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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 endedMarch 31, 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) 230-2376

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

On March 31, 2010,the Registrant had 85,882,100 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 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.

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:
o Headline News top    world and national news headlines;o Business News top    business headlines;o Financial    Highlights world-based financial indicators ;o Entertainment News    top entertainment headlines;o Health/Science News    top science/health headlines;o Quirky News Bits    latest off-beat news headlines;o Sports Headlines    top sports headlineso Latest Sports Lines    - latest sports odds for NFL, NBA, NHL, NCAA Football and NCAA Basketball;o National Football    League latest game schedule and in-game updates;o National Basketball    Association - latest game schedule and in-game updates;o Major League    Baseball - latest game schedule and in-game updates;o National Hockey    League - latest game schedule and in-game updates;o NCAA Football -    latest game schedule and in-game updates;o NCAA Men's    Basketball - latest game schedule and in-game updates;o Professional Golf    Association top 10 leaders continuously updated throughout the four-day tournament;o NASCAR top 10 race    positions updated every 20 laps throughout the race;oMajor league    soccer;oTraffic Mapping;o Animated Doppler    Radar and Forecast Maps;o Listings of the    day's horoscopes;o Listings of the    birthdays of famous persons born on each day;o Amber alerts;o Listings of    historical events which occurred on each day in history; ando 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 expenditures is approximately$30,000. We will continue these efforts to streamline operations, as we focus onincreasing sales and gross revenues over the next twelve months. We currently have noplans 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.

Projected revenue for the second quarter ending June 30, 2010 is $500,000. TheCompany’s operations are expected to generate positive cash flow from operations inthe third quarter of 2010.**Three Months Ended March 31, 2010 Compared to Three Months Ended March 31, 2009**
Our revenues for the three months ended March 31, 2010 were $95,323,compared to $109,940 for the three-month period ended march 31, 2009, representing adecrease of 13% from the same period in the prior year. The decrease in revenues wasmainly due to the deteriorating economic environment in connection with the currenteconomic downturn.

Costs of sales for the three months ended March 31, 2010 were $24,598,compared to $20,708 for the three-month period ended March 31, 2010. Costs of sales do notdecrease in direct proportion to a decrease in revenues because costs of sales are relatedto the bandwidth required to provide the subscription services.

Gross margins for the three months ended March 31, 2010 were 74%,compared to 81%, for the three-month period ended March 31, 2009.

Operating expenses for the three months ended March 31, 2010 were$170,817, compared to $155,424 for the three-month period ended March 31, 2009,representing an increase of $15,393 or 10% increase from the same period in the prioryear. The increase in operating expenses is mainly due to an increase in compensationcosts and travel expenses. 

Net loss for the three months ended March 31, 2010 was $100,092, compared to $66,192for the three-month period ended March 31, 2009. The increase in our net loss is due tothe decrease in revenues and increase in operating expenses as noted above.
**Liquidity and Capital Resources**
We had total current assets of $85,319, consisting of $45,123 of cash, $10,196 inaccounts receivable and $30,000 in prepaid expenses. We had total current liabilities of$243,634 as of March 31, 2010, which represented $43,123 of accounts payable, $145,511 inaccrued salaries and related liabilities and a $55,000 short-term note.

We had a negative working capital of $158,315 and an accumulated deficitof $8,651,652 on March 31, 2010.

We used $22,408 of cash in our operating activities during thethree-month period ended March 31, 2010, which was mainly due to a net loss of $100,092,offset by $12,665 in compensation for stock options and warrants, $25,833 in amortizationof deferred stock-based compensation, increase in accrued salaries of $10,800 anddepreciation costs of $2,942. Our accounts payable increased by $19,037 and our accountsreceivable decreased by $6,407, both changes had a positive impact on our cash flow fromoperations.

We had no investing activities during the three-month period ended March31, 2010. We received $30,000 from financing activities through the issuance of preferredshares during the three months ended March 31, 2010.

Due to our limited cash position, we believe that we have to raiseadditinal funds to continue our operations for approximately the next three months. Webelieve we will require approximately $500,000 to maintain our operations for the nexttwelve months. We plan to raise additional capital through the sale of debt and/or equity,which sales may cause dilution to our then existing shareholders, moving forward if neededto support our ongoing operations and expenses. There can be no assurances that we will beable to raise additional capital in the future, and/or that such sales of securities willnot be on unfavorable terms.

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

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 March 31, 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

