As filed with the Securities and Exchange Commission on February 17, 2006
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Nevada 7389 30-0062823
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(State or jurisdiction (Primary Standard (IRS Employer
of incorporation or Industrial Identification
organization) Classification No.)
Code Number)
600 Kenrick, Suite B-12
Houston, Texas 77060
(832) 230-2376
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(Address and telephone number of principal executive offices and principal place
of business or intended principal place of business)
James Ammons, President
600 Kenrick, Suite B-12
Houston, Texas 77060
(832) 230-2376
With copies to
David M. Loev, John S. Gillies,
David M. Loev, Attorney at Law David M. Loev, Attorney at Law
2777 Allen Parkway, Suite 1000 & 2777 Allen Parkway, Suite 1000
Houston, Texas, 77019 Houston, Texas, 77019 (713) 524-4110 Tel. (713) 524-4110 Tel. (713) 524-4122 Fax (713) 456-7908 Fax |
Approximate date of proposed sale to the public: as soon as practicable after the effective date of this Registration Statement.
If any of the Securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. (X)
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of earlier effective registration statement for the same offering. ( )
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ( )
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ( )
If delivery of the Prospectus is expected to be made pursuant to Rule 434, check the following box. ( )
CALCULATION OF REGISTRATION FEE Title of Each Amount Proposed Maximum Proposed Maximum Amount of Class of Securities Being Price Per Share(1) Aggregate Price(2) Registration To be Registered Registered Fee ------------------------------------------------------------------------------------------------ Common Stock 38,462,100 $0.10 $3,846,210 $452.70 ================================================================================================ Total 38,462,100 $0.10 $3,846,210 $452.70 |
(1) The offering price is the stated, fixed price of $.10 per share until the securities are quoted on the OTC Bulletin Board for the purpose of calculating the registration fee pursuant to Rule 457.
(2) This amount has been calculated based upon Rule 457 and the amount is only for purposes of determining the registration fee, the actual amount received by a selling shareholder will be based upon fluctuating market prices once the securities are quoted on the OTC Bulletin Board.
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
PROSPECTUS
DATA CALL TECHNOLOGIES
RESALE OF 38,462,100 SHARES OF COMMON STOCK
The selling stockholders listed on page 31 may offer and sell up to 38,462,100 shares of our Common Stock ("Common Stock") under this Prospectus for their own account. A current Prospectus must be in effect at the time of the sale of the shares of Common Stock discussed above. We will not receive any proceeds from the resale of Common Stock by the selling stockholders. The selling stockholders will be responsible for any commissions or discounts due to brokers or dealers. We will pay all of the other offering expenses.
We currently lack a public market for our Common Stock. Selling shareholders will sell at a price of $0.10 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. If before our shares are quoted on the OTC Bulletin Board, and after this Registration Statement becomes effective, selling shareholders wish to sell at a price other than $0.10 per share, we will file a post-effective amendment beforehand.
Each selling stockholder or dealer selling the Common Stock is required to deliver a current Prospectus upon the sale. In addition, for the purposes of the Securities Act of 1933, selling stockholders may be deemed underwriters.
The information in this Prospectus is not complete and may be changed. We may not sell these securities until the Registration Statement filed with the Securities and Exchange Commission is effective. This Prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE SHARES
ONLY IF YOU CAN AFFORD A COMPLETE LOSS. WE URGE YOU TO READ THE "RISK FACTORS"
SECTION BEGINNING ON PAGE 4 ALONG WITH THE REST OF THIS PROSPECTUS BEFORE YOU
MAKE YOUR INVESTMENT DECISION.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION ("SEC") NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
Prospectus Summary 1
Summary Financial Data 2
Risk Factors
Risks Related to Our Business 4
Risks Related to This Offering 4
Use of Proceeds 11
Dividend Policy 11
Legal Proceedings 11
Directors, Executive Officers, Promoters and Control Persons 11
Security Ownership of Certain
Beneficial Owners and Management 15
Interest of Named Experts and Counsel 16
Indemnification of Directors and Officers 16
Description of Business
Management Discussion and
Analysis of Financial Condition and Results of Operations 21
Description of Property 25
Certain Relationships and Related Transactions 26
Executive Compensation 28
Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure 29
Descriptions of Capital Stock 29
Shares Available for Future Sale 29
Plan of Distribution and Selling Stockholders 30
Market for Common Equity and
Related Stockholder Matters 44
Legal Matters 44
Additional Information 44
Financial Statements F-1
Part II 45
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PART I - INFORMATION REQUIRED IN PROSPECTUS
PROSPECTUS SUMMARY
The following summary highlights material information found in more detail elsewhere in the Prospectus. It does not contain all the information you should consider. As such, before you decide to buy our Common Stock, in addition to the following summary, we urge you to carefully read the entire Prospectus, especially the risks of investing in our Common Stock as discussed under "Risk Factors." In this Prospectus, the terms "we," "us," "our," "Data Call," and "Company," refer to Data Call Technologies, a Nevada corporation, and unless the context otherwise requires, "Common Stock" refers to the Common Stock, par value $0.001 per share, of Data Call Technologies.
We currently lack a public market for our Common Stock. Selling shareholders will sell at a price of $0.10 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. Management has estimated that the current fair market value of our Common Stock is $0.10 per share based on the price we have sold shares of Common Stock at in the past.
The following summary is qualified in its entirety by the detailed information appearing elsewhere in this Prospectus. The securities offered hereby are speculative and involve a high degree of risk. See "Risk Factors."
Data Call Technologies (the "Company") was founded on April 4, 2002 as "Data Call Wireless." Effective on June 19, 2003, we changed our name to "Data Call Technologies." We offer digital advertising and marketing services to customers through our Direct Lynk Messenger System, which enables customers to stream text from our website on the Internet onto televisions in their places of business.
We believe that the Direct Lynk service has a variety of uses including displaying food menus, sports scores, financial information, news, and entertainment information, as well as user programmable information and hopes to offer its Direct Lynk system to restaurants, hotels, airlines, banks, car dealerships as well as shopping malls.
Of the 38,462,100 shares of Common Stock included in this Prospectus, 5,627,600 shares of Common Stock were issued in connection with services rendered to us, 4,917,000 shares of Common Stock were transferred in consideration for certain shareholders of QVS Wireless entering into releases with us, and 27,917,500 shares were sold to investors at a price of $0.10 per share.
Our principal executive offices are located at 600 Kenrick, Suite B-12, Houston, Texas 77060. Our telephone number is (832) 230-2376. Our website address is www.datacalltech.com (and includes information we do not intend to include as part of this Prospectus).
THE OFFERING
COMMON STOCK OFFERED: 38,462,100 shares by selling stockholders
COMMON STOCK OUTSTANDING
BEFORE THE OFFERING: 55,462,100 shares
COMMON STOCK OUTSTANDING
AFTER THE OFFERING: 55,462,100 shares
USE OF PROCEEDS: We will not receive any proceeds of
the shares offered by the selling
stockholders. See "Use of Proceeds."
RISK FACTORS: The securities offered hereby
involve a high degree of risk, including
risks associated with our need for
additional financing, with our
prohibition from raising additional
capital during the "quiet period," with
the fact that we have not generated any
revenues from our services in the past,
with our reliance on key management,
outstanding issues with two of our
former officers and Directors, disputes
with persons formerly associated with
us, with our dependence on the marketing
of our products, with future government
regulation, with our Internet
infrastructure, with natural disasters
effecting our Internet operations, with
our lack of a patent for our technology,
with the potential volatility of our
common stock when traded and the penny
stock restrictions on our common stock.
See "Risk Factors."
OFFERING PRICE: Our management believes that the
offering price of $0.10 best represents
the fair market value of our shares due
to the fact that all of the shares of
Common Stock we sold pursuant to private
placements were sold at $0.10 per share.
