DCLT Data Call Technologies Inc (PK)

Data Call Technologies, Inc. was incorporated under the laws of the State of Nevada as Data Call Wireless, Inc. on April 4, 2002, and is sometimes referred to herein as "we", "us", "our", "Data Call" or the "Company." On March 1, 2006, we changed our name to Data Call Technologies, Inc. Since our inception, we have been engaged in the business of offering real-time information/content via digital signage and kiosk networks to our clients, who we consider to be our partners rather than simply as customers.

Our mission is to integrate cutting-edge information/content delivery solutions currently deployed by the media and make this content rapidly available to and within the control of our retail and commercial clients/customers. The Company's services put its clients in control of real-time news and other dynamic content, displayed within one or more locations, as well as to thousands of local, regional and national clients, through Digital Signage and Kiosk networks.

Our business plan is to focus on growing our client base by continually offering real-time information/content via Digital Signage and Kiosk networks, seeking to improve the delivery, security and variety of information/content services to the Digital Signage and Kiosk community.

Overview - What Is Digital Signage?

LED and LCD displays are continually replacing printed marketing materials such as signs and placards, as well as the old-fashioned whiteboard, for product and corporate branding, marketing and assisted selling. The appeal of instantly updating product videos and promotional messages on one or a thousand remotely located displays is driving the adoption of this exciting marketing tool. Digital Signage presentations are typically comprised of repeating loops of information used to brand, market or sell the owner's products and services. But once viewed, this information becomes repetitive and the viewer tunes it out, resulting in low retention of the client's message. As digital signage "comes of age," the dynamic characteristics of the digital signage presentations has taken center-stage requiring fresh, relevant and updated dynamic content.

Digital Signage Comes of Age

We believe that the Digital Signage industry is "coming of age" and that Data Call through multiple industry relationships has been engaged in the business for more than a decade. Our company has virtually been there from the start and is in in a prime position to enjoy and benefit from our industry's growth. A few short years ago, a business wanting to derive commercial benefit from use of digital signage was often confronted with a myriad of hardware and software companies, all offering their own version of what digital signage should be. Typical customers for digital signage were most-often offered the hardware for digital signage but without the full package of content with which to build and tailor their systems for their target customer base.

Those early digital signage customers often had to deal with the fact that their digital signage hardware vendors lacked the know-how to provide them with the "do's and don'ts" of content development. However, from our inception, Data Call recognized that our competitors and their typical customers lacked a key component which includes the offering of a comprehensive content package.

Recently, as the cost of platforms supporting infrastructure and digital displays have fallen significantly, digital signage has become more accessible to a wider range of potential users while the growing Kiosk market has cross-pollinated with Digital Signage. Companies in our industry have come to understand, as we have understood almost since our inception in 2002, that the initial, one-time, up-front cost of Data Call's integrated, content-flexible, hardware and software package is far more customer friendly and, as a result, far surpasses outweighs the up-front savings by not doing so.  The benefit that Data Call provides to our customers, in the form of ongoing content development, is expected to continue to provide our customers with desirable user friendly services.

As the cost of deployment has decreased, Data Call has continued to focus, as well as other providers have only begun focusing, on offering "attention-grabbing content" as a means of drawing target customers' attention to the core message of clients, thereby keeping their target customers engaged throughout Digital Signage and Kiosk presentations.

The Need for Speed - Active Content

Active and dynamic content is the integral part of digital signage presentations that must be constantly updated with timely and relevant information in order to attract and retain target customers to the product and service offered by clients. For instance, a typical presentation may contain ten 15-second loops that provide the primary message of the presentation, but the active dynamic content, such as that provided by Data Call, is updated with new information throughout the day. Those seeking to add active and dynamic content to their digital signage presentations are advised to employ Data Call's integrated content rather than attempting to "cut and paste" broadcast content of others into their digital signage presentation.

