UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________

FORM 10-Q
___________________

ý                                  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31,June 30, 2014

Commission file number 000-54696
 

DATA CALL TECHNOLOGIES, INC.
(Exact Name Of Registrant As Specified In Its Charter)

 Registrant's Telephone Number, Including Area Code: (866) 219-2025

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.

On MarchJuly 31, 2014, the Registrant had 125,976,421 shares of common stock outstanding.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS Back to Table of Contents

DATA CALL TECHNOLOGIES, INC.
Notes to Financial Statements
March 31,June 30, 2014
Back to Table of Contents

(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.

alerts, within one building or 10,000, local or thousands of miles away.

The accompanying unaudited financial statements have been prepared in accordance with U. S. generally accepted accounting principles (“GAAP”("GAAP") for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three-monththree and six-month period ended March 31,June 30, 2014 are not indicative of the results that may be expected for the year ending December 31, 2014.

As contemplated by the Securities and Exchange Commission (SEC) under Rules of Regulation S-X, the accompanying financial statements and related footnotes have been condensed and do not contain certain information that will be included in the Company's annual financial statements and footnotes thereto. For further information, refer to the Company's audited consolidated financial statements and related footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2013.

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 March 31,June 30, 2014 andor December 31, 2013.

Revenue Recognition

The 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.

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’scustomer's trade accounts receivable. The allowance for doubtful trade receivables was $0 as of March 31,June 30, 2014 and December 31, 2013 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.

Stock-based Compensation

We account for stock-based compensation in accordance with “FASB"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 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’sCompany's Assets &and Liabilities within the fair value hierarchy utilized to measure fair value on a recurring basis as of March 31,June 30, 2014 and December 31, 2013:

Recent Accounting Pronouncements

In July 2013, FASB issued ASU No. 2013-11, "Presentation"Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists." The provisions of ASU No. 2013-11 require an entity to present an unrecognized tax benefit, or portion thereof, in the statement of financial position as a reduction to a deferred tax asset for a net operating loss carryforward or a tax credit carryforward, with certain exceptions related to availability. ASU No. 2013-11 is effective for interim and annual reporting periods beginning after December 15, 2013. The adoption of ASU No. 2013-11 is not expected to have a material impact on the Company's Consolidated Financial Statements.

In February 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-02,2014-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income , to improve the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. The new amendments will require an organization to:

- Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period; and

- Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense.

The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). The amendments are effective for reporting periods beginning after December 15, 2012, for public companies. Early adoption is permitted. The adoption of ASU No. 2013-022014-02 is not expected to have a material impact on our financial position or results of operations.

In January 2013, the FASB issued ASU No. 2013-01,2014-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the Board determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU 2011-11, the amendments in this update will be effective for fiscal periods beginning on, or after January 1, 2013.2014. The adoption of ASU 2013-012014-01 is not expected to have a material impact on our financial position or results of operations.

- Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the

In October 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2013-04, “Technical2012-04, "Technical Corrections and Improvements”Improvements" in Accounting Standards Update No. 2013-04.2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2013.2012. The adoption of ASU 2013-042012-04 is not expected to have a material impact on our financial position or results of operations.

In August 2012, the FASB issued ASU 2013-03, “Technical2012-03, "Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update)”" in Accounting Standards Update No. 2013-03.2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2013-032012-03 is not expected to have a material impact on our financial position or results of operations.

In July 2012, the FASB issued ASU 2013-02, “Intangibles –2012-02, "Intangibles - Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment”Impairment" in Accounting Standards Update No. 2013-02.2012-02. This update amends ASU 2011-08, Intangibles –- Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles - Goodwill and Other - General Intangibles Other than Goodwill. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2013. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2013, if a public entity’sentity's financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The adoption of ASU 2013-02 is not expected to have a material impact on our financial position or results of operations.

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.

(2) Related Party Transactions

During the quarter ended March 31, 2013, two related parties agreed to convert their accrued salaries and related interest to notes.notes payable carrying 5% interest. As of March 31,June 30, 2014 and 2013, the total due to these two related parties for past accrued salaries is $2,750$Nil and $70,250,$50,750, respectively.

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 the firstsecond quarter of 2014 was $43,831.

$44,318 (2013: $44,318) and $ 88,149 for the six months ended June 30, 2014 (2013: $83,766).