NO MARKET: No assurance is provided that a
market will be created for our
securities in the future, or at all. If
in the future a market does exist for
our securities, it is likely to be
highly illiquid and sporadic.
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SUMMARY FINANCIAL DATA
You should read the summary financial information presented below for the years ended December 31, 2005 and December 31, 2004. We derived the summary financial information from our audited financial statements for the years ended December 31, 2005 and 2004, appearing elsewhere in this Prospectus. You should read this summary financial information in conjunction with our plan of operation, financial statements and related notes to the financial statements, each appearing elsewhere in this Prospectus.
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
BALANCE SHEET
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DECEMBER 31, 2005 DECEMBER 31, 2004
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ASSETS
Cash $ 671,228 $ 15,122
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Total Current Assets $ 671,228 $ 25,659
Net Property and Equipment $ 90,798 $ 29,131
Other Assets $ 5,255 $ 1,295
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Total Assets $ 767,281 $ 56,085
LIABILITIES
Accounts payable and accrued expenses $ 66,792 $ 55,000
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Total Liabilities $ 66,792 $ 55,000
STOCKHOLDER'S EQUITY
Common Stock $0.001 par value;
75,000 shares authorized; 50,952,100
and 33,199,500 shares issued and
outstanding at December 31, 2005
and December 31, 2004, respectively $ 50,952 $ 33,200
Additional Paid-in Capital $ 5,044,258 $ 3,286,750
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Accumulated deficit $ 4,394,721 $ 3,318,865
STATEMENT OF OPERATIONS
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YEAR ENDED YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004
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SALES $ 365 $ 16,823
COST OF SALES $ - $ 12,191
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Gross Profit $ 365 $ 4,632
OPERATING EXPENSES $ 1,076,221 $ 1,065,479
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NET LOSS $ 1,075,856 $ 1,060,847
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RISK FACTORS
The securities offered herein are highly speculative and should only be purchased by persons who can afford to lose their entire investment in Data Call Technologies. You should carefully consider the following risk factors and other information in this Prospectus before deciding to become a holder of our Common Stock. If any of the following risks actually occurs, our business and financial results could be negatively affected to a significant extent.
Our business is subject to many risk factors, including the following (references to "Data Call," "our," "we," and words of similar meaning in these Risk Factors refer to the Company):
WE REQUIRE ADDITIONAL FINANCING TO CONTINUE OUR BUSINESS PLAN.
We believe that we can continue our business operations for approximately the next twelve (12) months, assuming our current rate of monthly expenditure, number of employees, and other expenses do not increase significantly, due to the approximately $650,000 of cash on hand that we have as of the date this Registration Statement was filed. We do not have any commitments or identified sources of additional capital from third parties or from our officers, Directors or majority shareholders. We have generated limited revenues to date and have not generated any revenues through subscriptions to our Direct Lynk system. Since inception, we have depended mainly on financing raised through the sale of our common stock to support our operations. There is no assurance that additional financing will be available on favorable terms in the future, if at all or that our Direct Lynk system will ever generate any revenues, or that if it does, that such revenues will be sufficient to maintain our business operations. If we are unable to raise additional financing in the future or our current rate of expenditure increases significantly, it would have a materially adverse effect upon our ability to fully implement our business plan and/or to continue with our current operations. Any additional financing may involve dilution to our then-existing shareholders, which could result in a decrease in the value of our securities.
WE WILL BE LIMITED IN OUR EFFORTS TO RAISE ADDITIONAL CAPITAL FROM THE TIME WE FILE THIS REGISTRATION STATEMENT UNTIL THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
The period of time between when we file this Registration Statement and when it is declared effective by the Securities and Exchange Commission ("SEC") is called the "quiet period." During the quiet period, we are generally prohibited from raising any additional funds through the sale of our securities. As a result, we will be forced to depend on the approximately $671,228 of cash on hand which we had as of December 31, 2005, and the approximately $175,000, which we raised subsequent to December 31, 2005, until such time as this Registration Statement is declared effective by the SEC, if at all. While we believe this amount will be sufficient to sustain our operations for approximately twelve months, it may take longer than twelve months for this Registration Statement to be declared effective by the SEC. In the event that
we are not able to obtain effectiveness of this Registration Statement in the next twelve months, or at all, and/or our current cash does not sustain our operations and expenses during the quiet period, our securities could become worthless and we may be forced to curtail and/or abandon our business operations and/or the filing of amended Registration Statements in an attempt to have this Registration Statement declared effective.
WE HAVE GENERATED ONLY LIMITED REVENUES IN THE PAST, AND MAY NOT GENERATE ANY REVENUES IN THE FUTURE.
We have generated only $365 in revenues through sales of subscriptions to our Direct Lynk system since its implementation and have generated limited total revenues to date. We have offered free trials to numerous companies in the past and continue to offer free trials to companies, which we believe provides those companies an opportunity to try out our products and see how they may be able to implement the Direct Lynk system in their businesses. While we believe that we offer a unique product which has many beneficial marketing uses for potential customers, we cannot provide any assurances that there will be future demand for our products at the prices we may charge, or at all, as we have not sold any subscriptions for our Direct Lynk system in the past. If we are unable to generate any revenues through the sale of subscriptions for our Direct Lynk system in the future, we will likely be forced to abandon our business operations, causing any investment in us to become worthless.
WE RELY ON KEY MANAGEMENT AND IF KEY MANAGEMENT PERSONNEL ARE LOST, IT WOULD HAVE A MATERIALLY ADVERSE AFFECT ON OUR BUSINESS OPERATIONS.
Our success depends upon the personal efforts and abilities of James Ammons, our Chief Executive Officer, President, Treasurer, Secretary and Director; Larry Mosley our Chief Financial Officer and Director; Timothy Vance our Director of Customer Support and Director; and James Tevis our Chief Technology Officer and Chief Engineer. Our ability to operate and implement our business plan is heavily dependent upon the continued service of Messrs. Ammons, Mosley, Vance and Tevis, as well as our ability to attract, retain and motivate other qualified personnel. Messrs. Mosley, Vance and Tevis have entered into three year employment contracts with us (described below), which are renewable upon the mutual acceptance of both parties; and Mr. Ammons has entered into a five year employment agreement with us to serve as our Chief Executive Officer and President. We face aggressive and continued competition for such personnel and we cannot be certain that we will be able to attract, retain and motivate such personnel in the future. The loss of Messrs. Ammons, Mosley, Vance or Tevis, or our inability to hire, retain and motivate qualified sales, marketing and management personnel would have a material adverse effect on our business and operations and would likely result in a decrease in the value of our securities.
WE HAVE OUTSTANDING ISSUES WITH ONE OF OUR FORMER OFFICERS AND DIRECTORS, WHICH COULD FORCE US TO EXPEND SUBSTANTIAL RESOURCES ON LITIGATION AND/OR A SETTLEMENT.
Our former President and Director resigned on June 19, 2003, in connection with a dispute with our current officers and Directors. We have not entered into any releases or settlement agreements with this individual and it is
possible that this individual will bring claims against us in the future in connection with monies or shares owed and/or other claims against us. In the event that this individual brings claims against us in the future, we may be forced to expend substantial resources on the defense and/or settlement of such claims. Additionally, if brought, these claims would likely divert the attention and resources of our current officers and Directors away from our operations. If this individual was to bring claims against us in the future, we could be forced to raise additional finances, which may dilute our shareholders, and/or curtail or abandon our business plan, which could cause any investment in us to become worthless.
WE HAVE HAD DISPUTES WITH PEOPLE AFFILIATED WITH US IN THE PAST AND CANNOT PROVIDE ANY ASSURANCE THAT WE WILL NOT CONTINUE TO HAVE DISPUTES WITH THESE PEOPLE AND/OR NEW PEOPLE AFFILIATED WITH US IN THE FUTURE.