Our clients, by integrating Data Call's active content as a meaningful component of their digital signage presentations, can provide the entertainment and information content necessary to enhance the target customer's information retention without disrupting the core message of the presentation. Information categories provided by Data Call include news, weather, sports, financial data and the latest traffic alerts, among others. With such a broad range of offerings, our clients have access to the active and dynamic content they need, regardless of the target customers and market they are addressing.

Our Business Opportunities

Our many opportunities for client development in the digital signage industry are growing virtually exponentially. While many companies in our industry have traditionally outsourced all or part of their content creation, Data Call serves as a provider of dynamic active content to clients on a tailored basis. Whether a client desires general entertainment information for customers, such as news, sports, stock market quotes, etc. or location-specific content, such as local weather, traffic, product sales and specials, etc., our research has validated our long-held assumption that dynamic content draws and retains our clients' target viewers to their digital signage and keeps them engaged throughout the presentation.

Since our inception, management has developed strong relationships working with the leaders in digital signage. Collaborative efforts successfully created the data formats and means of communication to facilitate the delivery of our dynamic content more easily and efficiently by our clients for integration into their hardware and software products, setting industry standards.

Partners, Not Customers

Data Call's approach to our clients is to build long-lasting partnerships by creating client relationships that we believe are unique in the digital signage industry. We do this because we understand that each client has its own content requirement. In developing dynamic content for individual digital signage clients, we have identified three content-related factors: (i) reliability; (ii) objectivity; and (iii) ease of implementation. To address the reliability requirement, we have elected to enter into license arrangements with the leading providers of news, weather, sports and financial information, among other client-desired content rather than either: (i) downloading and repackaging content sourced from the Internet (which may be illegal); or (ii) pulling RSS feeds (which may come and go at the provider's whim). Licensing data from these premier providers has also served us by satisfying the second criteria, objectivity. Because it is commonly recognized that Internet content may often be unreliable, unverifiable and biased, we have determined that we could not simply use unfiltered Internet content for delivery to our clients. To achieve ease of implementation, our licensing of data facilitates the ease of delivery to and implementation and use by our client/partners. Data Call has understood that it's Digital Signage and Kiosk clients needed more complete service than to endeavor the sourcing of active content from multiple vendors. As a result, our flexible content packages permit our clients to do "one stop shopping" for all of their dynamic content requirements by a single sublicense from us. Ease of implementation also would require that the multiple formats of all Data Call's data providers be distilled into a single, usable format.

We enable our clients to receive customized dynamic content which may be displayed in a multitude of ways (banners, tickers, scrolls or artistically integrated with the overall presentations). We have created and produced multiple sets of common data layouts in the industry-standard XML (extensible markup language) format inclusive of MRSS. With the advent of HTML5, even more delivery methods have been made available to our clients, many of whom have found these new formats to be easily integrated into their products. Nevertheless, we have also produced customized data formats to the exact and specific requirements of our clients/partners, which, we believe ensures a higher level of reliability and ease of integration.

Market demand, opportunity and technology converge at a single point in time, and Data Call is there. Our integrity continues to build our business. Digital signage platforms are evolving to meet mass market requirements, costs for hardware and software are falling to the point of becoming commodities and the markets for digital signage are clarifying through historical trial and error.

Business Operations

In August of 2013, we announced the release of our Direct Lynk Media (DLMedia) product. The DLMedia product encapsulates the Direct Lynk Messenger product with major enhancements and options that allow the client to select and include in their feed images relative to the news feeds. Also in the release, both Weather and Traffic image products have been enhanced considerably. Other additions included within the release bring more value to the company's clients and create more interest from new and existing clients.

The current types of data and information, for which a client is able to subscribe to through the Direct Lynk System include:

We currently offer our Direct Lynk Messenger and DLMedia services to our clients and other potential customers through the Internet. Both DLM Services are Digital Signage products and real-time information services which provides a wide range of up-to-date information for display. Both DLM services are able to work concurrently with customers' existing digital signage systems. The Direct Lynk Messenger product is slowly becoming a legacy product with the DLMedia product in the forefront.

