments in Retama Development Corporation Bonds. The fair market
value of the securities at December 31, 2000 was $4,335,910. The Series A
bonds will generate $139,300 in interest income.

We applied for and received a $1,871,787 income tax refund in 1999, and a
federal income tax refund claim of $566,442 was filed in 2000.

Barron Chase executed a note payable to the Company in the amount of $750,000
bearing interest at 12% per annum. The note pays the Company $7,500.00 per
month which the Company utilizes as working capital. Such arrangement
terminates on August 15, 2000. On September 2, 2000, the Company received
$150,000 in cash and stock in an unrelated company valued at $306,300 to bring
the balance of the note to $293,700. The Company is actively pursuing
collection of the balance of the note.

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.

Restated Financial Statements

In reviewing the financial statements, current management has determined that
the transaction previously reported as a bond conversion from Series A to
Series B Bonds was not going to be completed by all of the parties. As
previously reported, the Series 1997 A & B bonds allowed conversion of the
Series B bonds to Series A bonds based on a quotient resulting from the lower
of EBITDA for the last two immediately preceding fiscal year divided by .0875.
Based on an "Agreed-Upon Procedure" by the principle auditors of RDC, $925,000
Series B bonds was converted to Series A bonds effective September 1, 2000.
Also, $283,390 in deferred interest income became due and payable over the
balance of the term of the bonds; which is 33 years. The market value of the
bonds has been reduced, the deferred interest has been removed, and the
accrued interest has been removed from the balance sheet and the statement of
operations.

Since this conversion was not completed, the financial statements have been
restated. The effect is as follows:

As Reported As Restated

Total Assets $10,318,347 $ 9,363,011
Total Liabilities 2,878,621 2,354,674
Total Stockholders' Equity 7,423,312 6,991,923
Net Income ( 510,071) ( 531,654)

ITEM 7. FINANCIAL STATEMENTS.

Index to Consolidated Financial Statements

Report of Independent Certified Public Accountants

Consolidated Financial Statements:

Consolidated Balance Sheet, December 31, 2000

Consolidated Statements of Operations, years ended December 31, 2000 and 1999

Consolidated Statements of Changes in Stockholders' Equity, years ended
December 31, 2000 and 1999

Consolidated Statements of Cash Flows, years ended December 31, 2000 and 1999

Notes to Consolidated Financial Statements

ITEM 8.

None

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CORPORATE PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

The directors and executive officers of the Company are as follows:

NAME AGE POSITION
William M. Allen...................74 Chairman and Director
Robert C. Buffkin..................69 President and Director
Bryan P. Brown.....................39 Director Susan
Lurvey.............................36 Secretary

William M. Allen was President from June 1992 to 1997 and a director from June
1992 and Chairman from February 1997. He has been managing partner of Black
Chip Stables from 1982 to date and President of Doric, Inc. from 1985 until
its merger with the Company in 1994. He has served as President of Kamm
Corporation from 1985 to date. He was Chairman and CEO of Academy Insurance
Group from 1975 to 1984.

Bryan P. Brown has served as director since 1997. He was President from 1997
to December 1998. He was previously President of Riverwood, a master planned
golf course community in Port Charlotte, Florida. He served as Treasurer of
the Mariner Group, Inc. and Assistant Vice President of First Union National
Bank and First Republic Bank. He also serves as CEO of the Company's 80% owned
subsidiary, Retama Entertainment Group, Inc.

Susan Lurvey has been the Secretary since June 1992. She has served as
administrative assistant to Mr. Allen since 1987.

Robert C. Buffkin has been a business consultant specializing in associations
and insurance since 1974. He was elected as a director in 1996 and President
in December 1998.
Bryan P. Brown is William M. Allen's son-in-law.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who beneficially own more than 10% of a registered
class of the Company's equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission and are
required to furnish copies to the Company. To the best of the Company's
knowledge, all reports required to be filed were timely filed in fiscal year
ended December 31, 2000.

ITEM 10. EXECUTIVE COMPENSATION.

SUMMARY COMPENSATION TABLE

Other Annual
Name and
Principal Position Year Salary Bonus Compensation
William M. Allen.............. 2000 $ 1 -0- -0-
Chairman, Chief Executive Officer 1999 $ 60,000 -0- -0-
1998 $ 240,000 -0- -0-
Bryan P. Brown................ 2000 $ 150,000 30,000 -0-
CEO of Retama Entertainment .... 1999 $ 150,000 -0- -0-
1998 $ 150,000 -0- -0-

There are no long term compensation or other compensation plans.

DIRECTOR COMPENSATION

Non-officer directors are entitled to a fee of $2,000 for attendance at
meetings of the Board of Directors, plus reimbursement for reasonable travel
expenses.

STOCK OPTIONS

The following table provides information about the stock options granted to
the named executive officers during the fiscal year ended December 31, 2000.
We granted a total of 1,020,000 options during the year.

