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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, 2008

  

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) 230-2376

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 |
|----------------------------------|-------------------------------|--------------------------------------|------------------------------------|

At September 30,2008, the Registrant had 82,188,100 shares of common stock outstanding.

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**TABLE OF CONTENTS**
| Item                                  |                          | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         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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 quarterlyreport 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 ofoperation 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 tohistorical or current facts. They use of words such as "anticipate,""estimate," "expect," "project," "intend,""plan," "believe," and other words and terms of similar meaning inconnection with any discussion of future operating or financial performance. From time totime, we also may provide forward-looking statements in other materials we release to thepublic.

**OVERVIEW**
***WhatIs Digital Signage?

Plasma and LCD displays arerapidly replacing printed marketing materials such as signs and placards, as well as theold fashioned whiteboard, for product and corporate branding, marketing and assistedselling. The appeal of instantly updating product videos and promotional messages on oneor a thousand remotely located displays is driving the adoption of this exciting marketingtool. James Bickers, senior editor of Digital Signage Today magazine recently describeddigital signage as “any form of business communication where a dynamic messagingdevice is used to take the place of, or supplement, other forms of messaging.” Thekey word in this definition of digital signage is “dynamic.” Digital signagepresentations are typically comprised of repeating loops of information used to brand,market or sell the owner’s products and services. But once seen, this informationbecomes repetitive and the viewer tunes it out, resulting in low retention of theclient’s message. As digital signage comes of age, the “dynamic”characteristic of the presentation has taken center stage.**DigitalSignage Comes of Age

Digital signage is coming of ageand DataCall Technologies has been there from the start. Four years ago, a company wantingto take the digital signage plunge was faced with a myriad of hardware and softwarecompanies, all offering their own “vision” of what digital signage should be.They were given the tools of digital signage, but were left pretty much left to their owndevices as to what to build. Those companies that took the early plunge where then facedwith the fact that no one had come before them to show the rights and wrongs, the dos anddon’ts of content development. But, even at this early stage of the game, DataCallrecognized that these pioneers of digital signage lacked a key component that would becomean integral part of any successful implementation—active content.
In the years since those early days of digital signage, the market hastaken care of weeding out the weaker providers of hardware and software. Companies nowhave a clearer understanding of what digital signage is, what is needed for a successfulimplementation and the best use of content space given their more-defined and attainablegoals. In the past two years, as the cost of platforms, supporting infrastructure anddisplays has fallen dramatically; digital signage has become more accessible to a widerrange of companies. And those companies are realizing that the initial, one-time cost ofgetting into the game is far outweighed by the cost of staying in the game, in the form ofongoing content development. As the cost of deployment decreased, companies began focusingon attention-grabbing content. Whether the goal of the presentation was product branding,marketing or assisted selling, content became king. Active content is on everyone’s“needs” 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 Needfor Speed--Active Content

Active content is that part of adigital signage presentation that is constantly updated with timely and relevantinformation. For instance, a typical presentation may contain ten 15-second loops thatprovide the primary message of the presentation, but the active content, such as thatprovided by DataCall, is updated with new information throughout the day. Those seeking toadd active content to their digital signage presentations are advised to employDataCall’s integrated content rather than shoehorning broadcast content into theirdigital signage presentation. 
However, by integrating DataCall’s active content alongside theirpresentations, companies can provide the entertainment content so necessary in dwell-timeretention without disrupting the core message of the presentation. Information categoriesprovided by DataCall include news, weather, sports, financial data and the latest trafficalerts. With such a broad range of offerings, companies have access to the active contentthey need, regardless of the market they are addressing. 
**DataCallOpportunities

The opportunities for DataCall inthe digital signage industry are countless. Many companies nowadays would outsource all orpart of their content creation. DataCall stands ready as their outsourced provider ofactive content data. Whether it’s general entertainment information (news, sports,stocks, etc.) or location-targeted active content (weather, traffic, etc), research isvalidating the long-held assumption--it is active content that draws viewers to digitalsignage and keeps them engaged throughout the presentation.
Over the past four years, DataCall has worked with the industry leadersin digital signage to develop the data formats and communication methods to allowDataCall’s active content to be easily integrated into their hardware and softwareproducts.
**The Stageis Set