The Digital Signage and Kiosk industry is still a relatively new and since our inception in 2002 we have come to understand that it provides an exciting method for advertisers, including our clients, to promote, inform, educate, and entertain their customers regarding their business products and services. Through Digital Signage, businesses can use a single display or a complex, networked series of flat screen LED, LCD and even combined as video walls as display devices to market their products and services directly at their facilities and elsewhere to their customers and patrons in real time. Additionally, because Digital Signage advertising takes place in real time, businesses can change their marketing efforts literally from moment to moment and over the course of a day or such other period as they may determine.

We believe that the ability of our clients to display in real-time the information and content we deliver better allows our clients companies to tailor their products, services and advertising to individual and target-group customers, thereby advertising and offering, for example, inventory and sales discounts that may be designed to appeal to those individual customers and target customer groups, increasing sales and revenues. We believe that the benefits of on-site, real-time Digital Signage displays compared to regular print or video advertising are substantial and include, among other advantages, being able to immediately change digitally-displayed images/advertisements depending on our client's customers own situation, not simply being restricted by in-store print circulars produced days, weeks or even months in advance, which may become stale or obsolete prior to or shortly after publication and dissemination.

We specialize in allowing clients to create their own Digital Signage dynamic content feeds which are delivered online directly to their chosen, electronic digital display devices at their various facilities. The only requirements our clients must have are: (i) a supported, third-party Digital Signage and/or Kiosk equipment solution, or similar device, which receives the data from our servers online; and (ii) an Internet connection. Our Direct Lynk System is supported by various, readily available third-party systems, varying in costs from inexpensive monthly cloud-based licenses to much more extensive and expensive content management/playback systems. Our Direct Lynk Systems allow customers to select from the pre-determined data and information subscriptions of those described above. We enable our clients to also select location specific content they wish to receive based on how and where their Digital Signage network is configured.

During the first quarter of fiscal 2014, we released our "Playlist-Ready" content products, enhancing our ability to further accommodate our current clients and appease new prospects. One product within the "Above the Fold" line has received a high level of acceptance at the industry trade shows, most recently at the Digital Signage Expo held in Las Vegas in March 2015.

In the end of 2015, we made available to our clients an online video creation tool. This tool is simple to use no matter what the level of computer skills a user may have. This online product requires no special artistic training. It is also ideal for re-purposing content originally created by a creative agency: customizing such content for local marketing, franchisee or dealer ID, web, digital signage, or agile marketing. It can create thousands of customized versions of a master piece of creative automatically. It has full brand compliance features built-in and satisfies professional artist specs. The system provides the client with the tools needed to create HD videos and video advertising in minutes. There are two available online options "Do It Myself" for extreme flexibility and control as the client creates HD videos and advertising from online templates, or a "Do It For Me" automated solution that lets the system do the work for the client. The client just needs to provide their business name and zip code. All of our products and services can be viewed on our website: datacalltech.com.

Dependence On A Few Major Customers

At December 31, 2016, we had over 1,000 customer/subscribers for our Direct Lynk System, which customers are relatively small, paying cumulatively an average monthly fee to Data Call of $10,000. We also have several larger new potential partner/clients that are testing our Digital Link Media products, and we expect that some or all of them may be expected to become significant clients in the near future. During the year ended December 31, 2016, we were dependent upon two major customers, who accounted for approximately 77% of our revenues. During the year ended December 31, 2015, we were dependent upon two major customers, who accounted for approximately 79% of our revenues.

Notwithstanding the forgoing, based upon recent communications with several potential clients who are volume users and/or wholesale distributors of digital signage content and content management systems, we believe that during 2017, several new clients will contribute significant revenue which should materially reduce our reliance on our three major customers to less than 50%. As a result, we believe that that we should become far less reliant on a few business clients for our source of revenue. However, there can be no assurance that our belief will prove to be justified or, if justified, that such trend will continue for any future period, if at all.

