CALL NOW INC - FORM 10-K/A - November 13, 2009

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EX-21 - EX-21 - CALL NOW INC	d70112exv21.htm
EX-32.1 - EX-32.1 - CALL NOW INC	d70112exv32w1.htm
EX-31.1 - EX-31.1 - CALL NOW INC	d70112exv31w1.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-K/A-2


þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED: DECEMBER 31, 2008

COMMISSION FILE NO. 0-27160

CALL NOW, INC.

(Exact name of registrant in its charter)


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

1 Retama Parkway
Selma, TX 78154
(Address of principal executive offices)

Registrant’s Telephone No. (210) 651-7145

Securities registered pursuant to Section 12(b) of the Act:
NONE

Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.001 par value per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes o No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Yes o No þ

Indicate by check mark 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 preceding 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 þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not 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-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o	Accelerated filer o	Non-accelerated filer o	Smaller Reporting Company þ
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

The aggregate market value of the registrant’s common stock held by non-affiliates as of June 30, 2008 (the last business day of the registrants’ most recently completed second fiscal quarter) was $1,566,208.

The number of shares outstanding of the issuer’s common equity is: 2,902,367 shares of common stock, as of March 4, 2009.

Documents Incorporated by Reference: NONE

Special Note Regarding Forward-Looking Statements

This Annual Report and the information contained herein contain forward-looking statements that involve both risk and uncertainty and that may not be based on current or historical fact. Although we believe our expectations to be accurate, forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Factors that could cause or contribute to such differences include but are not limited to:

	•		concentration of operations in our subsidiary

	•		concentration of assets one investment

	•		limited liquidity available in the secondary market for shareholders

	•		unresolved Internal Revenue Service examination

	•		general economic conditions

Forward-looking statements can be identified by the use of forward-looking words such as “believes,” “expects,” “hopes,” “may,” “will,” “plans,” “intends,” “estimates,” “could,” “should” “would,” “continue,” “seeks,” “pro forma,” or “anticipates” or other similar words (including their use in the negative), or by discussions of future matters such as the development of new technology, integration of acquisitions, possible changes in our regulatory environment and other statements that are not historical. Additional important factors that may cause our actual results to differ from our projections are detailed later in this report under the section entitled “Risk Factors.” You should not place undue reliance on any forward-looking statements, which speak only as of the date hereof. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statement.

Explanatory Note

Call Now, Inc. (“the “Company”) is filing this Amendment No. 2 on Form 10-K/A to its Annual Report on Form 10-K for the fiscal year ended December 31, 2008 (the “Form 10-K”) to provide enhanced disclosures in response to comments by the Securities and Exchange Commission on the original filing. Although the enhanced disclosures are contained in Items 1, 7 and the financial statements included in Item 8, this filing includes all of the other disclosure contained in the original Form 10-K filing.

PART I

ITEM 1. 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. The Company changed its name to Phone One International, Inc. in January 1994 and to Call Now, Inc. in December 1994. The Company changed its domicile to the State of Nevada in 1999.

The primary operation of the Company is the management of Retama Park racetrack (“Retama Park”) in Selma, Texas, through an 80% owned subsidiary, Retama Entertainment Group, Inc. (“REG”). In late 1997 the Company, in conjunction with Retama Partners, the holder of the racing license for Retama Park Racetrack, formed REG, a management company created to assume management responsibilities at Retama Park. Retama Park is owned by the Retama Development Corporation (the “RDC”), a local government corporation organized by and acting on behalf of the City of Selma, Texas. The RDC has an agreement with REG to operate and manage Retama Park that extends through November 1, 2010. The RDC, as owner of the facility, reimburses REG for the majority of payroll and payroll related expenses, plus a monthly management fee.

Our strategy is to operate the Retama Park racetrack in order to maintain its status as a Class I racetrack, attract horsemen to its racing meets, provide a satisfactory gaming and entertainment experience for its customers and provide a safe and attractive facility. We are also seeking to the legalization of additional forms of gaming at Texas racetracks. We believe that the offering of additional forms of gaming will be required to enable us to achieve a satisfactory return on our holdings of RDC Series B bonds, which are further described in the Bonds section of Item 7 of this Annual Report on Form 10-K.

We have provided loans to the RDC to support the operations of the racetrack and to meet its interest and sinking fund obligations on its Series A bonds, which are further described in the Bonds section of Item 7 of this Annual Report on Form 10-K. Such financial support is entirely at the discretion of the Company and is documented by promissory notes secured by a mortgage on the Retama Park racetrack real estate and facilities which is subordinated to the RDC Series A bonds and converted Series B bonds, if any. As of December 31, 2008, we were owed $3,627,569 in principal by the RDC for such loans, plus $1,311,894 of accrued interest. We believe that the value of the security for such notes is sufficient to assure repayment even if additional forms of gaming are not extended to Retama Park.

The status of racing industry in Texas is similar to many other states around the country as the Texas racing facilities continue to experience greater competition from those facilities that have granted the right to conduct additional forms of gaming such as video lottery terminals, slot machines and poker. All states that share a border with Texas — Louisiana, Arkansas, Oklahoma and New Mexico — currently allow additional forms of gaming at their racetracks. The benefits of additional gaming for racing facilities located in these states are two-fold. First, the operation of this additional gaming has provided these facilities with a new, and typically highly profitable, business line. Second, additional gaming has also provided supplemental funds for the horse purses (the prize money paid) within the state. These higher purses have attracted higher quality horses that tend to be more attractive to the betting public.

Series B bonds to be repaid. However, there can be no assurance that the Texas legislature and governor will approve such additional gaming and, if approved, whether the structure and taxation on such additional gaming would benefit the Company. There is substantial opposition to expanding gaming operations in Texas and no such expansion was approved during the 2009 Texas legislative session. Retama Park experiences strong competition from other gaming alternatives from the on-line gaming and surrounding states with other forms gaming, as well as from other entertainment venues in its market area. We expect these factors to continue to adversely affect the liquidity of REG in the absence of legislation allowing additional gaming.

However, the legalization of gaming in Texas remains uncertain in both the likelihood and timeframe. The alternative available to the Company as a majority Series B bondholder would be to develop a plan with the Series A bondholder and the RDC that would maximize the value of the underlying collateral real estate through a liquidation or a joint venture redevelopment with a third party.

On June 26, 2003 the Company entered into a “Convertible Promissory Note and Purchase Agreement” with Penson Worldwide, Inc. (“PWI”) to lend $6,000,000 with the note maturing on June 26, 2008 (the “PWI Note”). PWI is related to the Company as Thomas R. Johnson, President and CEO of Call Now, Inc., is also a Director of both companies. Mr. Johnson has served as a director of PWI since August 2003. The PWI Note also called for the Company to have the option to convert the entire outstanding principal amount into shares of PWI’s common stock. The conversion price per common share was 2.25 times PWI’s shareholders’ equity as of June 30, 2003 divided by the actual number of issued and outstanding shares of PWI as of June 30, 2003, which equated to $2.01 per share. On December 23, 2003 an additional $600,000 was loaned to PWI under similar terms and conditions as the original note.

On June 30, 2005, the Company converted the entire $6,600,000 principal balance of the PWI Note into 3,283,582 shares of PWI common stock. The Company originally extended credit to Penson in order to achieve a higher return on its capital for use in its business. After the loan was converted to Penson stock it continues to be held as a source of capital for the Company’s business.

The Company has maintained an investment account with Penson Financial Services, Inc., a wholly owned subsidiary of PWI, since 1999. At December 31, 2008, the Company had a margin loan in this account in the amount of $14,047,102, which is collateralized by a majority of its marketable securities.

On March 31, 2005 the Company entered into a partnership agreement to provide approximately 46% of the equity for the development of a 270-unit luxury apartment complex known as The Estates at Canyon Ridge, located in the master planned community of Stone Oak in San Antonio, Texas. The Estates at Canyon Ridge, Ltd. (“ECR Ltd.”) closed on the purchase of the 19.739-acre development site on May 2, 2005. The general partner of ECR Ltd. is an unrelated real estate developer (“General Partner”) that also serves as the management company of the property upon completion. The limited partner of ECR Ltd. is Stone Oak Prime, L.P. (“Limited Partner”). The Company owns the largest interest in the Limited Partner at 48%. Other partners of the Limited Partner include Thomas R. Johnson, President, CEO and Director of the Company, Christopher J. Hall, the majority shareholder and Director of the Company, and Bryan P. Brown, President of REG and Director of the Company. The General Partner is required to fund 5% of the equity and the Limited Partner is required to fund 95%. As a member of the Limited Partner, the Company is entitled to receive a preferred return of its capital contribution plus a 10% per annum cumulative return, compounded monthly. Following the repayment of the preferred return, excess cash, at the discretion of the General Partner, and net refinancing or disposition proceeds shall be paid 50% to the General Partner and 50% to the Limited Partner. As of December 31, 2008 and 2007, the Company’s investment totaled approximately $2.60 million and $1.78 million, respectively.

On December 11, 2006 the Company entered into a partnership agreement to provide 95% of the equity for the acquisition and rehabilitation of a 156-unit, 312-bed full-service, private dormitory located in Auburn, Alabama, immediately adjacent to the campus of Auburn University. The project is now known as The Cambridge at Auburn. The Company is the sole limited partner of Cambridge at Auburn, LP (“CA, LP”). The general partner of CA, LP is an unrelated real estate developer that will also serves as the management company of the project. The general partner of CA, LP is the same general partner of The Estates at Canyon Ridge, Ltd. transaction described in the preceding paragraph. As the limited partner, the Company is entitled to receive a preferred return of its capital contribution plus a 10% per annum cumulative return, compounded monthly. Excess cash, at the discretion of the general partner, as well as refinancing or disposition proceeds shall be paid 50% to the general partner and 50% to the limited partner. As of December 31, 2008 and 2007, the Company’s investment totaled approximately $1.36 million and $1.5 million, respectively.

During the course of 2007, the Company provided financing to TNO Holdings, LLC (“TNOH”), a Florida limited liability company, totaling approximately $811,000. TNOH owned three municipal bond issues secured by a first mortgage lien on five long-term care facilities located in Oklahoma and Texas. The purpose of the loan from the Company was to provide working capital for the facilities and fund various capital improvements. The loan accrued interest at a rate of 9.50% and compounded monthly. Following discussions with the managing member of TNOH, the Company has agreed convert the loan to an approximately 42% equity interest in TNOH. During the fourth quarter of 2007, the two nursing homes located in Texas were sold to a third party and the net sales proceeds were used to redeem a portion of the municipal bond issue secured by the facilities and owned by TNO Holdings. The subsequent distribution to the members of TNOH resulted in the repayment of substantially all of the funds originally loaned to TNOH by the Company plus an additional return. The Company continues to maintain an equity interest in TNOH. TNOH continues to own the Texas municipal bond issue pending collection of the remaining accounts receivable and two Oklahoma municipal bond issues secured by three nursing home facilities.

The Company, in association with other Texas racing interests, continues to pursue a legislative agenda that would allow for additional forms of gaming at Texas racetracks. There can be no assurance that this effort will be successful.

EMPLOYEES

The Company has approximately 88 full-time/year-round employees, 57 part-time/year-round employees and 240 seasonal employees. The majority of the personnel are employees of our 80% owned subsidiary, Retama Entertainment Group, Inc., which operates and manages the Retama Park racetrack.

