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Data Call
Technologies, Inc.
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Balance Sheets
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March 31, 2017 (Unaudited) and December
31, 2016
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(As Restated)
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Table of Contents
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March 31, 2017 (Unaudited)
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December 31, 2016
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(As Restated)
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(As Restated)
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Assets
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Current assets:
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Cash
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$
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9,631
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$
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53,499
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Accounts receivable
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110,479
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69,361
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Prepaid expenses
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-
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17,000
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Total current assets
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120,110
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139,860
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Property
and equipment
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128,573
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128,573
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Less accumulated depreciation and amortization
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127,813
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127,642
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Net property and equipment
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760
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931
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Other
assets
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800
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800
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Total assets
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$
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121,670
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$
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141,591
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Liabilities
and Stockholders' Equity (Deficit)
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Current
liabilities:
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Accounts payable
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$
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29,545
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$
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20,336
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Accounts payable - related party
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10,616
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3,389
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Accrued
salaries - related party
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499
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460
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Accrued interest
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22,241
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22,116
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Convertible short-term note payable to
related party - default
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10,000
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10,000
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Short-term note payable to
related party - default
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24,269
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26,028
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Total current liabilities
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97,170
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82,329
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Total liabilities
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97,170
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82,329
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Stockholders'
equity:
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Preferred stock, $0.001 par value. Authorized 10,000,000 shares:
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Series A 12% Convertible - 800,000 shares issued and outstanding
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at March 31, 2017 and December 31, 2016
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800
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800
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Preferred stock, $0.001 par value. Authorized 1,000,000 shares:
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Series B - 10,000 shares issued and outstanding
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at March 31, 2017 and December 31, 2016
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10
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10
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Common stock, $0.001 par value. Authorized
200,000,000 shares:
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4,832,547
shares
issued and outstanding
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at March 31, 2017 and December 31, 2016
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144,976
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144,976
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Additional paid-in capital
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9,715,750
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9,671,609
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Accumulated deficit
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(9,837,036)
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(9,758,133)
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Total stockholders' equity (deficit)
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24,500
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59,262
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Total liabilities and stockholders' equity (deficit)
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$
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121,670
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$
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141,591
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The
accompanying notes are an integral part of these financial statements.
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Data Call Technologies, Inc.
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Condensed Statements of Operations
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Three Months Ended March 31, 2017 and 2016 (Unaudited)
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(As Restated)
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Back to Table of
Contents
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Three Months
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Three Months
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ended
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ended
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March 31, 2017
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March 31, 2016
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(As Restated)
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(As Restated)
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Revenues
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Sales
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$
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152,239
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$
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167,786
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Cost of sales
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35,911
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42,046
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Gross margin
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116,328
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125,740
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Selling, general and administrative
expenses
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193,696
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192,563
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Depreciation and
amortization expense
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171
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171
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Total operating
expenses
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193,867
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192,734
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Other (income) expense
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Interest income
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(2)
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(1,157)
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Interest expense
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1,366
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1,366
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Total expenses
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195,232
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192,943
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Net income
(loss) before income taxes
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(78,903)
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(67,203)
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Provision
for income taxes
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-
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-
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Net loss
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$
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(78,903)
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$
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(67,203)
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Net loss per common share - basic and diluted:
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Net loss applicable to common shareholders
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$
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(0.00
)
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$
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(0.00
)
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Weighted
average common shares:
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Basic
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144,976,421
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144,976,421
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Diluted
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144,976,421
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144,976,421
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The
accompanying notes are an integral part of these financial statements.
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Data
Call Technologies, Inc.
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Condensed Statements of Cash Flows
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Three
Months Ended March 31, 2017 and 2016 (Unaudited)
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Back to Table of
Contents
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Three Months
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Three Months
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Ended
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Ended
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March 31, 2017
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March 31, 2016
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Cash flows from operating activities:
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Net loss
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$
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(78,903)
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$
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(67,203)
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Adjustments to reconcile net loss to net cash
provided by (used in)
operating activities:
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Depreciation
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171
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171
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Stock
based compensation
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43,832
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51,918
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Options expense
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309
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409
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Changes in operating assets and liabilities:
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Accounts receivable
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(41,118)
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(29,204)
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Prepaid expenses
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17,000
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11,370
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Accounts payable
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9,209
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21,493
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Accounts payable -
related party
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7,227
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(3,767)
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Accrued expenses
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125
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125
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Accrued expenses -
related party
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39
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1,798
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Deferred revenues
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-
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(1,521)
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Net cash provided by (used in) operating activities
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(42,109)
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(14,411)
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Cash flows
from investing activities
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Purchase of property and equipment
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-
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-
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Net cash used in investing activities
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-
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-
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Cash flows
from financing activities:
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Principal payment on borrowing from
related party
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(1,759)
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(1,759)
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Net cash used in financing activities
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(1,759)
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(1,759)
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Net increase (decrease) in cash
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(43,868)
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(16,170)
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Cash at
beginning of year
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53,499
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85,810
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Cash at
end of period
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$
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9,631
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$
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69,640
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Non-Cash Investing and Financing Activities:
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Conversion of short-term borrowing
from shareholder to common stock
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$
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-
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$
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-
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Supplemental Cash Flow Information:
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Cash paid for interest
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$
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1,366
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$
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1,241
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Cash paid for taxes
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$
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-
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$
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-
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The
accompanying notes are an integral part of these financial statements.
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Data Call Technologies, Inc.
Notes to Financial Statements
March 31, 2017
(Unaudited)
Back to Table of
Contents
(1) Summary of Significant
Accounting Policies
Organization, Ownership and Business
Data Call Technologies, Inc. (the
"Company") was incorporated under the laws of the State of Nevada in 2002.
The Company's mission is to integrate cutting-edge information delivery
solutions that are currently deployed by the media, and put them within the
control of retail and commercial enterprises. The Company's software and
services put its clients in control of real-time advertising, news, and
other content, including emergency alerts.
The accompanying unaudited financial
statements have been prepared in accordance with U. S. generally accepted
accounting principles ("GAAP") for interim financial information and with the
instructions to Form 10-Q. Accordingly, they do not include all of the
information and footnotes required by GAAP for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been included.
Operating results for the three-month period ended March 31, 2017 are not
indicative of the results that may be expected for the year ending December 31,
2017.