During the first quarter of 2014, 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 2013 5 year employment agreement and to Gary Woerz, CFO, in connection with the execution of a 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 $457 (2013: $0) in stock option compensation expense, in relation to these options, during the quarter ended March 31, 2014. Total stock option compensation expense is calculated at $2,877.

During the first quarter of 2013, 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 $2,356 (2013:$4,270)$982 in stock option compensation expense, in relation to these options, during the quarter ended March 31,June 30, 2014. Total stock option compensation expense is calculated at $26,872.

(3) Capital Stock, Warrants and Options

The Company is authorized to issue up to 10,000,000 shares of Preferred Stock, $.001 par value per share, of which 800,000 shares of Series A convertible preferred stock are outstanding at March 31,June 30, 2014 and December 31,2013.31, 2013. 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’sCompany's common stock, par value $.001 per share (“("Common Stock”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 and as of March 31,June 30, 2014 and 2013 unaccrued and undeclared dividends were $1,200.

$2,400.

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 the firstsecond quarter of 2014 was $43,831$44,318 (2013: $39,448)$44,318) and $ 88,149 for the six months ended June 30, 2014 (2013: $83,766).

During the first quarter of 2014, 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 2013execution of a new 5 year employment agreement and to Gary Woerz, the Company's newly designated CFO, in connection with the execution of the 2013a 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. Assumptions used to determine the fair value of the stock based compensation is as follows:

The Company recorded $457$982 (2013: $Nil) in stock option compensation expense, in relation to these options, during the quarter ended March 31,June 30, 2014. The Company recorded $1,439 (2013: $Nil) in stock option compensation expense, in relation to these options, during the six months ended June 30, 2014. Total stock option compensation expense is calculated at $2,877.

During the first quarter of 2013, 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. Assumptions used to determine the fair value of the stock based compensation is as follows:

The Company recorded $2,356$Nil (2013: $4,270)$6,630) in stock option compensation expense, in relation to these options, during the quarter ended March 31,June 30, 2014. The Company recorded $457 (2013: $10,900) in stock option compensation expense, in relation to these options, during the six months ended June 30, 2014. Total stock option compensation expense is calculated at $26,872.

The Company is authorized to issue up to 200,000,000 shares of Common Stock of which 125,976,421 are issued and outstanding at June 30, 2014 and December 31, 2013.

(4) Property and Equipment

Major classes of property and equipment together with their estimated useful lives, consisted of the following:

(5) Going Concern

The Company’sCompany's financial statements have been prepared on a going concern basis which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business for the foreseeable future. The Company has accumulated losses, negative working capital and without additional sales or capital will not be able to meet operating needs for the next twelve months, all of which raise substantial doubt about the Company’sCompany's ability to continue as a going concern.

In the near term management plans to continue to focus on increasing sales and raising the funds necessary to fully implement the Company’sCompany's business plan. Management believes that certain shareholders will continue to advance the capital required to meet the Company’sCompany's financial obligations. There is no assurance however, that these shareholders will continue to advance capital to the Company or that the business operations will be profitable.

The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.

(6) Shareholder Notes Payable

Repayments on shareholder notes payable during the quarter ended March 31,June 30, 2014 totaled $9,000$2,750 (2013: $23,000)$19,500).

Repayments on shareholder notes payable during the six months ended June 30, 2014 totaled $11,750 (2013: $42,500).

During the first quarter of 2013, the Company received cash in the sum of $10,000 from a shareholder for a note payable at a 5% interest rate. The note and related interest were converted to 1,000,000 shares of common stock resulting in a loss of $50,000 on conversion using the closing price of the stock on the date of conversion of $0.06 per share during 2013.

share.

During the first quarter of 2013, the Company converted two related party accrued salary balances and related interest to notes payable at a 5% interest rate. The interest for the notes payable balances has been calculated annually and has been accrued for the first quarter of 2014.

As of June 30, 2014, the total due to these related parties for accrued salaries was $Nil (2013: $50,750) and included in short-term note payable to shareholder. For the six months ended June 30, 2014, $11,750 of the balance converted was repaid (2013: $42,500).