AVAILABLE INFORMATION

Copies of the Company’s Form 10-K and proxy statement may be obtained by notifying the Company in writing at its physical address.

ITEM 1A. RISK FACTORS.

There are many factors that affect our business and the results of its operation, some of which are beyond our control. The following is a description of some of the important factors that may cause the actual results of our operations in future periods to differ materially from those currently expected or desired.

Risks Related to Our Business

Concentration of Operations of Subsidiary

Our 80% owned subsidiary, Retama Entertainment Group, Inc. provides management services to Retama Park racetrack, a Class 1 horseracing facility located in Selma, TX. The management contract with Retama Park is the only management agreement that REG has entered into with a track currently in operation and, therefore, the management fees received as a result of this management agreement represent the only source of revenue for REG. The financial performance of REG is reported on a consolidated basis with the Company. Under certain specific circumstances, the management agreement with Retama Park may be terminated. If this management agreement were to be terminated prematurely, it would have significant negative impact on our operations.

Concentration of Assets

As of December 31, 2008 the Company’s investment in Penson Worldwide, Inc. (“PWI”) common stock represented approximately 41% of the total assets of the Company. Any significant decline in the fair market value of this asset may negatively impact the financial position and operations of the Company.

Limited Liquidity Available in the Secondary Market

As detailed in Item 12 of this report, a director of the Company holds 89.05% of the outstanding common stock of the Company as of March 4, 2009. Given the majority position held by a single shareholder and the shareholder’s position as a director of the Company, there remains a relatively small amount of shares available in the public float. A limited float may have the effect of reducing the number of buyers and sellers of the Company’s stock, and as a result, negatively impact the liquidity of the Company’s common stock.

Internal Revenue Service Examination

As more fully detailed below in Note 7 to our audited financial statements as of December 31, 2008, in 2004 the Internal Revenue Services (“IRS”) conducted an examination of the tax-exempt status of the municipal bonds issued by the RDC in connection with that company’s reorganization in 1997. In February 2005, the IRS issued a proposed adverse determination with respect to the RDC’s 1997 Series A and Series B bonds. In August 2005, the IRS completed an examination of the Company’s tax returns for the years 2000 through 2003. As a result of the examination, the IRS submitted a request for change to include in taxable income the interest received by the Company on the RDC Series A bonds.

Over the past year, the Company has been engaged in negotiations with the IRS to settle this dispute. While the eventual result of these negotiations cannot be known at this time, a lack of a settlement could lead to a protracted legal dispute and possibly, a tax assessment on past tax-exempt interest received by the Company on the RDC bonds.

General Economic Conditions

The severe economic downturn that the United States is currently experiencing has had an effect on most businesses. While it remains difficult to assess to long-term effects on the Company, it is anticipated that if the severe national economic difficulties are protracted, this could negatively impact the businesses the Company is involved with.

Investment Company Act

The Company has taken the position it is not an investment company required to be registered under the Investment Company Act of 1940 (the “1940 Act”), based on one or more applicable exemptions there under. If it were established that we are an unregistered investment company, there would be a risk, among other material adverse consequences, that we could become subject to monetary penalties or injunctive relief, or both, in an action brought by the Securities and Exchange Commission. We would also be unable to enforce contracts with third parties or third parties could seek to obtain rescission of transactions undertaken with us during the period it was established that we were an unregistered investment company. See Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations — Investment Company, for more information.

Risks Related to Our Common Stock

Stock Price Volatility

The market for our common stock is highly volatile. In 2008, our closing stock price fluctuated between $1.10 and $17.00 per share. The trading price of our common stock could be subject to wide fluctuations in response to, among other things, quarterly variations in operating and financial results and the small trading float of our stock given the ownership of our majority owner of approximately 89% of our outstanding shares.

Control by a Single Shareholder

Christopher J. Hall owns approximately 89% of issued and outstanding common stock. As a result of such ownership, Mr. Hall has the power to effectively control the Company, including elections of directors, the determination of matters requiring shareholders approval and other matters pertaining to corporate governance.

Our liquidity and capital resources may be adversely affected by our margin loan

We depend upon a margin loan secured by our marketable securities to provide us with working capital. The amount available for borrowing is related to the market price of the collateral securities. In the event the market prices of such securities decline we may have to deposit cash or additional securities or the lender may sell the collateral securities. We have no arrangements for alternative sources of capital and may be unable to obtain financing or sell assets on satisfactory terms, or at all. This would impair our ability to obtain funding for working capital, capital expenditures, acquisitions, general corporate purposes or other purposes. For additional information see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.

ITEM 2. PROPERTIES.

The Company has offices of approximately 512 square feet at Retama Park in space leased from the Retama Development Corporation on a month-to-month basis.

The Company has an equity interest in a partnership, which developed a 270-unit apartment complex, which is further described above in Item 1.

The Company has an equity interest in a partnership that owns a 156-unit dormitory, which is further described above in Item 1.

ITEM 3. LEGAL PROCEEDINGS.

None.

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

There were no matters submitted to a vote of our stockholders during the fourth quarter of fiscal year 2008.

PART II


ITEM 5.		MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES

The Company’s Common Stock trades on the over-the-counter market under the symbol “CLNW”. 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.


FISCAL YEAR 2007	HIGH BID		LOW BID
1^st Quarter	$	14.95	$	7.00
2^nd Quarter		16.90		11.00
3^rd Quarter		17.00		7.00
4^th Quarter		17.00		7.10


FISCAL YEAR 2008	HIGH BID		LOW BID
1^st Quarter	$	17.00	$	7.10
2^nd Quarter		15.00		.10
3^rd Quarter		7.50		.10
4^th Quarter		7.00		.50

The Company has never declared or paid cash or stock dividends and has no present plans to pay any such dividends in the foreseeable future. There are no restrictions that limit the Company’s ability to pay dividends. As of March 4, 2009 there were approximately 298 registered holders of record of the Company’s common stock.

Issuer Purchases of Equity Securities

The following table sets forth information about our purchase of shares of our common stock during the quarter ended December 31, 2008.

(c)

(d)

(a)

(b)

Total number of shares

Maximum number (or approximate

Total number of

Average

purchased as part of

dollar value) of shares that may yet

shares

price paid

publicly announced plans or

be purchased under the plans or

Period

purchased

per share

programs

September 26, 2008

261,852 shares(1)

10.10


(1)		These shares were purchased privately from Christopher J. Hall for cash and securities. See Item 13 herein for further information about this transaction.


ITEM 6.		SELECTED FINANCIAL DATA.

Not applicable.


ITEM 7.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Retama Park Racetrack

Management

The Company is primarily engaged in the operation and management of Retama Park, a horse racetrack located in Selma, TX just outside of San Antonio, through our 80% owned subsidiary, Retama Entertainment Group, Inc.

(“REG”). REG is responsible for all of the day-to-day operational activities at Retama Park including: the presentation of a Quarter Horse Meet in the Spring and a Thoroughbred Meet in late Summer and Fall; daily simulcasting of other racetracks from around the country; the operation of all food and beverage outlets that include a Turf and Field Club, fine dining, a sports bar and concession stands; all regulatory responsibilities with the Texas Racing Commission; and the pursuit of additional legislation from the Texas Legislature that would be favorable to Retama Park, such as other forms of gaming.

The facility and real estate are owned by the Retama Development Corporation (the “RDC”), a municipal subdivision of the city of Selma, TX, and it is encumbered by $93,175,000 face amount of debt that is discussed in greater detail below in the Bonds section. All personnel at the racetrack are employees of REG, as a result, it is only the payroll costs of the personnel that are reimbursed by the RDC to the Company. REG also receives a $20,000 per month management fee from the RDC. The financial performance of Retama Park is not included in the Company’s financial statements. However, the management fee and the reimbursement of payroll and payroll related expenses are the Company’s only source of revenue at this time, and the loss of this management contract or the inability to collect the management fee and other obligations of the RDC would negatively impact the Company’s revenue and financial condition.

Bonds

In addition to the management relationship, the Company also maintains a substantial investment in the facility through holdings of a portion of the Retama Development Corporation Special Facilities Revenue Refunding Bonds.

The Company owns both Senior Series A Bonds and Subordinate Series B Bonds as detailed in the chart below.


	Senior		Subordinate
Retama Development Corporation Special	Series A Bonds		Series B Bonds
Facilities Revenue Bonds, Dated 1997	7% due 9/1/33		8% due 9/1/33
Total Face Amount Bonds Outstanding at December 31, 2008	$	6,250,000	$	86,925,000
Face Amount of Bonds owned by Call Now, Inc. at December 31, 2008	$	145,000	$	43,962,500
Cost Basis of Bonds owned by Call Now, Inc. at December 31, 2008	$	30,083	$	1,077,083
Carrying Value of Call Now, Inc. position at December 31, 2008 as reported on the balance sheet	$	145,000	$	-0-

The Series A bonds are subject to an annual mandatory sinking fund redemption and annual interest payment at the rate of 7% due on September 1^st each year, all of which were current as of December 31, 2008. As of December 31, 2008, a total of $750,000 of the original $7,000,000 Series A bonds have been redeemed through the sinking fund, resulting in the $6,250,000 in Series A bonds outstanding at December 31, 2008. The scheduled annual sinking fund redemptions for the next five years are as follows:


9/1/09	$	100,000
9/1/10	$	105,000
9/1/11	$	115,000
9/1/12	$	120,000
9/1/13	$	130,000

The Company recognizes a carrying value on the balance sheet at face value of the Series A bonds, or $145,000.

The Series B bonds are subject to an annual interest payment at the rate of 8% due on September 1^st each year, with a maturity of September 1, 2033. There is no sinking fund requirement for the Series B bonds. Payment of accrued interest is subject to the availability of Excess Cash Flow, as defined in the Trust Indenture as cash or cash equivalent on hand less senior debt obligations, required deposits to the Reserve Fund, adjustments for working capital and trust funds held by the issuer. If there are insufficient funds available for the payment of interest, the amount due shall be deferred (“Deferred Interest”) and not constitute an event of default. Each such installment of Deferred Interest shall accrue interest from the interest payment date and payable at maturity. Additionally, on September 1 of each year, beginning September 1, 1999, all or a part of the Series B bonds shall be converted to senior lien obligations on a parity and payable pari passu with the Series A bonds (“Converted Series B bonds”, and

the Series A bonds and Converted Series B bonds collectively referred to as “Senior Lien Obligations”), and thereafter shall bear interest at the rate of 7%, provided that there is no event of default existing on the Senior Lien Obligations. The number of Series B bonds to be converted to senior lien obligations shall equal (i) the quotient resulting from the lower of earnings before interest, taxes, depreciation and amortization for the last two immediately preceding fiscal years, divided by .0875, (ii) less the outstanding principal amount of the Series A bonds and Converted Series B bonds. Conversion is also subject to the RDC delivering to the bond Trustee to the Trustee’s satisfaction, the deed of trust including the Series B bonds to be converted and a new or amended mortgage title insurance policy ensuring that the liens securing the Series A bonds and all Converted Series B bonds are first and prior and pari passu, subject only to permitted encumbrances that are subordinate and inferior to the deed of trust. There have been no Series B bonds converted to Converted Series B bonds.