As contemplated by the Securities and Exchange
Commission (SEC) under Rules of Regulation S-X, the accompanying financial
statements and related footnotes have been condensed and do not contain certain
information that will be included in the Company's annual financial statements
and footnotes thereto. For further information, refer to the Company's audited
financial statements and related footnotes thereto included in the Company's
annual report on Form 10-K for the year ended December 31, 2016.
Cash and Cash Equivalents
For purposes of the statement of cash flows,
the Company considers all highly liquid investment instruments purchased with
original maturities of three months or less to be cash equivalents. There were
no cash equivalents as of March 31, 2017 and December 31, 2016.
Revenue Recognition
Company recognizes revenues based on monthly
fees for services provided to customers. Some customers prepay for annual
services and the Company defers such amounts and amortizes them into revenues as
the service is provided.
Accounts Receivable
Accounts receivable consist primarily of trade
receivables. The Company provides an allowance for doubtful trade receivables
equal to the estimated uncollectible amounts. That estimate is based on
historical collection experience, current economic and market conditions and a
review of the current status of each customer's trade accounts receivable. The
allowance for doubtful trade receivables was $0 as of March 31, 2017 and December
31, 2016 as we believe all of our receivables are fully collectable.
Property, Equipment and Depreciation
Property and equipment are recorded at cost
less accumulated depreciation. Upon retirement or sale, the cost of the assets
disposed of and the related accumulated depreciation are removed from the
accounts, with any resultant gain or loss being recognized as a component of
other income or expense. Depreciation is computed over the estimated useful
lives of the assets (3-5 years) using the straight-line method for financial
reporting purposes and accelerated methods for income tax purposes. Maintenance
and repairs are charged to operations as incurred.
Advertising Costs
The cost of advertising is expensed as
incurred.
Research and Development
Research and development costs are expensed as
incurred.
Product Development Costs
Product development costs consist of cost
incurred to develop the Company's website and software for internal and external
use. All product development costs are expensed as incurred.
Income Taxes
The Company is a taxable entity and recognizes
deferred tax assets and liabilities for the future tax consequences attributable
to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax basis. Deferred tax assets and
liabilities are measured using enacted tax rates expected to be in effect when
the temporary differences reverse. The effect on the deferred tax assets and
liabilities of a change in tax rates is recognized in income in the year that
includes the enactment date of the rate change. A valuation allowance is used to
reduce deferred tax assets to the amount that is more likely than not to be
realized.
Use of Estimates
The preparation of financial statements in
conformity with U. S. GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could vary from those estimates.
Beneficial Conversion Feature
Convertible debt includes conversion terms
that are considered in the money compared to the market price of the stock on
the date of the related agreement. The Company calculates the beneficial
conversion feature and records a debt discount with the amount being amortized
to interest expense over the term of the note.
Management's Estimates and Assumptions
The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses. Actual
results could differ from these estimates.
Stock-based Compensation
We account for stock-based compensation in
accordance with "FASB ASC 718-10." Stock-based compensation expense recognized
during the period is based on the value of the portion of share-based awards
that are ultimately expected to vest during the period. The fair value of each
stock option grant is estimated on the date of grant using the Black-Scholes
option pricing model. The fair value of restricted stock is determined based on
the number of shares granted and the closing price of the Company's common stock
on the date of grant. Compensation expense for all share-based payment awards is
recognized using the straight-line amortization method over the vesting period.
Restatements
During the second quarter of fiscal 2017,
the Company decided to not effectuate a previously declared reverse split of
its
common stock. Our financial statements have thus been restated to recognize
changes in share-based information in our balance sheets and statements of
operations. Please see Note 6 for more information.
Fair Value of Financial Instruments
The Company estimates the fair value of its
financial instruments using available market information and appropriate
valuation methodologies. However, considerable judgment is required in
interpreting market data to develop the estimates of fair value. Accordingly,
the Company estimates of fair value are not necessarily indicative of the
amounts that the Company could realize in a current market exchange. The use of
different market assumption and/or estimation methodologies may have a material
effect on the estimated fair value amounts. The interest rates payable by the
Company on its notes payable approximate market rates. The Company believes that
the fair value of its financial instruments comprising accounts receivable,
notes receivable, accounts payable, and notes payable approximate their carrying
amounts.
On January 1, 2009, the Company adopted an
accounting standard for applying fair value measurements to certain assets,
liabilities and transactions that are periodically measured at fair value. The
adoption did not have a material effect on the Company's financial position,
results of operations or cash flows. In August 2009, the FASB issued an
amendment to the accounting standards related to the measurement of liabilities
that are routinely recognized or disclosed at fair value. This standard
clarifies how a company should measure the fair value of liabilities, and that
restrictions preventing the transfer of a liability should not be considered as
a factor in the measurement of liabilities within the scope of this standard.
This standard became effective for the Company on October 1, 2009. The adoption
of this standard did not have a material impact on the Company's financial
statements. The fair value accounting standard creates a three level hierarchy
to prioritize the inputs used in the valuation techniques to derive fair values.
The basis for fair value measurements for each level within the hierarchy is
described below with Level 1 having the highest priority and Level 3 having the
lowest.
Level 1: Quoted prices in active markets for
identical assets or liabilities.
Level 2: Quoted prices for similar assets or
liabilities in active markets; quoted prices for identical or similar
instruments in markets that are not active; and model-derived valuations in
which all significant inputs are observable in active markets.
Level 3: Valuations derived from valuation techniques in which
one or more significant inputs are unobservable.
The following table presents the Company's
Assets & Liabilities within the fair value hierarchy utilized to measure fair
value on a recurring basis as of March 31, 2017 and December 31, 2016:
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(Level 1)
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(Level 2)
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(Level 3)
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March 31, 2017
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$
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0
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$
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0
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$
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0
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December 31, 2016
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$
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0
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$
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0
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$
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0
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Recent Accounting Pronouncements
In August, 2016, the FASB issued ASU No.
2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash
Receipts and Cash Payments(a consensus of the Emerging Issues Task Force).
Effective for public business entities for fiscal years beginning after December
15, 2017, and interim periods within those fiscal years. For all other entities,
the amendments are effective for fiscal years beginning after December 15, 2018,
and interim periods within fiscal years beginning after December 15, 2019. Early
adoption is permitted, including adoption in an interim period. If an entity
early adopts the amendments in an interim period, any adjustments should be
reflected as of the beginning of the fiscal year that includes that interim
period. An entity that elects early adoption must adopt all of the amendments in
the same period.
