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**UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549**___________________**FORM 10-Q**___________________

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

  

For the quarterly period endedSeptember 30, 2010

  

OR

  

** ̈                                TRANSITION REPORTPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

For the transition period from         to

  

Commissionfile number 333-131948  

**DATA CALLTECHNOLOGIES, INC.**(Exact Name Of RegistrantAs Specified In Its Charter)
| Nevada                                   | 30-0062823                           |
|------------------------------------------|--------------------------------------|
| (State of Incorporation)                 | (I.R.S. Employer Identification No.) |
|                                     |                                 |
| 600    Kenrick, Suite B-12, Houston, TX  | 77060                                |
| (Address of Principal Executive Offices) | (ZIP Code)                           |

 Registrant'sTelephone Number, Including Area Code: (832) 230-2379

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

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, or anon-accelerated filer.
| Large accelerated    filer  ̈ | Accelerated filer  ̈  | Non-Accelerated    filer  ̈  | Smaller reporting    company x |
|----------------------------------|-------------------------------|--------------------------------------|------------------------------------|

On September 30,2010, the Registrant had 99,382,100 shares of common stock outstanding.

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**TABLE OF CONTENTS**
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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    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| **PART I - FINANCIAL    INFORMATION** |
|                                  |
| ITEM 1.                               |      |    FINANCIAL STATEMENTS.
    3  
ITEM 2.
    
   MANAGEMENT'S    DISCUSSION AND ANALYSIS AND RESULTS OF OPERATION.
    3   ITEM 3.   QUANTITATIVE    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK6
ITEM 4.
    
   CONTROLS AND PROCEDURES.
    6     
**PART II - OTHER    INFORMATION**
  
ITEM 1.
    
   LEGAL    PROCEEDINGS.
    6  ITEM 1A.   RISK FACTORS6
ITEM 2.
    
   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF    PROCEEDS
    6   
ITEM 3.
    
   DEFAULT UPON SENIOR    SECURITIES.
    6   
ITEM 4.
    
   SUBMISSION    OF MATERS TO A VOTE OF SECURITY HOLDERS.
    7   
ITEM 5.
    
   OTHER INFORMATION.
    7   ITEM 6.   EXHIBITS.7
 
****
**PART I - FINANCIAL INFORMATION**

ITEM1. FINANCIAL STATEMENTS****Back to Table of Contents

The Registrant's unaudited interim financial statementsare attached hereto. UnauditedInterim Financial Statements

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

Some of the statements contained in this quarterly report of Data CallTechnologies, 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 financialcondition or state other forward-looking information. Forward-looking statements give ourcurrent expectations or forecasts of future events. You can identify these statements bythe fact that they do not relate strictly to historical or current facts. They use ofwords such as "anticipate," "estimate," "expect,""project," "intend," "plan," "believe," and otherwords and terms of similar meaning in connection with any discussion of future operatingor financial performance. From time to time, we also may provide forward-lookingstatements in other materials we release to the public.

Data Call Technologies, Inc. ("DataCall," or the “Company”) wasincorporated 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 solutionscurrently deployed by the media and make this content rapidly available to and within thecontrol of our retail and commercial clients. The Company's software and services put itsclients 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 nationalclients, through Digital Signage and Kiosk networks.

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

What Is Digital Signage?**
Plasma and LCD displays are rapidly replacing printed marketing materials such as signsand placards, as well as the old fashioned whiteboard, for product and corporate branding,marketing and assisted selling. The appeal of instantly updating product videos andpromotional messages on one or a thousand remotely located displays is driving theadoption of this exciting marketing tool. Digital signage presentations are typicallycomprised of repeating loops of information used to brand, market or sell the owner’sproducts and services. But once seen, this information becomes repetitive and the viewertunes it out, resulting in low retention of the client’s message. As digital signagecomes of age, the “dynamic” characteristic of the presentation has taken centerstage Dynamic being fresh, relevant, updated content.
**Digital Signage Comes of Age**
Digital signage is coming of age and DataCall Technologies has been there from thestart. Four years ago, a company wanting to take the digital signage plunge was faced witha myriad of hardware and software companies, all offering their own “vision” ofwhat digital signage should be. They were given the tools of digital signage, but wereleft pretty much left to their own devices as to what to build. Those companies that tookthe early plunge where then faced with the fact that no one had come before them to showthe rights and wrongs, the dos and don’ts of content development. But, even at thisearly stage of the game, DataCall recognized that these pioneers of digital signage lackeda key component that would become an integral part of any successful implementation-activecontent.