The stage is set and the playersare on their marks. The experience and lessons learned by both providers and implementersof digital signage are converging at that point where explosive growth in the industry canbe realistically anticipated. DataCall is excited to be in the position they are, poisedto leverage their expertise and relationships in the digital signage industry to bring itsofferings to the next level.
Already, DataCall is actively developing the next generation in digitalsignage content. Delivering active content video is an opportunity that is in theimmediate future, as well as implementation of interactive digital signage. Whether it isthe use of radio frequency identification (RFID) to delivery active content directly tocustomers via their cell phone or engaging the customer to create their own digitalsignage experience via text messaging, DataCall will be at the forefront of the evolutionof digital signage--just as DataCall was at the forefront of the revolution of digitalsignage. DataCall is poised to ride this explosive growth in digital signage not just as aservice provider, but as a partner providing a key component to the most successfulimplementations of digital signage,
**Partners,Not Customers

DataCall’s approach tocustomer relations is to not accumulate customers, but to build partnerships. EachDataCall partner is as unique as the digital signage market they service—and each hastheir own requirements for active content. In developing active content for digitalsignage, DataCall identified three factors that had to be addressed—reliability,objectivity and ease of implementation. To address the reliability requirement, DataCallopted to license information from the leaders news, weather, sports and financial datarather than “scrapping” information from the Internet (which can be illegal) orpulling RSS feeds (which may come and go at the provider’s whim). Licensing data fromthese providers also satisfied the second requirement—objectivity. The Internet is aslittered of slanted opinions and hidden agendas as there are users of the Internet, Soarbitrarily allowing these “news” sources to go unchecked into DataCall’sactive content was completely unacceptable. Finally, the third requirement—ease ofimplementation—was address by both DataCall’s licensing of data and the methodby which it was disseminated to their partners.
DataCall understood that digital signage implementers had larger issuesto tackle 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.
**Go ForLaunch

The stage is set and the playersare on their marks. Market demand, opportunity and technology converge at a single pointin time, and DataCall 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.**RESULTS OF OPERATIONS

The following discussion should be read in conjunction with ourfinancial statements.

Since our filing of our annual report, we have implemented numerouscost management measurements to reduce monthly expenditures. Our current rate of monthlycash expenditures are now averaging approximately $49,,000 per month, compared to anapproximate monthly average of $104,000 for the nine-month period ended September 30,2007. This represents a 5% reduction in expenses over nine months of the prior year.Furthermore, this is a 5% reduction from the previous quarter. We will continue tomaintain these efforts to streamline operations, as we focus on increasing sales and grossrevenues over the next 12 months. We currently have no initial plans to increase thenumber of employees we employ. However, as new opportunities present themselves, we mayfind it necessary to bring human resources on staff to accommodate the preparations forthose opportunities.

Recent partner, marketing and/or customer agreements have allowed us toexpand our product line into the Public Access Broadcast arena (i.e. Leightronix), as wellas providing our product line to an industry leader in the ad-revenue based model ofdigital signage (i.e., AdTek Media). Additionally, we recently engaged Lamar Advertising,to provide Data Call content to their digital billboard solutions being implementedthroughout the country. Moving forward, we feel these three vertical market opportunitieswill provide strong positive growth over the next 36 months. 

Assuming we have sufficient working capital moving forward, we plan tocontinue to grow our business and market our Direct Lynk System to potential customersover the course of the next twelve months by marketing our technology to digital signagemanufacturers, trade magazines, trade shows and call centers. We will also continue, on alimited basis, our practice of providing potential customers free trials of the DirectLynk System, for which we will receive no revenue, in an attempt to build both productawareness for the Direct Lynk System and to potentially drive sales in the future, whichin the opinion of management, has been successful in building brand awareness for theDirect Lynk System and in bringing in new clients for subscriptions.

We are planning and negotiating with current vendors and partners, toexpand our offering to other lateral markets. Hardware, software, and sales processes arecurrently being modified and/or developed. Additionally, we are negotiating with anational broadcast news group to provide localized and repurposed video clips, through aData Call Technologies licensing agreement, to the digital signage space.

Projected revenue for the fourth quarter ending December 31, 2008 is$107,000. This represents a 27% increase over the previous quarter. Projected cashexpenses for the fourth quarter ending December 31, 2008 is $88,000. Projected revenue forthe next fiscal year is $1,100,000, with projected cash expenses of $685,000. TheCompany’s operations are expected to generate positive cash flow from operations inthe fourth quarter of 2008. Effective July 1, 2008, executive salaries were reduced to$7,292 monthly, which represents a 32% reduction in monthly executive salaries.
**Three and Nine Months Ended September 30, 2008 Compared to Three and Nine Months EndedSeptember 30, 2007**
Sales revenue for the three and nine months ended September 30, 2008were $90,572 and $244,944, respectively, compared to $26,733 and $82,146, respectively,for the three and nine-month periods ended September 30, 2007 representing an increase of238.80% and 198.18%, respectively, from the prior period. The increase in sales revenuewas mainly due to an increase subscriptions from current customers and new customersubscriptions.