In June, 2016, the FASB issued ASU No.
2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit
Losses on Financial Instruments. For public business entities that are U.S.
Securities and Exchange Commission (SEC) filers, the amendments in this Update
are effective for fiscal years beginning after December 15, 2019, including
interim periods within those fiscal years. For all other public business
entities, the amendments in this Update are effective for fiscal years beginning
after December 15, 2020, including interim periods within those fiscal years.
For all other entities, including not-for-profit entities and employee benefit
plans within the scope of Topics 960 through 965 on plan accounting, the
amendments in this Update are effective for fiscal years beginning after
December 15, 2020, and interim periods within fiscal years beginning after
December 15, 2021. All entities may adopt the amendments in this Update earlier
as of the fiscal years beginning after December 15, 2018, including interim
periods within those fiscal years.
In May, 2016, the FASB issued ASU No. 2016-12,
Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and
Practical Expedients. The amendments in this Update affect the guidance in
Accounting Standards Update 2014-09, Revenue from Contracts with Customers
(Topic 606), which is not yet effective. The effective date and transition
requirements for the amendments in this Update are the same as the effective
date and transition requirements for Topic 606 (and any other Topic amended by
Update 2014-09). Accounting Standards Update 2015-14,Revenue from Contracts with
Customers (Topic 606): Deferral of the Effective Date, defers the effective date
of Update 2014-09 by one year.
In April, 2016, the FASB issued ASU No.
2016-10, Revenue from Contracts with Customers (Topic 606): Identifying
Performance Obligations and Licensing. The amendments in this Update affect the
guidance in Accounting Standards Update 2014-09, Revenue from Contracts with
Customers (Topic 606), which is not yet effective. The effective date and
transition requirements for the amendments in this Update are the same as the
effective date and transition requirements in Topic 606 (and any other Topic
amended by Update 2014-09). Accounting Standards Update 2015-14,Revenue from
Contracts with Customers (Topic 606): Deferral of the Effective Date, defers the
effective date of Update 2014-09 by one year.
The Company has considered all new accounting
pronouncements and has concluded that there are no new pronouncements that may
have a material impact on results of operations, financial condition, or cash
flows, based on current information.
(2) Related Party Transactions
During the first quarter of 2013, the Company
issued unregistered shares as follows: (i) 7,500,000 restricted shares to Tim
Vance, the Company's CEO, in connection with the execution of a new 5 year
employment agreement; and 7,500,000 restricted shares to Gary Woerz, the Company's
newly designated CFO, in connection with the execution of a new 5 year
employment agreement. The restricted shares were valued at $0.06 per share using
the closing price of the stock on the date of grant. Total expense associated
with the issuances is calculated at $900,000 to be recognized over the 5 year
term of the agreements. The expense recognized in the first quarter of 2017 was
$43,832 and the expense in the first quarter of 2016 was $44,318. The January
2013 employment agreements calls for a 5 year term ending January 30, 2018,
annual compensation of $85,000 per year for services as CEO, annual compensation
of $52,000 per year for services as CFO, 500,000 options to the CEO and 400,000
options to the CFO in addition to the 7,500,000 restricted shares to each the CEO
and CFO.
During the first quarter of 2015, the Company
granted a total of 900,000 options for the purchase of up to 900,000 shares of
common stock to Tim Vance, the Company's CEO, in connection with the execution
of a new 5 year employment agreement and to Gary Woerz, the Company's newly
designated CFO, in connection with the execution of a new 5 year employment
agreement. The Company uses the Black-Scholes option valuation model to value
stock options granted. The Black- Scholes model was developed for use in
estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. The model requires management to make estimates,
which are subjective and may not be representative of actual results. The
Company recorded $Nil (March 31, 2016: $266) in stock option compensation
expense, in relation to these options for the quarter ended March 31, 2017. The
Black-Scholes model calculations included stock price on date of measurement of
$0.0036, exercise price of $0.001, a term of 1.5 years, computed volatility of
251% and a discount rate of 0.33%. The January 2015 employment agreements calls
for a 5 year term ending January 30, 2018, annual compensation of $85,000 per
year for services as CEO, annual compensation of $52,000 per year for services
as CFO, 500,000 options to the CEO and 400,000 options to the CFO in addition to
the 7,500,000 restricted shares to each the CEO and CFO.
During the first quarter of 2016, the Company
granted a total of 900,000 options for the purchase of up to 900,000 shares of
common stock to Tim Vance, the Company's CEO, in connection with the execution
of a new 5 year employment agreement and to Gary Woerz, the Company's newly
designated CFO, in connection with the execution of a new 5 year employment
agreement. The Company uses the Black-Scholes option valuation model to value
stock options granted. The Black- Scholes model was developed for use in
estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. The model requires management to make estimates,
which are subjective and may not be representative of actual results. The
Company recorded $77 (March 31, 2016: $143) in stock option compensation
expense, in relation to these options for the quarter ended March 31, 2017. The
Black-Scholes model calculations included stock price on date of measurement of
$0.0014, exercise price of $0.001, a term of 3 years, computed volatility of
105% and a discount rate of 1.01%. The January 2016 employment agreements calls
for a 5 year term ending January 30, 2018, annual compensation of $85,000 per
year for services as CEO, annual compensation of $52,000 per year for services
as CFO, 500,000 options to the CEO and 400,000 options to the CFO in addition to
the 7,500,000 restricted shares to each the CEO and CFO.
During the first quarter of 2017, the Company
granted a total of 900,000 options for the purchase of up to 900,000 shares of
common stock to Tim Vance, the Company's CEO, in connection with the execution
of a new 5 year employment agreement and to Gary Woerz, the Company's newly
designated CFO, in connection with the execution of a new 5 year employment
agreement. The Company uses the Black-Scholes option valuation model to value
stock options granted. The Black- Scholes model was developed for use in
estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. The model requires management to make estimates,
which are subjective and may not be representative of actual results. The
Company recorded $232 (March 31, 2016: $Nil) in stock option compensation
expense, in relation to these options for the quarter ended March 31, 2017. The
Black-Scholes model calculations included stock price on date of measurement of
$0.002, exercise price of $0.001, a term of 3 years, computed volatility of 124%
and a discount rate of 1.93%. The January 2016 employment agreements calls for a
5 year term ending January 30, 2018, annual compensation of $85,000 per year for
services as CEO, annual compensation of $52,000 per year for services as CFO,
500,000 options to the CEO and 400,000 options to the CFO in addition to the
7,500,000 restricted shares to each the CEO and CFO.
