(6) 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 additional material events or transactions have occurred during this subsequent event reporting period which required recognition or disclosure in the financial statements.

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”) 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 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

In March of 2017, we released our Direct Lynk Manager (DLManager) customer portal at the Digital Signage Expo in Las Vegas. The DLManager incorporates 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:

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-displayeddigitally 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.

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

We continually add subscribers for our technology throughout and intend to build and increase such subscribers moving forward.

Three Months Ended June 30, 2022March 31, 2023, Compared to Three Months Ended June 30, 2021March 31, 2022

Our revenues for the three months ended June 30, 2022March 31, 2023, were $150,394,$139,067 compared to $151,837$141,867 for the three-month period ended June 30, 2021,March 31, 2022, representing ana decrease of $1,443$2,800 or approximately .95%.1.97% during the same period in the prior year. The decrease was mainly due to not all of the renewals being completed during the first quarter of the new year.

Costs of sales for the three months ended June 30, 2022March 31, 2023, were $46,316$50,087 compared to $58,393$55,660 for the three-month period ended June 30, 2021, costMarch 31, 2022, which represents a decrease of $5,573. Costs of sales for the quarter decreased $12,077. This was due to the Company’s ongoing efforts to reduce costs.

Gross margins for the three months ended June 30, 2022 were $104,078 compared to $93,444 asamount of June 30, 2021, or 69.2% for the three-month period ended June 30, 2022 as compared to 61.5% for the three-month period ending June 30, 2021.

Operating expenses for the three months ended June 30, 2022 were $91,196 compared to $88,077 for the three-month period ended June 30, 2021, representing an increase of $3,119 from the same period in the prior year. Net income (loss) for the three months ended June 30, 2022 was $12,637 compared to a net income of $4,561 for the three-month period ended June 30, 2021 or a net change of $8,076. The Company’s net income was due to our continuing efforts to reduce costs..

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

Our revenues for the six months ended June 30, 2022 were $292,261, compared to $306,749 for the six-month period ended June 30, 2021, representing an increase of $14,468 or approximately 4.7%. The decrease in revenues was mainly due to customers not renewing their subscriptions.

Costs of sales for the six months ended June 30, 2022 were $101,976, compared to $111,408 for the same period of the prior year. The decrease was due the costs related to the licensing and royalty expensebandwidth required to provide the subscription services.

Gross margins for the sixthree months ended June 30, 2022March 31, 2023, were $190,285compared$88,980 compared to $195,341 as of June 30, 2021,$86,207, or 65.1%64.0% for the six-monththree-month period ended June 30, 2022March 31, 2023, as compared to 63.7%60.8% for the six-monththree-month period ending June 30, 2021.March 31, 2022.

OperatingSelling, General and Administrative expenses for the sixthree months ended June 30, 2022March 31, 2023, were $189,934$98,510 compared to $188,061$98,738 for the six-monththree-month period ended June 30, 2021,March 31, 2022, representing an increasea decrease of $1,872$228 from the same period in the prior year. The decrease in SG&A expenses is mainly due to a decrease in expenses and a reduction in the costs of stock. Net income (loss)loss for the sixthree months ended June 30, 2022March 31, 2023, was $(139)$9,771 compared to a net incomeloss of $5,667$12,776 for the six-monththree-month period ended June 30, 2021.March 31, 2022. The decreaseCompany’s reduction in net loss was due to the decrease in revenues.revenue and the reduction of expenses.

Liquidity and Capital Resources

As of June 30, 2022, weWe had total current assets of $85,338,$324,713 consisting of $14,260 in$273,024 of cash and $71,078$51,689 in accounts receivable. As of March 31, 2023, we had total current liabilities of $25,987 consisting or $22,933$264,867, which represented $27,744 in accounts payable, $361 inand accrued payables related party of $3,897, accrued expenses of $384 and $2,693 in related party advances.deferred revenues of $232,842.

At June 30, 2022, weWe had a positive working capital of $59,351$59,846 and an accumulated deficit since inception of $9,971,856. The Company had net$9,976,706 on March 31, 2023.

We provided $250,174 of cash provided by (used in)for our operating activities of ($345) during the six-monththree-month period ended June 30, 2022,March 31, 2023, which was mainly due to a net income (loss)loss of $(139) an increase in accounts receivable of $3,802, an increase in stock compensation expense and options expense of $4,274, depreciation expense of $490 and a decrease in$9,771, accounts payable $11,034, prepaid expenses $1,400, accounts receivables of $1,180 and accrued interest expense of $12.

We had investing activities of $0 during the six-month period ended June 30, 2022$13,514, non-cash expenses related to the purchasestock-based compensation of property$887 and equipment.depreciation of $245 and deferred revenue of $232,842. We used $788 in ourhad financing activities during the six monthsthree-month period ended June 30, 2022.March 31, 2023 of $2,123

Due to our strong financial position we do not see a need to raise additional funds. We will continue to generate sufficient revenues and generate new revenues to support our operations.

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

A smaller reporting company, as defined by Item 10 of Regulation S-K, isWe have not requiredentered into, and do not expect to provide the information required by this item.enter into, financial instruments for trading or hedging purposes.

ITEM 4. CONTROLS AND PROCEDURES Back to Table of Contents

(a) Evaluation of Disclosure Controlsdisclosure controls and Procedures.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 June 30, 2022March 31, 2023 (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 June 30, 2021,March 31, 2023, 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 as described in our Annual Report on Internal Control Over Financial Reporting filed in our Annual Report on Form 10-K.

Our principal executive officers do not expect that our disclosure controls or internal controls will prevent all errors and all fraud. Although our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives and our principal executive officers have determined that our disclosure controls and procedures are effective at doing so, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented if there exists in an individual a desire to do so. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

(b) 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 three-month period ended June 30, 2022March 31, 2023, that have significantly affected, or are reasonably likely to significantly 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, 2019,2022, 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.

Date: May 15, 2023

Date: May 15, 2023