(7) Subsequent Events and Contingencies

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. No material events or transactions have occurred during this subsequent event reporting period which required recognition or disclosure in

The Company issued 10,000 shares of Series B Preferred Stock to the financial statements.CEO, Tim Vance, for services provided.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATION Back to Table of Contents

Some of the statements contained in this quarterly report of Data Call Technologies, Inc., Nevada corporation (hereinafter referred to as "we", "us", "our", "Company" and the "Registrant") discuss future expectations, contain projections of our plan of operation or financial condition or state other forward-looking information. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. They use of words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. From time to time, we also may provide forward-looking statements in other materials we release to the public.

Data Call Technologies, Inc. ("Data Call," or the “Company”"Company") was incorporated under the laws of the State of Nevada as Data Call Wireless on April 4, 2002. On March 1, 2006, we changed our name to Data Call Technologies, Inc.

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

Our business plan is to focus on growing our client base by continued offering of real-time information/content, seeking to continually improve the delivery, security, and variety of information/content to the Digital Signage and Kiosk community, while developing a similar offering for smart phones through the app community.

Overview

What Is Digital Signage?

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

Digital Signage Comes of Age

Digital signage is coming of age and Data Call Technologies has been there from the start. Ten years ago, a company wanting to take the digital signage plunge was faced with a myriad of hardware and software companies, all offering their own “vision”"vision" of what digital signage should be. They were given the tools of digital signage, but were left pretty much left to their own devices as to what to build. Those companies that took the early plunge where then faced with the fact that no one had come before them to show the rights and wrongs, the dos and don’tsdon'ts of content development. But, even at this early stage of the game, Data Call recognized that these pioneers of digital signage lacked a key component that would become an integral part of any successful implementation-active content.

In the years since those early days of digital signage, the market has taken care of weeding out the weaker providers of hardware and software. Companies now have a clearer understanding of what digital signage is, what is needed for a successful implementation and the best use of content space given their more-defined and attainable goals. In the past seven years, as the cost of platforms, supporting infrastructure and displays has fallen dramatically; digital signage has become more accessible to a wider range of companies while the growing Kiosk market has cross-pollinated with Digital Signage. And those combined companies are realizing that the initial, one-time cost of getting into the game is far outweighed by the cost of staying in the game, in the form of ongoing content development. As the cost of deployment decreased, companies began focusing on attention-grabbing content. Whether the goal of the presentation was product branding, marketing or assisted selling, content became king. Active content is on everyone’s “needs”everyone's "needs" list because it is proven to draw customers to the core message and keep customers engaged throughout the presentation, And Data Call stands ready to serve this exploding market.

The Need for Speed-Active Content

Active content is that part of a digital signage presentation that is constantly updated with timely and relevant information. For instance, a typical presentation may contain ten 15-second loops that provide the primary message of the presentation, but the active dynamic content, such as that provided by Data Call, is updated with new information throughout the day. Those seeking to add active and dynamic content to their digital signage presentations are advised to employ Data Call’sCall's integrated content rather than shoehorning broadcast content into their digital signage presentation.

However, by integrating Data Call’sCall's active content alongside their presentations, companies can provide the entertainment content so necessary in dwell-time retention without disrupting the core message of the presentation. Information categories provided by Data Call include news, weather, sports, financial data, and the latest traffic alerts, amongst others. With such a broad range of offerings, companies have access to the active and dynamic content they need, regardless of the market they are addressing.

Data Call Opportunities

The opportunities for Data Call in the digital signage industry are countless. Many companies nowadays would outsource all or part of their content creation. Data Call stands ready as their outsourced provider of active content data. Whether it’sit's general entertainment information (news, sports, stocks, etc.) or location-targeted active content (weather, traffic, etc.), research is validating the long-held assumption that it is active content that draws viewers to digital signage and keeps them engaged throughout the presentation.

Over the past ten years, Data Call has worked with the industry leaders in digital signage to develop the data formats and communication methods to allow Data Call’sCall's active content to be easily integrated into their hardware and software products.