We have had various disputes with our former officers and Directors as well as previous disputes with our current shareholders. A number of shareholders are former shareholders of QVS Wireless Corporation ("QVS"), with whom we have had disputes with and been in litigation with in the past (see "Description of Business" below). QVS and the majority of QVS's shareholders entered into settlements and releases with us in the past; however, we can provide no assurances that the former QVS shareholders will not have disputes with us in the future. If the QVS shareholders, our current shareholders, former Directors and officers and/or anyone we are affiliated with have disputes with us in the future, we could be forced to expend substantial additional resources in defense of such disputes, which could force us to curtail or abandon our business operations, and/or divert our resources away from our operations.
WE DEPEND HEAVILY ON OUR ABILITY TO MARKET OUR PRODUCTS TO POTENTIAL CONSUMERS.
We depend on our marketing department to make consumers and potential customers aware of our products. If our marketing department fails to make potential customers aware of our products and the advantages and possibilities we believe they bring to potential customers, it is not likely that we will be able to generate enough revenues to continue with research and development on new products and improve our current products. If this were to happen, it is likely that our products will become stagnant and we will not be able to compete in the market. If you invest in us and we fail to properly market our products, we could be forced to curtail our business plan or discontinue our business operations altogether.
WE MAY HAVE POTENTIAL LIABILITY FOR SHARES OF COMMON STOCK WHICH MAY HAVE BEEN SOLD IN VIOLATION OF FEDERAL AND/OR STATE SECURITIES LAWS.
Certain shares of Common Stock that were sold by us between October 2003 to December 2005 were not registered under federal or state securities laws, and exemptions from registration provided by these securities laws may not have been available or may not have been perfected, with the result that we may be deemed to have violated the registration requirements of these securities laws with
respect to the offer and sale of the Common Stock. While we have offered rescission to certain of our shareholders who purchased shares of Common Stock which we believe may have been in violation of certain state and/or federal securities laws, the federal securities laws and certain state securities laws do not expressly provide that a Rescission Offer will terminate a purchaser's right to rescind a sale of securities that was not registered under the relevant securities laws as required. Accordingly we may continue to be potentially liable under certain securities laws for such sales of Common Stock even after completing our Rescission Offer.
FUTURE GOVERNMENT REGULATION OF THE INTERNET MAY ADVERSELY IMPACT OUR BUSINESS OPERATIONS.
We are dependent upon the Internet in connection with our business operations. The United States Federal Communications Commission (the "FCC") does not currently regulate companies that provide services over the Internet, as it does common carriers or tele-communications service providers. Notwithstanding the current state of the FCC's rules and regulations, the FCC's potential jurisdiction over the Internet is broad because the Internet relies on wire and radio communications facilities and services over which the FCC has long-standing authority. Compliance with future government regulation of the Internet could result in increased costs which would have a material adverse effect on our business, operating results and financial condition, and which would lower the value of any of our securities which are held by you as an investor.
OUR LIMITED OPERATING HISTORY MAKES IT DIFFICULT TO FORECAST OUR FUTURE RESULTS, MAKING ANY INVESTMENT IN US HIGHLY SPECULATIVE.
As a result of our limited operating history, our historical financial and operating information is of limited value in predicting our future operating results. We may not accurately forecast customer behavior and recognize or respond to emerging trends, changing preferences or competitive factors facing us, and, therefore, we may fail to make accurate financial forecasts. Our current and future expense levels are based largely on our investment plans and estimates of future revenue. As a result, we may be unable to adjust our spending in a timely manner to compensate for any unexpected revenue shortfall, which could then force us to curtail or cease our business operations.
WE FACE POTENTIAL LIABILITY FOR INFORMATION POSTED ON OUR CORPORATE WEBSITE, WWW.DATACALLTECH.COM.
The legal obligations and potential liability of companies which provide information by means of the Internet are not well defined and are still evolving. Any liability of us resulting from information posted on, or disseminated through, our corporate website could have a material adverse affect on our business, operating results and our financial condition.
OUR VULNERABILITY TO SECURITY BREACHES, GLITCHES AND OTHER COMPUTER FAILURES COULD HARM OUR FUTURE CUSTOMER RELATIONSHIPS AND OUR ABILITY TO ESTABLISH OUR FUTURE CUSTOMER BASE.
Because we offer the majority of our services through our Internet website (www.datacalltech.com), the secure transmission of confidential information over public networks is a critical element of our operations. A party who is able to circumvent security measures could misappropriate proprietary information or cause interruptions in our operations. If we are unable to prevent unauthorized access to our users' information and transactions, our customer relationships will be harmed. Although we currently implement security measures, these measures may not prevent future security breaches. Additionally, heavy stress placed on our systems could cause our systems to fail or cause our systems to operate at speeds unacceptable to our users. If this were to happen, we could lose customers and if severe enough, we could be forced to curtail or abandon our business plan, which would decrease the value of any investment you have in us.
WE RELY ON THE INTERNET INFRASTRUCTURE, AND ITS CONTINUED COMMERCIAL VIABILITY, OVER WHICH WE HAVE NO CONTROL AND THE FAILURE OF WHICH COULD SUBSTANTIALLY UNDERMINE OUR BUSINESS STRATEGY.
Our success depends, in large part, on other companies maintaining the Internet system infrastructure, including maintaining a reliable network backbone that provides adequate speed, data capacity and security. If the Internet continues to experience significant growth in the number of users, frequency of use and amount of data transmitted, as well as the number of malicious viruses and worms introduced onto the Internet, the infrastructure of the Internet may be unable to support the demands placed on it, and as a result, the Internet's performance or reliability may suffer. Because we rely heavily on the Internet, this would make our business less profitable and would lead to a decrease in the value of our Common Stock.
OUR SYSTEMS AND OPERATIONS ARE VULNERABLE TO DAMAGE OR INTERRUPTION FROM FIRE, FLOOD, POWER LOSS, TELECOMMUNICATIONS FAILURE, BREAK-INS, EARTHQUAKE AND SIMILAR EVENTS.
Our website and systems are hosted by a third party. We are dependent on our systems and ability to stream information over the Internet to consumers. If our systems fail or become unavailable, it would harm our reputation, result in a loss of current and potential customers and could cause us to breach existing agreements. Our success depends, in part, on the performance, reliability and availability of our services. Our systems and operations could be damaged or interrupted by fire, flood, power loss, telecommunications failure, Internet breakdown, break-in, earthquake and similar events. We would face significant damage as a result of these events. In addition, our systems use sophisticated software which could be found to contain bugs which could interrupt service. For these reasons, we may be unable to develop or successfully manage the infrastructure necessary to meet current or future demands for reliability and scalability of our systems. If this were to happen, we would likely lose customers and our revenues would decrease, causing any investment in us to decease in value as well.
WE HAVE NO ISSUED PATENTS OR PENDING PATENT APPLICATIONS FOR OUR TECHNOLOGY AND THEREFORE CANNOT STOP OTHER COMPANIES FROM LAWFULLY PRACTICING TECHNOLOGY SIMILAR TO OURS AND MAY BE SUED BY COMPANIES IN THE FUTURE CLAIMING OUR ACTIVITIES INFRINGE ON THEIR PATENT RIGHTS.
We have no issued patents or pending patent applications for our technology in the United States or any other country and therefore cannot stop other companies from lawfully practicing technology identical or similar to ours in the future. If we are sued by another company claiming our activities infringe on their patent, we could be forced to abandon using our Direct Lynk system or other technology and/or expend substantial expenses in defending against another company's claims. This could have a severely adverse affect on our revenues and could force us to cease our business operations.
OUR AUDITORS HAVE EXPRESSED A CONCERN ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.