In the years since those early days of digital signage, the market has taken care ofweeding out the weaker providers of hardware and software. Companies now have a clearerunderstanding of what digital signage is, what is needed for a successful implementationand the best use of content space given their more-defined and attainable goals. In thepast three years, as the cost of platforms, supporting infrastructure and displays hasfallen dramatically; digital signage has become more accessible to a wider range ofcompanies while the growing Kiosk market has cross-pollinated with Digital Signage. Andthose combined companies are realizing that the initial, one-time cost of getting into thegame is far outweighed by the cost of staying in the game, in the form of ongoing contentdevelopment. As the cost of deployment decreased, companies began focusing onattention-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” list because it is proven to draw customers to the core message and keepcustomers engaged throughout the presentation, And DataCall stands ready to serve thisexploding market.
**The Need for Speed--Active Content**
Active content is that part of a digital signage presentation that is constantlyupdated with timely and relevant information. For instance, a typical presentation maycontain ten 15-second loops that provide the primary message of the presentation, but theactive dynamic content, such as that provided by DataCall, is updated with new informationthroughout the day. Those seeking to add active and dynamic content to their digitalsignage presentations are advised to employ DataCall’s integrated content rather thanshoehorning broadcast content into their digital signage presentation.

However, by integrating DataCall’s active content alongside their presentations,companies can provide the entertainment content so necessary in dwell-time retentionwithout disrupting the core message of the presentation. Information categories providedby DataCall 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 activeand dynamic content they need, regardless of the market they are addressing.
**DataCall Opportunities**
The opportunities for DataCall in the digital signage industry are countless. Manycompanies nowadays would outsource all or part of their content creation. DataCall standsready as their outsourced provider of active content data. Whether it’s generalentertainment information (news, sports, stocks, etc.) or location-targeted active content(weather, traffic, etc), research is validating the long-held assumption that it is activecontent that draws viewers to digital signage and keeps them engaged throughout thepresentation.

Over the past five years, DataCall has worked with the industry leaders in digitalsignage to develop the data formats and communication methods to allow DataCall’sactive content to be easily integrated into their hardware and software products.
**The Stage is Set**
The stage is set and the players are on their marks. The experience and lessons learnedby both providers and implementers of digital signage and Kiosk networks are converging atthat point where explosive growth in the industry can be realistically anticipated.DataCall is excited to be in the position they are, poised to leverage their expertise andrelationships in the digital signage industry to bring its offerings to the next level.

Already, DataCall is actively developing the next generation in digital signagecontent. Delivering active content video is an opportunity that is in the immediatefuture, as well as implementation of interactive digital signage. Whether it is the use ofradio frequency identification (RFID) to delivery active content directly to customers viatheir cell phone or engaging the customer to create their own digital signage experiencevia text messaging, DataCall will be at the forefront of the evolution of digital signagejust as DataCall was at the forefront of the revolution of digital signage. DataCall ispoised to ride this explosive growth in digital signage not just as a service provider,but as a partner providing a key component to the most successful implementations ofdigital signage,
**Partners, Not Customers**
DataCall’s approach to customer relations is to not accumulate customers, but tobuild partnerships. Each DataCall partner is as unique as the digital signage market theyservice, and each has their own requirements for active content. In developing activecontent for digital signage, DataCall identified three factors that had to be addressed -reliability, objectivity and ease of implementation. To address the reliabilityrequirement, DataCall opted to license information from the leaders that create news,weather, sports and financial data rather than “scrapping” information from theInternet (which can be illegal) or pulling RSS feeds (which may come and go at theprovider’s whim). Licensing data from these providers also satisfied the secondrequirement, objectivity. The Internet is as littered of slanted opinions and hiddenagendas as there are users of the Internet, So arbitrarily allowing these “news”sources to go unchecked into DataCall’s active content was completely unacceptable.Finally, the third requirement, ease of implementation, was address by bothDataCall’s licensing of data and the method by which it was disseminated to theirpartners.