Partners, Not Customers

Data Call’sCall's approach to customer relations is to not accumulate customers, but to build partnerships. Each Data Call partner is as unique as the digital signage market they service, and each has their own requirements for active content. In developing active content for digital signage, Data Call identified six factors that had to be addressed - reliability, objectivity, and ease of implementation. To address the reliability requirement, Data Call opted to license information from the leaders that create news, weather, sports and financial data rather than “scrapping”"scrapping" information from the Internet (which can be illegal) or pulling RSS feeds (which may come and go at the provider’sprovider's whim). Licensing data from these providers also satisfied the second requirement, objectivity. The Internet is as littered of slanted opinions and hidden agendas as there are users of the Internet, So arbitrarily allowing these “news”"news" sources to go unchecked into Data Call’sCall's active content was completely unacceptable. Finally, the third requirement, ease of implementation, was address by both Data Call’sCall's licensing of data and the method by which it was disseminated to their partners.

Data Call understood that digital signage and Kiosk implementers had larger issues to tackle than the multitude of licenses that would need to be managed and the varying formats of the source data to be dealt with if active content was obtained from multiple vendors. Data Call offers a “one"one stop shop”shop" for all of their active content requirements covered by a single license. Ease of implementation also would require that the multiple formats of all Data Call’sCall's data providers be distilled into a single format. Because active content may be displayed in a multitude of ways (banners, tickers, scrolls or artistically integrated with the overall presentation), Data Call produced a set of common data layouts in the industry-standard XML (extensible markup language) format. Many partners find these formats to be easily integrated into their products, but in several cases, Data Call has produced customized data formats to the exact requirements of their partners. This customization ensures the highest level of reliable and ease of integration possible.

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

Business Operations

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

Digital Signage is still a relatively new and exciting method advertisers can use to promote, inform, educate, and entertain clients and customers about their businesses and products. Through Digital Signage, companies and businesses can use a single television or a series of networked flat LCD or Plasma screens to market their services and products on site to their clients and customers in real time. Additionally, because Digital Signage advertising takes place in real time, businesses can change their marketing efforts at a moment’smoment's notice. We believe this real time advertising better allows companies to tailor their advertising to individual customers, and thereby advertise and sell inventory which appeals to those individual customers, thereby increasing sales and revenues. Benefits to Digital Signage compared to regular print or video advertising include, being able to immediately change a digitally displayed image or advertisement depending on the business’sbusiness's current clients and customers, and not getting locked into print advertising days or months in advance, which may become stale or obsolete prior to the advertising date of such print advertising.

Data Call specializes in allowing its clients to create their own Digital Signage dynamic content feeds delivered, via the Internet, to digital display devices at their establishments. The only requirements our clients must have are 1) a supported third party digital signage or Kiosk solution, or similar device, which receives the data from our servers via the Internet, and displays the content on digital displays and 2) an Internet connection. The Direct Lynk System is supported by various third party systems, varying in costs from $350 to $5,000.

The Direct Lynk Systems allow customers to select from the pre-determined data and information services described below. The client may choose which individual locations and which displays they would like to receive our feeds based on how their digital signage network is configured.

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

In the first quarter of 2014, the company released its “Playlist Ready”"Playlist Ready" products that broaden the company’scompany's reach of clients. One product within the “Above"Above the Fold”Fold" product line received a high level of acceptance at the industry trade shows. More on the product can be found at the company’scompany's website.

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

Results of Operations

The following discussion should be read in conjunction with our financial statements.

During the last twelve months, the Company has implemented cost management measurements to review monthly expenditures. We will continue these efforts to streamline operations, as we focus on increasing sales and gross revenues over the next twelve months. We do not currently have any plans to increase our monthly expenditures or number of employees. We estimate the Company will generate revenues in excess of $500,000 in 2014.

We plan to continue to grow our business and market our Direct Lynk System to potential customers over the course of the next twelve months by marketing our technology to digital signage manufacturers, Kiosk manufactures, the mobile app market, trade magazines, trade shows and call centers. We will also continue on a limited basis our practice of providing potential customers free trials of the Direct Lynk System, for which we will receive no revenue, in an attempt to build both product awareness for the Direct Lynk System and to potentially lead to sales down the road, which in the opinion of our management has been successful both in building brand awareness for the Direct Lynk System and in bringing in new clients for subscriptions. We continually add subscribers for our technology throughout and intend to build and increase such subscribers moving forward.

We are planning and negotiating with current vendors and partners, to expand our offering to other lateral markets. Hardware, software, and sales processes are currently being modified and/or developed. We are currently in the completion phases of our mobile application platform that we expect to bring to market during fiscal year 2014.