Our strategy is operate the Retama Park racetrack in order to maintain its status as a Class I racetrack, attract horsemen to its racing meets, provide a satisfactory gaming and entertainment experience for its customers and provide a safe and attractive facility. We are also seeking to the legalization of additional forms of gaming at Texas racetracks. We believe that the offering of additional forms of gaming will be required to enable us to achieve a satisfactory return on our holdings of RDC Series B bonds, which are further described in Item 1 — Business of this Annual Report on Form 10-K.

In the event of a default on the Series A bonds, the holders of the bonds could seek to foreclose on the Retama Park racetrack facilities and real estate. We have provided loans to the RDC to support the operations of the racetrack and to meet its interest and sinking fund obligations on its Series A bonds, which are further described in Item 1 — Business of this Annual Report on Form 10-K. We believe it has been in our best interest to help the RDC avoid default of the Series A bonds as the best strategy to achieve returns on the Series B bonds in the event of additional forms of gaming are approved for Texas racetracks, of which there can be no assurance. Such financial support is entirely at the discretion of the Company and is documented by promissory notes secured by a mortgage on the Retama Park racetrack real estate and facilities which is subordinated to the RDC Series A bonds and converted Series B bonds, if any. As of December 31, 2008, we were owed $3,627,569 in principal by the RDC for such loans, plus $1,311,894 of accrued interest. We believe that the value of the security for such notes is sufficient to assure repayment even if additional forms of gaming are not extended to Retama Park.

The status of racing industry in Texas is similar to many other states around the country as the Texas racing facilities continue to experience greater competition from those facilities that have granted the right to conduct additional forms of gaming such as video lottery terminals, slot machines and poker. All states that share a border with Texas — Louisiana, Arkansas, Oklahoma and New Mexico — currently allow additional forms of gaming at their racetracks. The benefits of additional gaming for racing facilities located in these states are two-fold. First, the operation of this additional gaming has provided these facilities with a new, and typically highly profitable, business line. Second, additional gaming has also provided supplemental funds for the horse purses (the prize money paid) within the state. These higher purses have attracted higher quality horses, which tend to be more attractive to the betting public.

We have been actively pursuing the legalization of additional gaming at Texas racetracks through direct lobbying of Texas legislators and through a coalition of Texas racetracks that includes the other two Class I tracks, Lone Star Park and Sam Houston Race Park. If the legalization of additional forms of gaming is approved at Texas racetracks, it is anticipated that the profit from this operation would provide sufficient cash flow to enable both the Series A and Series B bonds to be repaid. However, there can be no assurance that the Texas legislature and governor will approve such additional gaming and, if approved, whether the structure and taxation on such additional gaming would benefit the Company. There is substantial opposition to expanding gaming operations in Texas and no such expansion was approved during the 2009 Texas legislative session. Retama Park experiences strong competition from other gaming alternatives from the on-line gaming and surrounding states with other forms gaming, as well as from other entertainment venues in its market area. We expect these factors to continue to adversely affect the liquidity of REG in the absence of legislation allowing additional gaming.

In accordance with FAS 115, the Company fully impaired the Series B bonds in 2006 based on the limited available market, the uncertainty of principal or interest payments to be made in the foreseeable future and the subordinated lien on the collateral.

Penson Worldwide, Inc.

On June 26, 2003 the Company invested $6,000,000 in Penson Worldwide, Inc. (“PWI”) of Dallas, Texas. On December 23, 2003, an additional $600,000 was loaned to PWI. PWI is a leading provider of a broad range of critical securities-processing infrastructure products and services to the global securities and investment industry. Their products and services include securities and futures clearing, margin lending, facilities management, technology and other related offerings to broker-dealers, investment funds, banks and financial technology.

The investment in PWI was made in the form of a convertible promissory note maturing on June 26, 2008 (the “PWI Note”). The PWI Note also called for the Company, as noteholder, to have the option to convert the entire outstanding principal amount into shares of PWI’s common stock. The conversion price per common share was 2.25 times PWI’s shareholders’ equity as of June 30, 2003 divided by the actual number of issued and outstanding shares of PWI as of June 30, 2003, which equated to $2.01 per share.

In August of 2003, the Company’s President and CEO, Thomas R. Johnson, was elected to the Board of Directors of PWI.

On June 30, 2005, the Company converted the entire $6,600,000 principal balance of the PWI Note into PWI common stock, totaling 3,283,582 shares.

On May 16, 2006, PWI completed the Initial Public Offering (“IPO”) of their common stock (Nasdaq: PNSN). In a simultaneous transaction, PWI affected a 1-for-2.4 share reverse split and the split-off of certain non-core business operations known as SAMCO. As part of the IPO, the Company elected to participate in the exchange of PWI shares for SAMCO shares and sell a total of 11.5% of its investment, or 157,337 post-split shares, of the PWI shares in the IPO resulting in a gain on the sale of $1,728,504. Following the completion of the PWI IPO, the Company’s resulting position is as follows: 79,900 shares of SAMCO which represent an approximate 7.29% interest in the company; and 1,130,922 shares of the publicly traded PWI common stock. In August 2008, the Company sold 30,000 shares of PWI common stock, leaving a balance of 1,100,922 shares, which represents approximately 4.37% of PWI’s outstanding shares as of December 31, 2008. As of December 31, 2008 the Company recognized cumulative other comprehensive income from the increase in value of the PWI common stock of approximately $3,078,000 (gross) or $2,036,000 net of taxes.

The Company originally extended credit to Penson in order to achieve a higher return on its capital for use in its business. After the loan was converted to Penson stock it continues to be held as a source of capital for the Company’s business.

The Estates at Canyon Ridge

On March 31, 2005 the Company entered into a partnership agreement to provide approximately 46% of the equity for the development of a 270-unit luxury apartment complex to be known as The Estates at Canyon Ridge, located in the master planned community of Stone Oak in San Antonio, Texas. The Estates at Canyon Ridge, Ltd. (“ECR Ltd.”) closed on the purchase of the 19.739-acre development site on May 2, 2005. The general partner of ECR Ltd. is an unrelated real estate developer (“General Partner”). The Company owns the largest interest in Stone Oak Prime, L.P. (“Limited Partner”) at 48%. Other partners of the Limited Partner include Thomas R. Johnson, President, CEO and director of the Company, Christopher J. Hall, the majority shareholder and director of the Company, and Bryan P. Brown, CEO of Retama Entertainment Group, Inc. and director of the Company. The General Partner is required to fund 5% of the equity and the Limited Partner is required to fund 95%.

As a member of the Limited Partner, the Company is entitled to receive a preferred return of its capital contribution plus a 10% per annum cumulative return, compounded monthly. Following the repayment of the preferred return on the capital contribution, excess cash, at the discretion of the General Partner, and net refinancing or disposition proceeds shall be paid 50% to the General Partner and 50% to the Limited Partner. At December 31, 2008, the Company’s investment totaled approximately $2.60 million. Construction of project was completed in 2008 and the occupancy as of December 31, 2008 was approximately 88%.

The Cambridge at Auburn

On December 11, 2006 the Company entered into a partnership agreement to provide 95% of the equity for the acquisition and rehabilitation of a 156-unit, 312-bed full-service, private dormitory located in Auburn, Alabama, immediately adjacent to the campus of Auburn University. The project is now known as The Cambridge at Auburn. The Company is the sole limited partner of Cambridge at Auburn, LP (“CA, LP”). The general partner of CA, LP is an unrelated real estate developer who also serves as the management company of the project. The general partner of CA, LP is the same general partner of The Estates at Canyon Ridge, Ltd. transaction described in the preceding paragraphs. As the limited partner, the Company is entitled to receive a preferred return of its capital contribution plus a 10% per annum cumulative return, compounded monthly. Following the repayment of the repayment of the preferred return on the capital contribution, excess cash, at the discretion of the general partner, as well as refinancing or disposition proceeds shall be paid 50% to the general partner and 50% to the limited partner. As of December 31, 2008, the Company’s investment totaled approximately $1.36 million. Rehabilitation of the facility was completed during 2007 and 100% occupancy was achieved for the beginning of the 2008-2009 school year. An equity distribution of $125,000 was paid to the Company in February 2008.

TNO Holdings, LLC

During the course of 2007, the Company provided financing to TNO Holdings, LLC (“TNOH”), a Florida limited liability company, totaling approximately $811,000. TNOH owned three municipal bond issues secured by a first mortgage lien on five long-term care facilities located in Oklahoma and Texas. The purpose of the loan from the Company was to provide working capital for the facilities and fund various capital improvements. The loan accrued interest at a rate of 9.50% and compounded monthly. Following discussions with the managing member of TNOH, the Company has agreed convert the loan to an approximately 42% equity interest in TNOH. During the fourth fiscal quarter of 2007 for the Company, the two nursing homes located in Texas were sold to a third party and the net sales proceeds were used to redeem a portion of the municipal bond issue secured by the facilities and owned by TNO Holdings. The subsequent distribution to the members of TNOH resulted in the repayment of substantially all of the funds originally loaned to TNOH by the Company plus an additional return. The Company continues to maintain an equity interest in TNOH. TNOH continues to own the Texas municipal bond issue pending collection of the remaining accounts receivable and two Oklahoma municipal bond issues secured by three nursing home facilities.

Investment Company Act

The Company has taken the position that if is not an investment company required to be registered under the Investment Company Act of 1940 (the “1940 Act”) because under Section 3(b)(1) of such Act, an issuer which is primarily engaged in a business other than investment in securities is not considered an investment company under the Act. If it was established that the Company is an unregistered investment company, there would be a risk, among other material adverse consequences, that the Company could become subject to monetary penalties or injunctive relief, or both, in an action brought by the Securities and Exchange Commission. The Company would also be unable to enforce contracts with third parties or third parties could seek to obtain rescission of transactions undertaken in the period it was established the Company were an unregistered investment company.

If the Company were deemed an investment company under the 1940 Act and failed to qualify for an exemption, the Company would have to modify how it conducts business in order to conform to the Act. The 1940 Act places significant restrictions on the capital structure and corporate governance of a registered investment company, and materially restricts its ability to conduct transactions with affiliates. Such changes could have a material adverse affect on the Company’s business, results of operations and financial condition.

In addition, if the Company is deemed to have been an investment company and did not register under the 1940 Act, it would be in violation of the 1940 Act and would be prohibited from engaging in business or certain other types of transactions and could be subject to civil and criminal actions for doing so. In addition, the Company’s contracts would be voidable and a court could appoint a receiver to take control and liquidate it.

There can be no assurance that an exemption from the registration requirements of the 1940 Act will be available to the Company on a continuing basis. The Company is currently consulting with legal counsel and evaluating alternatives to ensure that it complies with applicable law.

Critical Accounting Policies and Estimates

General

Management’s discussion and analysis of its financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to the reported amounts of revenues and expenses and the valuation of our assets, income taxes, and contingencies. We base our estimates on historical experience and on various other assumptions and evidence as appropriate.We believe our estimates and assumptions to be reasonable under the circumstances. However, actual results could differ from those estimates under different assumptions or conditions.

Valuation of Marketable Securities

Investments in equity securities are generally based on quoted market prices. However, the investments in the RDC Series A and B bonds represent debt securities, and there is no readily available quoted market price, as these securities are owned by a limited number of holders. The Series A bonds are classified as available-for-sale and have been valued at their face value of $145,000 as supported by our estimate of the underlying value of the collateral (the Retama Park racetrack facility). We estimated the value based upon a complete appraisal of the racetrack land and improvements in June 2005, supplemented by our review of subsequent industry and economic trends, condition of the racetrack facilities and local real estate trends, and based our valuation of the Series A bonds on our percentage ownership. The Company has fully impaired the Series B bonds based on the limited available market, the uncertainty of principal or interest payments and the subordinate lien on the collateral.