The Company issued a total of twelve million (12,000,000 restricted shares) of the Company's common stock as follows:
six million restricted shares in the name of Timothy E. Vance and six million restricted shares in the name of Gary D. Woerz valued at $0.0038
based upon services provided by the Executive officers in improving the
Company's financial condition and operations and the shares will be subject to a
holding period of eighteen months prior to their availability for resale
pursuant to the provisions of Rule 144, and the Company determined that the
Employment Agreements between the Company and its Executive Officers be amended
to adjust the exercise price form the lower of $0.03 to $0.0015 and that the
expiration date of the options to be extended from January 31, 2018 to December
31, 2019. The company expensed $Nil for the quarter ending March 31, 2017 and
$7,600 for the quarter ending March 31, 2016. The total value of the 12,000,000
shares granted is $45,600.
During 2009, the Company received cash in the
sum of $50,000 from a shareholder for a Convertible Note Payable at a 10%
interest rate. On July 30, 2015, the Company entered into an amendment agreement
for the previously convertible note. The amendment removed the prior conversion
feature of the note and amended the due date to June 30, 2016. The remaining
balance of the note as of March 31, 2017 and December 31, 2016 was $24,269 and
$26,028, respectively. The interest for the note payable has been calculated
annually and has been paid for the quarter ended March 31, 2017 and the year
ended December 31, 2016.
As of March 31, 2017 and December 31, 2016,
convertible notes payable to related party had a balance of $10,000.The note is
past due and considered in default. The interest for the note payable has been
calculated annually and has been accrued for the quarter ended March 31, 2017
and the year ended December 31, 2016.
During the quarters ended March 31, 2017 and
March 31, 2016, the company repaid a total of $1,759 and $1,759, respectively,
to related parties on various note payables.
As of March 31, 2017 and December 31, 2016 the
total due to management for past accrued salaries is $499 and $460,
respectively.
As of March 31, 2017 and December 31, 2016 the
total due to management included in accounts payable is $10,616 and $3,389,
respectively.
(3) Capital Stock, Warrants and Options
The Company is authorized to issue up to
10,000,000 shares of Series A Preferred Stock, $0.001 par value per share, of
which 800,000 shares are outstanding at March 31, 2017 and December 31, 2016.
The Preferred Stock may be issued in one or more series, the terms of which may
be determined at the time of issuance by the Board of Directors, without further
action by stockholders, and may include voting rights (including the right to
vote as a series on particular matters), preferences as to dividends and
liquidation, conversion, redemption rights and sinking fund provisions.
Each share of Series A Preferred Stock shall
bear a preferential dividend of twelve percent (12%) per year and is convertible
into a number shares of the Company's common stock, par value $0.001 per share
("Common Stock") based upon Fifty (50%) percent of the average closing bid price
of the Common Stock During the ten (10) day period prior to the conversion. The
Company has not declared or accrued any dividends and as of March 31, 2017 and
2016 unaccrued and undeclared dividends were $1,200.
During the first quarter of 2013, the Company
issued unregistered shares as follows: (i) 7,500,000 restricted shares to Tim
Vance, the Company's CEO, in connection with the execution of a new 5 year
employment agreement; and 7,500,000 restricted shares to Gary Woerz, the Company's
newly designated CFO, in connection with the execution of a new 5 year
employment agreement. The restricted shares were valued at $0.06 per share using
the closing price of the stock on the date of grant. Total expense associated
with the issuances is calculated at $900,000 to be recognized over the 5 year
term of the agreements. The expense recognized in the first quarter of 2017 was
$43,832 (2016: $44,318).
During the quarter ended September 30, 2014,
the Company amended its Articles of incorporation to authorize 1,000,000 shares
of Series B Preferred Stock at a par value of $0.001 and issued 10,000 shares.
The Series B shares were valued at $76,000 and were expensed during 2014. The
Series B Preferred Stock may be issued to one or series by the terms of which
may be and may include preferences as to dividends and liquidation, conversion,
redemption rights and sinking fund provisions. The Series B Preferred Shares
have the right to vote in the aggregate, on all shareholder matters votes equal
to 51% of the total shareholder vote on any and all shareholder matters. The
Series B Preferred Stock will be entitled to this 51% voting right no matter how
many shares of common stock or other voting stock of Data Call Technology stock
is issued and outstanding in the future.
The Company granted a total of twelve million
(12,000,000 restricted shares) of the Company's common stock as follows:
6,000,000 restricted shares in the name of Timothy E. Vance and 6,000,000 restricted
shares in the name of Gary D. Woerz valued at the closing price on the date of
grant of $0.0038 per share based upon services provided by the Executive officers
in improving the Company's financial condition and operations and the shares
will be subject to a holding period of eighteen months prior to their
availability for resale pursuant to the provisions of Rule 144. The shares vest
over 18 months. The expense recognized during the quarter ended March 31, 2017
was $Nil. The expense recognized during the quarter ended March 31, 2016 was
$7,600. The total value of the 400,000 shares granted is $45,600. Additionally,
the Company determined that the Employment Agreements between the Company and
its Executive Officers be amended to adjust the exercise price form the lower of
$0.03 to $0.0015 and that the expiration date of the options to be extended from
January 31, 2018 to December 31, 2019.