Costs of sales for the three and nine months ended September 30, 2008were $23,596 and $47,465, respectively, compared to $15,720 and $35,927, respectively, forthe three and nine-month periods ended September 30, 2007. Costs of sales do not increasein direct proportion to an increase in sales revenue because costs of sales are related tothe amount bandwidth required to provide the subscription services.

Gross margins for the three and nine months ended September 30, 2008were 73.94% and 80.62%, respectively, compared to 41.19% and 56.26%, respectively, for thethree and nine-month periods ended September 30, 2007. The increase in gross margin isdirectly related to the explanation of decreases in costs of sales in the paragraphdirectly above.

Operating expenses for the three and nine months ended September 30,2008 were $271,608 and $735,562, respectively, compared to $362,832 and $1,252,207,respectively, for the three and nine-month periods ended September 30, 2007 representing adecrease of $91,224 or 25.14% and $516,654 or 41.11% decrease from the prior period. Thesignificant decrease in operating expenses is due to a decrease in compensation costs. 

Net losses for the three and nine months ended September 30, 2008 were $204,627 and$538,083, respectively, compared to $351,819 and $1,205,988, respectively, for the threeand nine-month periods ended September 30, 2007. The significant decrease in our netlosses are due to the increase in sale revenues and a decrease in operating expenses asnoted above.
**Liquidity and Capital Resources**
We had total current assets of $33,011, consisting of $4,400 of cash and $28,611 inaccounts receivable. We had total current liabilities of $156,952 as of September 30,2008, which represented $61,119 of accounts payable and $95,833 in accrued salaries.

We had total non-current liabilities of $204,400 as of September 30,2008, consisting of redeemable common stock. Redeemable common stock consisted of sharesof common stock sold to certain investors from 2003-2006, which investors may have ongoingrescission rights, even though those investors previously rejected our rescission offer tothem to return their shares of our common stock for their original subscription cost plusstatutory interest. While we are obligated to carry the $204,400 in redeemable commonstock on our balance sheet as a liability, we believe that the likelihood of any of theshareholders who hold those shares exercising their remaining rescission rights, if any,is very small. We had negative working capital of $123,941 and a deficit accumulated during thedevelopment stage of $8,297,378 as of September 30, 2008.

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 September 30, 2008, 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 FACTORS

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-KSB for the year ended December 31, 2007, whichcould materially affect our business, financial condition or future results. The risksdescribed in our Annual Report on Form 10-KSB are not the only risks facing ourcompany. Additional risks and uncertainties not currently known to us or that we currentlydeem to be immaterial also may materially adversely affect our business, financialcondition and/or operating results. 

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

None.