Valuation of Penson Worldwide, Inc. Common Stock

The Penson Worldwide, Inc. (“PWI”) (Nasdaq: PNSN) common stock is valued at the market value of the shares held by the Company at the close of business on December 31, 2008, the last trading day of the fiscal year. Based on a closing price of $7.62 per share and a position of 1,100,922 shares, the Company’s holdings of PWI common stock is valued at $8,389,026 as of December 31, 2008. The Company held 1,130,922 shares of PWI common stock as of December 31, 2007 and the holdings were value at $16,228,731 at that time.

Notes and Interest Receivable — Retama Development Corporation

The Company has provided advances to the RDC primarily to meet the RDC’s interest and sinking fund obligations on its Series A bonds. Such advances are entirely at the discretion of the Company and are documented by promissory notes secured by a second lien mortgage on the Retama Park racetrack real estate and facilities, which is subordinated to the RDC Series A bonds and Converted Series B bonds, if any. We estimate at the end of each reporting period the valuation and collectibility of the RDC note and any interest that has been recognized as income, and report the total amount as other assets in our consolidated balance sheet. Our policy in recognizing interest on the RDC note as income is discussed in greater detail in the following section, Interest Income Recognition — Retama Development Corporation. If such estimate indicates that the collateral value is sufficient to assure repayment of such advances and interest that has been recognized as income in the current and previous accounting periods, the notes and interest continue to be carried at the full amount. If we estimate the security for the RDC note and interest that has been previously recognized as income is insufficient to assure full repayment we would provide an allowance to reduce the carrying value of the notes and interest accordingly. As of December 31, 2008 and 2007 the Company estimated that the value of the security was sufficient to assure repayment of the advances and the related accrued interest, thus no allowance for uncollectable amounts was provided. The Company will continue to evaluate the collateral value securing the notes and interest receivable from the RDC, and make any adjustments it deems necessary.

Interest Income Recognition — Retama Development Corporation

During each accounting period, the Company evaluates whether to continue to recognize the accrued interest on the RDC note as income based on several criteria including, but not limited to, the value of the underlying collateral, the financial performance of Retama Park and the payment history of the RDC note and other similarly positioned debt securities. As of December 31, 2008, the Company has determined that continuing to recognize the accrued interest on the RDC note as income is appropriate based on this criteria.

Income Taxes

Deferred tax assets and liabilities are recorded based on the difference between the tax basis of assets and liabilities and their carrying amount for financial reporting purposes, as measured by the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company also has tax net operating loss carryforwards which result in the recognition of a deferred tax asset, and unrealized gains on marketable securities which result in the recognition of a deferred tax liability.

Effective January 1, 2007, the Company adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes”, which supplements FAS 109, “Accounting for Income Taxes”, by defining the confidence level that a tax position must meet in order to be recognized in the financial statements. FIN 48 requires a two-step approach under which the tax effect of a position is recognized only if it is “more-likely-than-not” to be sustained and the amount of tax benefit recognized is equal to the largest tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement of the tax position. This is a different standard for recognition than the approach previously required. Both approaches require the Company to exercise considerable judgment and estimates are inherent in both processes. FIN 48 also requires that the amount of interest expense to be recognized related to uncertain tax positions be computed by applying the applicable statutory rate of interest to the difference between the tax position recognized in accordance with FIN 48 and the amount previously taken or expected to be taken in a tax return.

YEAR ENDED DECEMBER 31, 2008 COMPARED TO 2007

RESULTS OF OPERATIONS

a. Revenues and Other Income

Revenue

The Company’s revenue for the year ended December 31, 2008 was $5,463,122 compared to $4,855,038 for the year ended December 31, 2007. The increase in revenue is attributed to an increase in Thoroughbred race days at Retama Park racetrack, 51 in 2008 as compared to 32 in 2007. Retama Park hosted the same number Quarter Horse race days in 2008 as compared to 2007. As discussed in the “Retama Park Racetrack — Management” section under Item 7 in this section, the Company’s revenue is directly related to the reimbursement of payroll and payroll related expenses of the racetrack. Therefore, an increase in race days results in an increase in staffing requirements and, consequently, increases reimbursements to the Company.

Interest Income

Interest income for the year ended December 31, 2008 was $729,905 compared to $564,057 for the year ended December 31, 2007. The increase in interest income was principally the result of an increase in accrued interest for the Company’s Funding Agreement with the Retama Development Corporation.

b. Expenses

Cost and Other Expenses of Revenues

Operating expenses for the year ended December 31, 2008 was $5,943,604 compared to $5,298,359 for the year ended December 31, 2007. The increase in operating expense in 2008 as compared to 2007 is also attributable to the increase in Thoroughbred race days at Retama Park in 2008 from the prior year.

Income Tax

The Company recognized a federal tax expense in 2008 of $178,393 and a benefit in 2007 of $263,603. The Company’s total federal income tax does not approximate the expected corporate tax rate due primarily to non-taxable municipal bond interest income. In 2008, the Company also incurred a $250,000 charge for an unrecognized tax benefit, which resulted in the Company incurring a total federal tax expense of $178,393 for the year.

Other Comprehensive Income

As of December 31, 2008, the Company recognized cumulative other comprehensive income of $2,113,109, net of related taxes, primarily on the increase in fair market value over the Company’s cost basis of its investments in Penson Worldwide, Inc. common stock based on the closing price of the common stock as of December 31, 2008. Accumulated other comprehensive income at December 31, 2007 was $7,227,628, net of taxes.

LIQUIDITY AND CAPITAL RESOURCES

During the year ended December 31, 2008, the Company’s operating activities used cash of $716,871 compared to $810,871 used for the year ended December 31, 2007.

As discussed in Note 5 to the audited financial statements, the Company maintains an investment account that utilizes a margin loan collateralized by the Company’s marketable securities. As of December 31, 2008 the available balance of that margin loan was in approximately $2.0 million, which is based upon our ability to borrow up to 75% of the value of the securities held as collateral in the margin account, as detailed in the following chart.


	As of December 31, 2008
Value of marginable securities	$	21,415,140
Maximum loan based on 75% loan-to-value	$	16,061,355
Margin loan outstanding	$	14,047,102
Margin loan availability	$	2,014,253

The amount available for borrowing under the margin loan would be reduced in the event of a decline in the value of the securities in the account, which consists primarily of our ownership of common stock of Penson Worldwide, Inc. (“PWI”) and Retama Development Corporation Series B bonds. Specifically, with each $1 movement in the price of Penson stock, our liquidity would increase, if the price goes up, or decrease, if the price goes down, by the number of Penson shares held by the Company, multiplied by the $1 price movement, multiplied by 25%. Furthermore, the lender has the discretion to reduce the amount of the borrowings available to us under the margin loan at any time, regardless of fluctuations in market value. For example, although our holdings of the Series B bonds have been fully written down according to Generally Accepted Accounting Principals (“GAAP”), the lender attributed a value of $11,714,687 to these bonds for purposes of calculating our margin loan availability at December 31, 2008. There can be no assurance that our holdings of the Series B bonds will continue to be marginable to the same extent, or at all, in the future. Any significant reduction in the amount available for borrowing could adversely affect our liquidity and might force us to post additional collateral for the margin loan or liquidate assets.

In response to the Company’s continued operating losses, the Company will continue to assess the sale of certain assets and marketable securities in order to provide additional liquidity. Specifically, management will assess the proper timing to continue selling a portion of the Company’s holdings of the Penson common stock. Given the highly liquid nature of this security, management believes it has adequate financial resources to fund its operations and capital requirements for the next twelve months and the foreseeable future.

Additionally, REG’s management agreement with the RDC is set to expire in November 2010. While there can be assurances, management believes that this agreement will be extended at that time. However, if the management agreement is not extended beyond November 2010, the Company would no longer receive the $20,000 per month management fee.

In the past the Company has provided loans to the RDC but has had no obligation to do so since 1999. These loans were provided in order to support the continued operation of Retama Park as a Class I racetrack while pursuing the approval of additional forms of gaming at Texas racetracks. We anticipate that the profits from additional gaming operations at Retama Park, if approved, would provide sufficient cash flow to the RDC to enable the Series B bonds to be repaid in full. We believe our loans to the RDC, which amount to $4,939,464 including accrued interest as of December 31, 2008, and our holdings of RDC Series A bonds in the amount of $145,000 are fully secured by the collateral security in the Retama Park facilities and real estate and would be repaid even if the operations of Retama Park racetrack were terminated. The Company will respond to any future requests for additional funding by the RDC as it deems appropriate.

OFF-BALANCE SHEET ARRANGEMENTS

We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

ITEM 7A. QUANTATATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA.


Report of Independent Registered Public Accounting Firm		F-1

Consolidated Balance Sheets, December 31, 2008 and 2007		F-2

Consolidated Statements of Operations, years ended December 31, 2008 and 2007		F-3

Consolidated Statements of Changes in Stockholders’ Equity, years ended December 31, 2008 and 2007		F-4

Consolidated Statements of Cash Flows, years ended December 31, 2008 and 2007		F-5

Notes to Consolidated Financial Statements		F-6

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
Call Now, Inc. and Subsidiary
San Antonio, Texas

We have audited the accompanying consolidated balance sheets of Call Now, Inc. and Subsidiary (collectively referred to as “the Company”) as of December 31, 2008 and 2007 and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. 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 audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Call Now, Inc. and Subsidiary as of December 31, 2008 and 2007, and the consolidated results of their operations and their cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 1 to the financial statements, in 2007 the Company changed its method for accounting for income taxes.


/s/ Akin, Doherty, Klein & Feuge, P.C.
Akin, Doherty, Klein & Feuge, P.C.
San Antonio, Texas
March 20, 2009

F-1

CALL NOW, INC. AND SUBSIDIARY

Consolidated Balance Sheets


	December 31,			December 31,
	2008			2007
ASSETS

Current Assets:
Cash and equivalents	$	88,837		$	231,030
Accounts receivable		609,069			369,069
Marketable securities — related party		8,389,026			16,228,731
Marketable securities — other		1,264,954			1,700,966
Other current assets		119,660			266,063

Total current assets		10,471,546			18,795,859

Furniture, Equipment and Improvements (less accumulated depreciation of $1,372)		18,249			—

Other Assets:
Marketable securities — Retama Development Corp.		145,000			145,000
Investments		4,342,948			3,654,348
Notes and interest receivable — Retama Development Corp.		4,939,464			4,071,935
Deferred tax asset		843,681			748,076

Total other assets		10,271,093			8,619,359


Total Assets	$	20,760,888		$	27,415,218


LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:
Accounts payable and accrued expenses	$	524,275			265,146
Margin loan payable — related party		14,047,102			988,271
Margin loan payable — other		—			9,346,388
Deferred taxes payable		1,088,571			3,723,324

Total current liabilities		15,659,948			14,323,129

Minority Interest in Consolidated Subsidiary		76,437			26,937

Stockholders’ Equity:
Preferred stock, $.001 par value; authorized 266,667 shares, none outstanding		—			—
Common stock, $.001 par value; authorized 16,666,667 shares, 3,327,075 issued and 2,902,367 outstanding		3,326			3,326
Additional paid-in-capital		7,091,121			7,091,121
Treasury stock, at cost, 424,708 and 162,856 shares		(3,094,455	)		(449,750	)
Accumulated other comprehensive income		2,113,109			7,227,628
Retained (deficit)		(1,088,598	)		(807,173	)

Total stockholders’ equity		5,024,503			13,065,152


Total Liabilities and Stockholders’ Equity	$	20,760,888		$	27,415,218

See notes to consolidated financial statements.

