ITEM 1. DESCRIPTION OF BUSINESS.
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 continue to exponentially grow our offering of our proprietary subscription services by integrating cutting-edge information/content delivery solutions to and within the control of retail and commercial resellers CMS manufacturers and end-users. Our Company's services put its clients in control of real-time news, sports, weather and other dynamic content, displayed within one or multiple locations, spanning from local, regional to global end points, through Digital Signage and Kiosk networks.
Our business plan continues to focus on growing our client base by effectively offering this real-time and licensed information/content displayed through Digital Signage and Kiosk networks, seeking to improve the delivery, security, and variety of information/content services to the growing Digital Signage and Kiosk community.
Overview - What Is Digital Signage?
You've seen Digital Signage, it's everywhere. Whether you're shopping, trying to find your way through the airport, in a taxi, or even along the highway on your way home, it's there. LED and LCD displays are continually replacing printed marketing materials such as signs and placards, as well as the old-school whiteboard, for product and corporate branding, marketing and assisted selling. The appeal of instantly updating product videos and promotional messages on one or thousands of remotely located displays is driving the adoption of this growing marketing platform. Digital Signage presentations are typically comprised of repeating loops (playlists) of information used to brand, market or sell the owner's products and services or corporate messaging. 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 has matured, the characteristics of the digital signage presentations have taken center-stage requiring fresh, relevant and dynamic content mixed within the marketing messages. Dynamic Content is key.
Digital Signage Matures
We are experiencing the Digital Signage Industry (back then called connected signage) steadily maturing and Data Call, through its multiple industry specific relationships, continues its engagement and influence in the direction of the Digital Signage industry. Data Call has been performing in this space for well over a decade. Our company has staked claim in assisting the industry's birth and maintains its prime position to enjoy and benefit from this industry's growth.
Early on, a business desiring to achieve commercial benefits from the use of digital signage was often confronted by a plethora of hardware and software solutions, all offering their own "standard" of what digital signage should be. Typical customers for digital signage were most-often offered expensive hardware to present digital signage with a very minimalistic content management solution (CMS), lacking the full package of content with which to build and tailor their systems for their target customer base.
Those early adopters of digital signage, often had to realize that their digital signage hardware vendors lacked the acumen to fully provide best practice of content strategy. The tools to manage content were provided, but not the content. From our inception, Data Call recognized that early signage providers and their typical customers lacked that key component - the offering of a comprehensive content package.
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. Companies in our industry have come to understand, as we have preached since our inception, that the cost of Data Call's integrated, content-flexible subscription service is extremely cost effective - and licensed for redistribution over their networks. The benefit that Data Call continues to provide our client base, in the form of ongoing content development, is expected to continue to provide our customers with desirable user-friendly content and content services.
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 to attract and retain target viewers to the products, services, or messaging offered by typical Digital Signage 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 constantly throughout the day. Those seeking to add active and dynamic content to their digital signage presentations are educated and advised to subscribe to Data Call's dynamic content rather than attempting to illegally "cut and paste" or "scrape" broadcast content or RSS Feeds "not for commercial use" of others into their digital signage presentation.
By integrating Data Call's content as a meaningful component of digital signage presentations, our clients can legally provide the entertainment and information content necessary to enhance the target customer's information retention without disrupting the core message of the presentation. Some of the Infotainment categories provided by Data Call include news, sports, weather, financial data, the latest traffic alerts, among many others. With such a broad range of offerings, our clients have access to this 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 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, etc., our research and experience has validated our long-held mantra that dynamic content draws and retains our clients' target viewers to their digital signage and keeps viewers engaged throughout the client presentation.
Since our inception, management has developed and maintains strong relationships working with the leaders and associations of the digital signage industry. Collaborative efforts have successfully created, now industry standard, data formats and methods to facilitate the delivery of our dynamic content more easily and efficiently for integration into most hardware and software products.
Partners, Not Customers
Data Call's enduring 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 understand that each client has their own content requirements. 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 are engaged in multiple 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) Scraping RSS feeds from news organizations (which may come and go at the provider's whim - not to mention this practice is also illegal).
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, early on, we determined that we could not simply use unfiltered Internet content for delivery to our clients. Our proper licensing of data facilitates the standard of delivery and implementation by our client/partners. Data Call does the heavy lifting by taking care of not just the licensing, but the proper formatting of that data for consumption by the industry utilizing our multiple formats offered. Data Call has understood that it's Digital Signage and Kiosk clients needed a more complete service than to endeavor the sourcing of active content from multiple vendors. As a result, our flexible content plans permit our clients to do "one stop shopping" for all dynamic content requirements by licensing subscriptions through us.
We empower our clients to receive customized dynamic content subscriptions to be displayed in a multitude of ways (banners, tickers, scrolls or visualizations integrated with the overall presentations). We have created "Playlist Ready" offerings and produced and distribute multiple sets of common data layouts in the industry-standard formats such as XML (extensible markup language), JSON　(JavaScript Object Notation), JPEG (Joint Photographic Experts Group), RSS (Rich Site Summary, often called Really Simple Syndication), MRSS (Media RSS) and MPEG (Moving Pictures Expert Group). With the advent of HTML5 (5th version of Hypertext Markup Language), even more delivery methods have been made available to our clients, many of whom have found any one or a combination of these formats to be easily integrated into their products. Nevertheless, we have also produced customized data formats and visualizations to the exact and specific requirements of our clients/partners, which, we believe ensures a higher level of reliability and ease of implementation.
Market demand, opportunity and technology converge at a single point in time, and Data Call continues hold its position. Our integrity persistently builds our business. Digital signage platforms steadily evolve 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
March of 2017, we released our Direct Lynk Manager (DLManager) customer portal at the Digital Signage Expo in Las Vegas. The DLManager incorporates In the Direct Lynk Media platform with major enhancements and options that enable the client to self-serve in a webstore environment. This is a moderated space that allows proper "white glove" treatment by our staff that our clients have come to expect and appreciate. Once the client is comfortable with navigation of the portal, they may then set up multiple groups and displays within their account for testing results in a demo fashion free of charge. Upon completion of their content selections and distribution points, the client may purchase the proper number of licenses needed to support their sections through various plans offered within the portal.
Some of the current types of data and information, for which a client may subscribe to through the Direct Lynk System, in multiple formats include:

Headline News - top world and national news headlines;

Business News - top business headlines;