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 14, 2008*

/s/ Larry MosleyLarry Mosley   *CFO**   Dated: November 14, 2008*

**Unaudited Interim Financial    Statements**Back    to Table of Contents  **DATA CALL TECHNOLOGIES, INC.**(A Development Stage Company)**Balance Sheets**September 30, 2008 (Unaudited) and December 31, 2007    (Audited)  
Assets  **September    30, 2008**
**December 31, 2007**(Audited**)**Current assets:      Cash$4,400$30,413      Accounts receivable28,61120,644     Total current    assets33,01151,057  Property    and equipment118,304118,304   Less accumulated    depreciation and amortization80,56463,200     Net property and    equipment37,74055,104  Other    assets5,2555,255       Total assets$76,006$111,416  
Liabilities    and Stockholders' Deficiency  Current    liabilities:      Accounts payable 61,11969,073  Accrued salaries    and related liabilities95,83352,550     Total current    liabilities156,952121,623Redeemable    common stock204,400204,400          Total liabilities361,352326,023  Stockholders'    equity:      Preferred stock, $.001 par value. Authorized 10,000,000 shares: None issued- -    Common stock, $.001    par value. Authorized 200,000,000 shares:     82,188,100 shares    issued and outstanding at September 30, 2008,     73,068,100    shares issued and outstanding at    December 31, 200782,18873,068      Additional paid-in capital8,109,2907,744,565      Deficit    accumulated during the development stage(8,297,378)(7,759,295)  (105,900)58,338      Deferred    stock compensation(179,446)(272,945)        Total stockholders' equity (deficit)(285,346)(214,607)          Total liabilities and stockholders' equity $76,006$111,416  The accompanying notes are an integral part of these    financial statements.**DATA CALL TECHNOLOGIES, INC.**(A Development Stage Company)**Statements of Operations**Three and Nine Months Ended September 30, 2008 and 2007    (Unaudited)**Cumulative****Three Months****Three Months****Nine Months****Nine Months****totals from****Ended****Ended****Ended****Ended****inception to****September 30, 2008****September 30, 2007****September 30, 2008****September 30, 2007****September 30, 2008**  Revenues   Sales$90,572$26,733$244,944$82,146$449,486   Cost of sales23,59615,72047,46535,927148,162        Gross margin66,97611,013197,47946,219301,324  Operating expenses:   Employee    compensation123,585131,903357,555723,4774,800,162   Contractual    services-135,000-160,000916,074   Legal and accounting96,65834,441178,981154,114976,582   Product development    costs19,0146,96621,67322,022428,588   Travel1,08920,95514,51397,598406,091   Office and    equipment rental11,9678,78332,16525,534170,236   Office supplies and    expenses8699196,83913,744179,617   Telephone3,5985,08415,19118,915122,567   Advertising10,32110,91977,45312,919387,376   Other2941,28413,8284,150130,845   Depreciation expense4,2086,57817,36419,73480,564        Total    operating expenses271,603362,832735,5621,252,2078,598,702            Net loss    before income taxes(204,627)(351,819)(538,083)(1,205,988)(8,297,378)  Provision for income taxes- - - - -        Net loss$(204,627)$(351,819)$(538,083)$(1,205,988)$(8,297,378)  Net loss per common share - basic and diluted: Net loss applicable to common shareholders$(0.00)$(0.01)$(0.01)$(0.02)    Weighted average common shares:    Basic and Diluted79,959,05067,438,10076,931,35063,837,100   The accompanying notes are an integral part of these    financial statements.**DATA CALL TECHNOLOGIES INC.**(A Development Stage Company)**Statements of Cash Flows**Nine Months Ended September 30, 2008 and 2007 (Unaudited)** ****Cumulative****Nine Months****Nine Months****totals from****Ended****Ended****inception to****September 30, 2008****September 30, 2007****September 30, 2008**Cash flows from operating activities:      Net loss$(538,083)$(1,205,988)$(8,297,378)      Adjustments to reconcile net loss to net cash used in operating activities:    Depreciation17,36419,73480,564    Common stock issued    for services96,125260,0003,503,707       Stock options and warrants issued for services37,995142,936193,596    Amortization of    deferred compensation93,49967,499276,554      (Increase) decrease in operating assets:     Accounts    receivable(7,967)(6,746)(28,611)    Other assets-- (5,255)   Increase (decrease)    in operating liabilities:     Accounts payable(7,954)(13,515)65,119        Accrued salaries and related liabilities118,008-166,558          Net cash used in operating activities (191,013)(736,080)(4,045,146)  Cash flows    from investing activities      Purchase of property and equipment- -(118,304)          Net cash used in investing activities- -(118,304)  Cash flows    from financing activities:      Proceeds from issuance of common shares under private placement165,000495,0003,913,450      Proceeds from issuance of redeemable common shares under private placement- - 204,400  Proceeds from    short-term borrowing from shareholder- -50,000          Net cash provided by financing activities165,000495,0004,167,850            Net increase (decrease) in cash (26,013)(241,080)4,400Cash at    beginning of year30,413281,699- Cash at    end of year$4,400$40,619$4,400  Supplemental schedule of cash flow information:   Non-cash financing transactions:     Issuance of common    shares for conversion of debt$74,725$50,000$124,725  The    accompanying notes are an integral part of these financial statements.
**DATA CALL TECHNOLOGIES, INC.**(A Development Stage Company)**Notes to Financial Statements**September 30, 2008
**(1) General

Data Call Technologies, Inc. (the"Company") was incorporated under the laws of the State of Nevada in 2002. TheCompany's mission is to integrate cutting-edge information delivery solutions that arecurrently deployed by the media, and put them within the control of retail and commercialenterprises. The Company's software and services put its clients in control of real-timeadvertising, news, and other content, including emergency alerts, within one building or10,000, local or thousands of miles away. The Company is as development stage company.

The accompanying unauditedfinancial statements have been prepared in accordance with U. S. generally acceptedaccounting principles (“GAAP”) for interim financial information and with theinstructions to Form 10-QSB. Accordingly, they do not include all of the information andfootnotes required by GAAP for complete financial statements. In the opinion ofmanagement, all adjustments (consisting of normal recurring adjustments) considerednecessary for a fair presentation have been included. Operating results for the nine-monthperiod ended September 30, 2008 are not indicative of the results that may be expected forthe year ending December 31, 2008.