F-2

CALL NOW, INC. AND SUBSIDIARY

Consolidated Statements of Operations


	Years Ended December 31
	2008			2007
Revenues
Reimbursement of payroll and payroll related expenses	$	5,215,622		$	4,615,038
Management fees		247,500			240,000

Total revenues		5,463,122			4,855,038

Expenses
Payroll and payroll related expenses		5,215,622			4,740,187
Corporate general and administrative operations		727,982			558,172

Total expenses		5,943,604			5,298,359


Net Operating (Loss)		(480,482	)		(443,321	)

Other Income (Expenses)
Interest income		729,905			564,057
Gain on sales of marketable securities		556,245			150,794
Interest expense — related party		(598,887	)		(416,151	)
Interest expense — other		(260,313	)		(472,051	)

Total other income (expense), net		426,950			(173,351	)


(Loss) before minority interest and income taxes		(53,532	)		(616,672	)

Minority interest in (loss) of subsidiary		(49,500	)		(22,970	)


(Loss) before income taxes		(103,032	)		(639,642	)

Income tax expense (benefit)		178,393			(263,643	)


Net (Loss)	$	(281,425	)	$	(375,999	)


(Loss) Per Share

Basic and diluted	$	(.09	)	$	(.12	)


Weighted average common shares outstanding:
Basic		3,095,879			3,164,219
Dilutive		3,095,879			3,164,219

See notes to consolidated financial statements.

F-3

CALL NOW, INC. AND SUBSIDIARY

Consolidated Statements of Changes in Stockholders’ Equity


												Accumulated
					Additional							Other			Retained			Total
	Common Stock				Paid-In		Treasury Stock					Comprehensive			Earnings			Stockholders’
	Shares		Amount		Capital		Shares		Amount			Income			(Deficit)			Equity
Balance, December 31, 2006		3,327,075	$	3,326	$	7,091,121		162,856	$	(449,750	)	$	17,008,772		$	(431,174	)	$	23,222,295

Comprehensive (loss):
Net (loss)		—		—		—		—		—			—			(375,999	)		(375,999	)
Unrealized (loss) on securities, net of $(5,039,000) of income taxes		—		—		—		—		—			(9,781,144	)		—			(9,781,144	)

Total comprehensive (loss)		—		—		—		—		—			—			—			(10,157,143	)


Balance, December 31, 2007		3,327,075		3,326		7,091,121		162,856		(449,750	)		7,227,628			(807,173	)		13,065,152

Purchase of treasury stock		—		—		—		261,852		(2,644,705	)		—			—			(2,644,705	)

Comprehensive (loss):
Net (loss)		—		—		—		—		—			—			(281,425	)		(281,425	)
Unrealized (loss) on securities, net of $(2,635,000) in income taxes		—		—		—		—		—			(5,114,519	)		—			(5,114,519	)

Total comprehensive (loss)		—		—		—		—		—			—			—			(5,395,944	)


Balance, December 31, 2008		3,327,075	$	3,326	$	7,091,121		424,708	$	(3,094,455	)	$	2,113,109		$	(1,088,598	)	$	5,024,503

See notes to consolidated financial statements.

F-4

CALL NOW, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows


	Years Ended December 31,
	2008			2007
Operating Activities
Net (loss)	$	(281,425	)	$	(375,999	)
Adjustments to reconcile net (loss) to net cash (used) by operating activities:
Net realized (gains) on sales of marketable securities		(556,245	)		(150,794	)
Minority interest		49,500			22,970
Deferred income taxes		(95,605	)		(263,643	)
Depreciation and amortization		1,372			—
Changes in operating assets and liabilities:
Accounts receivable		(240,000	)		(126,000	)
Other assets		146,403			75,473
Accounts payable and accrued expenses		259,129			7,122

Net Cash (Used) by Operating Activities		(716,871	)		(810,871	)

Investing Activities
Advances on notes receivable		(867,529	)		(1,205,599	)
Proceeds from sales of available-for-sale marketable securities		1,353,579			6,072,719
Proceeds from sales of available-for-sale marketable securities — related party		548,097			—
Purchase of available-for-sale marketable securities		(2,310,211	)		(4,625,762	)
Proceeds from other long-term investments		125,000			961,750
Purchase of other long-term investments		(813,600	)		(670,000	)
Purchases of furniture, equipment and improvements		(19,621	)		—

Net Cash Provided (Used) by Investing Activities		(1,984,285	)		533,108

Financing Activities
Proceeds from margin loans		4,244,007			19,157,778
Proceeds from margin loans — related party		16,916,625			4,478,117
Payments on margin loans		(13,590,396	)		(9,811,389	)
Payments on margin loans — related party		(3,857,793	)		(13,450,784	)
Purchase of treasury stock — related party		(1,153,480	)		—

Net Cash Provided by Financing Activities		2,558,963			373,722


Net Change in Cash		(142,193	)		95,959

Cash at beginning of year		231,030			135,071


Cash at End of Year	$	88,837		$	231,030


Supplemental Disclosures
Interest paid in cash	$	859,200		$	888,202
Income taxes paid in cash		13,536			31,200

Non-cash Transactions
Treasury stock acquired from related party with marketable securities — other		1,491,225			—

See notes to consolidated financial statements.

F-5

CALL NOW, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements
December 31, 2008 and 2007

NOTE 1 — SUMMARY OF ACCOUNTING POLICIES

Nature of Business: Call Now, Inc. was organized under the laws of the State of Florida on September 24, 1990 under the name Rad San, Inc. The Company changed its name to Phone One International, Inc. in January 1994 and to Call Now, Inc. in December 1994. The Company changed its domicile to the State of Nevada in 1999.

The primary operation of the Company is the management of Retama Park racetrack (“Retama Park”) in Selma, Texas, through an 80% owned subsidiary, Retama Entertainment Group, Inc. (“REG”). Retama Park is owned by the Retama Development Corporation (the “RDC”). The RDC has an agreement with REG to operate and manage Retama Park. The RDC, as owner of the facility, reimburses REG for the majority of payroll and payroll related expenses, plus a monthly management fee.

Principles of Consolidation: The accompanying consolidated financial statements include the accounts of Call Now, Inc. and its 80% owned subsidiary, Retama Entertainment Group Inc. (collectively “the Company” or “Call Now”). All significant inter-company transactions and balances have been eliminated in consolidation.

Cash and Equivalents: The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Accounts Receivable: Accounts receivable are reported at outstanding principal, net of an allowance for doubtful accounts of $-0- at December 31, 2008 and 2007. The allowance for doubtful accounts is determined based on historical trends and an account-by-account review. Accounts are charged off when collection efforts have failed and the account is deemed uncollectible. The Company normally does not charge interest on accounts receivable.

Marketable Securities: The Company classifies its investment portfolio as held-to-maturity, available-for-sale, or trading. At December 31, 2008 and 2007, all of the Company’s marketable securities were available-for-sale. Securities available-for-sale are carried at fair value with unrealized gains and losses included in stockholders’ equity as a component of other comprehensive income. Classification as current or non-current is based primarily on whether there is an active public market for such security.

Securities that do not trade in an active market are valued based on the best information available to Management. Impairments are reviewed on at least an annual basis. Gains or losses from the sale or redemption of the marketable securities are determined using the specific identification method.

Furniture and Equipment: Furniture and equipment are stated at cost. Depreciation and amortization are computed on a straight-line method over the estimated useful lives of the related assets, ranging from three to seven years. Leasehold improvements are amortized over the lesser of the estimated useful lives or remaining lease period. Expenditures for maintenance and repairs are charged to expense as incurred.

Impairment of Long-Lived Assets: The Company periodically reviews, on at least an annual basis, the carrying value of its long-lived assets, or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. To the extent the fair value of a long-lived asset, determined based upon the estimated future cash inflows attributable to the asset, less estimated future cash outflows, are less than the carrying amount, an impairment loss is recognized.

Notes and Interest Receivable — Retama Development Corporation: The Company has provided advances to the RDC primarily to meet RDC’s interest and sinking fund obligations on its Series A bonds. Such advances are entirely at the discretion of the Company and are documented by promissory notes secured by a second lien mortgage on the Retama Park racetrack real estate and facilities, which is subordinated to the RDC Series A bonds and Converted Series B bonds, if any. We estimate at the end of each reporting period the valuation and collectibility of the RDC note and any interest that has been recognized as income, and report the total amount as other asset in our consolidated balance sheet. Our policy in recognizing interest on the RDC note as income is discussed in greater detail in the following section, Interest Income Recognition — Retama Development

F-6

CALL NOW, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 2008 and 2007

NOTE 1 — SUMMARY OF ACCOUNTING POLICIES — continued

Corporation. If such estimate indicates that the collateral value is sufficient to assure repayment of such advances and interest that has been recognized as income in the current and previous accounting periods, the notes and interest continue to be carried at the full amount. If we estimate the security for the RDC note and interest that has been previously recognized as income is insufficient to assure full repayment we would provide an allowance to reduce the carrying value of the notes and interest accordingly. As of December 31, 2008 and 2007 the Company estimated that the value of the security was sufficient to assure repayment of the advances and the related accrued interest, thus no allowance for uncollectable amounts was provided. The Company will continue to evaluate the collateral value securing the notes and interest receivable from the RDC, and make any adjustments it deems necessary.

Interest Income Recognition — Retama Development Corporation: During each accounting period, the Company evaluates whether to continue to recognize the accrued interest on the RDC note as income based on several criteria including, but not limited to, the value of the underlying collateral, the financial performance of Retama Park and the payment history of the RDC note and other similarly positioned debt securities. As of December 31, 2008, the Company has determined that continuing to recognize the accrued interest on the RDC note as income is appropriate based on this criteria.

Income Taxes: Deferred tax assets and liabilities are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company is subject to the Texas margin tax.

Revenue Recognition: The Company receives reimbursement of payroll and related expenses for costs incurred under its management agreement with the RDC. Such amounts are recognized as revenue when the reimbursable expense is incurred. The Company also receives a monthly management fee under the agreement.

Interest and dividend income is recognized as earned on its investments, except for the RDC Series B bonds. The Company does not recognize interest income on the RDC Series B bonds (see Note 3), as the Company does not expect to realize such interest in the foreseeable future.

Earnings (Loss) Per Common Stock: Basic earnings (loss) per common share is 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 (loss) per share are excluded from the calculation.

Concentration of Credit Risk: Financial instruments that potentially expose the Company to credit risk consist of cash and equivalents, marketable securities, and notes receivable. The Company maintains its cash balances at two financial institutions. Accounts at the institutions are secured by the FDIC up to $250,000. Periodically, balances may exceed this amount. Cash balances at Penson Financial Services, Inc. have additional insurance in excess of $10,000,000.

F-7

CALL NOW, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 2008 and 2007

NOTE 1 — SUMMARY OF ACCOUNTING POLICIES — continued

At December 31, 2008 and 2007, the Company’s investment in Penson Worldwide, Inc. common stock totaled $8,389,026 and $16,228,731, respectively, or approximately 41% and 59%, respectively, of the Company’s total assets. Any significant decline in the fair market value of this asset would negatively impact the financial position of the Company.