DataCall understood that digital signage and Kiosk implementers had larger issues totackle than the multitude of licenses that would need to be managed and the varyingformats of the source data to be dealt with if active content was obtained from multiplevendors. DataCall offers a “one stop shop” for all of their active contentrequirements covered by a single license. Ease of implementation also would require thatthe multiple formats of all DataCall’s data providers be distilled into a singleformat. Because active content may be displayed in a multitude of ways (banners, tickers,scrolls or artistically integrated with the overall presentation), DataCall produced a setof 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 inseveral cases, DataCall has produced customized data formats to the exact requirements oftheir partners. This customization ensures the highest level of reliable and ease ofintegration possible.

Market demand, opportunity and technology converge at a single point in time, andDataCall is there. Digital signage platforms are evolving to meet mass marketrequirements, costs for hardware and software are falling to the point of becomingcommodities and the markets for digital signage are clarifying through historical trialand error.
**Business Operations**
We currently offer our Direct Lynk Messenger service to customers through the Internet.The Direct Lynk Messenger Service is a Digital Signage product and real-time informationservice which provides a wide range of up-to-date information for display. The Direct LynkMessenger service is able to work concurrently with customers' existing digital signagesystems.

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

Data Call specializes in allowing its clients to create their own Digital Signagedynamic content feeds delivered, via the Internet, to digital display devices (plasma,LCD, Jumbotron, Kiosks etc.) at their establishments. The only requirements our clientsmust have are 1) a supported third party digital signage or Kiosk solution, or similardevice, which receives the data from our servers via the Internet, and displays thecontent on digital displays and 2) an Internet connection. The Direct Lynk System issupported by various third party systems, varying in cost from $350 to $5,000, such asthose marketed by 3M Digital Signage, BroadSign, ChyTV, Hughes, Key West Technologies,Coolsign, Scala, and Cisco amongst others .

The Direct Lynk System allows customers to select from the pre-determined data andinformation services described below,. The client may which individual locations and whichdisplays they would like to receive our feeds based on how their digital signage networkis configured.

The current types of data and information, for which a client is able to subscribe tothrough the Direct Lynk System 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;-Quirky News    Bits latest off-beat news headlines;-Sports    Headlines top sports headlines-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    Baseball - 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;-Major league    soccer;-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;-Amber    alerts;-Listings of    historical events which occurred on each day in history; and-Localized    Traffic and Weather Forecasts.**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 measurementsto reduce monthly expenditures. Our current rate of monthly operating expexpenditures isapproximately $30,000. We will continue these efforts to streamline operations, as wefocus on increasing sales and gross revenues over the next twelve months. We currentlyhave no plans to increase the number of employees. However, as new opportunities presentthemselves, we may find it necessary to bring human resources on staff to accommodate thepreparations for those opportunities. We do not currently have any plans to increase ourmonthly expenditures or number of employees. We estimate the Company will generaterevenues in excess of $500,000 in 2010.

We plan to continue to grow our business and market our Direct Lynk System to potentialcustomers over the course of the next twelve months by marketing our technology to digitalsignage manufacturers, Kiosk manufactures, the mobile app market, trade magazines, tradeshows and call centers. We will also continue on a limited basis our practice of providingpotential customers free trials of the Direct Lynk System, for which we will receive norevenue, in an attempt to build both product awareness for the Direct Lynk System and topotentially lead to sales down the road, which in the opinion of our management has beensuccessful both in building brand awareness for the Direct Lynk System and in bringing innew clients for subscriptions. We continually add subscribers for our technologythroughout and intend to build and increase such subscribers moving forward.

We are planning and negotiating with current vendors and partners, to expand ouroffering to other lateral markets. Hardware, software, and sales processes are currentlybeing modified and/or developed. We are currently in the completion phases of our mobileapplication platform that we expect to bring to market during fiscal year 2010.