Financial Highlights - world-based financial indicators;

Entertainment News - top entertainment headlines;

Health/Science News - top science/health headlines;

Strange News- latest off-beat news headlines;

Sports Headlines - top sports headlines;
 AP News Minute Video
AP This Day In History Videos
AP Entertainment Minute Videos

Latest Sports Lines - latest sports odds for NFL, NBA, NHL, NCAA Football and NCAA Basketball;

National Football League - latest game schedule, and in-game updates;

National Basketball Association - latest game schedule, and in-game updates;

Major league soccer - latest game schedule, and in-game updates;

National Hockey League - latest game schedule, and in-game updates;

NCAA Football - latest game schedule, and in-game updates;

NCAA Men's Basketball - latest game schedule, and in-game updates;

Professional Golf Association top 10 leaders continuously updated throughout the four-day tournament;

NASCAR top 10 race positions updated every 20 laps throughout the race;

Traffic Mapping;

Animated Doppler Radar and Forecast Maps;

Listings of the day's horoscopes;

Listings of the birthdays of famous persons born on each day;

Health and Wellness;

Listings of historical events which occurred on each day in history; and

Localized Traffic and Weather Forecasts.
We continually add different types of content per client requests. We provide our DLM services to our clients and other potential customers through the Internet. All DLM Services are real-time information services providing a wide range of up-to-date information for display. These services are designed to work concurrently with customers' existing digital signage systems. The Direct Lynk Messenger product is scheduled to be sunset within the next 12 months, as DLMedia gradually moves into a legacy status with the DLManager portal taking the forefront.
Since our inception in 2002, we have come to deeply understand that this industry provides an exciting platform for advertisers, including our clients, to promote, inform, educate, and entertain their customers and employees regarding their business products, services, and corporate communications. Through Digital Signage, and Digital Out of Home (DOOH) businesses can use a single display or a complex, networked series of displays and video walls to market their products and services directly at their facilities and elsewhere to their customers and employees in real time. Additionally, because the core of Digital Signage advertising takes place in real time, businesses can change their marketing and messaging 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 to tailor their products, services, advertising and messaging 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 enabling our clients to create their own Digital Signage 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 or Kiosk equipment solution - through a CMS or a standalone player, or similar device, which receives the data from our servers online; and (ii) an Internet connection. Our DLM 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 Systems allow customers to select from their pre-determined data and information subscriptions offered. 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.
In December of 2017 the company completed the arduous task of reconstructing our back-end systems architecture. This task was initialized to exploit the latest technology advances within our space, utilizing our data center efficiencies to further streamline our processes. One of the greater culminations of this effort yielded the Data Call API (Application Programming Interface) allowing our enterprise channel partners to embed our products within their offerings to further widen our reach.
Data Call continues to grow its client base through relationships that are gained through industry events such as seminars and trade shows. Our company has become a leader in syndicated content and custom content development for Digital Signage. Our licensed content is utilized on thousands of screens in hundreds of deployments. We are truly excited of our continued growth through our resellers, CMS manufacturers and end users.
Dependence On A Few Major Customers
At December 31, 2017, 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, 2017, we were dependent upon two major customers, who accounted for approximately 81% of our revenues. During the year ended December 31, 2016, 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 2018, 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, 2017, 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 2017 and continuing into 2018. 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, 2017 is approximately $2,000,000.
ITEM 1A.
ITEM 1A. RISK FACTORS.
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 for our year-ended December 31, 2017.
This annual report on Form 10-K 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.
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 business 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, 2017 compared to December 31, 2016, 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:

　 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.
 　 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.
 　 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:

　 the other risk factors described in this Form 10-K;
 　 changing demand for our products and services and ability to develop and generate sufficient revenues;
 　 any delay in our ability to generate operating revenue or net income;
 　 general conditions in markets we operate in;
 　 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, 2017, the Registrant had 145,484,165, shares of common stock issued and outstanding of which 34,861,850 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, 2017, we have 145,484,165 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.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 2.
ITEM 2. DESCRIPTION OF PROPERTY.
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.
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4.
ITEM 4. MINE SAFETY DISCLOSURE.
None.
PART II
ITEM 5.
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Market Information
Our common stock is currently quoted on the OTCQB under the symbol DCLT. Quotation of the Company's securities on the OTCQB limits the liquidity and price of the Company's common stock more than if the Company's shares of common stock were listed on The Nasdaq Stock Market or a national exchange. For the periods indicated, the following table sets forth the high and low bid prices per share of common stock. The below prices represent inter-dealer quotations without retail markup, markdown, or commission and may not necessarily represent actual transactions.
As of December 31, 2017, our shares of common stock were held by approximately 189 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.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA.
N.A.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATION.
Results of Operations during the year ended December 31, 2017 as compared to the year ended December 31, 2016
We had $612,798 of sales revenue for the year ended December 31, 2017, compared to sales revenue of $640,613 for the year ended December 31, 2016, a decrease in sales revenue of $27,815 or approximately a 4.4% decrease from the prior year. We generate revenues through subscription fees received in connection with our DL Manager and InfoServices.
We had total costs of sales for the year ended December 31, 2017 of $150,039 compared to total costs of sales of $153,772 for the year ended December 31, 2016, or a decrease 2.43% of which resulted in a gross margin of $462,759 for the year ended December 31, 2017 or 75.5%, compared to a gross margin of $486,841 or 76% for the year ended December 31, 2016, a decrease in gross margin of $24,082 from the prior year, our decrease in gross margin was due to our decrease in revenue.
Cost of sales as a percentage of sales was 24.5 % for the year ended December 31, 2017, compared to 24% for the year ended December 31, 2016. As we gain more customers and enter into more service agreements, we anticipate our cost of sales will decrease as we expect to take advantage of applicable economies of scale. Our operating expenses decreased to $651,695 for the year ended December 31, 2017, compared to total expenses of $683,603 for the year ended December 31, 2016, a decrease in expenses of $31,908 from the prior period. The decrease in expenses for the year of 2017 was due to the company's ongoing efforts to expand its business opportunities in the most cost effective and efficient means while reducing costs. We had a net loss of $194,393 for the year ended December 31, 2017, compared to a net loss of $200,938 for the year ended December 31, 2016. While there can be no assurance regarding our operating results in 2018, we believe that we will experience a significant reduction in non-cash expense as well as increased operating revenues which should result in profitable operations.
Liquidity and Capital Resources
We had current assets of $124,076 as of December 31, 2017, which consisted of, $44,590 in cash, accounts receivable of $73,386 and $6,100 in prepaid expense.
We had total assets of $133,174 as of December 31, 2017, compared to $141,591 as of December 31, 2016 or a decrease of $8,417, which consisted of current assets of $124,076, total property and equipment (net of accumulated depreciation) of $8,298, which included high end flat screen televisions, computers and software equipment responsible for running our DL Manager InfoCall Services and our Image Library which are stored in our Friendswood office and other off site locations; and other assets of $800, which included our deposit on our Friendswood office space.
We had total liabilities of $88,364 as of December 31, 2017, compared to $82,329 as of December 31, 2016, an increase of $6,035, primarily consisting of accounts payable of $21,826 accrued expenses of $23,100, short-term notes of $28,992 and deferred revenue of $14,446. We had positive working capital of $35,712 and an accumulated deficit of $9,952,526 as of December 31, 2017.
Operating activities provided $14,503 of cash for the year ended December 31, 2017, which was mainly due to a net loss of $194,393, common stock and options expense of $179,941, increase in depreciation expense of $9,009 increase in accounts receivables of $4,025, decrease in prepaid expenses of $10,900, decrease in accounts payable of $1,899, increase in accrued expenses of $524, and change in deferred revenue of $14,446.
We had investing activities for the year ended December 31, 2017 of $16,376 for capital expenditures for equipment and no investing activities for the year ended 2016, respectively.
We had financing activities of $7,036 primarily for the pay down of borrowings from related party during 2017 as compared to 2016 we had financing activity of $7,036 for the pay down of borrowings from related party.
Off-Balance Sheet Arrangements
As of December 31, 2017 and 2016, we did not have any off-balance sheet arrangements as defined in Item　303(a) (4) (ii) of Regulation S-K promulgated under the Securities Act of 1934.
Contractual Obligations and Commitments
As of December 31, 2017 and 2016, we did not have any contractual obligations.
Critical Accounting Policies
Our significant accounting policies are described in the notes to our financial statements for the years ended December 31, 2017 and 2016, and are included elsewhere in this annual report.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
We have not entered into, and do not expect to enter into, financial instruments for trading or hedging purposes.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
	 	Report of Independent Registered Public Accounting Firm
Balance Sheets - December 31, 2017 and 2016
	Statements of Operations -Years ended December 31, 2017 and 2016
Statement of Stockholders’ Equity 	- Years ended December 31, 2017 and 2016
Statements of Cash Flows - Years ended December 31, 2017 and 2016
Notes to Financial Statements
Report of Independent Registered Public Accounting Firm
To the Board of Directors & Stockholders of
Data Call Technologies, Inc.
Friendswood, Texas
We have audited the accompanying balance sheets of Data Call Technologies, Inc. as of December 31, 2017 and 2016 and the related statements of operations, stockholders' equity (deficit) and cash flows for each of the two years in the two-year period ended December 31, 2017. Data Call's management is responsible for the financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits 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, 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 financial statements referred to above present fairly, in all material respects, the financial position of Data Call Technologies, Inc. as of December 31, 2017 and 2016 and the results of its operations and its cash flows for each of the two years in the two-year period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.
/s/ M&K CPAS, PLLC
www.mkacpas.com
Houston, Texas
March 8, 2018
Data Call Technologies, Inc.
Notes to Financial Statements
December 31, 2017
Note 1. Summary of Significant Accounting Policies.
Organization, Ownership and Business
Data Call Technologies, Inc. (the "Company") was incorporated under the laws of the State of Nevada in 2002. The Company's mission is to integrate cutting-edge information delivery solutions that are currently deployed by the media, and put them within the control of retail and commercial enterprises. The Company's software and services put its clients in control of real-time advertising, news, and other content, including emergency alerts, within one building or 10,000, local or thousands of miles away.
The Company's financial statements are presented in accordance with accounting principles generally accepted (GAAP) in the United States. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and result of operations for the periods presented have been reflected herein.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly liquid investment instruments purchased with original maturities of three months or less to be cash equivalents. There were no cash equivalents as of December 31, 2017 or 2016.