Notes receivable due from the RDC are collateralized by real estate (see Note 3).

Fair Value of Financial Instruments: Cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses are reflected in the accompanying consolidated financial statements at cost, which approximates fair value because of the short-term maturity of these instruments. Marketable securities are recorded at fair value, with a majority of such securities being traded in an active market.

Use of Estimates: The preparation of financial statements in conformity with U.S. 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.

Stock Based Compensation: The Company accounts for stock based compensation in accordance with Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment,” (“SFAS 123(R)”) which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including grants of stock options and employee stock purchases under the Company’s Employee Stock Purchase Plan based on estimated fair values. SFAS 123(R) supersedes the Company’s previous accounting under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”) for periods beginning in 2006. There was no impact to the Company for adopting SFAS 123(R) in 2007 or 2008 as there were no options granted 2007 or 2008, and no options granted in prior years vested in 2007 or 2008.

Comprehensive Income: SFAS No. 130, “Reporting Comprehensive Income,” establishes standards for reporting and presentation 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. The components of comprehensive income are included in the Statement of Changes in Stockholders’ Equity.

Recent Accounting Pronouncements: In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (“SFAS 141(R)”), which establishes principles and requirements for how the acquirer: (a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; (b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and (c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141(R) requires contingent consideration to be recognized at its fair value on the acquisition date and, for certain arrangements, changes in fair value to be recognized in earnings until settled. SFAS 141(R)also requires acquisition-related transaction and restructuring costs to be expensed rather than treated as part of the cost of the acquisition. SFAS 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.

In June 2008, the FASB Staff Position EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities.” EITF 03-6-1 requires unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents to be treated as participating securities as defined in EITF Issue No. 03-6, “Participating Securities and the Two-Class Method under FASB Statement No. 128,” and, therefore, included in the earnings allocation in computing earnings per share under the two-class method

F-8

CALL NOW, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 2008 and 2007

NOTE 1 — SUMMARY OF ACCOUNTING POLICIES — continued

described in FASB Statement No. 128, “Earnings per Share.” Upon adoption, all previously reported earnings per share data should be adjusted retrospectively to conform to the requirements of EITF 03-6-1. The Company is required to adopt EITF 03-6-1 starting in 2009. The Company does not expect EITF 03-6-1 to have an effect on its consolidated financial statements.

Reclassification: Certain reclassifications, all insignificant in amount, 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 are as follows at December 31, 2008 and 2007:


			Gross		Gross			Carrying/
			Unrealized		Unrealized			Market
2008	Cost		Gains		(Losses)			Value
Current Assets, available-for-sale:
Equity securities, PWI common stock, see note 4	$	5,310,849	$	3,078,177	$	—		$	8,389,026
Municipal bonds		1,256,368		24,967		(16,381	)		1,264,954


	$	6,567,217	$	3,103,144	$	(16,381	)	$	9,653,980


Non-current Assets, available-for-sale:
RDC Series A bonds		30,083		114,917		—			145,000


Total available-for-sale securities	$	6,597,300	$	3,218,061	$	(16,381	)	$	9,798,980


			Gross		Gross			Carrying/
			Unrealized		Unrealized			Market
2007	Cost		Gains		(Losses)			Value
Current Assets, available-for-sale:
Equity securities	$	5,455,568	$	10,773,162	$	—		$	16,228,730
Municipal bonds		1,638,094		66,346		(3,473	)		1,700,967


	$	7,093,662	$	10,839,508	$	(3,473	)	$	17,929,697


Non-current Assets, available-for-sale:
RDC Series A bonds		30,083		114,917		—			145,000


Total available-for-sale securities	$	7,123,745	$	10,954,425	$	(3,473	)	$	18,074,697

Unrealized gains on marketable securities available-for-sale at December 31, 2008 and 2007 are shown net of income taxes as a component of stockholders’ equity.

F-9

CALL NOW, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 2008 and 2007

NOTE 3 — RETAMA DEVELOPMENT — MARKETABLE SECURITIES AND NOTES RECEIVABLE

During 1996 and 1997, the Company purchased a significant portion of the Special Facilities Revenue Bonds, Series 1993, of the Retama Development Corporation (the “RDC”). The revenue bonds were originally issued to fund the construction of the Retama Park racetrack in Selma, Texas. Following the bankruptcy by the RDC and the defeasance of the Series 1993 bonds, the Company retained a significant interest in the new 1997 RDC Series B bonds, which are secured by a lien, subordinate to the Series A bonds and the funding agreement, on the Retama Park racetrack real and personal property, and now owns a small position the Series A bonds (the Retama Series A bonds hold the first lien position). Both the Series A and Series B bonds mature September 1, 2033. For several years following the initial acquisition, the Company purchased and sold several blocks of the bonds. However, the Company has not purchased or sold any of the Series B bonds since 2002, and changes to the Series A bonds have been limited to redemptions of $5,000 each year. The Company’s investment in the RDC Series B bonds was fully impaired in 2006.

Payment on the Series A bonds have remained current substantially as a result of loans made through the Funding Agreement. There have never been any payments made on the Series B bonds and it is not anticipated that any payment will be made unless additional forms of gaming (video lottery terminals, slot machines, table games) are legalized at Texas racetracks or the underlying collateral real estate is either sold or redeveloped. The Company has fully impaired the Series B bonds based on the limited available market, the uncertainty of principal or interest payments and the subordinate lien on the collateral.

As part of the bond defeasance agreement, the Company was obligated to lend certain amounts to the RDC to fund any operating losses for up to 2 years, which expired in 1999. Although the Company is not currently obligated to fund the RDC, it has continued to do so as part of its strategy to assure continued operations at the racetrack. At December 31, 2008, the total amount funded by the Company to the RDC for its operations includes principal of $3,627,569 plus accrued interest of $1,311,894. At December 31, 2007, the principal was $3,088,419 plus accrued interest of $983,516. Such funding is secured by a second lien on the racetrack facility.

The balance of these bonds and notes receivable, all considered long-term, are as follows at December 31, 2008 and 2007:


			Face Amount
	Total Face Amount		Owned By		Cost		Carrying
2008	Outstanding		Call Now		Basis		Value
RDC Bonds (Marketable Securities):
RDC Series A bonds	$	6,250,000	$	145,000	$	30,083	$	145,000
RDC Series B bonds		86,925,000		43,962,500		1,077,463		—

Total bonds, long-term							$	145,000


RDC Notes and Interest Receivable:
Notes receivable, principal balance	$	3,627,569	$	3,627,569			$	3,627,569
Accrued interest receivable		1,311,894		1,311,894				1,311,894

Total notes and interest receivable							$	4,939,464

F-10

CALL NOW, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 2008 and 2007

NOTE 3 — RETAMA DEVELOPMENT — MARKETABLE SECURITIES AND NOTES RECEIVABLE — continued


			Face Amount
	Total Face Amount		Owned By		Cost		Carrying
2007	Outstanding		Call Now		Basis		Value
RDC Bonds (Marketable Securities):
RDC Series A bonds	$	6,345,000	$	145,000	$	30,083	$	145,000
RDC Series B bonds		86,925,000		43,962,500		1,077,083		—

Total bonds, long-term							$	145,000


RDC Notes and Interest Receivable:
Notes receivable, principal balance	$	3,088,419	$	3,088,419			$	3,088,419
Accrued interest receivable		983,516		983,516				983,516

Total notes and interest receivable							$	4,071,935

NOTE 4 — PENSON WORLDWIDE, INC. — INVESTMENT IN RELATED PARTY

On June 26, 2003 the Company entered into a “Convertible Promissory Note and Purchase Agreement” with Penson Worldwide, Inc. (“PWI”) to lend $6,000,000 with the note maturing on June 26, 2008. The President of Call Now, Inc. is a Director of PWI. The note called for principal payments in the amount of $400,000 to be paid monthly beginning April 26, 2007 and ending on June 26, 2008. The note required the Company, as noteholder, to have the option to convert the entire outstanding principal amount into shares of PWI common stock. The conversion price per common share was 2.25 times PWI shareholders’ equity as of June 30, 2003 divided by the actual number of issued and outstanding shares of PWI as of June 30, 2003, which equated to $2.01 per share. On December 23, 2003, an additional $600,000 was loaned to PWI under similar terms and conditions as the original note.

On June 30, 2005, the Company converted the entire $6,600,000 principal balance of the PWI note into PWI common stock, totaling 3,283,582 shares.

On May 16, 2006, PWI completed the Initial Public Offering (“IPO”) of their common stock (Nasdaq: PNSN). In a simultaneous transaction, PWI affected a 1-for-2.4 share reverse split and the split-off of certain non-core business operations known as SAMCO. As part of the IPO, the Company elected to participate in the exchange of PWI shares for SAMCO shares and sell a total of 11.5% of its investment, or 157,337 post-split shares, of the PWI shares in the IPO resulting in a gain on the sale of $1,728,504. Following the completion of the PWI IPO, the Company’s resulting position is as follows: 79,900 shares of SAMCO which represents an approximate 7.29% interest in the company; and 1,130,922 shares of the publicly traded PWI common stock. In August 2008, the Company sold 30,000 shares of PWI common stock, leaving a balance of 1,100,922 shares, which represents approximately 4.37% of PWI’s outstanding shares as of December 31, 2008. The SAMCO shares are valued at the Company’s cost basis of $385,438 at December 31, 2008 and 2007. The PWI common stock is valued at the market value of $8,389,026 as of December 31, 2008 and $16,228,731 at December 31, 2007. The Company originally extended credit to Penson in order to achieve a higher return on its capital for use in its business. After the loan was converted to Penson stock it continues to be held as a source of capital for the Company’s business.

NOTE 5 — PENSON FINANCIAL SERVICES, INC. — MARGIN LOAN PAYABLE

The Company has a margin loan payable to Penson Financial Services, Inc., a wholly owned subsidiary of Penson Worldwide, Inc., which accrues interest at an interest rate of 8.20% and 8.70% at December 31, 2008 and 2007, respectively. The balance of the margin loan was $14,047,102 and $988,271 at December 31, 2008 and 2007, respectively. The margin loan is collateralized by a majority of the Company’s marketable securities, including all of the PWI common stock. The Company paid interest on the margin loan of $598,887 in 2008 and $416,151 in 2007.

F-11

CALL NOW, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 2008 and 2007

NOTE 6 — STOCKHOLDERS’ EQUITY

Preferred Stock: The Company has authorized 266,667 shares of $.001 par value preferred stock, of which 100,000 shares are designated Class A convertible redeemable preferred stock (Class A), 66,667 shares are designated Class B convertible redeemable preferred stock (Class B), and 100,000 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. No Class A shares are outstanding at December 31, 2008 and 2007.

The Class B preferred stock is non-voting, redeemable at the option of the Company at a price of $100 per share plus accrued but unpaid dividends, and convertible into 100 shares of common stock at the option of the holder. The Class B preferred stockholders are entitled to receive an annual dividend of $6.00 per share. No Class B shares are outstanding at December 31, 2008 and 2007.

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. No Class C shares are outstanding at December 31, 2008 and 2007.

Stock Options: The Company periodically grants non-qualified stock options to directors and officers. We recognize expense at the time of grant in accordance with SFAS 123R.