The Company has generated positive cash flow from operations in the third quarter of2010 and expects positive cash flow from operations for the year ended December 31, 2010.
**Three Months Ended September 30, 2010 Compared to Three Months Ended September 30, 2009**
Our revenues for the three months ended September 30, 2010 were$104,976, compared to $104,349 for the three-month period ended September 30, 2009,representing an insignificant increase from the same period in the prior year.

Costs of sales for the three months ended September 30, 2010 were$23,671, compared to $24,444 for the three-month period ended September 30, 2009. Cost ofsales decreased due to decreased costs related to the bandwidth required to provide thesubscription services.

Gross margins for the three months ended September 30, 2010 were 77%,compared to 76%, for the three-month period ended September 30, 2009.

Operating expenses for the three months ended September 30, 2010 were$211,300, compared to $124,402 for the three-month period ended September 30, 2009,representing an increase of $86,898 or 70% increase from the same period in the prioryear. The increase in operating expenses is mainly due to an increase in professionalfees, compensation expenses, other expenses and product development costs.

Net loss for the three months ended September 30, 2010 was $129,995, compared to$44,497 for the three-month period ended September 30, 2009. The increase in our net losswas due to the increase in operating expenses as noted above.
**Nine Months Ended September 30, 2010 Compared to Nine Months Ended September 30, 2009**
Our revenues for the nine months ended September 30, 2010 were$314,384, compared to $334,652 for the nine-month period ended September 30, 2009,representing a decrease of 6% from the same period in the prior year. The decrease inrevenues was mainly due to the deteriorating economic environment in connection with thecurrent economic downturn.

Costs of sales for the nine months ended September 30, 2010 were$72,935, compared to $64,499 for the nine-month period ended September 30, 2009. Cost ofsales decreased due to decresed costs related to the bandwidth required to provide thesubscription services.

Gross margins for the nine months ended September 30, 2010 were 77%,compared to 81%, for the nine-month period ended September 30, 2009.

Operating expenses for the nine months ended September 30, 2010 were$582,101, compared to $419,607 for the nine-month period ended September 30, 2009,representing an increase of $75,596 or 39% increase from the same period in the prioryear. The increase in operating expenses is mainly due to an increase in professionalfees, compensation costs, other expenses and product development costs.

Net loss for the nine months ended September 30, 2010 was $340,652, compared to$149,454 for the nine-month period ended September 30, 2009. The increase in our net losswas due to the decrease in revenues and increase in operating expenses as noted above.
**Liquidity and Capital Resources**
As of September 30, 2010, we had total current assets of $129,500, consisting of$83,876 in cash, $15,624 in accounts receivable and $30,000 in prepaid expenses. We hadtotal current liabilities of $335,363 as of September 30, 2010, consisting of $44,933 inaccounts payable, $143,111 in accrued salaries and related liabilities, $107,915 indeferred revenues and a $55,000 short-term note.

We had a negative working capital of $205,863 and an accumulated deficit of $8,892,212as of September 30, 2010. The Company is operating with limited capital. As a result, theCompany is dependent on the procurement of additional financing to continue as a goingconcern.

We generated $8,648 of cash in our operating activities during the nine-month periodended September 30, 2010, which was based on a net loss of $340,652, offset by $117,500 innon-cash stock compensation, $22,337 in compensation for stock options and warrants,$77,782 in amortization of deferred stock-based compensation, increase in accrued salariesof $8,400, deferred revenues of $107,915 and depreciation costs of $9,136. Our accountspayable increased by $5,251 and our accounts receivable increased by $979. All suchchanges had a positive impact on our cash flow from operations.

Our investing activities were limited to the purchase of  property and equipmentin the amount of $2,303 during the nine-month period ended September 30, 2010.  Wereceived $40,000 from financing activities through the issuance of preferred shares duringthe nine months ended September 30, 2010.

Due to our limited cash position, we believe that we have to raise additinal funds tocontinue our operations for approximately the next three months. We believe we willrequire approximately $500,000 to maintain our operations for the next twelve months. Weplan to raise additional capital through the sale of debt and/or equity, which sales maycause dilution to our then existing shareholders, moving forward if needed to support ourongoing operations and expenses. There can be no assurances that we will be able to raiseadditional capital in the future, and/or that such sales of securities will not be onunfavorable terms.