Options Granted in 2000 Fiscal Year

Name Number of Shares % of Total Options
Underlying Options Granted to Employees Exercise Expiration
Granted in Fiscal Year Price Date
---------- ------------------ --------------------- -------------------
William Allen 400,000 39.2% $ .375 December 31, 2005
Bryan P. Brown 300,000 29.4% $ .375 December 31, 2005

The following table sets forth the number of stock options held by the
executive officers named in the Summary Compensation Table as of December 31,
2000 and the value of unexercised in-the-money options held which represents
the positive difference between the exercise price and the market price at
fiscal year end. No such executive exercised any options during the 2000
year.

2000 Fiscal Year Option Values

Number of Value of Unexercised
Unexercised Options in-the-money Option
Name At Fiscal Year End Fiscal Year End
------------------ ------------------------ --------------------
William M. Allen 1,420,000 -0-
Bryan P. Brown 900,000 -0-

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table sets forth, as of March 30, 2001, the beneficial ownership
of the Company's Common Stock by (i) the only persons who own of record or are
known to own, beneficially, more than 5% of the Company's Common Stock; (ii)
each director and executive officer of the Company; and (iii) all directors
and officers as a group.

Percent of
Number of Outstanding
Name Shares Common Stock
William M. Allen............. 5,021,000 (1)(2) 60.20 %
Robert C. Buffkin............ 621,000 (2) 7.454
Susan Lurvey................. 18,000 *
Bryan P. Brown............... 900,000 (2) 10.7

Officers and Directors
as a group (4 Persons)...... 6,560,000 (1)(2) 77.8 %

(1) Includes 1,068,000 shares owned by William M. Allen's wife as to which he
disclaims any beneficial interest.

(2) Includes stock options held as follows: William M. Allen -- 1,400,000
shares, Bryan P. Brown -- 900,000 shares, Robert C. Buffkin -- 610,000
shares.

* Less than 2%.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Consulting fees aggregating approximately $46,000 were paid to a certain
shareholder and director of the Company in 2000 and 1999, respectively.

In December 1996 the Company loaned Bryan P. Brown $92,838 with interest at
8%. The loan was due January 7, 1999 and was extended to January 2000. As of
December 31, 2000, the Company agreed to cancel the note receivable and
reverse stock held as security for the note.

PART IV

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

(a) Certain exhibits listed below are incorporated by reference to previously
filed registration statements and reports as indicated in the Incorporated by
Reference Note column and notes below.

EXHIBIT INC. BY
NO. REF. NOTE DESCRIPTION
3(a) -- A Articles of Incorporation of Registrant
as filed with the Secretary of State of
Nevada on September 3, 1999.
3(b) -- B Plan of Merger of Call Now, Inc.(Florida)
into Call Now, Inc (Nevada).
3(c) -- F By-Laws of the Registrant
8.7 -- L Agreement with Barron Chase Securities, Inc.
8.8 -- M Agreement with Howe, Solomon & Hall Financial,
Inc. dated 10/17/96 covering purchase of
Retama Development Corp. bonds
8.9 -- N Agreement with Retama Park Association, Inc.,
Retama Partners, Ltd. and Retama Park
Management Co. L.C. relating to purchase of
certain Retama Development Corp. notes.
8.10 -- O Agreement to purchase certain real estate
in Texas.
8.11 -- P Agreement to sell assets of ARN Communication Corp.
8.12 -- Q Management Agreement for Retama Park Racetrack.
8.13 -- R Agreement with Global Trust and Hemisphere Trust
dated May 27, 1999.
8.14 -- S Agreement for construction services between
Retama Development Corporation and William M. Allen.

Incorporation by Reference Notes:

NOTE INCORPORATION BY REFERENCE
A -- Incorporated by reference to Exhibit 3(a) of Form 10-KSB for
the year ended December 31, 1999
B -- Incorporated by reference to Exhibit 3(b) of Form 10-KSB for
the year ended December 31, 1999
L -- Incorporated by reference to Exhibit 8.9 of Form 10-KSB
for year ended December 31, 1996
M -- Incorporated by reference to Exhibit A of Form 8-K filed November 21, 1996
N -- Incorporated by reference to Exhibit B of Form 8-K filed
November 21, 1996
O -- Incorporated by reference to Exhibit C of Form 8-K filed November 21, 1996
P -- Incorporated by reference to Exhibit D of Form 8-K filed
November 21, 1996
Q -- Incorporated by reference to Exhibit 8.12 of Form 10-KSB
for year ended December 31, 1997.
R -- Incorporated by reference to Exhibit 8.13 of Form 10-KSB for
year ended December 31, 1998.
S -- Incorporated by reference to Exhibit 8.14 of Form 10-KSB for
year ended December 31, 1998.

The following exhibits are filed herewith:

27. -- Financial Data Schedule (for SEC use only).

CALL NOW, INC.
Audited Financial Statements
December 31, 2000

Clyde Bailey, P.C.
Certified Public Accountant
10924 Vance Jackson #404
San Antonio, Texas 78230

CLYDE BAILEY P.C.
______________________________________________________________________________
Certified Public Accountant
10924 Vance Jackson #404
San Antonio, Texas 78230
(210) 699-1287(ofc.)
(888) 699-1287 ¨ (210) 691-2911 (fax)
Member:
American Institute of CPA's
Texas Society of CPA's

To the Board of Directors and Shareholders
Call Now, Inc.