NOTE 7 — INCOME TAXES

Income tax expense does not approximate the expected corporate tax rate due primarily to non-taxable municipal bond interest income received in each year. The components of the provision for income tax expense (benefit) are as follows at December 31:


	2008			2007
Deferred federal income tax (benefit)	$	(95,605	)	$	(263,643	)
Current federal income tax		250,000			—
State income tax		23,998			—


	$	178,393		$	(263,643	)

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows as of December 31, 2008 and 2007:


	2008			2007
Deferred tax assets:
Net operating loss carryforward, long-term	$	672,477		$	576,872
Basis difference in assets, long-term		171,204			171,204

	$	843,681		$	748,076

Deferred tax (liabilities):
Unrealized gains on marketable securities, current	$	(1,088,571	)	$	(3,723,324	)

F-12

CALL NOW, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 2008 and 2007

NOTE 7 — INCOME TAXES — continued

The Company has net operating loss carryforwards for tax purposes of approximately $1,978,000 that begin to expire in the year 2015.

Other Tax Matters

The Company adopted the provisions of FIN 48 on January 1, 2007. The Company recognizes interest and penalties related to unrecognized tax benefits in tax expense.

The Company included accruals for unrecognized income tax benefits totaling $250,000 as a component of other liabilities as of December 31, 2008. The unrecognized tax benefits of $250,000 at December 31, 2008, if recognized, would impact the Company’s effective tax rate. The Company accrued no interest or penalties at December 31, 2008. The Company does not anticipate a significant change in the amount of unrecognized tax benefits in the next 12 months.

A reconciliation of the change in the unrecognized tax benefits from December 31, 2007 to December 31, 2008 is as follows:


Unrecognized tax benefit at December 31, 2007	$	—
Gross increases — tax positions in prior years		250,000


Unrecognized tax benefits at December 31, 2008	$	250,000

During 2004, the Internal Revenue Service (the “IRS”) notified the RDC that it was conducting an examination of the tax-exempt status of the municipal bonds issued in connection with that company’s reorganization in 1997. In February 2005, the IRS issued a proposed adverse determination with respect to the RDC’s 1997 Series A and Series B bonds, stating that the interest on the bonds is not excludable from the gross income of their holders. The RDC has filed a protest of such determination and requested that the matter be referred to the Office of Appeals of the IRS. Management has been advised that Retama Development Corporation is vigorously defending itself with respect to this issue.

In August 2005, the IRS completed an examination of the Company’s tax returns for the years 2000 through 2003. As a result of the examination, the IRS has submitted a request for change to include in taxable income the interest earned by the Company on the RDC Series A bonds in the total amount of $588,000. If the IRS is successful, the Company would incur additional federal income taxes of approximately $200,000. Management intends to vigorously defend itself against this assessment.

As of December 31, 2008, the tax years ended December 31, 2004 through 2007 remained subject to examination by tax authorities.

NOTE 8 — RELATED PARTY TRANSACTIONS

The Company owns 1,100,922 shares of Penson Worldwide, Inc. common stock with a market value of $8,389,026 at December 31, 2008, and 1,130,922 shares with a market value of $16,228,731 at December 31, 2007. The Company also has a margin loan payable to Penson Financial Services, Inc., a wholly owned subsidiary of Penson Worldwide, Inc., with a balance of $14,047,102 at December 31, 2008 and $988,271 at December 31, 2007. The President of Call Now, Inc. is a Director of Penson Worldwide, Inc.

The Company has purchased a limited partnership interest, with a cost basis of $2,597,700 at December 31, 2008, in a 270-unit luxury apartment complex under development at the master planned community of Stone Oak in San Antonio, Texas. Other limited partners include the Company’s President/CEO, the Company’s majority shareholder and the President of REG. The general partner is an unrelated real estate development company based in Houston. The Company’s cost basis at December 31, 2007 was $1,784,100.

F-13

CALL NOW, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 2008 and 2007

NOTE 8 — RELATED PARTY TRANSACTIONS — continued

On September 26, 2008 the Company completed the acquisition of 261,852 shares of the Company’s common stock from Christopher J. Hall, the Company’s Chairman and controlling stockholder. The Company purchased 114,206 shares for cash at a price of $10.10 per share, or $1,153,481. The Company acquired an additional 147,646 shares through an exchange of$225,000 principal amount of Will County Illinois Student Housing bonds, 7.75% due 9/1/09 (CUSIP 969081BG2) and $2,105,000 principal amount of Will County Illinois Student Housing bonds, 6.75% due 9/1/33 (CUSIP 969081BB3). The effective value of this transaction was also $10.10 per share of common stock, for a total cost of $1,491,225. The transactions reduced the Company’s outstanding common stock to 2,902,367 shares. The transaction was evaluated and approved by the Company’s directors who had no interest in the transaction. The board received a fairness opinion from the Hancock Firm, LLC, Houston, Texas.

NOTE 9 — MANAGEMENT AGREEMENT

The Company’s agreement to operate and manage the Retama Park racetrack extends through November 1, 2010. The Company is reimbursed for the majority of its payroll and payroll related expenses, and receives a management fee is $20,000 per month, with certain adjustments.

NOTE 10 — FAIR VALUE MEASUREMENTS

In September 2006, the FASB issued SFAS 157, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of SFAS 157 are effective January 1, 2008. The FASB has also issued Staff Position FAS 157-2 (FSP No. 157-2), which delays the effective date of SFAS 157 for nonfinancial assets and liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), until fiscal years beginning after November 15, 2008. Effective January 1, 2008, the Company adopted SFAS 157 as discussed above and has elected to defer the application thereof to nonfinancial assets and liabilities in accordance with FSP No. 157-2.

As defined in SFAS 157, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. SFAS 157 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements).

The three levels of the fair value hierarchy defined by SFAS 157 are as follows:


		Level 1:		Quoted prices are available in active markets for identical asset or liabilities;

		Level 2:		Quoted prices in active markets for similar assets and liabilities that are observable for the asset or liability; or

		Level 3:		Unobservable pricing inputs that are generally less observable from objective sources, such as discounted cash flow models or valuations.

The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value as of December 31, 2008. As required by SFAS 157, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

F-14

CALL NOW, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 2008 and 2007


	December 31, 2008
Recurring Fair Value Measures	Level 1		Level 2		Level 3		Total
Assets:
Marketable securities — related party	$	8,389,026	$	—	$	—	$	8,389,026
Marketable securities — other		1,264,954		—		—		1,264,954

Liabilities:
None	$	—	$	—	$	—	$	—

The Company’s financial instruments relate to its available-for-sale marketable securities, which are valued using quoted market prices. Adjustments to fair value are recorded in other comprehensive income until the investment is sold.

NOTE 11 — EARNINGS PER SHARE

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


	Income			Shares		Per Share
	(Numerator)			(Denominator)		Amount
Year Ended December 31, 2008
Basic EPS:
Net (loss)	$	(281,425	)		3,095,879	$	(.09	)
Effect of dilutive options		—			—		—


Dilutive EPS	$	(281,425	)		3,095,879	$	(.09	)


Year Ended December 31, 2007
Basic EPS:
Net (loss)	$	(375,999	)		3,164,219	$	(0.12	)
Effect of dilutive options		—			—		—


Dilutive EPS	$	(375,999	)		3,164,219	$	(0.12	)

NOTE 12 — CONTINGENCY

Investment Company Act: Management has taken the position that the Company is not an investment company required to be registered under the Investment Company Act of 1940. If it was established that the Company is an unregistered investment company, there would be a risk, among other material adverse consequences, that the Company could become subject to monetary penalties or injunctive relief, or both, in an action brought by the Securities and Exchange Commission. The Company would also be unable to enforce contracts with third parties or third parties could seek to obtain rescission of transactions undertaken the period it was established the Company were an unregistered investment company.

F-15

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A(T). CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management evaluated, with the participation of our Chief Executive Officer and our Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Annual Report on Form 10-K. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of December 31, 2008 are effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act (i) is recorded, processed summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required reasonable assurance that such information is accumulated and communicated to our management. Our disclosure controls and procedures are designed to provide reasonable assurance that such information is accumulated and communicated to our management. Our disclosure controls and procedures include components of our internal control over financial reporting. Management’s assessment of the effectiveness of our internal control over financial reporting is expressed at the level of reasonable assurance that the control system, no matter how well designed and operated, can provide only reasonable, but not absolute, assurance that the control system’s objectives will be met.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

Under the supervisions and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2008. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework as supplemented by the COSO publication, Internal Control over Financial Reporting — Guidance for Smaller Public Companies. Based on this evaluation, our management concluded that our internal control over financial reporting was effective as December 31, 2008 based on these criteria.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this annual report.

Changes in Control Over Financial Reporting

There were no changes in our internal controls over financial reporting that occurred during the quarter ended December 31, 2008 that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.

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


NAME AND POSITION	AGE
William M. Allen, Director		81
Bryan P. Brown, Director and CEO of Retama Entertainment Group, Inc.		48
Christopher J. Hall, Director and Chairman		50
Thomas R. Johnson, Director and President and Chief Executive Officer		41

William M. Allen was President of the Company from June 1992 to 1997 and a director since June 1992. He was Chairman from February 1997 to November of 2001. 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 has served as CEO of the Company’s 80% owned subsidiary, Retama Entertainment Group, Inc. since December 1998. Mr. Brown is the son-in-law of Mr. Allen.

Christopher J. Hall was the co-founder and co-owner of Howe, Solomon and Hall, Inc. (“HSH”) from 1985-1998. HSH was a NASD licensed securities firm founded on Wall Street. In 1998 Mr. Hall left to pursue entrepreneurial efforts which include Call Now, Inc. He became a director in November 2001.

Thomas R. Johnson was elected as President, Chief Executive Officer and Director of Call Now, Inc. in November 2001. Mr. Johnson has served on the Board of Directors of Penson Worldwide, Inc. (“PWI), a publicly traded company that the Company holds a position of 1,130,922 shares, since August of 2003. Prior to joining the Company, Mr. Johnson was an independent fixed-income bond trader and analyst. He also has been a fixed-income bond analyst and broker for a municipal bond firm from 1989 to 1999.

Our directors are elected yearly at our annual shareholders’ meeting. The Board of Directors may fill vacancies with an appointment until the next annual meeting. Officers serve until removed or replaced by the Board.

CODE OF ETHICS

The Company has adopted a Business Ethics and Conduct Policy that has been filed as Exhibit 14 to the Annual Report as its code of ethics. This policy is applicable to all of the Company’s directors, officers and employees, including its principal executive officer, principal financial officer and principal accounting officer. We will provide a copy to any person, without charge, upon a request in writing to: Thomas R. Johnson, President, Call Now, Inc., P.O. Box 47535, San Antonio, Texas, 78265.

ITEM 11. EXECUTIVE COMPENSATION.

The following table presents compensation information for the year ended December 31, 2008 for the persons who served as our principal executive officer and each of our two other most highly compensated executive officers whose aggregate salary and bonus was more than $100,000 in such year. We refer to these executive officers as our “named executive officers” elsewhere in this annual report. Mr. Hall received a bonus of $10,000 in 2008. Mr. Brown and Mr. Johnson were each paid a $10,000 bonus for 2008 in the 2009 fiscal year.