Three Months Ended March 31,June 30, 2014 Compared to Three Months Ended March 31,June 30, 2013

Our revenues for the three months ended March 31,June 30, 2014 were $166,775$164,713, compared to $157,100$157,388 for the three-month period ended March 31,June 30, 2013, representing an increase of $9,675$7,325 or 6.2% duringan increase of approximately 4.7% from the same period in the prior year. The increase in revenues was mainly due to additional contractsstandard renewals and the renewal of annual contracts at the beginning of the year.

new business.

Costs of sales for the three months ended March 31,June 30, 2014 were $32,574$26,921 compared to $28,557$26,348 for the three-month period ended March 31, 2014, which represents an increase of $4,017 or 14.1%. CostsJune 30, 2013. Cost of sales did not increase in direct proportion to an increase in revenuesincreased $573 because of costs of sales are directly linkedrelated to the bandwidth required to provide the subscription services. Costs of sales increased substantially because of the new products.

Gross margins for the three months ended March 31,June 30, 2014 were $134,20183.7%, compared to $128,543 or 81.8%83.3%, for the three-month period ended March 31,June 30, 2013.

Selling, General and Administrative

Operating expenses for the three months ended March 31,June 30, 2014 were $143,779$144,632, compared to $256,653$128,812 for the three-month period ended March 31,June 30, 2013, representing a decreasean increase of $112,874$15,820 from the same period in the prior year. The increase in SG&Aoperating expenses is mainly due to decreased legal expenses of $32,476 due to the management changes at the beginning of the year 2013. The non-recurring payments to made to prior management of $9,000, and the difference between non-recurring expenses related to the issuanceexpense of stock options and options to management in the amount of $41,728.

warrants.

Net loss for the three months ended March 31,June 30, 2014 was $13,292$9,711, compared to $641 for the three month period ended June 30, 2013. The increase in our net loss is mainly due to the expense of stock options and warrants. Profit from operations for the quarter was $37,895 (2013: $100,307). Operating profit is calculated by adding back the expense for non-cash items such as shares issued for services.

Six Months Ended June 30, 2014 Compared to Six Months Ended June 30, 2013

Our revenues for the six months ended June 30, 2014 were $331,488, compared to $314,488 for the six-month period ended June 30, 2013, representing an increase of $17,000 from the same period in the prior year. The increase in revenues was mainly due to the standard renewals and new business.

Costs of sales for the six months ended June 30, 2014 were $59,495, compared to $54,905 for the six-month period ended June 30, 2013. Cost of sales increased due the costs related to the bandwidth required to provide the subscription services and the additional cost associated with the increase in revenue.

Gross margins for the six months ended June 30, 2014 were 82.1%, compared to 82.5%, for the six-month period ended June 30, 2013.

Operating expenses for the six months ended June 30, 2014 were $289,254, compared to $386,155 for the six-month period ended June 30, 2013, representing a decrease of $96,901 from the same period in the prior year. The decrease in operating expenses is mainly due to the decreased expense associated with the issuance of stock and options.

Net loss for the six months ended June 30, 2014 was $(23,003), compared to a net loss of $130,167$130,808 for the three-monthsix-month period ended March 31,June 30, 2013. The Company’s net loss was significantly lower for the first quarter due to reorganization expenses, which were occurred at the beginning of theyear 2013. The Company has calculated all of the expenses for the quarter, which were due to the reorganization. Excluding costs associated with our 2013reorganization, our net loss would have $1,867 if the above non-recurring expenses are removed from the current net loss. The Company has calculated that net incomeexpense of stock issuances and options. Profit from operations for the first quarter ofsix-month period ended June 30, 2014 would have been $43,427 ifwas $72,322 (2013: $63,858). Operating profit is calculated by adding back the above non-recurring expenses are removed from the current net loss.

expense for non-cash items such as shares issued for services.

Liquidity and Capital Resources

We had total current assets of $131,328$108,519, consisting of $77,649$70,797 of cash and $53,679 in$37,722 accounts receivable as of March 31, 2014. As of March 31, 2014, wereceivable. We had total current liabilities of $194,127,$134,103 as of June 30, 2014, which represented $35,627 in$36,890 of accounts payable, $22,497$17,779 in accrued salaries $22,875 in accrued interest and related liabilities, accrued interests of $24,250, deferred revenues of $59,278$6,084 and $53,850$51,100 in short-term notes payable.

notes.