Our auditors, in our audited financial statements expressed a concern about our ability to continue as a going concern. We have an accumulated deficit of $4,394,721 as of December 31, 2005, and have generated limited revenues to date. These factors raise substantial doubt as to whether we will be able to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of liabilities that might be necessary should we be unable to continue as a going concern.
OUR TOTAL AMOUNT OF ISSUED AND OUTSTANDING SHARE AMOUNTS MAY BE INCORRECT, AND WE MAY HAVE OUTSTANDING SHARES WHICH ARE UNACCOUNTED FOR.
We have not engaged a transfer agent to keep track of and verify the number of outstanding shares. The majority of our shares which are held by our non-affiliates were purchased in private transactions, and the purchased shares were then issued and entered into our stock records. Due to the large number of these transactions which have occurred since our inception, we cannot be certain that all shares purchased by shareholders were entered into our stock records, entered correctly and/or that all shareholders who purchased shares received share certificates. As a result, we may have a larger number of shares outstanding than we currently show on our shareholders list. This difference, if present, may force us to revise our Registration Statement prior to or after it becomes effective to include such shares, and may mean that the dilutive effect of the additional shares registered pursuant to the Registration Statement is more than the current number of shares thought to be issued and outstanding and offered through such offering.
WE FACE A RISK OF A CHANGE IN CONTROL DUE TO THE FACT THAT OUR CURRENT OFFICERS AND DIRECTORS DO NOT OWN A MAJORITY OF OUR OUTSTANDING COMMONS STOCK.
Our current officers and Directors can vote an amount of common stock equal to approximately twenty-four percent (24%) of our outstanding common stock. As a result, our officers and Directors may not exercise majority voting control over us and our shareholders who are not officers and Directors of us may be able to obtain a sufficient number of votes to choose who serves as our Directors. Because of this, the current composition of our Board of Directors may change in the future, which could in turn have an effect on those individuals who currently serve in management positions with us. If that were to happen, our new management could affect a change in our business focus and/or curtail or abandon our business operations, which in turn could cause the value of our securities, if any, to decline.
IF THERE IS A MARKET FOR OUR COMMON STOCK, OUR STOCK PRICE MAY BE VOLATILE
If there is a market for our Common Stock, we anticipate that such market would be subject to wide fluctuations in response to several factors, including, but not limited to:
(1) actual or anticipated variations in our results of operations;
(2) our ability or inability to generate new revenues;
(3) increased competition; and
(4) conditions and trends in the consumer marketing, information display and digital signage industries.
Furthermore, our stock price may be impacted by factors that are unrelated or disproportionate to our operating performance. These market fluctuations, as well as general economic, political and market conditions, such as recessions, interest rates or international currency fluctuations may adversely affect the market price and liquidity of our Common Stock.
INVESTORS MAY FACE SIGNIFICANT RESTRICTIONS ON THE RESALE OF OUR COMMON STOCK DUE TO FEDERAL REGULATIONS OF PENNY STOCKS
Our Common Stock is subject to the requirements of Rule 15(g)9, promulgated under the Securities Exchange Act as long as the price of our Common Stock is below $5.00 per share. Under such rule, broker-dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements, including a requirement that they make an individualized written suitability determination for the purchaser and receive the purchaser's consent prior to the transaction. The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 also requires additional disclosure in connection with any trades involving a stock defined as a penny stock. Generally, the Commission defines a penny stock as any equity security not traded on an exchange or quoted on NASDAQ that has a market price of less than $5.00 per share. The required penny stock disclosures include the delivery, prior to any transaction, of a disclosure schedule explaining the penny stock market and the risks associated with it. Such requirements could severely limit the market liquidity of the securities and the ability of purchasers to sell their securities in the secondary market.
SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS
Some of the information in this document contains forward-looking statements within the meaning of the federal securities laws. You should not rely on forward-looking statements in this Registration Statement. Forward-looking statements typically are identified by use of terms such as "anticipate," "believe," "plan," "expect," "future," "intend," "may," "should," "estimate," "predict," "potential," "continue," and similar words, although some forward-looking statements are expressed differently. All forward-looking statements address matters that involve risk and uncertainties, and there are
many important risks, uncertainties and other factors that could cause our actual results, as well as those of the markets we serve, levels of activity, performance, achievements and prospects to differ materially from the forward-looking statements contained in this Registration Statement. You should also consider carefully the statements under "Risk Factors" and other section of this Registration Statement, which address additional facts that could cause our actual results to differ from those set forth in the forward-looking statements. We undertake no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise.
USE OF PROCEEDS
We will not receive any proceeds from the resale of Common Stock by the Selling Stockholders.
DIVIDEND POLICY
To date, we have not declared or paid any dividends on our outstanding shares. We currently do not anticipate paying any cash dividends in the foreseeable future on our Common Stock, when issued pursuant to this offering. Although we intend to retain any earnings to finance our operations and future growth, our Board of Directors will have discretion to declare and pay dividends in the future. Payment of dividends in the future will depend upon our earnings, capital requirements and other factors, which our Board of Directors may deem relevant.
LEGAL PROCEEDINGS
We are not aware of any pending legal proceeding to which we are a party or to which our property is subject to any pending legal proceeding.
However, from time to time, we may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business. We are not involved currently in legal proceedings that could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations. We may become involved in material legal proceedings in the future.
DIRECTORS, EXECUTIVE OFFICERS,
AND CONTROL PERSONS
The following table sets forth the name, age and position of each of our Directors and executive officers. Our officers and Directors are as follows:
NAME AGE POSITION
---- --- --------
James Ammons 52 Chief Executive Officer, Secretary,
Treasurer and Director
Larry Mosley 53 Chief Financial Officer and Director
Timothy Vance 39 Director of Customer Support and
Director
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JAMES AMMONS, CHIEF EXECUTIVE OFFICER AND DIRECTOR
James Ammons has served as our Chief Executive Officer, Secretary, Treasurer and Director since May 2002. From May 2001 to April 2002, Mr. Ammons served as our Vice President. From February 1999 to April 2001, Mr. Ammons was the General Manager of QVS Wireless Corporation. From February 1998 to January 1999, Mr. Ammons was General Manager of Federal Data, a credit card processing company.
LARRY MOSLEY, CHIEF FINANCIAL OFFICER AND DIRECTOR
Mr. Mosley has served as our Chief Financial Officer and Director since October 11, 2004. Since November 1986, Mr. Mosley has been self employed as a Certified Public Accountant. From September 1985 to November 1986, Mr. Mosley was Vice President for Fiscal Affairs of Hargest College in Houston Texas. From July 1983 to September 1985, Mr. Mosley worked as a Management Consultant at Alexander Grant & Co. (now Grant Thornton) in Houston, Texas. From January 1981 to July 1983, he served as an auditor at Ernst & Whitney (Now Ernst & Young) in Houston, Texas. Mr. Mosley received a degree in Business Administration and Accounting from Texas Southern University in 1980. He has been a Certified Public Accountant since 1984. Mr. Mosley spends on average, approximately 10-15 hours per week on company matters. Effective January 1, 2006, we entered into a three year renewable employment contract with Mr. Mosley, as described below under "Employment Agreements."
TIMOTHY VANCE, DIRECTOR
Timothy Vance has served as one of our Directors since June 2003. However, Mr. Vance has been part of the Data Call Technologies management team since our inception. Before working for us, from January 2000 through January 2001 Mr. Vance was employed at QVS Wireless Corporation, where his employment consisted of general office duties. From December 1987 to June 2000, Mr. Vance worked at World Ship Supply, as a General Manager. From January 1986 to December 1986, Mr. Vance worked at Xerox Corp. as a service technician. Effective January 1, 2006, we entered into a three year renewable employment contract with Mr. Vance, as described below under "Employment Agreements."