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

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

We have not enteredinto, and do not expect to enter into, financial instruments for trading or hedgingpurposes.

ITEM 4.CONTROLS AND PROCEDURES****Back to Table of Contents

*Evaluation of disclosure controls andprocedures.* As of June 30, 2010, the Company's chief executive officer and chieffinancial officer conducted an evaluation regarding the effectiveness of the Company'sdisclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) underthe  Exchange Act. Based upon the evaluation of these controls and procedures, ourchief executive officer and chief financial officer concluded that our disclosure controlsand procedures were effective as of the end of the period covered by this report.

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

**PART II - OTHER INFORMATION**

ITEM 1. LEGALPROCEEDINGS**** Back to Table of Contents

None.

ITEM 1A.RISK FACTORSBackto Table of Contents

In addition to the otherinformation set forth in this report, you should carefully consider the factors discussedin Part I, “Item 1. Description of Business, subheading Risk Factors” inour Annual Report on Form 10-K for the year ended December 31, 2009, which couldmaterially affect our business, financial condition or future results. The risks describedin our Annual Report on Form 10-K are not the only risks facing our company.Additional risks and uncertainties not currently known to us or that we currently deem tobe immaterial also may materially adversely affect our business, financial conditionand/or operating results. 

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

During the three-months period ended September 30, 2010,the Company issued 4,500,000 restricted shares in connection with a legal settlementpursuant to Section 4(2) umder the Act.  

ITEM3. DEFAULTS UPON SENIOR SECURITIES****Back to Table of Contents

None.

ITEM4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSBack to Table of Contents

None.

ITEM5. OTHER INFORMATION****Back to Table of Contents

None.

ITEM6. EXHIBITS****Back to Table of Contents

(a) The following documentsare filed as exhibits to this report on Form 10-Q or incorporated by reference herein. Anydocument incorporated by reference is identified by a parenthetical reference to the SECfiling that included such document.

Exhibit    No.Description31.1Certification of CEO pursuant    to Rule 13a-14(a) or 15d-14(a) of the Exchange Act pursuant to Section 302 of the    Sarbanes-Oxley Act of 2002.31.2Certification of CFO pursuant    to Rule 13a-14(a) or 15d-14(a) of the Exchange Act pursuant to Section 302 of the    Sarbanes-Oxley Act of 2002.32.1Certification of CEO pursuant    to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of    2002.32.2Certification of CFO pursuant    to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of    2002.
SIGNATURES

Pursuant to therequirements of the Securities Exchange Act of 1934, this report has been signed below bythe following persons on behalf of the registrant and in the capacities and on the dateindicated.