During the first quarter of 2017, the Company
granted a total of 900,000 options for the purchase of up to 900,000 shares of
common stock to Tim Vance, the Company's CEO, in connection with the 2013 5 year
employment agreement and to Gary Woerz, CFO, in connection with the execution of
the 2013 5 year employment agreement. The Company uses the Black-Scholes option
valuation model to value stock options granted. During the period ended March
31, 2015, the Company determined that the Employment Agreements between the
Company and its Executive Officers be amended to adjust the exercise price form
the lower of $0.03 to $0.0015 and that the expiration date of the options to be
extended from January 31, 2018 to December 31, 2019. The Black- Scholes model
was developed for use in estimating the fair value of traded options that have
no vesting restrictions and are fully transferable. The model requires
management to make estimates, which are subjective and may not be representative
of actual results. The Black-Scholes model calculations included stock price on
date of measurement of $0.002, exercise price of $0.001, a term of 3 years,
computed volatility of 124% and a discount rate of 1.93%. Assumptions used to
determine the fair value of the stock based compensation is as follows:
|
Exercise price
|
Total Options Outstanding
|
Weighted Average Remaining Life (Years)
|
Total Weighted Average Exercise Price
|
Options Exercisable
|
|
$0.001
|
900,000
|
2.90
|
$0.001
|
900,000
|
The Company recorded $232 (2016: $Nil) in
stock option compensation expense, in relation to these options, during the
quarter ended March 31, 2017. Total stock option compensation expense is
calculated at $1,460.
During the first quarter of 2016, the Company
granted a total of 900,000 options for the purchase of up to 900,000 shares of
common stock to Tim Vance, the Company's CEO, in connection with the 2013 5 year
employment agreement and to Gary Woerz, CFO, in connection with the execution of
the 2013 5 year employment agreement. The Company uses the Black-Scholes option
valuation model to value stock options granted. During the period ended March
31, 2015, the Company determined that the Employment Agreements between the
Company and its Executive Officers be amended to adjust the exercise price form
the lower of $0.03 to $0.0015 and that the expiration date of the options to be
extended from January 31, 2018 to December 31, 2019. The Black- Scholes model
was developed for use in estimating the fair value of traded options that have
no vesting restrictions and are fully transferable. The model requires
management to make estimates, which are subjective and may not be representative
of actual results. The Black-Scholes model calculations included stock price on
date of measurement of $0.0014, exercise price of $0.001, a term of 3 years,
computed volatility of 105% and a discount rate of 1.01%. Assumptions used to
determine the fair value of the stock based compensation is as follows:
|
Exercise price
|
Total Options Outstanding
|
Weighted Average Remaining Life (Years)
|
Total Weighted Average Exercise Price
|
Options Exercisable
|
|
$0.001
|
900,000
|
2.11
|
$0.001
|
900,000
|
The Company recorded $77 (2016: $143) in
stock option compensation expense, in relation to these options, during the
quarter ended March 31, 2017. Total stock option compensation expense is
calculated at $884.
During the first quarter of 2015, the Company
granted a total of 900,000 options for the purchase of up to 900,000 shares of
common stock to Tim Vance, the Company's CEO, in connection with the 2013 5 year
employment agreement and to Gary Woerz, CFO, in connection with the execution of
the 2013 5 year employment agreement. The Company uses the Black-Scholes option
valuation model to value stock options granted. During the period ended March
31, 2015, the Company determined that the Employment Agreements between the
Company and its Executive Officers be amended to adjust the exercise price form
the lower of $0.03 to $0.0015 and that the expiration date of the options to be
extended from January 31, 2018 to December 31, 2019. The change in value from
the lower exercise price and extended expiration date was considered immaterial.
The Black- Scholes model was developed for use in estimating the fair value of
traded options that have no vesting restrictions and are fully transferable. The
model requires management to make estimates, which are subjective and may not be
representative of actual results. The Black-Scholes model calculations included
stock price on date of measurement of $0.0036, exercise price of $0.001, a term
of 1.5 years, computed volatility of 251% and a discount rate of 0.33%.
Assumptions used to determine the fair value of the stock based compensation is
as follows:
|
Exercise price
|
Total Options Outstanding
|
Weighted Average Remaining Life (Years)
|
Total Weighted Average Exercise Price
|
Options Exercisable
|
|
$0.001
|
900,000
|
0.84
|
$0.001
|
900,000
|
The Company recorded $Nil (2016: $266) in
stock option compensation expense, in relation to these options, during the
quarter ended March 31, 2017. Total stock option compensation expense is
calculated at $3,039.
The Company is authorized to issue up to
200,000,000 shares of Common Stock, of which 144,976,421 shares were issued and
outstanding as of March 31, 2017 and December 31, 2016.
(4) Property and Equipment
Major classes of property and equipment
together with their estimated useful lives, consisted of the following:
|
|
Years
|
|
March 31, 2017
|
|
December 31, 2016
|
|
Equipment
|
3-5
|
$
|
96,236
|
$
|
96,236
|
|
Office
furniture
|
7
|
|
21,681
|
|
21,681
|
|
Leasehold
improvements
|
3
|
|
10,656
|
|
10,656
|
|
|
|
|
128,573
|
|
128,573
|
|
Less
accumulated depreciation and amortization
|
|
|
(127,813)
|
|
(127,642)
|
|
Net property
and equipment
|
|
$
|
760
|
$
|
931
|
(5) Shareholder Notes Payable
Repayments on shareholder notes payable during
the quarter ended March 31, 2017 totaled $1,759 (2016: $1,759).
(6) Restatements
During the second quarter of fiscal 2017,
the Company decided to not effectuate a previously declared 1 for 30 reverse split of
its
common stock. Our financial statements have thus been restated to recognize
changes in share-based information in our balance sheets and statements of
operations. See below for the effects of the adjustments on the
Company's previously filed financial statements as of March 31, 2017.