As contemplated by the Securitiesand Exchange Commission (SEC) under Rules of Regulation S-B, the accompanying financialstatements and related footnotes have been condensed and do not contain certaininformation that will be included in the Company's annual financial statements andfootnotes thereto. For further information, refer to the Company's audited consolidatedfinancial statements and related footnotes thereto included in the Company's annual reporton Form 10-KSB for the year ended December 31, 2007.
**(2) Use of Estimates**
The preparation of financialstatements in conformity with U. S. GAAP requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements and the reportedamounts of revenues and expenses during the reporting period. Actual results could varyfrom those estimates.
**(3) Recent AccountingPronouncements**
In February 2007, the FASB issuedSFAS No. 159, *“The Fair Value Option for Financial Assets and FinancialLiabilities – Including an amendment of FASB Statement No. 115,”* which iseffective for fiscal years beginning after November 15, 2007. This statement permitsentities to choose to measure many financial instruments and certain other items at fairvalue. This statement also establishes presentation and disclosure requirements designedto facilitate comparisons between entities that choose different measurement attributesfor similar types of assets and liabilities. Unrealized gains and losses on items forwhich the fair value option is elected would be reported in earnings.

In December 2007, the FASB issuedSFAS No. 141R, *"Business Combinations"*. SFAS 141R requires theacquiring entity in a business combination to record all assets acquired and liabilitiesassumed at their respective acquisition-date fair values, changes the recognition ofassets acquired and liabilities assumed arising from contingencies, changes therecognition and measurement of contingent consideration, and requires the expensing ofacquisition-related costs as incurred. SFAS 141R also requires additional disclosureof information surrounding a business combination, such that users of the entity'sfinancial statements can fully understand the nature and financial impact of the businesscombination. SFAS 141R applies prospectively to business combinations for which theacquisition date is on or after the beginning of the first annual reporting periodbeginning on or after December 15, 2008. An entity may not apply it before that date.

In December 2007, the FASB issuedSFAS No. 160. *“Noncontrolling Interests in Consolidated Financial Statements-andAmendment of ARB No. 51.”* SFAS 160 establishes accounting and reporting standardspertaining to ownership interests in subsidiaries held by parties other than the parent,the amount of net income attributable to the parent and to the noncontrolling interest,changes in a parent’s ownership interest, and the valuation of any retainednoncontrolling equity investment when a subsidiary is deconsolidated. This statement alsoestablishes disclosure requirements that clearly identify and distinguish between theinterests of the parent and the interests of the noncontrolling owners. SFAS 160 iseffective for fiscal years beginning on or after December 15, 2008. 

Management has reviewed these newstandards and believes that they have no impact on the financial statements of the Companyat this time; however, they may apply in the future.
**(4) Capital Stock, Options andWarrants**
The Company is authorized toissue up to 10,000,000 shares of Preferred Stock, $.001 par value per share, of which noneare presently outstanding. The Preferred Stock may be issued in one or more series, theterms of which may be determined at the time of issuance by the Board of Directors,without further action by stockholders, and may include voting rights (including the rightto vote as a series on particular matters), preferences as to dividends and liquidation,conversion, redemption rights and sinking fund provisions.

The Company is authorized toissue up to 200,000,000 shares of Common Stock, of which 82,188,100 shares were issued andoutstanding at September 30, 2008, and 17,600,000 shares were reserved for issuancepursuant to the exercise of outstanding stock options and warrants as of September 30,2008.

In addition to the amount ofcommon shares issued and outstanding as noted above, 2,044,000 shares were issued and arein the hands of shareholders at September 30, 2008; however, these shares are not includedin the Company’s permanent equity at September 30, 2008. These shares are considered“Redeemable Common Stock” and are included in the financial statements as along-term liability.

The following table summarizesinformation about options and warrants outstanding at September 30, 2008 and 2007:
**Shares**
**Weighted Average Exercise Price September 30, 2008**
**Shares**
**Weighted Average Exercise Price September 30, 2007**
Outstanding at    beginning of period
17,600,000
$
.10
3,500,000
$
.10
Granted
-
.10
14,100,000
.10
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
.10
.10
None
$
.10Exercisable    at end of period
17,600,000
$
.10
17,600,000
.10
Stock-based compensation is composed of the following for thesix-months ended September 30, 2008 and 2007:

**2008**
**2007**
Stock-based    compensation at fair value
$
146,125
$
260,000
Options and    warrants
37,995
142,936
Amortization of    deferred stock    compensation
93,499
67,499Cancellation of previously issued    shares
(50,000)
-
Total    stock-based compensation expense
$
227,619
$
470,435******************* |