Employees

At December 31, 2016, we had 4 full-time employees, including our two executive officers. Depending upon our level of our growth, if any, we expect that we may or will be required to hire additional personnel in the areas of sales and marketing, software design, research and development and otherwise, during 2016 and continuing into 2017. However, we will be dependent upon revenue growth and profitability, of which there can be no assurance, to fund any increase in staff. None of our employees are covered by a selective bargaining agreement

Estimate Of The Amount Spent On Research And Development Activities

Since our inception in April 2002, the majority of our expenditures have been on research and development to create our Direct Lynk Messenger Systems, including software and hardware development and testing costs. The amount spent on this research and development from inception through December 31, 2016 is approximately $2,000,000.

ITEM 1A. RISK FACTORS. Table of Contents

Investing in our common stock, while providing investors with an equity ownership interest, involves a high degree of risk, including the potential loss of all or a significant portion of their investment. Shareholders will be subject to risks inherent in our business relative to, among other things, general economic and industry conditions, market conditions and competition. The value of the investment may increase or decrease and could result in a loss, the size and extent of which cannot be predicted. An investor should carefully consider the following factors as well as other information contained in this annual report on Form 10-K/A for our year-ended December 31, 2016.

This annual report on Form 10-K/A also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of many factors, including the risk factors described below and the other factors described elsewhere in this Form 10-K/A.

Since our inception, we have had a history of generating operating losses. However, in the past two calendar years, we have reversed that trend and have been able to generate positive cash flow from operations. As a result, our auditors have removed the going concern from their opinion. We anticipate being profitable in the near future. We currently expect to significantly increase our revenues by increasing our client base and/or generating additional revenue streams by offering new and enhanced products and services. However, there can be no assurance that our plan will be successful, either in whole or in part. If we fail to grow our revenues, our ability to achieve and fulfill our business plan may be delayed, which could adversely impact our results of operations.

Unforeseen events.

There can be no assurance that unforeseen events, such as: (i) the length of time necessary to generate increasing market acceptance of our Direct Lynk Systems; (ii) any unexpected material increased development costs; (iii), the general economy in the markets where we offer our Direct Lynk Systems.

We have competition.

There are many different sectors in the Digital Signage industry, including but not limited to (i) content Management providers, (ii) content Creation services, (III) hardware manufacturers, (iv) network management providers and (v) installation service providers. These sectors are extremely vas and well capitalized. We are in the content sector within a more specific niche of providing subscriptions of dynamic content. We provide subscription service of a wide variety of dynamic infotainment to the industry. As the leader in our subsector of the industry, other companies have attempted to duplicate us and we expect competition to increase in the future. To be competitive, we must continue to invest significant resources in research and development, sales and marketing and customer support. Few have sufficient resources to make these investments or are unable to make the technological advances necessary to continue to remain the leader, our competitive position may suffer. Increased competition could result in price reductions, fewer customer orders, reduced margins and loss of market share. Our failure to compete successfully against current or future competitors could adversely affect our fussiness and financial condition.

We rely on key management personnel.

We are highly dependent upon the services and efforts of key persons, as follows: Tim Vance, our founder and full-time CEO and Chief Operating Officer. Our ability to operate and implement our business plan is heavily dependent upon the continued services of Mr. Vance to grow as anticipated, our ability to attract, retain and motivate qualified, newly-hired, full and part-time personnel. The loss of Mr. Vance, in particular, and our inability, in the future to hire and retain qualified sales and marketing, software engineers and additional management personnel, as needed, could have a material adverse effect on our business and operations. We do not have "key man" life insurance on Mr. Vance.

We are highly dependent upon our ability to successfully market Direct Lynk System to subscribers.