REPORT OF INDEPENDENT PUBLIC ACCOUNTANT

We have audited the accompanying consolidated balance sheet of Call Now, Inc.
and subsidiaries (Company) as of December 31, 2000 and the related
consolidated statements of operations, changes in stockholders' equity, and
cash flows for the years ended December 31, 2000 and 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statements based on
our audit.

We conducted our audit 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 audit provides a reasonable basis
for our opinion. On May 25, 1999 an agreement was signed between the Company
and two trusts known as the Global Trust and the Hemisphere Trust to sell 50%
of the Company's investment in the Retama Development Corporation Special
Facilities Revenue Bonds. This event is further explained in Note 15 in the
notes to financial statements.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of the Company and
subsidiaries as of December 31, 2000, and the consolidated results of their
operations and their cash flows for the years ended December 31, 2000 and 1999
in conformity with generally accepted accounting principles.

Clyde Bailey
Certified Public Accountant

March 14, 2001
Except for Note 17- December 28, 2001

CALL NOW, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
As of December 31, 2000

A S S E T S

Current Assets
Cash And Cash Equivalents $174,559
Accounts Receivable 30,000
Accounts Receivable - Other 103,114
Marketable Securities, At Market Value 4,603,910
Income Tax Refund Claim 528,035
Note Receivable 293,700
Other 43,099
---------
Total Current Assets $5,776,417

Furniture And Equipment
(Less Accumulated Depreciation of $30,618) 2,581

Land 2,369,075

Long-Term Notes and Loan Receivables 731,370

Deferred Tax Assets 251,522

Other 232,046
---------
Total Assets $9,363,011
=========

CALL NOW, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
As of December 31, 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 $36,939
Deferred Tax Payable - Bonds 460,367
Current Portion of Mortgage Payable 17,657
Note Payable 52,905
Accrued Expenses 83,149
---------
Total Current Liabilities 651,017

Non-Current Liabilities
Mortgage Payable, less current maturity 1,703,657
---------
Total Non-Current Liabilities 1,703,657

Total Liabilities 2,354,674
---------
Commitment and Contingencies -

Minority Interest in Consolidated Subsidiary 16,414
---------
Stockholders' Equity
Preferred stock, .001 par value -
authorized 800,000 shares
none outstanding
Common Stock, .001 par value 8,430
authorized 50,000,000,
8,430,444 shares issued
and 8,340,444 shares outstanding
Additional Paid-In-Capital 5,874,511
Retained Earnings 525,938
Accumlulated other comprehensive income 789,094
Treasury stock, at cost (206,050)
---------
Total Stockholders' Equity 6,991,923
---------
Total Liabilities and Stockholders' Equity $9,363,011
=========

CALL NOW, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Restated

Years Ended December 31
2000 1999
Income
Race Track Operating Income $6,038,399 $5,725,224
Management Fees 180,000 180,000
--------- ---------
Total Income 6,218,399 5,905,224
--------- ---------
Costs and Expenses
Salaries and Wages 5,251,498 5,167,529
Payroll Taxes and Benefits 1,038,542 1,021,267
Legal & Professional 317,866 340,448
Consulting Fees 16,586 106,456
General and Administrative 311,587 415,709
Interest 168,624 267,291
Depreciation and Amortization 3,700 4,180
--------- ---------
Total Cost and Expenses 7,108,403 7,322,880
--------- ---------
(Loss) from continuing operations before (890,004) (1,417,656)
other income and expenses, income taxes, and
minority interest

Other Income and Expenses 223,951 102,789
--------- ---------
(Loss) before income taxes and (666,053) (1,314,867)
minority interest

Income Tax Benefit 134,043 447,814
--------- ---------
(Loss) before minority interest (532,010) (867,053)

Minority Interest 356 2,662
--------- ---------

Net (Loss) $(531,654) $(864,391)
========= =========
Earnings Per Share - Basic and Diluted:
Net (Loss) (0.06) (0.10)

CALL NOW, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows

Years Ended December 31
2000 1999

Cash Flows from Operating Activities:
Net (Loss) $(531,654) $(864,391)

Adjustments to reconcile net loss to net cash
used in operating activities:

Depreciation and Amortization 3,700 4,180
Income Tax Refund Claim 38,407 1,305,345
Loss on sale of marketable securities - 150,159
Changes in assets and liabilities:
(Increase) Decrease in Assets:
Accounts Receivable 15,000 3,999
Accounts Receivable - Other 268,311 (371,425)
Deferred Tax Asset (186,513) 117,099
Other Current Assets 55,081 (66,386)
Other Assets (8,227) (11,605)
Increase (Decrease) in Liabilities:
Accounts Payable 2,223 (16,632)
Accrued Expenses (503,646) (202,843)
Accrued Expenses-Other (168,740) (155,523)
Deferred Income - -
Minority Interest (356) (2,662)
------- -------
Total Adjustments (484,760) 753,706
------- -------
Net Cash (used for) Operating Activities (1,016,414) (110,685)
------- -------

CALL NOW, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows

Years Ended December 31
2000 1999

Cash Flows from Investing Activities:

Proceeds from the sale of marketable securities - 4,429,021
Capital Expenditures - -
Purchase of marketable securities (306,300) (2,000,000)
Notes and Loans Receivable:
Advances - (14,856)
Cancellations 339,916 -
Collections 456,300 120,000
Proceeds from bond redemption 15,000 10,000
------- -------
Net Cash provided by Investing Activities 504,916 2,544,165
------- -------
Cash Flows from Financing Activities

Payment of Short-term debt - (2,000,000)
Cancellation of Common Stock (322,837)
Note Payable 52,905 -
Payment of Long Term Debt (7,907) (14,806)
------- -------
Net Cash provided by (used for) Financing Activities (277,839) (2,014,806)
------- -------
Net Increase in Cash (789,337) 418,674

Cash Balance, Beginning of Year 963,896 545,222
------- -------
Cash Balance, End of Year $174,559 $963,896
======= =======
Supplemental cashflow information:
Cash Paid for interest $168,624 $267,291
Cash Paid for income taxes $ - $ -

CALL NOW, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders' Equity

Years Ended December 31, 2000 and 1999

Restated

Accumulated
Subscription Other
Common Stock Additional Treasury Stock Notes Receivable Comprehensive Retained
Shares Amount Paid-In-Calital Shares Amount Shares Amount Income (Loss) Earnings Total

Balance December 31, 1998 8,585,444 8,585 6,197,193 90,000 (206,050) 115,000 (230,000) (7,141) 1,921,984 7,684,571

Comprehensive
(Loss):

Net (Loss) (864,392) (864,392)
Unrealized (Loss) on securities 839,459 839,459

Total Comprehensive (Loss) (24,933)
---------
---------- -------- ---------- -------- --------- -------- -------- --------- ---------- ----------
Balance, December 31, 1999 8,585,444 $8,585 6,197,193 90,000 $(206,050) 115,000 $(230,000) $832,318 $1,057,592 $7,659,638

Comprehensive (Loss):

Net (Loss) (531,654) (531,654)
Unrealized Gain on securities (43,224) (43,224)
---------
Total Comprehensive Income (Loss) (574,878)
---------
Stock Cancelled (155,000) (155) (322,682) (115,000) 230,000 (92,837)
---------- -------- ---------- -------- --------- -------- -------- --------- ---------- ----------
Balance, December 31, 2000 8,430,444 $8,430 5,874,511 90,000 $(206,050) - $ - 789,094 525,938 6,991,923
========== ======== ========== ======== ========= ======== ======== ========= ========== ==========

Call Now, Inc.
And Subsidiaries
Notes to Financial Statements

NOTE 1- SUMMARY OF ACCOUNTING POLICIES

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 it's 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 December 31, 1999, 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.

Income Taxes
The Company accounts for income taxes pursuant to the provisions of the
Financial Accounting Standards Board Statement No. 109, "Accounting for
Income Taxes", which requires an asset and liability approach to calculating
deferred income taxes. The asset and liability approach requires the
recognition of deferred tax liabilities and assets for the expected future tax
consequences of temporary differences between the carrying amounts and the tax
basis of assets and liabilities.

Call Now, Inc.
And Subsidiaries
Notes to Financial Statements

NOTE 1- SUMMARY OF ACCOUNTING POLICIES (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.

Uninsured Cash Balances
The Company maintains its cash balances at several financial institutions.
Accounts at the institutions are secured by the Federal Deposit Insurance
Corporation up to $100,000. Periodically, balances may exceed this amount.
At December 31, 2000, uninsured balances aggregated $26,397.

Concentration of Credit Risk / Economic Dependency
The Company's current business involves two ventures, which are interest rate
sensitive. First is ownership of tax-exempt bonds partially collateralized by
a first mortgage on the Retama Park Horse Racing Facility in Selma, Texas.
The second is ownership of development property in Williamson County, Texas
(near Austin, Texas). Both ventures are dependent on continued low interest
rates and economic prosperity in the Austin and San Antonio metropolitan
areas.

Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure on
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Fair Value of Financial Instruments
The carrying value of financial instruments including marketable securities,
notes and loans receivables, accounts payable and notes payable approximate
their fair values at December 31, 2000.

Long-Lived Assets
Statement of Financial Accounting Standards No. 121 "Accounting for Impairment
of Long-Lived Assets to be Disposed of " requires, among other things,
impairment loss of assets to be held and gains or losses from assets that are
expected to be disposed of be included as a component of income from
continuing operations before taxes on income. The Company has not identified
any such impairment losses to date.

Call Now, Inc.
And Subsidiaries
Notes to Financial Statements

NOTE 1 - SUMMARY OF ACCOUNTING POLICIES (CONTINUATION)

Stock Based Compensation
Statement of Financial Accounting Standards No. 123, "Accounting for Stock
Based Compensation" established a fair value method for accounting for
stock-based compensation plans either through recognition or disclosure. The
Company did not adopt the fair value based method but instead discloses the
effects of the calculation required by the statement.

Comprehensive Income
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income," establishes standards for reporting and display of
comprehensive income, its components and accumulated balances. Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures,
SFAS No.130 requires that all items that are required to be recognized under
current accounting standards as components of comprehensive income be reported
in a financial statement that is displayed with the same prominence as other
financial statements.