Our Directors are elected annually and hold office until our annual meeting of the shareholders and until their successors are elected and qualified. Officers will hold their positions at the pleasure of the Board of Directors, absent any employment agreement. There are no family relationships among our officers and Directors. Our officers and Directors may receive compensation as determined by us from time to time by vote of the Board of Directors. Such compensation might be in the form of stock options. Vacancies in the Board are filled by majority vote of the remaining Directors. Directors may be reimbursed by us for expenses incurred in attending meetings of the Board of Directors.
EMPLOYMENT AGREEMENTS
Effective October 1, 2005, we entered into employment agreements with Timothy Vance to serve as our Director of Customer Support and Larry Mosley to serve as our Chief Financial Officer. On February 13, 2006, we entered into Addendums to those agreements, to change the effective date of such agreements from October 1, 2005, to January 1, 2006 (the "Employment Agreements"). The Employment Agreements have a term of three years and are renewable for successive one-year terms at the mutual acceptance of us and each executive. Mr. Mosley is entitled to receive a salary of $75,000 per year that he is employed under his agreement and Mr. Vance is entitled to receive a salary of $80,000 per year that he is employed under his agreement. Additionally, both Mr. Vance and Mr. Mosley are entitled to reimbursement for business expenses incurred in connection with their employment, not to exceed $500, without our prior approval. Additionally, Mr. Vance and Mr. Mosley are entitled to up to $500 per month to be used for car payments on a car to be used in connection with employment under the Employment Agreements.
On February 8, 2006, with an effective date of January 1, 2006, we entered into an employment agreement with James Ammons to serve as our Chief Executive Officer and President (the "Ammons Employment Agreement," and collectively with the Employment Agreements, the Executive Employment Agreements"). The Ammons Employment Agreement has a term of five (5) years, and is renewable for successive one-year terms. Mr. Ammons is entitled to a different "Yearly Salary" depending on the year which Mr. Ammons is employed under the Ammons Employment Agreement. Mr. Ammons' first Yearly Salary (for the yearly period from January 1, 2006 to December 31, 2006) is $120,000, and his Yearly Salary increases 5% per year (rounded to the nearest dollar) for each additional year Mr. Ammons is employed pursuant to the Ammons Employment Agreement, for example, Mr. Ammons' Yearly Salary for the second year of the Ammons Employment Agreement (the period from January 1, 2007 to December 31, 2007) is $126,000 ($120,000 + ($120,000 x .05)). In the event the Ammons Employment Agreement is automatically renewed for successive one-year periods, Mr. Ammons salary will continue to increase by 5% each year he is employed.
All of the Executive Employment Agreements contain confidentiality clauses, stating that we have ownership rights to any intellectual property created Mr. Vance, Mr. Mosley or Mr. Ammons (collectively the "Executives") in connection with their employment under the Executive Employment Agreements. Additionally, the Executive Employment Agreements provide that for a period of nine months (12 months under Mr. Ammons agreement) following their termination from employment with us, no Executive will directly or indirectly serve in certain capacities with any of our competitors in Harris County, Texas, or any of the surrounding counties.
Additionally, under the Executive Employment Agreements, we agreed to indemnify and hold harmless the Executives, their nominees and/or assigns against any and all losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses and disbursements (incurred in any and all actions, suits, proceedings and investigations in respect thereof and any and all legal and other costs, expenses and disbursements in giving testimony or furnishing documents in response to a subpoena or otherwise), including without
limitation, the costs, expenses and disbursements, as and when incurred, of investigating, preparing or defending any such action, suit, proceeding or investigation that is in any way related to their employment with us (whether or not in connection with any action in which they are a party). Such indemnification does not apply to acts performed by the Executives, which are criminal in nature or a violation of law.
The Executive Employment Agreements terminate:
(a) in the event the Executive suffers an injury, illness, or incapacity of such character as to prevent him from performing his duties without reasonable accommodation for a period of more than thirty (30) consecutive days upon us giving at least thirty (30) days written notice of termination to him;
(b) upon the death of the Executive;
(c) at any time because of, (i) the conviction of Executive of an act or acts constituting a felony or other crime involving moral turpitude, dishonesty or theft or fraud; or (ii) his gross negligence in the performance of his duties hereunder; or
(d) Executive may terminate his employment for "good reason" by giving us ten (10) days written notice if: (i) he is assigned, without his express written consent, any duties materially inconsistent with his positions, duties, responsibilities, or status with us, or a change in his reporting responsibilities or titles as in effect as of the date hereof; (ii) his compensation is reduced; or (iii) we do not pay any material amount of compensation due hereunder and then fail either to pay such amount within the ten (10) day notice period required for termination hereunder or to contest in good faith such notice.
In the event Mr. Vance's or Mr. Mosley's employment is terminated under (a) through (d) above, either of them is entitled to all compensation earned by him through the date of his termination. Additionally, Mr. Vance may be terminated at any time without cause, provided that we pay him a one-time lump sum payment payable within 30 days of his termination without cause of the total amount of salary remaining to be paid under his employment agreement. Mr. Mosley cannot be terminated without cause.
The Ammons Employment Agreement may also be terminated without cause, provided that in the event Mr. Ammons employment is terminated with cause or for good reason, Mr. Ammons shall be entitled to receive a lump sum payment of 150% of his Yearly Salary (as defined above) then in effect.
The Ammons Employment Agreement provides that Mr. Ammons may be provided a car allowance by us, not to exceed $600 per month. In consideration for Mr. Ammons entering into the Ammons Employment Agreement, we agreed to grant him options to purchase 3,000,000 shares of our common stock at $0.10 per share (the "Options"). The Options vested immediately upon Mr. Ammons entry into the Ammons Employment Agreement, and expire on February 8, 2011. The Options also contain a cashless exercise provision, whereby Mr. Ammons can pay for the exercise of the Options in shares of our common stock.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table provides the names and addresses of each person known to own directly or beneficially more than a 5% of the outstanding Common Stock (as determined in accordance with Rule 13d-3 under the Exchange Act) as of February 8, 2006 and by the officers and Directors, individually and as a group. Except as otherwise indicated, all shares are owned directly.
Shares Beneficially Owned
Prior to Offering
Name and Address of ---------------------------
Beneficial Owner Shares Percent(1)
---------------------- ----------- ----------
JAMES AMMONS 12,000,000(2) 20.5%(3)
CEO, Treasurer,
Secretary and Director
600 Kenrick, Suite B-12
Houston, Texas 77060
MILFORD & RUTH MAST 7,466,000 13.4%
466 N. Manor Rd.
Elverson, PA 19520
TERRY BREEDLOVE 5,000,000 9.0%
Employee
600 Kenrick, Suite B-12
Houston, Texas 77060
TIMOTHY VANCE 1,000,000 1.8%
Director of Customer Support
and Director
600 Kenrick, Suite B-12
Houston, Texas 77060
LARRY MOSLEY 1,000,000 1.8%
CFO and Director
600 Kenrick, Suite B-12
Houston, Texas 77060
ALL THE OFFICERS AND DIRECTORS 14,000,000 24.0%(3)
AS A GROUP (3 PERSONS)
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(1) Using 55,462,100 shares outstanding as of February 8, 2006.
(2) Includes 9,000,000 shares of common stock held by Mr. Ammons and 3,000,000 Options for shares of our commons stock held by Mr. Ammons (described above in greater detail under "Directors, Executive Officers and Control Persons").
(3) Using 58,453,100 shares outstanding, which number includes the full exercise of Mr. Ammons 3,000,000 Options.
INTEREST OF NAMED EXPERTS AND COUNSEL
David M. Loev, Attorney at Law who prepared this Form SB-2 Registration Statement, is the beneficial owner of 1,000,000 shares of our Common Stock.