|
Balance Sheets as of March 31, 2017
|
|
|
|
|
|
|
|
|
|
(As Filed)
|
|
Adjustments
|
|
(As Restated)
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value. Authorized 10,000,000 shares:
|
|
|
|
|
|
|
|
Series A 12% Convertible - 800,000 shares issued and outstanding
|
|
|
|
|
|
|
|
at March 31, 2017
|
|
800
|
|
-
|
|
800
|
|
Preferred stock, $0.001 par value. Authorized 1,000,000 shares:
|
|
|
|
|
|
|
|
Series B - 10,000 shares issued and outstanding
|
|
|
|
|
|
|
|
at
March 31, 2017
|
|
10
|
|
-
|
|
10
|
|
Common stock, $0.001 par value. Authorized
200,000,000 shares:
|
|
|
|
|
|
|
|
144,976,421 at
March 31, 2017
|
|
4,833
|
|
140,143
|
|
144,976
|
|
Additional paid-in capital
|
|
9,855,893
|
|
(140,143)
|
|
9,715,750
|
|
Accumulated deficit
|
|
(9,837,036)
|
|
-
|
|
(9,837,036)
|
|
Total stockholders' equity
|
|
24,500
|
|
-
|
|
24,500
|
|
Total liabilities and stockholders' equity
|
$
|
121,670
|
$
|
-
|
$
|
121,670
|
|
|
|
|
|
|
|
|
|
Balance Sheets as of December 31, 2016
|
|
|
|
|
|
|
|
|
|
(As Filed)
|
|
Adjustments
|
|
(As Restated)
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value. Authorized 10,000,000 shares:
|
|
|
|
|
|
|
|
Series A 12% Convertible - 800,000 shares issued and outstanding
|
|
|
|
|
|
|
|
at December 31, 2016
|
|
800
|
|
-
|
|
800
|
|
Preferred stock, $0.001 par value. Authorized 1,000,000 shares:
|
|
|
|
|
|
|
|
Series B - 10,000 shares issued and outstanding
|
|
|
|
|
|
|
|
at December 31, 2016
|
|
10
|
|
-
|
|
10
|
|
Common stock, $0.001 par value. Authorized
200,000,000 shares:
|
|
|
|
|
|
|
|
144,976,421 at December 31, 2016
|
|
4,833
|
|
140,143
|
|
144,976
|
|
Additional paid-in capital
|
|
9,811,752
|
|
(140,143)
|
|
9,671,609
|
|
Accumulated deficit
|
|
(9,758,133)
|
|
-
|
|
(9,758,133)
|
|
Total stockholders' equity
|
|
59,262
|
|
-
|
|
59,262
|
|
Total liabilities and stockholders' equity
|
$
|
141,591
|
$
|
-
|
$
|
141,591
|
|
|
|
|
|
|
|
|
|
Statement
of Operations for the three-month period ended March 31, 2017
|
|
|
|
|
|
|
|
|
|
As Filed
|
|
Adjustments
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
Net income
(loss) per common share - basic and diluted:
|
|
|
|
|
|
|
|
Net income
(loss) applicable to common shareholders
|
$
|
(0.02
)
|
$
|
0.02
|
$
|
(0.0
0)
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares:
|
|
|
|
|
|
|
|
Basic
|
|
4,832,547
|
|
140,143,874
|
|
144,976,421
|
|
Diluted
|
|
4,832,547
|
|
140,143,874
|
|
144,976,421
|
|
Statement
of Operations for the three-month period ended March 31, 2016
|
|
|
|
|
|
|
|
|
|
As Filed
|
|
Adjustments
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
Net income
(loss) per common share - basic and diluted:
|
|
|
|
|
|
|
|
Net income
(loss) applicable to common shareholders
|
$
|
(0.01
)
|
$
|
0.01
|
$
|
(0.0
0)
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares:
|
|
|
|
|
|
|
|
Basic
|
|
4,832,547
|
|
140,143,874
|
|
144,976,421
|
|
Diluted
|
|
4,832,547
|
|
140,143,874
|
|
144,976,421
|
(7) Subsequent Events and Contingencies
The Company has evaluated subsequent events
from the date on the balance sheet through the date these financial statements
are being filed with the Securities and Exchange Commission. No material events
or transactions have occurred during this subsequent event reporting period
which required recognition or disclosure in the financial statements.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATION
Back to Table of Contents
Some of the statements contained in this quarterly report of Data
Call Technologies, Inc., Nevada corporation (hereinafter referred to as "we",
"us", "our", "Company" and the "Registrant")
discuss future expectations, contain projections of our plan of operation or financial
condition or state other forward-looking information. Forward-looking statements give our
current expectations or forecasts of future events. You can identify these statements by
the fact that they do not relate strictly to historical or current facts. They use of
words such as "anticipate," "estimate," "expect,"
"project," "intend," "plan," "believe," and other
words and terms of similar meaning in connection with any discussion of future operating
or financial performance. From time to time, we also may provide forward-looking
statements in other materials we release to the public.
Data Call Technologies, Inc. ("Data Call," or the "Company") was incorporated
under the laws of the State of Nevada as Data Call Wireless on April 4, 2002. On
March 1, 2006, we changed our name to Data Call Technologies, Inc.
Our mission is to integrate cutting-edge information/content delivery
solutions currently deployed by the media and make this content rapidly
available to and within the control of our retail and commercial clients. The
Company's software and services put its clients in control of real-time, news,
and other content, including emergency alerts, displayed within one building as
well as to thousands of local, regional, and national clients, through Digital
Signage and Kiosk networks.
Our business plan is to focus on growing our client base by continued
offering of real-time information/content, seeking to continually improve the
delivery, security, and variety of information/content to the Digital Signage
and Kiosk community.
Overview
What Is Digital Signage?
LED and LCD displays are continually replacing printed marketing materials
such as signs and placards, as well as the old-fashioned whiteboard, for product
and corporate branding, marketing and assisted selling. The appeal of instantly
updating product videos and promotional messages on one or a thousand remotely
located displays is driving the adoption of this exciting marketing tool.
Digital Signage presentations are typically comprised of repeating loops of
information used to brand, market or sell the owner's products and services. But
once viewed, this information becomes repetitive and the viewer tunes it out,
resulting in low retention of the client's message. As digital signage "comes of
age," the dynamic characteristics of the digital signage presentations has taken
center-stage requiring fresh, relevant and updated dynamic content.
Digital Signage Comes of Age
We believe that the Digital Signage industry is "coming of age" and that Data
Call through multiple industry relationships has been engaged in the business
for more than a decade. Our company has virtually been there from the start and
is in in a prime position to enjoy and benefit from our industry's growth. A few
short years ago, a business wanting to derive commercial benefit from use of
digital signage was often confronted with a myriad of hardware and software
companies, all offering their own version of what digital signage should be.
Typical customers for digital signage were most-often offered the hardware for
digital signage but without the full package of content with which to build and
tailor their systems for their target customer base.
Those early digital signage customers often had to deal with the fact that
their digital signage hardware vendors lacked the know-how to provide them with
the "do's and don'ts" of content development. However, from our inception, Data
Call recognized that our competitors and their typical customers lacked a key
component which includes the offering of a comprehensive content package.