Segments of an Enterprise and Related Information
Statement of Financial Accounting Standards (SFAS) No. 131, Disclosures about
Segments of an Enterprise and Related Information, supersedes SFAS No. 14,
"Financial Reporting for Segments of a Business Enterprise." SFAS 131
establishes standards for the way that public companies report information
about operating segments in annual financial statements and requires reporting
of selected information about operating segments in interim financial
statements issued to the public. It also establishes standards for
disclosures regarding products and services, geographic areas and major customer
s. SFAS 131 defines operating segments as components of a company about which
separate financial information is available that is evaluated regularly by the
chief operating decision maker in deciding how to allocate resources and in
assessing performance.

Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Investments
and Hedging Activities" ("SFAS No 133") which establishes accounting and
reporting standards requiring that every derivative instrument be recorded in
the balance sheet as either an asset or liability measured at its fair value.
The statement also requires that changes in the derivative's fair value be
recognized in earnings unless specific hedge accounting criteria are met. SFAS
No. 133, as extended by SFAS No. 137 and amended by SFAS No. 138, is effective
for all fiscal quarters beginning after June 15, 2000. The Company does not
expect adoption of SFAS No. 133 to have an effect on its financial statements.

In December 1999, the Securities and Exchange Commission issues Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements"
(SAB 101, which provides guidance on the recognition, presentation and
disclosure of revenue in financial statements of all public registrants. The
provisions of SAB 101 are effective for transactions beginning in fiscal year
after September 30, 2000. The Company does not expect adoption of SAB 101 to
have an effect on its financial statements.

Call Now, Inc.
And Subsidiaries
Notes to Financial Statements

NOTE 1- SUMMARY OF ACCOUNTING POLICIES (CONTINUATION)

Reclassification
Certain reclassifications have been made to the prior year's financial
statements in order to conform to the current presentation.

NOTE 2- MARKETABLE SECURITIES
The carrying amounts of marketable securities as shown in the accompanying
balance sheet and their approximate market values at December 31, 2000 are as
follows:

Gross Gross
Unrealized Unrealized Market
Available for sale: Cost Gains Losses Value
Municipal bonds and notes
Corporate $ 3,052,464 $ 1,283,446 $ - $ 4,335,910
Securities 321,885 - 53,885 268,000
----------------- ------------ ------------ -------------
$ 3,374,349 $ 1,283,446 $ 53,885 $ 4,603,910

Unrealized gains on securities available for sale at December 31, 2000 are
shown net of income taxes as a component of stockholders' equity.

NOTE 3 - INCOME TAX REFUND CLAIM
For federal income tax purposes the Company had an operating loss of
$3,537,625 and a capital loss carry-back in the amount of $1,967,504 in 1998.
As a result, the Company filed a Federal income tax refund claim in the amount
of $1,871,787. The claim was received in June 1999. The Company filed another
claim for refund to carry back the net operating loss from 1999 and 1998 to
1996 and 1997 in the amount of $528,035. The net operating loss will expire in
2013 and 2014.

NOTE 4 - INVESTMENT IN BONDS AND BOND DEFEASANCE TRANSACTION
On September 20, 1996, the Company acquired $52,274,000, 8.75% term bonds of
Retama Development Corporation ("RDC") Special Facilities Revenue Bonds,
Series 1993 for a purchase price of $10,300,000. The bonds were secured by a
first mortgage on the Retama Park Horse Racing facility.

In November 1996, the Company purchased $39,275,000 principal amount of Retama
Development Corporation Series 1993A notes and $500,000 of Retama Development
Corporation Series 1993B notes for 385,700 shares of the Company's common
stock valued at $337,488. The notes were secured by a lien on the Retama Park
Horse Racing facilities, including real and personal property.

Simultaneously, the Company sold 50% of the bonds and notes to a broker/dealer
for an initial payment of $1,704,000 and future payments of $1,950.000 to be
paid prior to December 16, 1996.

On March 26, 1997, the Company participated in the defeasance of the RDC bonds
and notes held by it, and received cash in the amount of $3,853,086,
$3,640,000 7% Series 1997 A Bonds and $45,200,000, 8% Series 1997 B Bonds as
part of the defeasance. The 1997 bonds were valued by an independent third
party at the same value as the carrying value of the 1993 bonds.

Call Now, Inc.
And Subsidiaries
Notes to Financial Statements

NOTE 4 - INVESTMENT IN BONDS AND BOND DEFEASANCE TRANSACTION (CONTINUATION)

On April 7, 1997, the Company acquired the balance of the RDC bonds in
exchange for 760,000 shares of the Company's common stock, 15,000 shares of
Compressent Corporation ("Compressent") common stock, and $2,150,000 in cash.
The cost of the remaining bonds purchased by the Company, including
acquisition costs, was $3,187,728. At December 31, 1997 the Company's total
holdings of RDC bonds were: (a) 1997 Series A 7% bonds-$7,000,000 and (b) 1997
Series B 8% bonds-$86,925,000.

Due to unanticipated difficulty in securing complete financing for the bond
transaction and the possibility of losing a three million non-refundable
deposit, the Company decided to approach the second bidder for the RDC bonds.
As a result, Howe, Solomon, and Hall ("HSH") agreed to purchase 50% of the
bonds for $3.69 million dollars, which resulted in a loss of $1.7 million
dollars. This business decision was made in order to complete the acquisition
of the bonds, which the Company considered to be a valuable asset and to
preserve the three million non-refundable deposit.