EXPERTS
Our audited financial statements for the years ending December 31, 2005, and 2004, included in this Prospectus have been prepared by R.E. Bassie and Company, certified public accountants, our independent auditors, as stated in their report appearing herein and have been so included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Nevada Revised Statutes and our Articles of Incorporation, as amended, allow us to indemnify our officers and Directors from certain liabilities and our Bylaws state that we shall indemnify every (i) present or former Director, advisory Director or officer of us, (ii) any person who while serving in any of the capacities referred to in clause (i) served at the our request as a Director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, and (iii) any person nominated or designated by (or pursuant to authority granted by) the Board of Directors or any committee thereof to serve in any of the capacities referred to in clauses (i) or (ii) (each an "Indemnitee").
Our Bylaws provide that we shall indemnify an Indemnitee against all judgments, penalties (including excise and similar taxes), fines, amounts paid in settlement and reasonable expenses actually incurred by the Indemnitee in connection with any proceeding in which he was, is or is threatened to be named as defendant or respondent, or in which he was or is a witness without being named a defendant or respondent, by reason, in whole or in part, of his serving or having served, or having been nominated or designated to serve, if it is determined that the Indemnitee (a) conducted himself in good faith, (b) reasonably believed, in the case of conduct in his Official Capacity, that his conduct was in our best interests and, in all other cases, that his conduct was at least not opposed to our best interests, and (c) in the case of any criminal proceeding, had no reasonable cause to believe that his conduct was unlawful; provided, however, that in the event that an Indemnitee is found liable to us or is found liable on the basis that personal benefit was improperly received by the Indemnitee, the indemnification (i) is limited to reasonable expenses actually incurred by the Indemnitee in connection with the Proceeding and (ii) shall not be made in respect of any Proceeding in which the Indemnitee shall have been found liable for willful or intentional misconduct in the performance of his duty to us.
Except as provided above, the Bylaws also provide that no indemnification shall be made in respect to any proceeding in which such Indemnitee has been (a) found liable on the basis that personal benefit was improperly received by him, whether or not the benefit resulted from an action taken in the Indemnitee's
official capacity, or (b) found liable to us. The termination of any proceeding by judgment, order, settlement or conviction, or on a plea of nolo contendere or its equivalent, is not of itself determinative that the Indemnitee did not meet the requirements set forth in clauses (a) or (b) above. An Indemnitee shall be deemed to have been found liable in respect of any claim, issue or matter only after the Indemnitee shall have been so adjudged by a court of competent jurisdiction after exhaustion of all appeals therefrom. Reasonable expenses shall, include, without limitation, all court costs and all fees and disbursements of attorneys for the Indemnitee. The indemnification provided shall be applicable whether or not negligence or gross negligence of the Indemnitee is alleged or proven.
DESCRIPTION OF BUSINESS
Data Call Technologies (the "Company," "we," "us") was incorporated on April 4, 2002, as Data Call Wireless. We subsequently filed Articles of Amendment with the Nevada Secretary of State and changed our name to Data Call Technologies on June 19, 2003.
Three of our officers and Directors, James Ammons, Timothy Vance and James Tevis, were previously employed by QVS Wireless Corporation, a Nevada corporation ("QVS"), which specialized in wireless data management systems and technology, previous to our formation. Those individuals left QVS to help form Data Call Technologies in the spring of 2002. Subsequent to those individuals leaving QVS, QVS filed litigation against us, Mr. Ammons, Mr. Tevis, Mr. Vance and our previous officers and Directors, Richard Clemens and Derek Argo, alleging breach of contract, breach of fiduciary duty, usurping corporate opportunities, fraud, negligent misrepresentation, tortuous interference, and conversion against those individuals and us.
On August 12, 2002, we, Mr. Ammons, Mr. Vance, Mr. Tevis and QVS entered into a "Side Letter Agreement Made August 12, 2002," which provided for us to pay QVS $20,000 in monthly installments of $2,500 per month and to return $38,000 to Dr. Carl Hoffman in connection with his investment in us.
Effective August 12, 2002, we, Mr. Ammons, Mr. Tevis and Mr. Vance entered into a Settlement Agreement and Mutual Release with QVS, whereby the parties agreed to release each other from all claims or causes of action, suits, proceedings, torts, debts, sums of money, accounts, contracts, controversies, damages, known or unknown, then existing and/or thereafter arising. Pursuant to the Settlement Agreement and Mutual Release, the parties agreed to file an Agreed Permanent Injunction in connection with the pending legal suit, we agreed to assign and release to QVS the domain name www.qvswireless.com, refrain from selling, leasing, marketing or distributing QVS's products, communicating with QVS's shareholders regarding matters related to QVS, and soliciting, contacting or communicating with any of QVS's vendors and/or clients.
On June 13, 2003, QVS granted us a Full and Final Release of all claims known or unknown against us and we agreed to pay QVS $2,000 and to assign all of our ownership rights to the "Copy/CallQ-Trac" system to QVS. Additionally, we agreed to issue Dr. Hoffman 500,000 shares of our common stock in lieu of the $38,000 he was owed in connection with the Side Letter Agreement entered into in August 2002.
In June 2002, our Chief Executive Officer transferred approximately 40 QVS shareholders an aggregate of approximately 4,610,000 shares of our restricted Common Stock in consideration for each of those QVS shareholders signing a Release, whereby they agreed to release us, our Chief Executive Officer, James Ammons, and our officers and Directors and employees from any and all claims, rights, obligations, demands and causes of action arising from or relating to QVS.
We currently offer our Direct Lynk Messenger service to customers through the Internet. The Direct Lynk Messenger Service is a streaming digital signage product and real-time information service which provides "cafeteria-style" client selection (via our website, www.datacalltech.com) of a wide range of up-to-date information, as well as custom messaging services for display. The Direct Lynk Messenger service is able to work as a stand alone service for customers' displays, and/or to work concurrently with customers' existing digital signage.
Through a portal on our website, www.datacalltech.com, our clients are able to pick and choose which of our text feeds (described below) they would like to stream to a supported third party hardware box connected to the Internet and placed anywhere around the world. All that a client needs to stream our text feeds from the Internet to their third party data decoder box is to have access to the Internet. Clients are also able to add their own user defined text messages and advertising to our Direct Lynk Messenger text stream, and pick which individual locations and which of their third party hardware decoder boxes they would like to receive our feeds.
The current types of information, which a client is able to stream through to their televisions through the Direct Lynk system include:
o Headline News top world and national news headlines (six headlines updated every 30 minutes);
o Business News top business headlines (six headlines updated every 30 minutes);
o Financial Highlights world-based financial indicators (ten indicators updated every 30 minutes during NYSE market hours);
o Entertainment News top entertainment headlines (six headlines updated every 30 minutes);
o Science News top science headlines (six headlines updated every 30 minutes);
o Quirky News Bits latest off-beat news headlines (six headlines updated every 30 minutes);
o Sports Headlines top sports headlines (six headlines updated every 30 minutes)
o Latest Sports Lines - latest sports odds for NFL, NBA, NHL, NCAA Football and NCAA Basketball (currently set by Sportsbook.com, but subject to change);
o National Football League latest game schedule (updated once per day) and in-game updates (updated continuously);
o National Basketball Association - latest game schedule (updated once per day) and in-game updates (updated continuously);
o Major League Baseball - latest game schedule (updated once per day) and in-game updates (updated continuously);
o National Hockey League - latest game schedule (updated once per day) and in-game updates (updated continuously);
o NCAA Football - latest game schedule (updated once per day) and in-game updates (updated continuously) ;
o NCAA Men's Basketball - latest game schedule (updated once per day) and in-game updates (updated continuously);
o Professional Golf Association top 10 leaders continuous updated throughout the four-day tournament;
o NASCAR top 10 race positions updated every 20 laps throughout the race;
o Computer industry news;
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; and
o Localized Weather Forecasts.