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: May 20, 2010*

/s/ Larry MosleyLarry Mosley   *CFO**   Dated: May 20, 2010*

**Unaudited Interim Financial    Statements**Back    to Table of Contents  **DATA CALL TECHNOLOGIES, INC.****Balance Sheets**March 31, 2010 (Unaudited) and December 31, 2009 (Audited)  
Assets**December    31, 2009**  **March    31, 2010**
(Audited)Current assets:      Cash$45,123$37,531      Accounts receivable10,19616,603      Prepaid expenses30,00030,000     Total current    assets85,31984,134  Property    and equipment118,872118,872   Less accumulated    depreciation and amortization105,794102,852     Net property and    equipment13,07816,020  Other    assets5,2555,255       Total assets$103,652$105,409  
Liabilities    and Stockholders' Deficiency  Current    liabilities:      Accounts payable 43,12329,086      Accrued salaries and related liabilities145,511134,711   Short-term note    payable to shareholder55,00050,000          Total liabilities243,634213,797  Stockholders'    equity:      Preferred stock, $.001 par value. Authorized 10,000,000 shares: Series A convertible600-         - 600,000 shares issued and outstanding at March 31, 2010 and 0 at December 31, 2009   Common stock, $.001    par value. Authorized 200,000,000 shares:     85,882,100 shares    issued and outstanding at March 31, 2010     and outstanding at    December 31, 200985,88285,882      Additional paid-in capital8,449,6368,407,571      Accumulated    deficit(8,651,652)(8,551,560)  (115,534)(58,107)      Deferred    stock compensation(24,448)(50,281)        Total stockholders' equity (deficit)(139,982)(108,388)          Total liabilities and stockholders' equity $103,652$105,409  The    accompanying notes are an integral part of these financial statements.**DATA    CALL TECHNOLOGIES, INC.****Statements of Operations**Three    Months Ended March 31, 2010 and 2009 (Unaudited)**Three Months****Three Months****Ended****Ended****March 31, 2010****March 31, 2009**  Revenues   Sales$95,323$109,940   Cost of sales24,59820,708     Gross margin70,72589,232  Operating    expenses:   Employee    compensation90,55787,782      Legal and accounting41,45843,211   Product development    costs-500   Travel8,8061,912   Office and    equipment rental5,1363,494   Office supplies and    expenses2,3392,391   Telephone and    utilities4,3845,250   Advertising9,8974,353   Other5,2981,831   Depreciation expense2,9424,700     Total operating    expenses170,817155,424         Net loss before    income taxes(100,092)(66,192)  Provision    for income taxes- -           Net loss$(100,092)$(66,192)  Net loss    per common share - basic and diluted: Net loss    applicable to common shareholders$(0.00)$(0.00)       Weighted    average common shares:       Basic and Diluted85,882,10083,213,140      The    accompanying notes are an integral part of these financial statements.**DATA    CALL TECHNOLOGIES INC.****Statements of Cash Flows**Three    Months Ended March 31, 2010 and 2009 (Unaudited)** ****Three Months****Three Months****Ended****Ended****March 31, 2010****March 31, 2009**Cash flows from operating activities:      Net loss$(100,092)$(66,192)      Adjustments to reconcile net loss to net cash used in operating activities:    Depreciation2,9424,700    Amortization of    deferred compensation25,83325,833       Stock options and warrants issued for services12,66512,665      (Increase) decrease in operating assets:     Accounts    receivable6,407(500)    Other assets- -    Increase (decrease)    in operating liabilities:     Accounts payable19,0376,032    Accrued    salaries and related liabilities10,80016,525          Net cash used in operating activities (22,408)(937)  Cash flows    from investing activities      Purchase of property and equipment- -           Net cash used in investing activities- -   Cash flows    from financing activities:  Proceeds from    issuance of convertible preferred stock30,000-           Net cash provided by financing activities30,000-             Net increase (decrease) in cash 7,592(937)Cash at    beginning of period37,5318,971Cash at    end of period$45,123$8,034  The    accompanying notes are an integral part of these financial statements.
**DATA CALL TECHNOLOGIES, INC.Notes to Financial Statements**March 31, 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 three-month period ended March 31, 2010 arenot 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 ARB No. 51*,to require revised evaluations of whether entities represent variable interest entities,ongoing assessments of control over such entities, and additional disclosures for variableinterests. We believe the adoption of this pronouncement will not have a material impacton 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 600,000 shares of Series Aconvertible preferred stock are outstanding at March 31, 2010 and 0 at March 31, 2009. ThePreferred Stock may be issued in one or more series, the terms of which may be determinedat the time of issuance by the Board of Directors, without further action by stockholders,and may include voting rights (including the right to vote as a series on particularmatters), preferences as to dividends and liquidation, conversion, redemption rights andsinking fund provisions.

The Company is authorized to issue up to 200,000,000shares of Common Stock, of which 85,882,100 shares were issued and outstanding at March31, 2010, and 17,600,000 shares were reserved for issuance pursuant to the exercise ofoutstanding stock options and warrants as of March 31, 2010.

The following table summarizes information about optionsand warrants outstanding at March 31, 2010 and 2009:
**Shares**
**Weighted Average Exercise Price March 31, 2010**
**Shares**
**Weighted Average Exercise Price March 31, 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
N/A
N/A
N/A
$
N/AExercisable    at end of period
17,600,000
$
.10
17,600,000
.10
Stock-based compensation is composed of the following for thethree-months ended March 31, 2010 and 2009:

**2010**
**2009**
Stock-based    compensation at fair value
$
-
$
-
Options and    warrants
12,665
12,665
Amortization of    deferred stock    compensation
25,833
25,833
Total    stock-based compensation expense
$
38,498
$
38,498**(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) Subsequent Event and Contingencies**
On April 23, 2010, the Company, itsChief Executive Officer and the Chairman of the Board of Directors (the “Defendants”) were served with a lawsuit by a former officer who resigned from of hisposition with the Company in 2003, prior to the Company becoming a publicly tradedcompany. The former officer claims that the Company owes him 4,500,000 shares of theCompany's common stock. The lawsuit charges the Defendants with: 1) securities fraud, 2)breach of fiduciary duty, 3) common law fraud, 4) conversion, and 5) unjust enrichment. 

Management feels that the formerofficer's claim is wholly without merit and that management believes that the Companywill prevail. As a result, no liability has been established for this contingentliability.**** |