The Company was able to acquire bonds at a cost of $10.34 million dollars,
which are secured by Retama Racetrack that has been appraised at over $22
million dollars by an independent appraisal group.

Under the terms of the bond defeasance, after giving effect to the purchase of
the additional bonds referred to in the preceding paragraph, the Company had a
gain of $3,853,086. However, the Company was obligated to lend to RDC, to
fund any operating deficit (as defined) of RDC, up to $2,150,000 for a
two-year period expiring March 1999, of which $853,000 had been advanced and
$120,000 was repaid at December 31, 1999.

As a result of the foregoing obligation, the Company reduced the gain on the
bond defeasance by $2,150,000 in 1997, which was reflected in the balance
sheet as deferred gain from bond defeasance. In this connection, a deferred
tax asset of $801,950 in 1997 has been recorded. At December 31, 1999, the
Company has loaned a total of $853,000 to RDC of which $120,000 was repaid in
1999. The funding agreement expired in March 1999 and no further loans have
been made. As a result, the Company reversed the deferral of $2,150,000 to
income and recorded an accompanying income tax benefit of $801,950 in 1998.

Call Now, Inc.
And Subsidiaries
Notes to Financial Statements

NOTE 5 - NOTES AND LOANS RECEIVABLE

Notes and loans receivable at December 31, 2000 comprise the following:

On August 15, 1998, the Company executed a note with a broker-dealer in the
amount of $750,000. The note bears an interest rate of 12% per annum, payable
monthly and matures August 15, 2000. The note is an approved transaction
through the National Association of Securities Dealers. The Company has
advised the broker-dealer that it will not renew this Agreement. On September
2, 2000, the Company received $150,000 in cash and stock in an unrelated
company valued at $306,300 to bring the balance of the note to $293,700. The
Company is actively pursing collection of the balance of the note.

NOTE 6 - LAND AND MORTGAGE PAYABLE

On July 15, 1996, the Company acquired 118 acres of development property in
Williamson County, Texas for a purchase price of $2,363,060. Under the terms
of the purchase, the Company paid $589,310 and executed a seven year, 9% note,
in the approximate amount of $1,770,000 with semi-annual principal and
interest payments of $85,721 commencing January 1997 and ending July 15, 2003,
at which time the remaining $1,655,056 balance is due.

The following is a summary of annual principal payments due under this note:

Year Amount

2001 17,657
2002 19,282
2003 1,684,375
-------------------
$ 1,721,314

NOTE 7 - STOCKHOLDERS' EQUITY

The Company has authorized 800,000 shares of $.001 par value preferred stock.
Of the 800,000 shares, 300,000 are designated Class A convertible redeemable
preferred stock (Class A), 200,000 are designated Class B convertible
redeemable preferred stock (Class B), and 300,000 are designated as Class C
convertible redeemable preferred stock (Class C).

The Class A preferred stock is non-voting, redeemable at the option of the
Company at a price of $5 per share plus accrued but unpaid dividends, and
convertible into five shares of common stock at the option of the holder. The
Class A preferred stockholders are entitled to receive an annual dividend of
$.30 per share. Of the 300,000 designated shares, none were outstanding at
December 31, 2000.

Call Now, Inc.
And Subsidiaries
Notes to Financial Statements

NOTE 7 - STOCKHOLDERS' EQUITY (CONTINUATION)

The Class C preferred stock is non-voting, redeemable at the option of the
Company at a price of $3.00 per share plus one share of common stock and
convertible into one share at the option of the holder. Of the 300,000
designated shares, none were outstanding at December 31, 2000.

In a prior year, the Company entered into "Consultant's Stock Purchase and
Sale Agreements" (stock subscription notes receivable) with several
individuals. In exchange for providing certain advisory and/or consulting
services, the individuals were entitled to purchase 710,000 shares of the
Company's common stock at $.80 per share. The purchase price was payable in
five years, with interest at prime plus 1% per annum. All of any compensation
due by any of the individuals was credited to the purchase price of the stock.

During 1997, the Company authorized three of its officers and employees to
exercise options aggregating 110,000 in exchange for notes totaling $230,000.
As of December 31, 2000, the Company agreed to cancel the notes along with the
common stock that was held as security for the notes, and to reverse the
accrued interest receivable on the subscription notes receivable in the amount
of $18,400 to interest income and $45,584 to other income.

Also during 1997, the Company advanced to an officer a note in the amount of
$92,837 to purchase 45,000 shares of common stock that was held as security
for the note. As of December 31, 2000, the Company agreed to cancel the note
receivable and reverse the accrued interest in the amount of $9,441 to
interest income and $24,111 to other income.

NOTE 8 - STOCK BASED COMPENSATION

At December 31, 1999, the Company has non-plan options, which are described
below. The Company applies APB Opinion 25; Accounting for stock issued to
employees, and related interpretations in accounting for the options. Under
APB Opinion 25, because the exercise price of the Company's employee stock
options equals or exceeds the market price of the underlying stock on the date
of grant, no compensation cost is recognized.