/s/ Timothy E.VanceTimothy E. Vance   *CEO**   Dated: November 15, 2010*

/s/ Larry MosleyLarry Mosley   *CFO**   Dated: November 15, 2010*

**Unaudited Interim Financial    Statements**Back    to Table of Contents  **DATA CALL TECHNOLOGIES, INC.****Balance Sheets**September 30, 2010 (Unaudited) and December 31, 2009    (Audited)  
Assets**December    31, 2009**  **September    30, 2010**
(Audited)Current assets:      Cash$83,876$37,531      Accounts receivable15,62416,603      Prepaid expenses30,00030,000     Total current    assets129,50084,134  Property    and equipment121,175118,872   Less accumulated    depreciation and amortization111,988102,852     Net property and    equipment9,18716,020  Other    assets5,2555,255       Total assets$143,942$105,409  
Liabilities    and Stockholders' Deficiency  Current    liabilities:      Accounts payable 29,33729,086      Accrued salaries and related liabilities143,111134,711   Short-term note payable to    shareholder55,00050,000   Deferred revenues107,915-     Total current    liabilities335,363213,797  Stockholders'    equity:      Preferred stock, $.001 par value. Authorized 10,000,000 shares:         Series A 12% Convertible - 800,000 shares issued and outstanding         at September 30, 2010 and 0 at December 31, 2009800-   Common stock, $.001    par value. Authorized 200,000,000 shares:     99,382,100 shares    issued and outstanding at September 30, 2010,     85,882,100 shares    issued and outstanding at    December 31, 200999,38285,882      Additional paid-in capital8,683,1088,407,571      Accumulated    deficit(8,892,212)(8,551,560)  (108,922)(58,107)      Deferred    stock compensation(82,499)(50,281)        Total stockholders' equity (deficit)(191,421)(108,388)          Total liabilities and stockholders' equity $143,942$105,409  The    accompanying notes are an integral part of these financial statements.**DATA CALL TECHNOLOGIES, INC.****Statements of Operations**Three and Nine Months Ended September 30, 2010 and 2009    (Unaudited)  **Three Months****Three Months****Nine Months****Nine Months****Ended****Ended****Ended****Ended****September    30, 2010****September    30, 2009****September    30, 2010****September    30, 2009**  Revenues   Sales$104,976$104,349$314,384$334,652   Cost of sales23,67124,44472,93564,499     Gross margin81,30579,905241,449270,153  Operating    expenses:   Employee    compensation85,50077,132259,678244,821      Legal and accounting38,28927,821135,383106,845   Product development    costs7,82137547,203875   Travel2,5312,03414,7164,195   Office and    equipment rental5,4572,64812,98111,162   Office supplies and    expenses1,4461,8756,3608,182   Telephone4,5814,25914,54114,986   Advertising3,5672,67717,26110,866   Other59,0541,08264,8423,883   Depreciation expense3,0544,4999,13613,792     Total operating    expenses211,300124,402582,101419,607         Net loss before    income taxes(129,995)(44,497)(340,652)(149,454)  Provision    for income taxes- - - -           Net loss$(129,995)$(44,497)$(340,652)$(149,454)  Net loss    per common share - basic and diluted: Net loss    applicable to common shareholders$(0.00)$(0.00)$(0.00)$(0.00)       Weighted    average common shares:       Basic and Diluted95,512,10083,300,60089,217,10083,241,850      The    accompanying notes are an integral part of these financial statements.**DATA    CALL TECHNOLOGIES INC.****Statements of Cash Flows**Nine    Months Ended September 30, 2010 and 2009 (Unaudited)** ****Nine Months****Nine Months****Ended****Ended****September 30, 2010****September 30, 2009**Cash flows from operating activities:      Net loss$(340,652)$(149,454)      Adjustments to reconcile net loss to net cash used in operating activities:    Depreciation9,13613,792    Common stock issued    for services117,5002,500       Stock options and warrants issued for services22,33737,995    Amortization of    deferred compensation77,78277,499      (Increase) decrease in operating assets:     Accounts    receivable979(12,147)    prepaid expenses- (30,000)   Increase (decrease)    in operating liabilities:     Accounts payable5,251(37,595)    Accrued    salaries and related liabilities8,40023,100       Deferred revenues107,915-          Net cash provided (used in) operating activities 8,648(74,310)  Cash flows    from investing activities      Purchase of property and equipment(2,303)(568)          Net cash used in investing activities(2,303)(568)  Cash flows    from financing activities:      Proceeds from issuance of common shares under private placement-25,000  Proceeds from    issuance of preferred shares under private placement40,000-       Proceeds from short-term borrowing from shareholder-50,000          Net cash provided by financing activities40,00075,000            Net increase in cash 46,345122Cash at    beginning of period37,5318,971Cash at    end of period$83,876$9,093  The    accompanying notes are an integral part of these financial statements.
**DATA CALL TECHNOLOGIES, INC.Notes to Financial Statements**September 30, 2010
**(1) General

Data Call Technologies, Inc. (the "Company")was incorporated under the laws of the State of Nevada in 2002. The Company's mission isto integrate cutting-edge information delivery solutions that are currently deployed bythe media, and put them within the control of retail and commercial enterprises. TheCompany'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 orthousands of miles away.