Recently, as the cost of platforms supporting content management
infrastructure and displays have fallen significantly, digital signage has
become more accessible to a wider range of potential users while the growing
Kiosk market has cross-pollinated with Digital Signage. Companies in our
industry have come to understand as we have understood almost since our
inception in 2002, that the benefit that Data Call provides to our customers, in
the form of ongoing content development (dynamic content) is expected to
continue to provide our customers with desirable services. Content needs to stay
fresh. Data Call has automated this process for their subscribers. As the cost
of deployment has decreased, Data Call has continued to focus, as well as other
providers have only begun focusing, on offering "attention-grabbing content" as
a means of drawing target customers' attention to the core message of clients,
thereby keeping their target customers engaged throughout Digital Signage and
Kiosk presentations.
The Need for Speed-Active Content
Active and dynamic content is the integral part of digital signage
presentations that must be constantly updated with timely and relevant
information in order to attract and retain target customers to the product and
service offered by clients. For instance, a typical presentation may contain ten
15-second loops that provide the primary message of the presentation, but the
active dynamic content, such as that provided by Data Call, is updated with new
information throughout the day. Those seeking to add active and dynamic content
to their digital signage presentations are advised to employ Data Call's
integrated content rather than attempting to "cut and paste" broadcast content
of others into their digital signage presentation.
Our clients, by integrating Data Call's active content as a meaningful
component of their digital signage presentations, can provide the entertainment
and information content necessary to enhance the target customer's information
retention without disrupting the core message of the presentation. Information
categories provided by Data Call include news, weather, sports, financial data
and the latest traffic alerts, among others. With such a broad range of
offerings, our clients have access to the active and dynamic content they need,
regardless of the target customers and market they are addressing.
Our Business Opportunities
Our many opportunities for client development in the digital signage industry
are growing virtually exponentially. While many companies in our industry have
traditionally outsourced all or part of their content creation, Data Call serves
as a provider of dynamic active content to clients on a tailored basis. Whether
a client desires general entertainment information for customers, such as news,
sports, stock market quotes, etc. or location-specific content, such as local
weather, traffic, product sales and specials, etc., our research has validated
our long-held assumption that dynamic content draws and retains our clients'
target viewers to their digital signage and keeps them engaged throughout the
presentation.
Since our inception, management has developed strong relationships working
with the leaders in digital signage. Collaborative efforts successfully created
the data formats and means of communication to facilitate the delivery of our
dynamic content more easily and efficiently by our clients for integration into
their hardware and software products, setting industry standards.
Partners, Not Customers
Data Call's approach to our clients is to build long-lasting partnerships by
creating client relationships that we believe are unique in the digital signage
industry. We do this because we understand that each client has its own content
requirement. In developing dynamic content for individual digital signage
clients, we have identified three content-related factors: (i) reliability; (ii)
objectivity; and (iii) ease of implementation. To address the reliability
requirement, we have elected to enter into license arrangements with the leading
providers of news, weather, sports and financial information, among other
client-desired content rather than either: (i) downloading and repackaging
content sourced from the Internet (which may be illegal); or (ii) pulling RSS
feeds (which may come and go at the provider's whim). Licensing data from these
premier providers has also served us by satisfying the second criteria,
objectivity. Because it is commonly recognized that Internet content may often
be unreliable, unverifiable and biased, we have determined that we could not
simply use unfiltered Internet content for delivery to our clients. To achieve
ease of implementation, our licensing of data facilitates the ease of delivery
to and implementation and use by our client/partners. Data Call has understood
that it's Digital Signage and Kiosk clients needed more complete service than to
endeavor the sourcing of active content from multiple vendors. As a result, our
flexible content packages permit our clients to do "one stop shopping" for all
of their dynamic content requirements by a single sublicense from us. Ease of
implementation also would require that the multiple formats of all Data Call's
data providers be distilled into a single, usable format.
We enable our clients to receive customized dynamic content which may be
displayed in a multitude of ways (banners, tickers, scrolls or artistically
integrated with the overall presentations). We have created and produced
multiple sets of common data layouts in the industry-standard XML (extensible
markup language) format inclusive of MRSS. With the advent of HTML5, even more
delivery methods have been made available to our clients, many of whom have
found these new formats to be easily integrated into their products.
Nevertheless, we have also produced customized data formats to the exact and
specific requirements of our clients/partners, which, we believe ensures a
higher level of reliability and ease of integration.
Market demand, opportunity and technology converge at a single point in time,
and Data Call is there. Our integrity continues to build our business. Digital
signage platforms are evolving to meet mass market requirements, costs for
hardware and software are falling to the point of becoming commodities and the
markets for digital signage are clarifying through historical trial and error.
Business Operations
In August of 2013, we announced the release of our Direct Lynk Media (DLMedia)
product. The DLMedia product encapsulates the Direct Lynk Messenger product with
major enhancements and options that allow the client to select and include in
their feed images relative to the news feeds. Also in the release, both Weather
and Traffic image products have been enhanced considerably. Other additions
included within the release bring more value to the company's clients and create
more interest from new and existing clients.
The current types of data and information, for which a client is able to
subscribe to through the Direct Lynk System include:
|
-
|
Headline
News top world and national news headlines;
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Business
News top business headlines;
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Financial
Highlights world-based financial indicators ;
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Entertainment
News top entertainment headlines;
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Health/Science
News top science/health headlines;
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Quirky News
Bits latest off-beat news headlines;
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Sports
Headlines top sports headlines
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Latest
Sports Lines - latest sports odds for NFL, NBA, NHL, NCAA Football and NCAA Basketball;
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National
Football League latest game schedule and in-game updates;
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National
Basketball Association - latest game schedule and in-game updates;
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Major
League Baseball - latest game schedule and in-game updates;
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National
Hockey League - latest game schedule and in-game updates;
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NCAA
Football - latest game schedule and in-game updates;
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NCAA Men's
Basketball - latest game schedule and in-game updates;
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Professional
Golf Association top 10 leaders continuously updated throughout the four-day tournament;
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NASCAR top
10 race positions updated every 20 laps throughout the race;
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Major
league soccer;
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Traffic
Mapping;
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Animated
Doppler Radar and Forecast Maps;
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Listings of
the day's horoscopes;
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Listings of
the birthdays of famous persons born on each day;
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Trivia;
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Listings of
historical events which occurred on each day in history; and
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Traffic and Weather Forecasts.