On April 25, 1997, the Company granted a stock bonus of 14,544 shares of its
common stock to its corporate counsel, chief financial officer and
controller. In addition, on the same date, the Company granted options to
purchase 530,000 shares of the Company's common stock to its president, chief
executive officer and two members of the Company's board of directors. The
options are exercisable at prices ranging from $2.34 - $4 per share and expire
five years from the date of grant.

In March of 1999 the Company granted options to its directors to purchase
400,000 shares at the average bid/ask price plus 10%. The options will expire
in five years.

In December of 1999 the Company granted options to its directors and certain
employees to purchase 1,020,000 shares at an option price of $1.04 per share.
The options will expire in five years.

Call Now, Inc.
And Subsidiaries
Notes to Financial Statements

NOTE 8 - STOCK BASED COMPENSATION (CONTINUATION)

In November of 2000, the Company granted options to its directors and certain
employees to purchase 1,020,000 shares at an option price of $.375 per share.
The options will expire in five years.

FASB Statement 123, Accounting for Stock-Based Compensation, requires the
Company to provide pro forma information regarding net income per share as if
compensation cost for the Company's options had been determined in accordance
with the fair value based method prescribed in FASB Statement 123. Under SFAS
123, the value of each option granted during 2000 and 1999 was estimated on
the date of grant using the Black Scholes model with the following
assumptions: Risk-free interest rate - 6.5%, dividend yield - 0%, volatility -
19.3% and expected life of the option - 5 years.

Under the accounting provisions of FASB Statement 123, the Company's net
income and earnings per share would have been reduced to the pro forma amount
indicated below:

2000 1999
Net Income
As reported ( $ 510,071 ) ( $ 864,392 )
Pro forma ( $ 606,052 ) ( $ 924,792 )

Earnings per share
As reported ( .06 ) ( .10 )
Pro forma ( .07 ) ( .11 )

A summary of the status of the Company's non-plan options as of December 31,
2000 and 1999, and changes during the years ended on those dates is presented
below:

December 31, 2000 December 31, 1999
Weighted Average Weighted Average
Shares Exercise Price Shares Exercise Price
Outstanding at
Beginning of year 1,960,000 $ 2.26 540,000 $ 3.27
Granted 1,020,000 0.37 1,420,000 $ 1.20
Exercised - - - -
Forfeited - - -

Outstanding at
the end of year 2,980,000 $ 1.49 1,960,000 $ 2.26

Options exercisable
at year end 2,980,000 $ 1.49 1,960,000 $ 2.26

Call Now, Inc.
And Subsidiaries
Notes to Financial Statements

NOTE 8 - STOCK BASED COMPENSATION (CONTINUATION)

The following table summarizes information about non-plan options outstanding
at December 31, 2000:

Options Outstanding Options Exercisable

Range of Number of Options Weighted Average Range of Number of Options Weighted Average
Exercise Prices Outstanding at remaining Exercise Prices Outstanding at remaining
12/31/00 contractual life 12/31/00 contractual life

$0.375 1,020,000 4.9 Years $0.375 1,020,000 4.9 Years
$1.25 400,000 3.3 Years $1.25 400,000 3.3 Years
$1.04 1,020,000 3.9 Years $1.04 1,020,000 3.9 Years
$2.34 230,000 1.3 Years $2.34 230,000 1.3 Years
$4.00 300,000 1.3 Years $4.00 300,000 1.3 Years
$3.00 10,000 3.0 Years $3.00 10,000 3.0 Years

NOTE 9 - INCOME TAXES

The components of the provision for income tax benefits are as follows:

Year Ended December 31,
2000 1999

Current:
Federal ( $ 134,043 ) ( $ 447,814 )
State -0- -0-
--------------------- --------------------
( $ 134,043 ) ( $ 447,814 )

Such income tax benefits are included in the accompanying consolidated
financial statements as follows:

Year Ended December 31,
2000 1999

Income from operations ( $ 134,043 ) ( $ 447,814 )
Extraordinary Items -0- -0-
--------------------- --------------------
( $ 134,043 ) ( $ 447,814 )

The above provision has been calculated based on Federal and State statutory
rates in the adjusted rates of 34% for Federal and 4.5% for State tax rates.

The net operating loss for 1999 was carried back to 1996 and 1997 and the
unused portion will be carried forward along the net operating loss from 2000.
The net operating loss will expire in 2019 and 2020.

Call Now, Inc.
And Subsidiaries
Notes to Financial Statements

NOTE 10 - RELATED PARTY TRANSACTIONS

Consulting fees aggregating approximately $46,000 were incurred to a certain
shareholder and director of the Company in 2000 and 1999.

In December of 1999, the Board of Directors approved a resolution to settle
the Company's President's salary of $240,000 per year by agreeing to pay the
salary for 1998 in February 2000, settle the 1999 salary for an investment
valued at $60,000 (as Consultant's Fees), and to pay $1 for his salary in
2000.