In addition to the above information categories and the client-generated messages, we may, at our discretion, include a Public Service Announcement
("PSA"), third-party advertisement (for additional revenue streams) and/or a Data Call Technologies tag line to our streaming text advertising in the future.
Our Direct Lynk Messenger service is currently compatible with various digital signage hardware decoder boxes such as those marketed by MagicBox Aavelin, ChyTV, Scala, Adaptive LED, 3M Company, Keywest Technologies and Vertigo X Media.
We are currently in negotiations with a platform developer in connection with a distribution agreement, which would allow us to transfer our Direct Lynk System feed over cell phones. We are also in negotiations with a company to supply our Direct Lynk System feed to the company's elevator televisions. Although we are in negotiations with these companies, we have not entered into any definitive agreements with either of these companies as of the date of this Prospectus.
DEPENDENCE ON ONE OR A FEW CUSTOMERS
We do not currently have any customers who pay to subscribe to the Direct Lynk Service, however we do currently have several companies which are testing the Direct Lynk system. In the near future, we will depend on a small number of customers for the bulk of our revenues, if any. However, in the future, we plan to depend less on a small number of customers. Instead, we hope to offer our Direct Lynk service to many customers in numerous industries. We hope that the diversification of products in the marketplace will lower the risk that the loss of one customer or decline in any one industry will impact our revenues; however, as we have not yet generated any revenues though out Direct Lynk system and have no companies which pay to subscribe to the Direct Lynk system, we may be forced to depend on a small number of clients in the future.
PATENTS, TRADEMARKS & LICENSES
In July 2004, we filed a U.S. provisional patent application for software used in connection with an earlier version of our product, known at that time as "Infocall." A provisional patent application gives a filer one full year to assess an invention's commercial potential before committing to the higher cost of filing and prosecuting a non-provisional application for a patent. We did not file a non-provisional application and have thus lost any patent rights which were the subject matter of the provisional patent application. The provisional patent filed by us did not automatically become a valid patent and since the one year period has expired, it cannot be extended. In order for us to have a valid legally binding patent on our Direct Lynk Messenger System, we must file a new patent application directed to inventions neither disclosed in the provisional patent application nor which have been on sale, offered for sale, or commercially used over a year prior to its filing date, which must then be granted by the United States Patent and Trademark Office, of which there can be no assurance. No such patent applications have been filed or discussed.
We have no patents, patent applications, trademarks, trademark applications or licenses covering our Direct Lynk Messenger service. We may choose to file a patent application in the future, if our management feels it is in our best interest and raises sufficient capital to pay for the legal costs associated with such filing, but we currently have no plans to file such application. As we have no current patents on our technology, we can provide future investors no assurances that another company does not already have a patent on our technology, that we are not in violation of such patent, if one exists, and/or that we can assert patent rights against another company that utilizes the same technology as us.
EMPLOYEES
We currently employ eight (8) full time employees.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our financial statements.
ESTIMATE OF THE AMOUNT SPENT ON RESEARCH AND DEVELOPMENT ACTIVITIES
Since our inception in April 2002, the majority of our expenditures have been on research and development on our Direct Lynk Messenger system, including software and hardware development and testing. The amount spent on this research and development since inception is estimated by us to be approximately $1,500,000.
PLAN OF OPERATIONS
We believe that we can continue our business operations for approximately the next twelve (12) months, assuming our current rate of monthly expenditure, number of employees, and other expenses do not increase significantly, due to the approximately $671,228 of cash on hand as of December 31, 2005, and the approximately $175,000 raised subsequent to December 31, 2005. In the event that our current monthly rate of expenditure, the number of employees we employ and/or any of our other expenses increase, we may be forced to raise additional capital within the next twelve months.
We plan to continue to grow our business and market our Direct Lynk system to potential customers over the course of the next twelve months. We will also continue on a limited basis our practice of providing potential customers free trials of the Direct Lynk system, for which we will receive no revenue, in an attempt to build both product awareness for the Direct Lynk system and to potentially lead to sales down the road. Additionally, we are currently working on adapting our technology to allow us to broadcast our live feeds to cell phones. As of the date of this Prospectus, we have generated only minimal
revenues through paying subscriptions for the Direct Lynk system, and we can provide no assurances that we will generate any revenues in the future, that we will be successful in marketing our Direct Lynk system to potential customers or that we will continue to have enough money to continue our business operations and marketing activities in the future (please see "Risk Factors" above for more detailed descriptions of these and other risks to which we are subject).
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
ACCOUNTS RECEIVABLE
Accounts receivable consist primarily of trade receivables, net of a valuation allowance for doubtful accounts.
INVENTORIES
Inventories are valued at the lower-of-cost or market on a first-in, first-out basis.
INVESTMENT SECURITIES
The Company accounts for its investments in accordance with Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities." Management determines the appropriate classification of its investments in marketable securities at the time of purchase and reevaluates such determination at each balance sheet date. Securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities. Debt securities for which the Company does not have the intent or ability to hold to maturity and equity securities not classified as trading securities are classified as available-for-sale. The cost of investments sold is determined on the specific identification or the first-in, first-out method. Trading securities are reported at fair value with unrealized gains and losses recognized in earnings, and available-for-sale securities are also reported at fair value but unrealized gains and losses are shown in the caption "unrealized gains (losses) on shares available-for-sale" included in stockholders' equity. Management determines fair value of its investments based on quoted market prices at each balance sheet date.
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.
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.
RESULTS OF OPERATIONS
COMPARISON FOR THE YEAR ENDED DECEMBER 31, 2005 COMPARED TO THE YEAR ENDED
DECEMBER 31, 2004
Sales for the year ended December 31, 2005 were $365, a decrease in sales of $16,458 or 97% from the prior period, which were attributable to the sale of a subscription feed for our Direct Lynk System during the year ended December 31, 2005, compared to sales of $16,823 for the year ended December 31, 2004, which sales were attributable to sales of flat screen televisions. The decrease in sales was attributable to a decrease in sales of flat screen televisions, in connection with our focus on our Direct Lynk System.
Total operating expenses for the year ended December 31, 2005 increased $10,742 or 1%, to $1,076,221, from total operating expenses of $1,065,479 for the year ended December 31, 2004. This increase was due to the following line item increases for the year ended December 31, 2005, compared to the year ended December 31, 2004, an increase of $75,815 or 128% in legal and accounting expenses in connection with our attempt to file a Registration Statement with the Securities and Exchange Commission; an increase of $8,947 or 13.7% in product development costs associated with our Direct Lynk System; an increase of $69,954 or 368% in travel costs associated with our travel to certain trade shows and to certain corporation's offices to demonstrate our Direct Lynk System; an increase of $3,068 or 14.2% in office and equipment rental in connection with our move to our Houston office space (as described under "Description of Property," herein); increases of $3,517 or 26.9% in telephone expense associated with our purchase of an automated telephone answering system for our Houston office; and increases of $6,233 or 245% in depreciation expense.
These increases in total operating expenses were offset by the following decreases in operating expenses for the year ended December 31, 2005, compared to the year ended December 31, 2004; a $94,002 or 12.1% decrease in contractual
services, due to a reworking of our subscription feeds, which lowered our provider costs, a $43,991 or 58,7% decrease in office supplies and expenses, due to the fact that for the majority of the fiscal 2005 year we operated without our Dallas office and therefore used less office supplies than we did for the year ended December 31, 2004; a $13,450 or 92.1% decrease in trade show expenses, due to the fact that while we traveled to many trade shows throughout the year ended December 31, 2005, we did not display our Direct Lynk System at any shows; and a $12,234 or 86.8% decrease in other expense.
Net loss for the year ended December 31, 2005 was $1,075,856, which was an increase in net loss of $15,374 or 1.4% from net loss for the year ended December 31, 2004, which was $1,065,479. The increase in net loss was mainly attributable to increases in our legal and accounting expenses and traveling expenses, which were offset by decreases in our consulting expenses and our office supplies and expenses cost.