We had a negative working capital of $62,799$27,800 and an accumulated deficit of $9,227,779$9,237,490 on March 31,June 30, 2014.

We were provided $86,649$82,547 of cash in our operating activities during the three-monthsix-month period ended March 31,June 30, 2014, which was mainly due to a net loss of $13,292, a decrease in deferred revenues$23,003, common stock and warrant expense of $81,313 and decrease in accounts payableof $18,886 offset by a$95,325 an decrease in accounts receivables of $149,692, non-cash compensation valued at $44,906,$165,649 , an increase in accounts payable of $19,067 and non-cash expenses related to options and warrantsan increase in deferred revenues of $2,813.$136,029. We had no investing activities during the three-monthsix-month period ended March 31,June 30, 2014. We used $9,000$11,750 in our financing activities during the threesix months ended March 31,June 30, 2014, for theconsisting of $11,750 of repayment of shareholder notes payable.

Due to our limited cash position, we believe that we have to raise additional funds to continue our operations for approximately the next three months. We believe we will require approximately $500,000 to maintain our operations for the next twelve months.

We plan to raise additional capital through the sale of debt and/or equity, which sales may cause dilution to our then existing shareholders, moving forward if needed to support our ongoing operations and expenses. There can be no assurances that we will be able to raise additional capital in the future, and/or that such sales of securities will not be on unfavorable terms.

Although we hope to continue to generate meaningful revenues sufficient to support our operations in the next eight to twelve months, if we are unsuccessful in generating such revenues, we will likely need to take steps to raise equity capital or to borrow additional funds, to continue our operations and meet liabilities. We have no commitments from officers, Directors, or affiliates to provide funding. Our failure to obtain adequate additional financing may require us to delay, curtail, or scale back some or all of our operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Back to Table of Contents

We haveA smaller reporting company, as defined by Item 10 of Regulation S-K, is not entered into, and do not expectrequired to enter into, financial instruments for trading or hedging purposes.provide the information required by this item.

ITEM 4. CONTROLS AND PROCEDURES Back to Table of Contents

Evaluation of disclosure controls and procedures. As of March 31, 2014, the Company's chief executive officer and chief financial officer conducted an evaluation regardingManagement has assessed the effectiveness of our internal control over financial reporting as of June 30, 2014. In making this assessment, management used the Company's disclosure controlscriteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on our assessment and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the  Exchange Act. Based upon the evaluation of these controls and procedures, our chief executive officer and chief financial officerthose criteria, we have concluded that our disclosure controlsinternal control over financial reporting had material weaknesses including lack of sufficient internal accounting personnel in order to ensure complete documentation of complex transactions and procedures were not effective as of the end ofadequate financial reporting during the period covered by this report.ended June 30, 2014. Management has identified corrective actions for the weakness and has begun implementation during the second quarterremainder of 2014.

Changes in internal controls. During the quarterly period covered by this report, no changes occurred in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS  Back to Table of Contents

None.

ITEM 1A. RISK FACTORS Back to Table of Contents

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1. Description of Business, subheading Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2013, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K is not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS Back to Table of Contents

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES Back to Table of Contents

None.

ITEM 4. MINE SAFETY DISCLOSURE Back to Table of Contents

None.

ITEM 5. OTHER INFORMATION Back to Table of Contents

None.

ITEM 6. EXHIBITS Back to Table of Contents

(a) The following documents are filed as exhibits to this report on Form 10-Q or incorporated by reference herein. Any document incorporated by reference is identified by a parenthetical reference to the SEC filing that included such document.

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: May 12,July 31, 2014

By: /s/ Gary Woerz
Gary Woerz
Chief Financial Officer
(Principal Financial and Principal Accounting Officer)
Date: May 12,July 31, 2014

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
Chief Executive Officer and Chairman
(Principal Executive Officer)
Date: May 12,July 31, 2014

By: /s/ Gary Woerz
Gary Woerz
Chief Financial Officer and Director
(Principal Financial and Principal Accounting Officer)
Date: May 12, 2014

By: /s/ John Schafer
John Schafer
Director
Date: May 12,July 31, 2014