Revenue Recognition
Company recognizes revenues based on monthly fees for services provided to customers. Some customers prepay for annual services and the Company defers such amounts and amortizes them into revenues as the service is provided. The Company recognizes revenue in accordance with ASC 605 (1) when the price is fixed and determinable, (2) persuasive evidence of an arrangement exists, (3) the service has been provided, and (4) collectability is assured.
Accounts Receivable
Accounts receivable consist primarily of trade receivables. The Company provides an allowance for doubtful trade receivables equal to the estimated uncollectible amounts. That estimate is based on historical collection experience, current economic and market conditions and a review of the current status of each customer's trade accounts receivable. The allowance for doubtful trade receivables was $0 as of December 31, 2017 and 2016 as we believe all of our receivables are fully collectable.
Property, Equipment and Depreciation
Property and equipment are recorded at cost less accumulated depreciation. Upon retirement or sale, the cost of the assets disposed of and the related accumulated depreciation are removed from the accounts, with any resultant gain or loss being recognized as a component of other income or expense. Depreciation is computed over the estimated useful lives of the assets (3-5 years) using the straight-line method for financial reporting purposes and accelerated methods for income tax purposes. Maintenance and repairs are charged to operations as incurred.
Advertising Costs
The cost of advertising is expensed as incurred.
Research and Development
Research and development costs are expensed as incurred.
Product Development Costs
Product development costs consist of cost incurred to develop the Company's website and software for internal and external use. All product development costs are expensed as incurred.
Income Taxes
The Company is a taxable entity and recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to be in effect when the temporary differences reverse. The effect on the deferred tax assets and liabilities of a change in tax rates is recognized in income in the year that includes the enactment date of the rate change. A valuation allowance is used to reduce deferred tax assets to the amount that is more likely than not to be realized.
Use of Estimates
The preparation of financial statements in conformity with U. S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of 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 vary from those estimates.
Beneficial Conversion Feature
Convertible debt includes conversion terms that are considered in the money compared to the market price of the stock on the date of the related agreement. The Company calculates the beneficial conversion feature and records a debt discount with the amount being amortized to interest expense over the term of the note.
Management's Estimates and Assumptions
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses. Actual results could differ from these estimates.
Earnings (Loss) Per Share
The basic net income per common share is computed by dividing the net loss by the weighted average number of shares outstanding during a period. Diluted net loss per common share is computed by dividing the net loss, adjusted on an as if converted basis, by the weighted average number of common shares outstanding plus potential dilutive securities using the treasury stock method. For the years ended December 31, 2017 and 2016, potential dilutive securities that had an anti-dilutive effect were not included in the calculation of diluted net loss per common share. These securities include options and warrants to purchase shares of common stock. Under the treasury stock method, an increase in the fair market value of the Company's common stock results in a greater dilutive effect from outstanding options, restricted stock awards and common stock warrants. In years with a net loss, potentially dilutive securities are not included because their effect is anti-dilutive.
Stock-based Compensation
We account for stock-based compensation in accordance with "FASB ASC 718-10." Stock-based compensation expense recognized during the period is based on the value of the portion of share-based awards that are ultimately expected to vest during the period. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model. The fair value of restricted stock is determined based on the number of shares granted and the closing price of the Company's common stock on the date of grant. Compensation expense for all share-based payment awards is recognized using the straight-line amortization method over the vesting period.
Fair Value of Financial Instruments
The Company estimates the fair value of its financial instruments using available market information and appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the Company estimates of fair value are not necessarily indicative of the amounts that the Company could realize in a current market exchange. The use of different market assumption and/or estimation methodologies may have a material effect on the estimated fair value amounts. The interest rates payable by the Company on its notes payable approximate market rates. The Company believes that the fair value of its financial instruments comprising accounts receivable, notes receivable, accounts payable, and notes payable approximate their carrying amounts.
On January 1, 2009, the Company adopted an accounting standard for applying fair value measurements to certain assets, liabilities and transactions that are periodically measured at fair value. The adoption did not have a material effect on the Company's financial position, results of operations or cash flows. In August 2009, the FASB issued an amendment to the accounting standards related to the measurement of liabilities that are routinely recognized or disclosed at fair value. This standard clarifies how a company should measure the fair value of liabilities, and that restrictions preventing the transfer of a liability should not be considered as a factor in the measurement of liabilities within the scope of this standard. This standard became effective for the Company on October 1, 2009. The adoption of this standard did not have a material impact on the Company's financial statements. The fair value accounting standard creates a three-level hierarchy to prioritize the inputs used in the valuation techniques to derive fair values. The basis for fair value measurements for each level within the hierarchy is described below with Level 1 having the highest priority and Level 3 having the lowest.
Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.
Level 3: Valuations derived from valuation techniques in which one or more significant inputs are unobservable.
The following table presents the Company's assets and liabilities within the fair value hierarchy utilized to measure fair value on a recurring basis as of December 31, 2017 and 2016:
(Level 1)
(Level 1)
(Level 3)
$
$
$
$
$
$
Recent Accounting Pronouncements
In March, 2017, the FASB issued Update 2017-08-Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.
In March 2017, the FASB issued Update 2017-07 - Compensation -Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. Effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those annual periods. For other entities, the amendments in this Update are effective for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. Early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance. That is, early adoption should be within the first interim period if an employer issues interim financial statements. Disclosures of the nature of and reason for the change in accounting principle are required in the first interim and annual periods of adoption.
In August, 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments(a consensus of the Emerging Issues Task Force). Effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period.
In May, 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. The amendments in this Update affect the guidance in Accounting Standards Update 2014-09,　Revenue from Contracts with Customers (Topic 606), which is not yet effective. The effective date and transition requirements for the amendments in this Update are the same as the effective date and transition requirements for Topic 606 (and any other Topic amended by Update 2014-09). Accounting Standards Update 2015-14,Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, defers the effective date of Update 2014-09 by one year.