We are dependent on the abilities of our sales and marketing activities to generate new clients for subscriptions to our Direct Lynk Systems and to broaden our customer base. While the number of paying subscribers for our Direct Lynk System increased during December 31, 2016 compared to December 31, 2015, there can be no assurance that our sales and marketing efforts will be able to market acceptance for our Direct Lynk System and increase our customer base to a level that will permit continued profitable operations. If our sales and marketing cannot continue to achieve market acceptance for our Direct Lynk Systems, and increase our customer base to a level that will permit profitable operations. If our sales and marketing efforts are unable to continue to generate new customers, we may not be able to generate sufficient revenues to continue with planned research and development on new products and improve our current products.

Difficult and volatile conditions in the capital, credit and commodities markets and general economic uncertainty have prompted companies to cut capital spending worldwide and could continue to materially adversely affect our business.

Disruptions in the economy and constraints in the capital markets have caused companies to reduce or delay capital investment. Some of our prospective customers may cancel or delay spending on the development or roll-out of technology projects with us due to continuing economic uncertainty. Our financial position, results of operations and cash flow could continue to be materially adversely affected by continuing difficult economic conditions and significant volatility in the capital. The continuing impact that these factors might have on us and our business is uncertain and cannot be predicted at this time. Such economic conditions have accentuated each of the risks we face and magnified their potential effect on us and our business. The difficult conditions in these markets and the overall economy affect our business in a number of ways. For example:

Ÿ   Market volatility has exerted downward pressure on our stock price, which may make it more difficult for us to raise additional capital in the future. Economic conditions could continue to result in our customers experiencing financial difficulties or electing to limit spending because of the declining economy, which may result in decreased revenue for us.
Ÿ   Difficult economic conditions have adversely affected certain industries in particular, including the automotive and restaurant industries, in which we have major customers. We could also experience lower than anticipated order levels from current customers, cancellations of existing but unfulfilled orders, and extended payment terms. Economic conditions could materially impact us through insolvency of our suppliers or current customers.
Ÿ   Economic conditions combined with the weakness in the credit markets could continue to lead to increased price competition for our products, and higher overhead costs as a percentage of revenue.

If the markets in which we participate experience further economic downturns or slow recovery, this could continue to negatively impact our revenue generation, margins and operating expenses, and consequently have a material adverse effect on our business, financial condition and results of operations. If customer demand were to decline further, we might be unable to adjust expense levels rapidly enough in response to falling demand or without changing the way in which we operate. If revenue were to decrease further and we were unable to adequately reduce expense levels, we might incur significant losses that could adversely affect our overall financial performance and the market price of our common stock.

Potential future government regulation of the Internet may adversely affect our business.

We are dependent upon the Internet in connection with our business operations and the delivery of content for our Direct Lynk Systems. The United States Federal Communications Commission (the "FCC") does not currently regulate companies that provide services over the Internet, as it does common carriers or tele-communications service providers. Notwithstanding the current state of the FCC's rules and regulations, the potential jurisdiction of the FCC over the Internet is broad and if the FCC should determine in the future to regulate the Internet, our operations, as well as those of other Internet service providers, could be adversely. Compliance with future government regulation of the Internet could result in increased costs and because of our limited resources; it would have a material adverse effect on our business operations and operating results and financial condition.

We are dependent on the security of the Internet to serve our customers; any security breaches or other Internet difficulties could adversely affect our business.

We offer the majority of our services through, the secure transmission of confidential information over public networks are a critical element of our operations. A party who is able to circumvent security measures (hacker) could misappropriate proprietary information or cause interruptions in our operations. If we are unable to prevent unauthorized access to our users' information and transactions, our customer relationships could be irreparably harmed. Although we currently have in place security measures that we feel are adequate to protect our business and those of our customers, these measures may not prevent future security breaches. Nature's events placed on our systems could cause our systems to fail or cause our systems to operate at speeds unacceptable to our users, in which event we could lose customers and experience a material impact on our financial condition.