Name and Principal							Options		All Other
Position	Year		Salary		Bonus		Awards		Compensation(1)		Total
Thomas R. Johnson,		2008	$	200,000		—		—	$	7,000	$	207,000
President/CEO		2007	$	175,000		—		—	$	4,000	$	179,000

Christopher J. Hall,		2008	$	131,140	$	10,000		—	$	7,000	$	148,140
Chairman		2007		—		—			$	4,000	$	4,000

Bryan P. Brown,		2008	$	200,000		—		—	$	7,000	$	207,000
CEO, Retama		2007	$	200,000		—		—	$	4,000	$	204,000
Entertainment Group


(1)		Consists of director meeting fees.

EXECUTIVE EMPLOYMENT CONTRACTS

In March 2004, the Company and REG entered into an employment agreement with Thomas R. Johnson (“Johnson”). The terms of the agreement called for a base salary of $125,000 per year that has been amended and is currently at the rate of $200,000. If Electronic Gaming Machines (“EGM”) are authorized for operation at Retama Park, Johnson shall receive a monthly bonus of ¹/2% of monthly Net Win generated from EGMs up to $120 million at Retama. For annual net win in excess of $120 million at Retama, Johnson shall receive a monthly bonus of ¹/4% of monthly Net Win. In the event of Johnson’s termination upon a Change of Control, Johnson shall receive at closing, one lump sum payment equal to the payment made according to the percentage bonus based on Net Win in the month immediately preceding the Change of Control multiplied by seventy-six (76). The term of Johnson’s employment continues for one (1) year and thereafter for successive terms of one (1) year each unless at the option of either party upon at least thirty days’ prior written notice such employment is terminated at the end of the current term.

In March 2004, REG entered into an employment agreement with Bryan P. Brown (“Brown”) as CEO of REG. The terms of the agreement call for a base salary of $200,000 per year. If EGM are authorized for operation at Retama Park, Brown shall receive bonus compensation of a one-time payment of $100,000 upon the commercial operation of EGMs at Retama. Brown shall receive a monthly bonus of ¹/2% of monthly Net Win generated from EGMs up to $120 million at Retama. For annual net win in excess of $120 million at Retama, Brown shall receive a monthly bonus of ¹/4% of monthly Net Win. In the event of Brown’s termination upon a Change of Control, Brown shall receive at closing, one lump sum payment equal to the payment made according to the percentage bonus based on Net Win in the month immediately preceding the Change of Control multiplied by seventy-six (76). The term of Brown’s employment continues for one (1) year and thereafter for successive terms of one (1) year each unless at the option of either party upon at least thirty days’ prior written notice such employment is terminated at the end of the current term.

In May 2008, the Company engaged Christopher J. Hall, the majority shareholder of the Company, as Chairman with an annual salary of $200,000 per year. At this time, there is no employment agreement with Mr. Hall.

EQUITY COMPENSATION PLAN INFORMATION AS OF DECEMBER 31, 2008

The Company does not have any equity compensation plans outstanding as of December 31, 2008. All equity compensation awards have been exercised or expired prior to such date.

DIRECTOR COMPENSATION

Our directors, including our directors who are named executive officers, are paid $1,000 for each board meeting attended. We reimburse our directors for reasonable travel and lodging expenses incurred in attending meetings.

The following table sets forth compensation earned or paid to our non-employee directors in 2008.


	Fees Earned or		Option		Non-equity Incentive		All Other
Name	Paid in Cash		Awards		Plan Compensation		Compensation		Total
William M. Allen	$	6,000		—		—		—	$	6,000
Bryan P. Brown	$	7,000		—		—		—	$	7,000
Christopher J. Hall	$	7,000		—		—		—	$	7,000
Thomas R. Johnson	$	7,000		—		—		—	$	7,000

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table sets forth, as of March 4, 2009, 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 Outstanding
Name	Number of Shares		Common Stock
Christopher J. Hall		2,584,648		89.05	%
Thomas R. Johnson		93,975		3.24	%
Bryan P. Brown		-0-		0	%
William M. Allen		-0-		0	%

Officers and Directors as a group (4 Persons) 2,940,475 92.93%

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS; DIRECTOR INDEPENDENCE.

As of December 31, 2008, the Company owned 1,100,922 shares of common stock of Penson Worldwide, Inc. with a market value of $8,389,026. In August of 2003, the Company’s President and CEO, Thomas R. Johnson, was elected to the Board of Directors of PWI pursuant to a provision in the original PWI Note which required that PWI use its best efforts to appoint a nominee of the Company to PWI’s board of directors. The Company has maintained an investment account with Penson Financial Services, Inc., a wholly owned subsidiary of Penson Worldwide, Inc., since 1999. On December 31, 2008, the Company had a margin loan in this account in the amount of $14,047,102, which is collateralized by its marketable securities.

The Company has purchased a limited partnership interest, with a cost basis of $2,597,700 at December 31, 2008, in The Estates at Canyon Ridge, a 270-unit luxury apartment complex under development at the master planned community of Stone Oak in San Antonio, Texas. Other limited partners include the Company’s President/CEO, the Company’s majority shareholder and the President of REG, each of who is also a director of the Company. The general partner is an unrelated real estate development company based in Houston.

DIRECTOR INDEPENDENCE

The following information concerning director independence is based on the director independence standards of The NASDAQ Stock Market Corporate Governance Rules. Because more than 50% of our voting power is held by Christopher J. Hall, we would be considered a “controlled company” under such rules and would not be subject to

the requirements of NASDAQ Rule 4350(c) that would otherwise require us to have (i) a majority of independent directors on the Board; (ii) a compensation committee composed solely of independent directors; (iii) a nominating committee composed solely of independent directors; (iv) compensation of our executive officers determined by a majority of the independent directors or a compensation committee composed solely of independent directors; and (v) director nominees selected, or recommended for the Board’s selection, either by a majority of the independent directors or a nominating committee composed solely of independent directors.

The Board has determined that directors Christopher J. Hall, Thomas R. Johnson, Bryan P. Brown and William M. Allen are not independent. In determining independence, the Board reviews and seeks to determine whether directors have any material relationship with the Company, direct or indirect, which would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The Board reviews business, professional, charitable and familial relationships of the directors in determining independence. The Board has not designated a separate compensation or nominating committee.

AUDIT COMMITTEE

The Board of Directors has not designated a separate audit committee and the entire Board, whose members are named above, conducts the functions of such committee. The Board has determined that Thomas R. Johnson is an audit committee financial expert and that Mr. Johnson in not an independent director.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Akin, Doherty, Klein & Feuge, P.C. (“Akin”) audited the Company’s financial statements for the year ended December 31, 2008 and December 31, 2007.

Fees related to services performed by Akin in the year ended December 31, 2008 and December 31, 2007 was as follows:


	2008		2007
Audit Fees (1)	$	56,100	$	51,000

Audit-Related Fees		—		—

Tax Fees (2)		6,150		3,000

All Other Fees		—		—


Total	$	62,250	$	54,000


(1)		Audit fees represent services provided in connection with the fiscal year audit of our financial statements and review of our quarterly financial statements, notwithstanding when the fees were billed or when the service was rendered.

(2)		Tax fees principally included tax advice, tax planning and tax return preparation, for services billed from January through December of the fiscal year.

BOARD OF DIRECTORS REPORT

The Board of Directors has reviewed and discussed with the Company’s management and independent auditor the audited consolidated financial statements of the Company contained in the Company’s Annual Report on Form 10-K for the Company’s 2008 fiscal year. The Board has also discussed with the independent auditor the matters required to be discussed pursuant to SAS No. 61 (Codification of Statements on Auditing Standards, AU Section 380), which includes, among other items, matters related to the conduct of the audit of the Company’s consolidated financial statements.

The Board has received and reviewed the written disclosures and the letter from the independent auditor required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor’s communications with the Board concerning independence, and has discussed with its independent auditor its independence from the Company.

The Board has considered whether the provision of services other than audit services is compatible with maintaining auditor independence.

Based on the review and discussions referred to above, the Board approved the inclusion of the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for its 2008 fiscal year for filing with the SEC.

Pre-Approval Policies

The Board’s policy is to pre-approve all audit services and all permitted non-audit services (including the fees and terms thereof) provided by the Company’s independent auditor; provided, however, pre-approval requirements for non-audit services are not required if all such services (1) do not aggregate to more than five percent of total revenues paid by the Company to its accountant in the fiscal year when services are provided; (2) were not recognized as non-audit services at the time of the engagement; and (3) are promptly brought to the attention of the Board and approved prior to the completion of the audit.

The Board pre-approved all fees described above.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

PART IV

ITEM 15. EXHIBITS.

(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(c)	—	C	By-Laws of the Registrant.

8.12	—	G	Management Agreement for Retama Park.

8.15	—	L	First Amendment to Management Agreement for Retama Park.

8.16	—	M	Second Amendment to Management Agreement for Retama Park.

8.17	—	N	Third Amendment to Management Agreement for Retama Park.

10.3	—	O	Employment Agreement between Call Now, Inc. and Thomas R. Johnson, dated November 3, 2003. *

10.4	—	P	Employment Agreement between Retama Entertainment Group and Bryan P. Brown, dated March 31, 2004. *

14	—	U	Business Ethics and Conduct Policy (Code of Ethics).

21	—		Subsidiaries.

31.1	—		Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32.1	—		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2003 (filed herewith).

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.

C	—	Incorporated by reference to Exhibit 3(c) of Form 10-KSB for the year ended December 31, 1999.

E	—	Incorporated by reference to Exhibit A of Form 8-K filed November 21, 1996.

F	—	Incorporated by reference to Exhibit B of Form 8-K filed November 21, 1996.

G	—	Incorporated by reference to Exhibit 8.12 of Form 10-KSB for year ended December 31, 1997.

H	—	Incorporated by reference to Exhibit 8.13 of Form 10-KSB for year ended December 31, 1998.

I	—	Incorporated by reference to Exhibit 8.14 of Form 10-KSB for year ended December 31, 1998.

K	—	Incorporated by reference to Exhibit 10.2 of Form 8-K filed February 8, 2002.

L	—	Incorporated by reference to Exhibit 8.15 of Form 10-KSB for year ended December 31, 2004.

M	—	Incorporated by reference to Exhibit 8.16 of Form 10-KSB for year ended December 31, 2004.

N	—	Incorporated by reference to Exhibit 8.17 of Form 10-KSB for year ended December 31, 2004.

O	—	Incorporated by reference to Exhibit 10.3 of Form 10-KSB for year ended December 31, 2004.

P	—	Incorporated by reference to Exhibit 10.4 of Form 10-KSB for year ended December 31, 2004.

T	—	Incorporated by reference to Exhibit 10.5 of Form 10-KSB for year ended December 31, 2005.

U	—	Incorporated by reference to Exhibit 14 of Form 10-KSB for year ended December 31, 2005.


*		— Indicates a management contract or compensatory plan or agreement.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


CALL NOW, INC.
By:	/s/ THOMAS R. JOHNSON
	Name:	Thomas R Johnson
	Title:	President, Chief Executive Officer and Director
Date: November 12, 2009

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


/s/ THOMAS R. JOHNSON	President, Chief Executive Officer and Director	November 12, 2009
Thomas R. Johnson	(Principal Executive Officer and Principal
	Accounting Officer)

/s/ CHRISTOPHER J. HALL	Chairman and Director	November 12, 2009
Christopher J. Hall

/s/ WILLIAM M. ALLEN	Director	November 12, 2009
William M. Allen

/s/ BRYAN P. BROWN	Director	November 12, 2009
Bryan P. Brown

Attached files

CALL NOW INC Reports

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