NOTE 11 - MANAGEMENT AGREEMENT

On October 27, 1997 the RDC'S Board Of Directors approved a management
contract granting Retama Entertainment Group, Inc., an 80% owned subsidiary of
the Company, the right to manage the operations of the Facility commencing on
January 1, 1998. The five-year agreement provides Retama Entertainment Group,
Inc., with a monthly management fee of $15,000 plus a variable fee equal to
25% of profits in excess of $1,000,000 annually. Operations of this subsidiary
began January 1, 1998.

NOTE 12 - CONTINGENCIES

In 1999, the Securities and Exchange Commission has been reviewing the 1997
and 1998 filings concerning the transaction of the 1997 bond defeasance and the
recognition of the $3,853,086 gain on the transaction. Although the Company
and its auditors believe that the accounting for the transaction was and is
correct, the Commission maintains that rather than a gain recognized, as
reported by the predecessor auditors, there should have been a reduction in
cost basis. If this adjustment is made then the 1997 and 1998 filings would
have to be restated and a "net" change of retained earnings of ($1,857,432)
for 1997 and 1998 would be recorded after allowing for the sale and exchanges
of the bonds in 1998 and 1999. After adjusting the remaining RDC bonds to
market value there would be a negative effect on Stockholder's Equity in the
amount of $1,009,592.

NOTE 13 - EARNINGS PER SHARE

The following reconciles the components of the earnings per share (EPS)
computation:

------- 2000 ------- ------- 1999 -------
Earnings Per (Loss) Shares Per Share (Loss) Shares Per Share
Common Share (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount

Net Income ( $ 510,071) 8,340,444 ( $ .06 ) ( $ 864,392) 8,495,444 ( $.10)

Options to purchase 2,980,000 shares and 1,960,000 were outstanding at
December 31, 2000 and 1999 respectively were not included in the computation
of diluted EPS as they would be anti-dilutive.

Call Now, Inc.
And Subsidiaries
Notes to Financial Statements

NOTE 14 - OTHER INCOME AND EXPENSE ITEMS

The following items are shown on the consolidated statement of operations as
other income and expense items and are disclosed elsewhere in these notes:

2000 1999

Interest Income 270,387 303,264
Gain (Loss) on Sale of Assets ( 16,903 ) ( 191,202)
Accrued Expense - Other ( 29,533) ( 9,273)

Total $ 223,951 $ 102,789

NOTE 15 - OTHER EVENTS

On May 25, 1999 an agreement was signed between the Company and two trusts
known as the Global Trust and the Hemisphere Trust (Trusts) to sell 50% of the
Company's investment in the Retama Development Corporation Special Facilities
Revenue Bonds.

The agreement calls for the Company to exercise an option to purchase from ITG
Fund $6,950,000 in aggregate principal amount of Retama Development
Corporation (RDC) Series 1997A bonds for a total exercise price of $4,775,000.
The Agreement further provides for the Trusts to purchase these bonds from the
Company for a total price of $4,862,500 plus accrued interest on the Series A
bonds and to deliver to the Company $2,000,000 of the Series A bonds plus the
payment of the Compressent debt assumed by the Company, and the Company will
deliver to the Trusts $43,462,500 in the Series B bonds of RDC.

The Agreement further provides for the Trusts to assume 50% of the Company's
obligation to the RDC for the repairs to the lake (not to exceed a total of
$600,000) in the aforementioned lawsuit, and to provide 50% of the Chief
Executive Officer's compensation of the track operations.

NOTE 16 - SUBSEQUENT EVENTS

The Company and its CEO (William M Allen) were sued by RDC, the issuer of the
bonds held by the Company, in connection with the repair of the lake at Retama
Park Racetrack. The action seeks $600,000 in damages plus exemplary damages.
The Company had indemnified the contractor regarding matters related to the
racetrack. The Company has entered into a construction services contract with
the RDC to dismiss the lawsuit against the Company and Mr. Allen, and an
assignment by the RDC of its claims and causes of action against the
contractor and related parties. The Company engaged an engineering firm to
perform a study to repair the lake, and has engaged a qualified contractor to
repair the lake. The Company expended a total of $391,732 to repair the lake
the Trusts reimbursed one-half of this amount to the Company. In February
2000, a settlement was reached between the parties to drop all actions after
the construction was completed and the lake was repaired.

Call Now, Inc.
And Subsidiaries
Notes to Financial Statements

NOTE 16 - SUBSEQUENT EVENTS (CON'T)

On February 15, 2001, the Company signed a contract with the Georgetown
Independent School District to sell fourteen acres of the 123 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
development.

No other material subsequent events have occurred that warrants disclosure
since the balance sheet date.

Note 17 - Restated Financial Statements

Since this conversion was not completed, the financial statements have been
restated. The effect is as follows:

As Reported As Restated

Total Assets $10,318,347 $ 9,363,011
Total Liabilities 2,878,621 2,354,674
Total Stockholders' Equity 7,423,312 6,991,923
Net Income ( 510,071) ( 531,654)

SIGNATURES

In accordance with Section 13 or 15(d) 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/ Thomas R Johnson
------------------------------------
Thomas R Johnson
President

January 3, 2002

In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities on the
dates indicated.

/s/ Thomas R Johnson Chairman and Director January 3, 2002
------------------ (Principal Executive Officer)
Thomas R Johnson (Principal Accounting Officer)