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We currently
offer our Direct Lynk Messenger and DLMedia services to our clients and other
potential customers through the Internet. Both DLM Services are Digital Signage
products and real-time information services which provides a wide range of
up-to-date information for display. Both DLM services are able to work
concurrently with customers' existing digital signage systems. The Direct Lynk
Messenger product is slowly becoming a legacy product with the DLMedia product
in the forefront.
The Digital
Signage and Kiosk industry is still a relatively new and since our inception in
2002 we have come to understand that it provides an exciting method for
advertisers, including our clients, to promote, inform, educate, and entertain
their customers regarding their business products and services. Through Digital
Signage, businesses can use a single display or a complex, networked series of
flat screen LED, LCD and even combined as video walls as display devices to
market their products and services directly at their facilities and elsewhere to
their customers and patrons in real time. Additionally, because Digital Signage
advertising takes place in real time, businesses can change their marketing
efforts literally from moment to moment and over the course of a day or such
other period as they may determine.
We believe
that the ability of our clients to display in real-time the information and
content we deliver better allows our clients companies to tailor their products,
services and advertising to individual and target-group customers, thereby
advertising and offering, for example, inventory and sales discounts that may be
designed to appeal to those individual customers and target customer groups,
increasing sales and revenues. We believe that the benefits of on-site,
real-time Digital Signage displays compared to regular print or video
advertising are substantial and include, among other advantages, being able to
immediately change digitally-displayed images/advertisements depending on our
client's customers own situation, not simply being restricted by in-store print
circulars produced days, weeks or even months in advance, which may become stale
or obsolete prior to or shortly after publication and dissemination.
We
specialize in allowing clients to create their own Digital Signage dynamic
content feeds which are delivered online directly to their chosen, electronic
digital display devices at their various facilities. The only requirements our
clients must have are: (i) a supported, third-party Digital Signage and/or Kiosk
equipment solution, or similar device, which receives the data from our servers
online; and (ii) an Internet connection. Our Direct Lynk System is supported by
various, readily available third-party systems, varying in costs from
inexpensive monthly cloud-based licenses to much more extensive and expensive
content management/playback systems. Our Direct Lynk Systems allow customers to
select from the pre-determined data and information subscriptions of those
described above. We enable our clients to also select location specific content
they wish to receive based on how and where their Digital Signage network is
configured.
During the
first quarter of fiscal 2014, we released our "Playlist-Ready" content products,
enhancing our ability to further accommodate our current clients and appease new
prospects. One product within the "Above the Fold" line has received a high
level of acceptance at the industry trade shows, most recently at the Digital
Signage Expo held in Las Vegas in March 2017. All of our products and services
can be viewed on our website: datacalltech.com.
Results of Operations
The
following discussion should be read in conjunction with our financial
statements.
During the
last twelve months, the Company has implemented cost management measurements to
review monthly expenditures. We will continue these efforts to streamline
operations, as we focus on increasing sales and gross revenues over the next
twelve months. We do not currently have any plans to increase our monthly
expenditures or number of employees. We currently offer our Direct Lynk
Messenger and DLMedia services to our clients and other potential customers
through the Internet. Both DLM Services are Digital Signage products and
real-time information services which provides a wide range of up-to-date
information for display. Both DLM services are able to work concurrently with
customers' existing digital signage systems. The Direct Lynk Messenger product
is slowly becoming a legacy product with the DLMedia product in the forefront.
We
continually add subscribers for our technology throughout and intend to build
and increase such subscribers moving forward.
Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016
Our revenues
for the three months ended March 31, 2017 were $152,239 compared to $167,786 for
the three-month period ended March 31, 2016, representing a decrease of $15,547
or 9.3% during the same period in the prior year. The decrease was mainly due to
fewer renewals at the beginning of the year.
Costs of
sales for the three months ended March 31, 2017 were $35,911 compared to $42,046
for the three-month period ended March 31, 2016, which represents a decrease of
$6,135. Costs of sales decreased due to the corresponded decrease in revenues
and the amount of bandwidth required to provide the subscription services.
Gross
margins for the three months ended March 31, 2017 were $116,328 compared to
$125,740 or 76.4% for the three-month period ended March 31, 2017 as compared to
74.9% for the three month period ending March 31, 2016.
Selling,
General and Administrative expenses for the three months ended March 31, 2017
were $193,696 compared to $192,563 for the three-month period ended March 31,
2016, representing an increase of $1,133 from the same period in the prior year.
The increase in SG&A expenses is mainly due to an increase in expenses related to
the trade show. Net loss for the three months ended March 31, 2017 was $78,903
compared to a net loss of $67,203 for the three-month period ended March 31,
2016. The Company's net loss was higher due to the decrease in revenue.
Liquidity and Capital Resources
We had total
current assets of $120,110 consisting of $9,631 of cash and $110,479 in accounts
receivable as of March 31, 2017. As of March 31, 2017, we had total current
liabilities of $97,170, which represented $40,161 in accounts payable, $22,740
in accrued expenses and $34,269 in notes payable.
We had a
positive working capital of $22,940 and an accumulated deficit of $9,837,036 on
March 31, 2017.
We used
$42,109 of cash for our operating activities during the three-month period ended
March 31, 2017, which was mainly due to a net loss of $78,903, accounts payable
of $9,209, offset by accounts receivables of $41,118, non-cash compensation
related to stock expense valued at $43,832, and non-cash expenses related to
options and warrants of $309 and prepaid expenses of $17,000. We had no
investing activities during the three-month period ended March 31, 2017. We used
$1,759 in financing activities during the three months ended March 31, 2017 for
the repayment of related party notes payable.
Due to our
strong financial position we do not see a need to raise additional funds. We
will continue to generate sufficient revenues and generate new revenues to
support our operations.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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We have not entered
into, and do not expect to enter into, financial instruments for trading or hedging
purposes.
ITEM 4.
CONTROLS AND PROCEDURES
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Evaluation of disclosure controls and
procedures.
As of March 31, 2017, the
Company's chief executive officer and chief financial officer conducted an
evaluation regarding the effectiveness of the Company's disclosure controls and
procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act.
Based upon the evaluation of these controls and procedures, our chief executive
officer and chief financial officer concluded that our disclosure controls and
procedures were not effective as of the end of the period covered by this
report. Management has identified corrective actions for the weakness and has
begun implementation during the second quarter of 2017.
Changes in internal controls.
During the quarterly period covered by this report, no changes occurred in our internal
control over financial reporting that materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.