We must rely on other companies to maintain the Internet infrastructure if we hope to be successful.

Our future success depends, in large part, on other companies maintaining the Internet system infrastructure, including maintaining a reliable network backbone that provides adequate speed, data capacity and security. If the Internet continues to experience anticipated significant growth in the number of users, frequency of use and amount of data transmitted, as well as the number of malicious viruses and worms introduced onto the Internet by hackers and others, the infrastructure of the Internet may be unable to support the demands placed on it at any particular time or from time-to-time. Because we rely heavily on the Internet and our limited capital, any disruption of the Internet could adversely affect us to a greater degree than our competitors and other users of the Internet.

Our website and systems are hosted by a third party and we are vulnerable to disruptions or other events that are beyond our control.

Our website and systems are hosted by a third party. We are dependent on our systems' ability to distribute information over the Internet to customers. If our systems fail, it would harm our reputation, resulting in a loss of current and potential future customers and could cause us to breach existing agreements. Our success depends, in part, on the performance, reliability and availability of our services, which in turn are dependent on our third-party provider. Our systems and operations could be damaged or interrupted by fire, flood, power loss, telecommunications failure, Internet breakdown, break-in, earthquake and similar events. We would face significant damage as a result of these events. As a result, we may be unable to develop or successfully manage the infrastructure necessary to meet current or future demands for reliability and scalability of our systems, which would have a negative impact on our business and financial conditions.

Our Direct Lynk Systems use sophisticated software which could be found to contain bugs or could be compromised by viruses. While we have not experienced any material bugs and viruses to date, if such event could occur, it could be costly for us to identify and repair, and until such bugs or viruses, if any, are fixed, they could cause interruptions in our service, which could cause our reputation to decline and/or cause us to lose clients. 

Risk Factors Related to Our Common Stock

We are subject to financial reporting and other requirements for which our accounting, other management systems and resources may not be adequately prepared.

As a public company, we incur significant legal, accounting and other expenses, including costs associated with reporting requirements and corporate governance requirements, including requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the Sarbanes-Oxley Act of 2002, and rules implemented by the SEC.

If we identify significant deficiencies or material weaknesses in our internal control over financial reporting that we cannot remediate in a timely manner, investors and others may lose confidence in the reliability of our financial statements, and the trading price of our common stock and ability to obtain any necessary equity or debt financing could suffer. In addition, if our independent registered public accounting firm is unable to rely on our internal control over financial reporting in connection with its audit of our financial statements, and if it is unable to devise alternative procedures in order to satisfy itself as to the material accuracy of our financial statements and related disclosures, it is possible that we would be unable to file our annual report with the SEC, which could also adversely affect the trading price of our common stock and our ability to secure any necessary additional financing.

In addition, the foregoing regulatory requirements could make it difficult or costly for us to obtain certain types of insurance, including directors' and officers' liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, on board committees or as executive officers.

Market prices of our equity securities can fluctuate significantly.

The market prices of our common stock may change significantly in response to various factors and events beyond our control, including the following:

Ÿ   the other risk factors described in this Form 10-K/A;
Ÿ   changing demand for our products and services and ability to develop and generate sufficient revenues;
Ÿ   any delay in our ability to generate operating revenue or net income;
Ÿ   general conditions in markets we operate in;
Ÿ   issuance of a significant number of shares, whether for compensation under employee stock options, conversion of debt, potential acquisitions, additional financing or otherwise.

There is only a limited trading market for our common stock.

Our Common Stock is subject to quotation on the OTC market. There has only been limited trading activity in our common stock. There can be no assurance that a more active trading market will commence in our securities as a result of the increasing operations of Data Call. Further, in the event that an active trading market commences, there can be no assurance as to the level of any market price of our shares of common stock, whether any trading market will provide liquidity to investors, or whether any trading market will be sustained.

State blue sky registration; potential limitations on resale of our securities.