The accompanying unaudited financial statements havebeen prepared in accordance with U. S. generally accepted accounting principles(“GAAP”) for interim financial information and with the instructions to Form10-Q. Accordingly, they do not include all of the information and footnotes required byGAAP for complete financial statements. In the opinion of management, all adjustments(consisting of normal recurring adjustments) considered necessary for a fair presentationhave been included. Operating results for the nine-month period ended September 30, 2010are not indicative of the results that may be expected for the year ending December 31,2010.

As contemplated by the Securities and ExchangeCommission (SEC) under Rules of Regulation S-X, the accompanying financial statements andrelated footnotes have been condensed and do not contain certain information that will beincluded in the Company's annual financial statements and footnotes thereto. For furtherinformation, refer to the Company's audited consolidated financial statements and relatedfootnotes thereto included in the Company's annual report on Form 10-K for the year endedDecember 31, 2009.
**(2) Use of Estimates**
The preparation of financial statements in conformitywith U. S. GAAP requires management to make estimates and assumptions that affect thereported amounts of assets and liabilities and disclosure of contingent assets andliabilities at the date of the financial statements and the reported amounts of revenuesand expenses during the reporting period. Actual results could vary from those estimates.
**(3) Recent Accounting Pronouncements**
In June 2009, the FASB issued SFAS No. 167, *Amendmentsto FASB Interpretation No. 46(R)*, which is effective for us beginning January 1,2010. This Statement amends Financial Accounting Standards Board Interpretation (*“FIN”*)No. 46(R), *Consolidation of Variable Interest Entities an interpretation of ARBNo. 51*, to require revised evaluations of whether entities represent variableinterest entities, ongoing assessments of control over such entities, and additionaldisclosures for variable interests. We believe the adoption of this pronouncement will nothave a material impact on our financial statements.

Management has reviewed this new standard and believesthat is no impact on the financial statements of the Company at this time; however, it mayapply in the future.
**(4) Capital Stock, Options and Warrants**
The Company is authorized to issue up to 10,000,000shares of Preferred Stock, $.001 par value per share, of which 800,000 shares of Series Aconvertible preferred stock are outstanding at September 30, 2010 and 0 at September 30,2009. The Preferred Stock may be issued in one or more series, the terms of which may bedetermined at the time of issuance by the Board of Directors, without further action bystockholders, and may include voting rights (including the right to vote as a series onparticular matters), preferences as to dividends and liquidation, conversion, redemptionrights and sinking fund provisions.

The Company is authorized to issue up to 200,000,000shares of Common Stock, of which 99,382,100 shares were issued and outstanding atSeptember 30, 2010, and 17,600,000 shares were reserved for issuance pursuant to theexercise of outstanding stock options and warrants as of September 30, 2010.

The following table summarizes information about optionsand warrants outstanding at September 30, 2010 and 2009:

**Shares**
**Weighted Average Exercise Price September 30, 2010**
**Shares**
**Weighted Average Exercise Price September 30, 2009**
Outstanding at    beginning of period
17,600,000
$
.10
17,600,000
$
.10
Granted
-
-
-
-
Exercised
-
-
-
-
Canceled
-
-
-
-
Outstanding at    end of period
17,600,000
$
.10
17,600,000
$
.10  
Weighted average    fair value of options and warrants granted    during the period
None
N/A
none
$
N/AExercisable    at end of period
17,600,000
$
.10
17,600,000
.10
Stock-based compensation is composed of the following for thenine-months ended September 30, 2010 and 2009:

**2010**
**2009**
Stock-based    compensation at fair value
$
117,500
$
2,500
Options and    warrants
22,337
37,995
Amortization of    deferred stock    compensation
77,782
77,499
Total    stock-based compensation expense
$
217,619
$
117,994**(5) Going Concern**
The Company is operating with limited capital.Successful development and marketing of the Company’s products and the procurement ofadditional financing is necessary for the Company to continue as a going concern.

In view of these matters, realization of a major portionof the assets in the accompanying balance sheet is dependent upon continued operations ofthe Company. Management believes that actions presently being taken to obtain additionalequity financing will provide the opportunity to continue as a going concern.

**(6) Deferred Revenue**

Deferred revenue consists of collections in advance forservices to be provided in future periods.** |