In April, 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments in this Update affect the guidance in Accounting Standards Update 2014-09,　Revenue from Contracts with Customers (Topic 606), which is not yet effective. The effective date and transition requirements for the amendments in this Update are the same as the effective date and transition requirements in Topic 606 (and any other Topic amended by Update 2014-09). Accounting Standards Update 2015-14,Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, defers the effective date of Update 2014-09 by one year.
The Company has considered all new accounting pronouncements and has concluded that there are no new pronouncements that may have a material impact on results of operations, financial condition, or cash flows, based on current information.
Note 2. Related Party Transactions.
During the first quarter of 2013, the Company issued unregistered shares as follows: (i) 7,500,000 restricted shares to Tim Vance, the Company's CEO, in connection with the execution of a new 5 year employment agreement; and 7,500,000 restricted shares to Gary Woerz, the Company's newly designated CFO, in connection with the execution of a new 5 year employment agreement. The restricted shares were valued at $0.06 per share using the closing price of the stock on the date of grant. Total expense associated with the issuances is calculated at $900,000 to be recognized over the 5 year term of the agreements. The expense recognized in 2017 was $177,721 and the expense in 2016 was $178,247. The January 2013 employment agreements calls for a 5 year term ending January 30, 2018, annual compensation of $85,000 per year for services as CEO, annual compensation of $52,000 per year for services as CFO, 500,000 options to the CEO and 400,000 options to the CFO in addition to the 7,500,000 restricted shares to each the CEO and CFO.
During the first quarter of 2015, the Company granted a total of 900,000 options for the purchase of up to 900,000 shares of common stock to Tim Vance, the Company's CEO, in connection with the execution of a new 5 year employment agreement and to Gary Woerz, the Company's newly designated CFO, in connection with the execution of a new 5 year employment agreement. The Company uses the Black-Scholes option valuation model to value stock options granted. The Black- Scholes model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. The model requires management to make estimates, which are subjective and may not be representative of actual results. The Company recorded $Nil (2016: $266) in stock option compensation expense, in relation to these options. The Black-Scholes model calculations included stock price on date of measurement of $0.0036, exercise price of $0.001, a term of 1.5 years, computed volatility of 251% and a discount rate of 0.33%. The January 2014 employment agreements calls for a 5 year term ending January 30, 2018, annual compensation of $85,000 per year for services as CEO, annual compensation of $52,000 per year for services as CFO, 500,000 options to the CEO and 400,000 options to the CFO in addition to the 7,500,000 restricted shares to each the CEO and CFO.
During the first quarter of 2016, the Company granted a total of 900,000 options for the purchase of up to 900,000 shares of common stock to Tim Vance, the Company's CEO, in connection with the execution of a new 5 year employment agreement and to Gary Woerz, the Company's newly designated CFO, in connection with the execution of a new 5 year employment agreement. The Company uses the Black-Scholes option valuation model to value stock options granted. The Black- Scholes model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. The model requires management to make estimates, which are subjective and may not be representative of actual results. The Company recorded $77 (2016: $1,072) in stock option compensation expense, in relation to these options for the year ended December 31, 2017. The Black-Scholes model calculations included stock price on date of measurement of $0.0014, exercise price of $0.001, a term of 3 years, computed volatility of 105% and a discount rate of 1.01%. The January 2016 employment agreements calls for a 5 year term ending January 30, 2018, annual compensation of $85,000 per year for services as CEO, annual compensation of $52,000 per year for services as CFO, 500,000 options to the CEO and 400,000 options to the CFO in addition to the 7,500,000 restricted shares to each the CEO and CFO.
During the first quarter of 2017, the Company granted a total of 900,000 options for the purchase of up to 900,000 shares of common stock to Tim Vance, the Company's CEO, in connection with the execution of a new 5 year employment agreement and to Gary Woerz, the Company's newly designated CFO, in connection with the execution of a new 5 year employment agreement. The Company uses the Black-Scholes option valuation model to value stock options granted. The Black- Scholes model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. The model requires management to make estimates, which are subjective and may not be representative of actual results. The Company recorded $1,331 (December 31, 2016: $Nil) in stock option compensation expense, in relation to these options for the tweve month period ended December 31, 2017. The Black-Scholes model calculations included stock price on date of measurement of $0.002, exercise price of $0.001, a term of 3 years, computed volatility of 124% and a discount rate of 1.93%. The January 2017 employment agreements calls for a 5 year term ending January 30, 2018, annual compensation of $85,000 per year for services as CEO, annual compensation of $52,000 per year for services as CFO, 500,000 options to the CEO and 400,000 options to the CFO in addition to the 7,500,000 restricted shares to each the CEO and CFO.
The Company issued a total of twelve million (12,000,000 restricted shares) of the Company's common stock as follows: 6,000,000 restricted shares in the name of Timothy E. Vance and 6,000,000 restricted shares in the name of Gary D. Woerz valued at $0.0038 based upon services provided by the Executive officers in improving the Company's financial condition and operations and the shares will be subject to a holding period of eighteen months prior to their availability for resale pursuant to the provisions of Rule 144, and the Company determined that the Employment Agreements between the Company and its Executive Officers be amended to adjust the exercise price form the lower of $0.03 to $0.0015 and that the expiration date of the options to be extended from January 31, 2018 to December 31, 2019. The company expensed $Nil for the year ended December 31, 2017 and $15,200 for the year ended December 31, 2016. The total value of the 12,000,000 shares granted is $45,600.
During 2009, the Company received cash in the sum of $50,000 from a shareholder for a Convertible Note Payable at a 10% interest rate. On July 30, 2015, the Company entered into an amendment agreement for the previously convertible note. The amendment removed the prior conversion feature of the note and amended the due date to December 31, 2016. The remaining balance of the note as of December, 31, 2017 and December 31, 2016 was $18,992 and $26,028, respectively. The interest for the note payable has been calculated annually and has been paid for the years ended December 31, 2017 and December 31, 2016.
As of December 31, 2017, and December 31, 2016, convertible notes payable to related party had a balance of $10,000. The note is past due and considered in default. The interest for the note payable has been calculated annually for the year ended December 31, 2017 and 2016.
During the years ended December 31, 2017 and December 31, 2016, the company repaid a total of $12,000 and $12,000, respectively, to related parties on various note payables and related interest.
As of December 31, 2017, and December 31, 2016 the total due to management for past accrued salaries is $484 and $460, respectively.
As of December 31, 2017, and December 31, 2016 the total due to management included in accounts payable is $3,704 and $3,389, respectively.
Note 3. Prepaid Expenses.
As of December 31, 2017, the Company had prepaid expenses of $6,100 for 2018 trade show expenses paid in 2017. As of December 31, 2016, the Company had $17,000 in prepaid expenses for a 2017 trade show.
Note 4. Property and Equipment.
Major classes of property and equipment together with their estimated useful lives, consisted of the following:
Note 5. Income Taxes.
The Company has current net operating loss carryforwards in excess of $3,089,556 as of December 31, 2017, to offset future taxable income, which expire beginning 2029.
Deferred taxes are determined based on the temporary differences between the financial statement and income tax bases of assets and liabilities as measured by the enacted tax rates, which will be in effect when these differences reverse. The components of deferred income tax assets are as follows:
At December 31, 2017, the Company provided a 100% valuation allowance for the deferred tax asset because it could not be determined whether it was more likely than not that the deferred tax asset/(liability) would be realized.
Note 6. Capital Stock, Options and Warrants.
The Company is authorized to issue up to 10,000,000 shares of Series A Preferred Stock, $0.001 par value per share, of which 800,000 are outstanding as of December 31, 2017 and 2016. The Preferred Stock may be issued in one or more series, the terms of which may be determined at the time of issuance by the Board of Directors, without further action by stockholders, and may include voting rights (including the right to vote as a series on particular matters), preferences as to dividends and liquidation, conversion, redemption rights and sinking fund provisions.
Each share of Series A Preferred Stock shall bear a preferential dividend of twelve percent (12%) per year and is convertible into a number shares of the Company's common stock, par value $0.001 per share ("Common Stock") based upon Fifty (50%) percent of the average closing bid price of the Common Stock During the ten (10) day period prior to the conversion. The Company has not declared or accrued any dividends as of December 31, 2017 or 2016. Unaccrued and undeclared dividends were $4,800 as of December 31, 2017 and 2016, respectively.
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 at a par value of $0.001 and issued 10,000 shares. The Series B shares were valued at $76,000 and were expensed during 2014. The Series B Preferred Stock 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. The Series B Preferred Shares have the right to vote in the aggregate, on all shareholder matters votes equal to 51% of the total shareholder vote on any and all shareholder matters. The Series B Preferred Stock will be entitled to this 51% voting right no matter how many shares of common stock or other voting stock of Data Call Technology stock is issued and outstanding in the future.
During the first quarter of 2015, the Company issued a total of twelve million (12,000,000 restricted shares) of the Company's common stock as follows: 6,000,000 restricted shares in the name of Timothy E. Vance and 6,000,000 restricted shares in the name of Gary D. Woerz valued at $0.0038 based upon the closing price of the stock on the date of grant for services provided by the Executive officers in improving the Company's financial condition and operations. The shares will be subject to a holding period of eighteen months prior to their availability for resale pursuant to the provisions of Rule 144, and the Company determined that the Employment Agreements between the Company and its Executive Officers be amended to adjust the exercise price form the lower of $0.03 to $0.0015 and that the expiration date of the options to be extended from January 31, 2018 to December 31, 2019. The company expensed $Nil for the year ending December 31, 2017 (2016: $15,200). The total value of the 12,000,000 shares granted is $45,600.
During the first quarter of 2013, the Company issued unregistered shares as follows: (i) 7,500,000 restricted shares to Tim Vance, the Company's CEO, in connection with the execution of a new 5 year employment agreement; and 7,500,000 restricted shares to Gary Woerz, the Company's newly designated CFO, in connection with the execution of a new 5 year employment agreement. The restricted shares were valued at $0.06 per share using the closing price of the stock on the date of grant. Total expense associated with the issuances is calculated at $900,000 to be recognized over the 5 year term of the agreements. The expense recognized in 2017 was $177,721 and in 2016 the recognized expense was $178,247.
During the first quarter of 2015, the Company granted a total of 900,000 options for the purchase of up to 900,000 shares of common stock to Tim Vance, the Company's CEO, in connection with the execution of a 5 year employment agreement and to Gary Woerz, the Company's newly designated CFO, in connection with the execution of a new 5 year employment agreement. The Company uses the Black-Scholes option valuation model to value stock options granted. During the period ended March 31, 2015 the Company determined that the Employment Agreements between the Company and its Executive Officers be amended to adjust the exercise price from $0.03 to $0.0015 and that the expiration date of the options to be extended from January 31, 2018 to December 31, 2019. The change in value from the lower exercise price and extended expiration date was considered immaterial. The Black- Scholes model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. The model requires management to make estimates, which are subjective and may not be representative of actual results. The Black-Scholes model calculations included stock price on date of measurement of $0.0036, exercise price of $0.001, a term of 1.5 years, computed volatility of 251% and a discount rate of 0.33%. Assumptions used to determine the fair value of the stock based compensation is as follows:
Exercise price
Total Options Outstanding
Weighted Average Remaining Life (Years)
Total Weighted Average Exercise Price
Options Exercisable
$0.001
900,000
0.61
$0.001
900,000
The Company recorded $Nil (2016: $266) in stock option compensation expense, in relation to these options, during the year ended December 31, 2017. Total stock option compensation expense is calculated at $3,039, to be recognized over the vesting period of one year.
During the first quarter of 2016, the Company granted a total of 900,000 options for the purchase of up to 900,000 shares of common stock to Tim Vance, the Company's CEO, in connection with the execution of a 5 year employment agreement and to Gary Woerz, the Company's newly designated CFO, in connection with the execution of a new 5 year employment agreement. The Company uses the Black-Scholes option valuation model to value stock options granted. During the period ended March 31, 2015 the Company determined that the Employment Agreements between the Company and its Executive Officers be amended to adjust the exercise price from $0.03 to $0.0015 and that the expiration date of the options to be extended from January 31, 2018 to December 31, 2019. The change in value from the lower exercise price and extended expiration date was considered immaterial. The Black- Scholes model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. The model requires management to make estimates, which are subjective and may not be representative of actual results. The Black-Scholes model calculations included stock price on date of measurement of $0.0014, exercise price of $0.001, a term of 3 years, computed volatility of 105% and a discount rate of 1.01%. Assumptions used to determine the fair value of the stock based compensation is as follows:
Exercise price
Total Options Outstanding
Weighted Average Remaining Life (Years)
Total Weighted Average Exercise Price
Options Exercisable
$0.001
900,000
1.53
$0.001
900,000
The Company recorded $77 (2016: $1,072) in stock option compensation expense, in relation to these options, during the year ended December 31, 2017. Total stock option compensation expense is calculated at $884, to be recognized over the vesting period of one year.
During the first quarter of 2017, the Company granted a total of 900,000 options for the purchase of up to 900,000 shares of common stock to Tim Vance, the Company's CEO, in connection with the execution of a 5 year employment agreement and to Gary Woerz, the Company's newly designated CFO, in connection with the execution of a new 5 year employment agreement. The Company uses the Black-Scholes option valuation model to value stock options granted. During the period ended March 31, 2015 the Company determined that the Employment Agreements between the Company and its Executive Officers be amended to adjust the exercise price from $0.03 to $0.0015 and that the expiration date of the options to be extended from January 31, 2018 to December 31, 2019. The change in value from the lower exercise price and extended expiration date was considered immaterial. The Black- Scholes model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. The model requires management to make estimates, which are subjective and may not be representative of actual results. The Black-Scholes model calculations included stock price on date of measurement of $0.002, exercise price of $0.001, a term of 3 years, computed volatility of 214% and a discount rate of 1.93%. Assumptions used to determine the fair value of the stock based compensation is as follows:
Exercise price