Our common stock, the class of the Company's securities that is registered under the Exchange Act, has not been registered for resale under the Securities Act of 1933 or the "blue sky" laws of any state. The holders of such shares and persons, who desire to purchase them in any trading market that might develop in the future, should be aware that there may be significant state blue-sky law restrictions upon the ability of investors to resell our securities. Accordingly, investors should consider the secondary market for the Company's securities to be a limited one.

It is the intention of the management to seek coverage and publication of information regarding the Company in an accepted publication which permits a manual exemption. This manual exemption permits a security to be distributed in a particular state without being registered if the Company issuing the security has a listing for that security in a securities manual recognized by the state. However, it is not enough for the security to be listed in a recognized manual. The listing entry must contain (1) the names of issuers, officers, and directors, (2) an issuer's balance sheet, and (3) a profit and loss statement for either the fiscal year preceding the balance sheet or for the most recent fiscal year of operations. Furthermore, the manual exemption is a nonissuer exemption restricted to secondary trading transactions, making it unavailable for issuers selling newly issued securities.

Most of the accepted manuals are those published in Standard and Poor's, Moody's Investor Service, Fitch's Investment Service, and Best's Insurance Reports, and many states expressly recognize these manuals. A smaller number of states declare that they "recognize securities manuals" but do not specify the recognized manuals. The following states do not have any provisions and therefore do not expressly recognize the manual exemption: Alabama, Georgia, Illinois, Kentucky, Louisiana, Montana, South Dakota, Tennessee, Vermont and Wisconsin.

Dividends unlikely on our common stock.

We do not expect to pay dividends for the foreseeable future. The payment of dividends, if any, will be contingent upon our future revenues and earnings, capital requirements and general financial condition. The payment of any dividends will be within the discretion of our board of directors. It is our intention to retain all earnings for use in our business operations and accordingly, we do not anticipate that the Company will declare any dividends in the foreseeable future.

Compliance with Penny Stock Rules.

Our securities will initially be considered a "penny stock" as defined in the Exchange Act and the rules there under, since the price of our shares of common stock is less than $5. Unless our common stock is otherwise excluded from the definition of "penny stock," the penny stock rules apply with respect to that particular security. The penny stock rules require a broker-dealer prior to a transaction in penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the SEC that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its sales person in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that the broker-dealer, not otherwise exempt from such rules, must make a special written determination that the penny stock is suitable for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure rules have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules. So long as the common stock is subject to the penny stock rules, it may become more difficult to sell such securities. Such requirements, if applicable, could additionally limit the level of trading activity for our common stock and could make it more difficult for investors to sell our common stock.

Shares eligible for future sale.

As of December 31, 2016, the Registrant had 144,976,421, shares of common stock issued and outstanding of which 32,461,440 shares are "restricted" as that term is defined under the Securities Act, and in the future may be sold in compliance with Rule 144 under the Securities Act. Rule 144 generally provides that a person holding restricted securities for a period of six months may sell every three months in brokerage transactions and/or market-maker transactions an amount equal to the greater of one (1%) percent of (a) the Company's issued and outstanding common stock or (b) the average weekly trading volume of the common stock during the four calendar weeks prior to such sale. Rule 144 also permits, under certain circumstances, the sale of shares without any quantity limitation by a person who has not been an affiliate of the Company during the three months preceding the sale and who has satisfied a six month holding period. However, all of the current shareholders of the Company owning 5% or more of the issued and outstanding common stock are subject to Rule 144 limitations on selling.

The Nevada Revised Statutes and our articles of incorporation authorize to issue additional shares of common stock and shares of preferred stock, which preferred stock having such rights, preferences and privileges as our board of directors shall determine.

Pursuant to our Articles of Incorporation, as amended and restated, we have authorized capital stock of 200,000,000 shares of common stock and 10,000,000 shares of preferred stock. As of the December 31, 2016, we have 144,976,321 shares of common stock issued and outstanding and 800,000 shares of preferred A stock issued and outstanding and 10,000 shares of preferred B stock issued and outstanding. Our Board of Directors has the ability, without shareholder approval; to issue a significant number of additional shares of common stock without shareholder approval, which if issued would cause substantial dilution to our then common shareholders. Additionally, shares of preferred stock may be issued by our Board of Directors at their sole discretion and without shareholder approval, in such classes and series, having such rights, including voting rights and super-majority voting rights, and such preferences and relative, participating, optional or other special rights, powers and privileges as determined by our Board of Directors from time-to-time. If shares of preferred stock are issued by our Board of Directors having super-majority voting rights, or having conversion rights to convert their preferred stock into a number of shares of common stock at a ratio of greater that one-for-one, holders of our common stock would be subject to dilution that may be significant.

During the quarter ended September 30, 2014 the Company amended its Articles of Incorporation to authorize 1,000,000 shares of Series B Preferred Stock, par value $0.001 (the "Series B Stock"), 10,000 shares of which were issued to our CEO, Tim Vance. The Series B Stock, which may be issued in one or more series by the terms of which may be and may include preferences as to dividends and liquidation, conversion, redemption rights and sinking fund provisions, has the right to vote, in the aggregate, on all shareholder matters, equal to 51% of the total shareholder vote on any and all shareholder matters. The Series B Stock is entitled to this super-majority, 51% voting right no matter how many shares of common stock or other voting stock of Data Call stock is issued and outstanding in the future. The voting rights of the Series B Stock make a change in control without the approval of Timothy Vance, our CEO, impossible.

ITEM 1B. UNRESOLVED STAFF COMMENTS. Table of Contents

None.

ITEM 2. DESCRIPTION OF PROPERTY. Table of Contents

On January 9, 2013, the Company entered into a one-year lease agreement with Bridwell Property Group Inc., our landlord, for office space of 700 square feet located at 700 S Friendswood Drive, Suite E., Friendswood, TX 77546. The property changed ownership on February 1, 2014 and the Company and the new owner, Berkenmeier Properties, LLC mutually agreed to extend the lease for additional years at the same monthly rent of $900. We believe that these facilities are sufficient for our present level of operations including the growth we anticipate during the next twelve months. In the event that we need additional space, we believe that it will be available in the same property at comparable rates.

ITEM 3. LEGAL PROCEEDINGS. Table of Contents

None.

ITEM 4. MINE SAFETY DISCLOSURE. Table of Contents

PART II

Market Information

As of December 31, 2016, our shares of common stock were held by approximately 281 stockholders of record.

Dividends

The holders of our Preferred Stock, Series A, are entitled to a dividend of 12 percent annually, subject to conversion into common stock. The undeclared dividends of this stock are calculated, but have not been recorded.

Holders of common stock are entitled to dividends when, as, and if declared by the Board of Directors, out of funds legally available therefore. We have never declared cash dividends on its common stock and our Board of Directors does not anticipate paying cash dividends in the foreseeable future as it intends to retain future earnings to finance the growth of our businesses. There are no restrictions in our articles of incorporation or bylaws that restrict us from declaring dividends.

Securities Authorized for Issuance Under Equity Compensation Plans

On December 26, 2014, the board of directors approved the Company's 2015 Employee Incentive Plan (the "Plan") pursuant to which the Company's board of director or a committee is authorized to issue 25,000,000 shares.

The board of director or committee shall determine at any time and from time to time after the effective date of this Plan:
(i) the Eligible Participants;
(ii) the number of shares of Common Stock issuable directly or to be granted pursuant to an Option;
(iii) the price per share at which each Option may be exercised or the value per share if a direct issue of stock pursuant to a Stock Award; and
(iv) the terms on which each Option may be granted.

Such determination, as may from time to time be amended or altered at the sole discretion of the board of director or committee.