Total Options Outstanding
Weighted Average Remaining Life (Years)
Total Weighted Average Exercise Price
Options Exercisable
$0.001
900,000
2.45
$0.001
900,000
The Company recorded $1,331 (2016: $Nil) in stock option compensation expense, in relation to these options, during the year ended December 31, 2017. Total stock option compensation expense is calculated at $1,460, to be recognized over the vesting period of one year.
During the quarter ended September 30, 2017 the Company granted 507,744 shares of common stock to two consultants for services provided. The stock was valued using the grant date closing price for the Company's stock for a total compensation expense of $812.
The Company is authorized to issue up to 200,000,000 shares of Common Stock, of which 145,484,165 shares were issued and outstanding as of December 31, 2017 (2016: 144,976,421).
Note 7. Commitments and Contingencies.
The Company conducted its operations from a facility located in Friendswood Texas during FY 2017 and 2016. During January 2013 the Company moved facilities to Friendswood Texas under a 12 month operating lease expiring on January 30, 2017. The Friendswood lease was extended in February 2015 for a term of 24 months expiring on February 1, 2016. The lease is currently month to month.
The following is a schedule of future minimum rental payments required under the above operating lease as of December 31, 2017:
Year
Amount
$ -
$ -
$ -
$ -
$ -
Rent expense in 2017 and 2016 under the terms of the Houston Texas lease 	was $10,800 and $10,800, respectively.
Note 8. Concentrations.
Concentration of Major Customers
As of December 31, 2017, the Company's trade accounts receivables from two customers represented approximately 87% of its accounts receivable. As of December 31, 2016 the Company's trade accounts receivables from two customers represented approximately 94% of its accounts receivable.
For the year ended December 31, 2017 the Company received approximately 81% of its revenue from two customers. The specific concentrations were Customer A, 53%, and Customer B, 28%. For the year ended December 31, 2016 the Company received approximately 77% of its revenue from two customers.
Concentration of Supplier Risk
The Company had 5 vendors that accounted for approximately 76% of purchases during the year ended December 31, 2017 related to operations. Specific concentrations were Vendor A 17%, Vendor B 17%, Vendor C 16%, Vendor D 14%, and Vendor E 12%. For the year ended December 31, 2016 the Company had 4 vendors that accounted for approximately 66% of purchases.
Note 9. Convertible Shareholder Notes Payable.
During 2009, the Company received cash in the sum of $50,000 from a shareholder for a note payable at a 10% interest rate. The interest for the note payable has been calculated annually and has been paid for 2017 and 2016. During 2013, the note payable agreement was amended to include a conversion feature to the Company's common stock at $0.0001 per share. Under ASC 470-50, the amendment adds a substantive conversion option which causes the amended note to be evaluated as a new debt issuance. As the conversion term is considered in the money a beneficial conversion feature was present with a debt discount calculated at $50,000. The debt discount was amortized to interest expense during 2013 due to the note being due at the time of the amendment. During 2013, the creditor sold a portion of his note for $8,900. At the request of the new creditors the Company issued 89,000,000 shares of common stock at $0.0001 in terms with the amended agreement. No gain or loss was recorded on the conversion of debt to equity during the period ending December 31, 2013 as it was converted within the terms of the agreement. On July 30, 2015, the Company entered into an amendment agreement for the previously convertible note. The amendment removed the prior conversion feature of the note and amended the due date to June 30, 2016. The remaining balance due under this note was $18,992 as of December 31, 2017 and $26,028 as of December 31, 2016. This note is currently in default.
During the quarter ended September 30, 2011, the Company issued a short-term convertible note to a shareholder in the amount of $10,000. The convertible note is due in one year and bears interest of 12%. The interest for the convertible note has been calculated annually and has been accrued for 2016 and 2015. As of December 31, 2017, the convertible note contains a conversion feature at a 50% discount of the 10 day average closing price prior to notice. The note holder agreed that the conversion would not force the Company to issue more shares than allowed under the current capitalization which eliminates the existence of a derivative. The beneficial conversion feature included in the discounted share price of the conversion was found to be immaterial for the years ended December 31, 2017 and 2016. As the note is past its due date of June 2, 2012, the note is considered in default.
Note 10. Subsequent Events.
The Company has evaluated subsequent events from the date on the balance 	sheet through the date these financial statements are being filed with the 	Securities and Exchange Commission.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Principal Executive Officer and our Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2017 (the "Evaluation Date"). The term "disclosure controls and procedures," as defined in Rules　13a-15(e)　and 15d-15(e)　under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of December 31, 2017, our Principal Executive Officer and Principal Financial Officer concluded that, as of such date, our disclosure controls and procedures were not effective at the reasonable assurance level.
Management's Annual Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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 the policies or procedures may deteriorate.
Management has conducted, with the participation of our Principal Executive Officer and our Principal Accounting Officer, an assessment, including testing of the effectiveness, of our internal control over financial reporting as of Evaluation Date. Management's assessment of internal control over financial reporting was conducted using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework (2013 Framework).
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. In connection with our management's assessment of our internal control over financial reporting as required under Section 404 of the Sarbanes-Oxley Act of 2002, we have concluded that our internal control over financial reporting had material weaknesses including lack of sufficient internal accounting personnel in order to ensure complete documentation of complex transactions and adequate financial reporting during the year ended December 31, 2017. Based on this assessment, Management identified the following material weaknesses that have caused management to conclude that, as of December 31, 2017, our disclosure controls and procedures, and our internal control over financial reporting, were not effective at the reasonable assurance level:
1.	We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
2.	We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented. Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.
This Annual Report does not include an attestation report of our independent 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 the rules of the Securities and Exchange Commission that permit us to provide only our management's report in this Annual Report.
Remediation of Material Weaknesses
To remediate the material weakness in our documentation, evaluation and testing of internal controls we plan to engage a third-party firm to assist us in remedying this material weakness once resources become available.
We also intend to remedy our material weakness with regard to insufficient segregation of duties by hiring additional employees in order to segregate duties in a manner that establishes effective internal controls once resources become available.
Management has identified corrective actions for the weakness and has begun implementation during the first quarter of 2018.
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 an exemption for smaller reporting companies under Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Changes in Internal Control over Financial Reporting
There have been no significant changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) or in other factors that occurred during the period of our evaluation that have significantly affected, or are reasonably likely to significantly affect, our internal control over financial reporting
.
ITEM 9B.
ITEM 9B. OTHER INFORMATION.
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS AND CORPORATE GOVERNANCE.
The following table sets forth the name, age and position of each of our Directors and executive officers. Our officers and Directors are as follows:
Name Age Position
Timothy Vance
Chief Executive Officer, Chief Operating Officer and Director
Gary D. Woerz
Chief Financial Officer and Director
John Schafer
				Director
Timothy Vance - Chief Executive Officer, Chief Operating Officer and Director
Timothy Vance, a founder and an intricate element in the fabric of the 	Company, has served as one of our Directors since June 2003, as our Chief 	Operating Officer since January 2007 and as our Chief Executive Officer 	since July 2008. Mr. Vance has been part of the Data Call management team 	since the company's inception. Prior to founding Data Call, Mr. Vance was 	employed at QVS Wireless Corporation. Prior to QVS Wireless, Mr. Vance was 	employed for 17 years by World Ship Supply, a global maritime supply 	company. He was the General Manager of the Houston branch for several years 	before following his entrepreneurial vision.
Gary D. Woerz - Chief Financial Officer and Director
From March 2009 to January 2012, Gary Woerz provided financial consulting 	services to private and public companies. From September 2007 to January 	2008, Mr. Woerz was CFO and COO of Larrea Biosciences, a public company. 	From July 2006 to July 2007, Mr. Woerz was the CFO of Virexx Medical Corp., 	a public company organized under the laws of the Province of Alberta, 	Canada. From April 2004 to May 2007, Mr. Woerz served as CFO of American 	International Industries, Inc., a public reporting company.
John Schafer - Director
Mr. Schafer has been a member of Data Call's Board of Directors since his 	appointment in May 2013. From March 2005 through the present, Mr. Schafer 	has served as Vice President of Operations of Waterfront Ventures LLC, a 	private company engaged in real estate development and operations, 	specializing in the hospitality and public service industry. Mr. Schafer's 	duties at Waterfront Ventures include strategic and financial planning and 	chief of operations. In addition, from 2004 through the present, Mr. Schafer 	has been President and principal of JLS Holdings LLC, a private company 	engaged in the business of marketing, business development, financial 	planning and promotion, primarily for the real estate and hospitality 	industry, among others.
Employment Agreements
Effective January 30, 2013, the Company entered into a five-year employment agreement with Tim Vance, to as Chief Executive Officer and Chief Operating Officer at a base compensation of $85,000 per year. The agreement also provided for the issuance of 7,500,000 restricted shares of the Company's common stock which vest at the rate of 1,500,000 shares per year and the grant of options to purchase 500,000 shares per annum at a price of $0.0015, commencing on February 1, 2013. On January 8, 2015, Board of Directors amended the employment agreement with Mr. Vance to provide for the issuance of an additional 6,000,000 restricted shares which vest at the rate of 2,000,000 shares per year. During the period ended March 31, 2015 the Company determined that the Employment Agreements between the Company and its Executive Officers be amended to adjust the exercise price of the options from $0.03 to $0.0015 and that the expiration date of the options to be extended from January 31, 2018 to December 31, 2019.
Also effective on January 30, 2013, the Company entered into a five-year employment agreement with Gary D. Woerz to serve as Chief Financial Officer at a base compensation of $52,000 per year. The agreement also provided for the issuance of 7,500,000 restricted shares of the Company's common stock which vest at the rate of 1,500,000 shares per year, and the grant of warrants to purchase 400,000 shares per annum at a price of $0.0015, commencing on February 1, 2013. On January 8, 2015, Board of Directors amended the employment agreement with Mr. Woerz to provide for the issuance of an additional 6,000,000 restricted shares which vest at the rate of 2,000,000 shares per year. During the period ended March 31, 2015, the Company determined that the Employment Agreements between the Company and its Executive Officers be amended to adjust the exercise price of the options from $0.03 to $0.0015 and that the expiration date of the options to be extended from January 31, 2018 to December 31, 2019.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION.
The following table sets forth information concerning the total compensation during the fiscal years ending December 31, 2017, 2016 and 2015.
(1) In June 2008, Timothy E. Vance was 	appointed CEO of the Registrant.
(2) In January 2013, Gary D. Woerz was 	appointed CFO of the Registrant.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. Table of Contents
The following table sets forth information regarding the beneficial ownership of our common stock as of December 31, 2017. The information in this table provides the ownership information for: each person known by us to be the beneficial owner of more than 5% of our common stock; each of our directors; each of our executive officers; and our executive officers and directors as a group. Beneficial ownership has been determined in accordance with the rules and regulations of the SEC and includes voting or investment power with respect to the shares. Unless otherwise indicated, the persons named in the table below have sole voting and investment power with respect to the number of shares indicated as beneficially owned by them.
Name of Beneficial Owner
Common Stock Beneficially Owned
Percentage of Common Stock Owned (1)
Timothy E. Vance, CEO, COO and Director
				14,176,410
9.77%
700 South Friendswood Drive, Suite E
Friendswood, TX 77546
Gary D. Woerz, CFO and Director
				13,700,010
9.41%
700 South Friendswood Drive, Suite E
Friendswood, TX 77546
John Schafer, Director
				1,000,000
0.69%
700 South Friendswood Drive, Suite E
Friendswood, TX 77546
Director and Officer (3 people)
				28,876,420
				19.85%
(1) Applicable percentage ownership is based on 145,484,165 shares of common stock outstanding as of December 31, 2017. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock that are currently exercisable or exercisable within 60 days of December 31, 2017 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.
None.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Independent Public Accountants
Our auditor, M&K CPAS, PLLC. has served as the Company's independent registered public accountants for the fiscal years 2017 and 2016.
Principal Accounting Fees
The following table presents the fees for professional audit services rendered by M&K CPAS, PLLC for the audits of the Registrant's annual financial statements for the years ended December 31, 2017 and 2016, and fees billed for other services rendered by M&K CPAS, PLLC during those periods.
ITEM 15.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. Table of Contents
(a) The exhibits listed below are filed as part of this annual report.
3.1
Articles of Incorporation, attached to the Company's Form S-1 as filed with the SEC 					on February 21, 2006.
3.2
Certificate of Amendment to Articles of Incorporation, 						attached to the Company's Form S-1 as filed with the SEC on 					February 21, 2006.
					3.3.1
					Amended and Restated Articles of Incorporation,
					attached to the Company's Form S-1/A as filed with the SEC 					on June 29, 2006.
										3.4
					Amended Bylaws,
					attached to the Company's Form S-1 as filed with the SEC on 					February 21, 2006.
					4.1
					Certificate of Designation of Series B Preferred Stock dated 					August 30, 2013, filed herewith.
					10.16
					Employment Agreement between the Company and Timothy E. 					Vance, as amended, filed herewith.
					10.17
					Employment Agreement between the Company and Gary Woerz, as 					amended, filed herewith.
					31.1
					Certificate of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith
					31.2
					Certificate of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith
									32.1
					Certificate of the Chief Executive Officer to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith
									32.2
					Certificate of the Chief Financial Officer to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith
									
					
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.
DATA CALL TECHNOLOGIES INC.
By: /s/ Timothy E. Vance
	Timothy E. Vance
Chief Executive Officer and Chairman
(Principal Executive Officer)
Date: March 8, 2018
By: /s/ Gary D. Woerz
	Gary D. Woerz
Chief Financial Officer
(Principal Financial and Principal Accounting Officer)
Date: March 8, 2018
Pursuant to the requirements of the Securities Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: /s/
	Timothy E. Vance
Timothy E. Vance
		Chairman
Date: March 8, 2018
By: /s/ Gary D. Woerz
	Gary D. Woerz
		Director
Date: March 8, 2018