LIQUIDITY AND CAPITAL RESOURCES
We had current assets of $671,228 as of December 31, 2005, which consisted solely of cash of $671,228.
We had total assets of $767,281 as of December 31, 2005, consisting of total current assets of $671,228; net property and equipment of $90,798, which included high end flat screen televisions, computers and software equipment responsible for running our Direct Lynk System which is stored in our Houston and Dallas offices; and other assets of $5,255, which included our deposit on our Houston and Dallas office space.
We had total current liabilities representing accounts payable and accrued expenses of $66,792, which was also our sole liability as of December 31, 2005, and which included $50,000 which was owed to our former legal counsel.
We had net working capital of $604,436 as of December 31, 2005.
We had $676,853 of cash used in operating activities for the year ended December 31, 2005, which was mainly due to net loss of $1,075,856, offset by 371,860 of stock issued for services, which shares were issued to our consultants and employees in connection with services rendered.
We had $70,441 of cash used in investing activities during the year ended December 31, 2005, which included $70,441 of capital expenditure for equipment relating to Houston office space.
We had $1,403,400 in net cash provided by financing activities for the year ended December 31, 2005, representing proceeds from the sale of 14,034,000 shares of our Common Stock for $0.10 per share pursuant to a private placement.
Due to the $1,403,400 of net cash raised through the sale of Common Stock during the year ended December 31, 2005, of which $671,228 remained as of December 31, 2005, and the approximately $175,000 raised subsequent to December 31, 2005, we believe that with our current rate of monthly expenditures, we will be able to maintain our operations for approximately twelve months, if we generate no additional funds through sales during the next twelve months, and slightly longer if we are able to generate sales, of which there can be no assurance.
We will need to take steps to raise equity capital or to borrow additional funds subsequent to the effectiveness of this Registration Statement, to continue our operations and meet our upcoming liabilities, as we have generated only limited revenues to date, and have received the vast majority of the money we have spent on our operations and for research and development through the private placement of shares of our Common Stock. There can be no assurance that any new capital will be available to us or that adequate funds for our operations, whether from our financial markets, or other arrangements will be available when needed or on terms satisfactory to us, will be available subsequent to the effectiveness of our registration statement. We have no commitments from officers, Directors or affiliates to provide funding. Our failure to obtain adequate additional financing may require us to delay, curtail or scale back some or all of our operations. Additionally, any additional financing may involve dilution to our then-existing shareholders.
DESCRIPTION OF PROPERTY
We entered into a three year lease on our principal offices at 600 Kenrick, Suite B-12, Houston, Texas 77060, with First Industrial Development Services, Inc., a Maryland corporation ("Landlord"), which became effective on April 1, 2005. The lease covers approximately 2,240 square feet and has a monthly rental cost of $1,120 from April 1, 2005 to March 31, 2006 and $1,164.80 from April 1, 2006 to March 31, 2008. We have the option to terminate the lease on April 1, 2007, provided that we give the Landlord 180 days notice of our intention to terminate the lease and pay $3,365 in penalties.
On January 1, 2006, we entered into a lease on approximately 1,875 square feet of office space, which we plan to use for sales/development at 14683 Midway Road, Suite 150, Addison, Texas 75001. The lease has a three year term, ending on December 31, 2008. The monthly rental fee for the term of the lease is $1,719 per month. Additionally, pursuant to the Addison office space lease, we agreed to reimburse the landlord for any costs associated with utilities, taxes and assessments and casualty and liability insurance in connection with the leased space.
Additionally, we currently rent office space in the house of one of our employees, outside of New Orleans, Louisiana, for which we pay the employee $350 per month, which office space encompasses approximately 10 square feet. We use our New Orleans office space for sales and marketing.
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
In April 2002, our Chief Executive Officer, James Ammons was issued 9,000,000 shares of our restricted Common Stock, our Director Timothy Vance was issued 150,000 shares of our restricted Common Stock in consideration for services rendered to us, our former Director and officer, Derek Argo was issued 1,000,000 shares of our restricted Common Stock (of which 900,000 shares were subsequently cancelled by Mr. Argo "Recent Sales of Unregistered Securities") in consideration for services rendered to us, and our counsel, David M. Loev was issued 1,000,000 shares in consideration for services rendered to us.
In June 2002, our Chief Executive Officer transferred approximately 40 QVS shareholders an aggregate of approximately 4,610,000 shares of our restricted shares of Common Stock in return for each of those QVS shareholders signing a Release, whereby they agreed to release us, our Chief Executive Officer, James Ammons, and our officers and Directors and employees from any and all claims, rights, obligations, demands and causes of action arising from or relating to QVS.
In August 2003, we issued 1,000,000 shares of our restricted common stock to Terry Breedlove, an employee and a greater than 5% shareholder of us, in consideration for services rendered to us.
In November 2003, we issued 1,250,000 shares of our restricted common stock to Terry Breedlove, an employee and a greater than 5% shareholder of us, in consideration for services rendered to us.
In November 2003, our Director, Timothy Vance was issued 750,000 shares of our restricted Common Stock in consideration for services rendered to us.
In April 2004, our Director, Timothy Vance was issued 100,000 shares of our restricted Common Stock in consideration for services rendered to us.
In June 2004, our Chief Financial Officer and Director, Larry Mosley was issued 50,000 shares of our restricted Common Stock in consideration for services rendered to us.
In June 2004, we issued 250,000 shares of our restricted common stock to Terry Breedlove, an employee and a greater than 5% shareholder of us, in consideration for services rendered to us.
Effective September 1, 2004, we issued 4,610,000 shares of our restricted common stock to our Chief Executive Officer, James Ammons in consideration for his transfer of his personal shares to QVS shareholders in consideration for the QVS shareholders release of us, Mr. Ammons, and our officers, Directors and employees from any and all claims, rights, obligations, demands and causes of action arising from or relating to QVS.
In January 2005, we issued an aggregate of 950,000 shares of our restricted Common Stock to our Chief Financial Officer and Director, Larry Mosley, in consideration for services rendered to us.
Effective October 1, 2005, we entered into employment agreements with Larry Mosley, our Chief Financial Officer and Timothy Vance, our Director of Customer Support. We later amended the effective date of those agreements to January 1, 2006, pursuant to an "Addendum No. 1 to Executive Employment Agreement" entered into on February 14, 2006, which each of those individuals. The employment agreements are described in greater detail above.
In October 2005, we sold an aggregate of 3,000,000 shares of our restricted common stock to Milford and Ruth Mast, greater than 5% shareholders of us, in consideration for $300,000 (or $0.10 per share).
In November 2005, we sold an aggregate of 3,016,000 shares of our restricted common stock to Milford and Ruth Mast, greater than 5% shareholders of us, in consideration for $301,600 (or $0.10 per share).
In December 2005, we sold 1,450,000 shares of our restricted common stock to Milford and Ruth Mast, greater than 5% shareholders of us, in consideration for $145,000 (or $0.10 per share).
In January 2006, we sold 50,000 shares of our restricted common stock to Milford and Ruth Mast, greater than 5% shareholders of us, in consideration for $5,000 (or $0.10 per share).
In January 2006, we sold 50,000 shares of our restricted common stock to Milford and Ruth Mast, greater than 5% shareholders of us, in consideration for $5,000 (or $0.10 per share).
In February 2006, we sold 950,000 shares of our restricted common stock to Milford and Ruth Mast, greater than 5% shareholders of us, in consideration for $95,000 (or $0.10 per share).
In February 2006, we issued 2,500,000 shares of our restricted common stock to Terry Breedlove, an employee and a greater than 5% shareholder of us, in consideration for services rendered to us.
In February 2006, our Board of Directors approved a $35,000 bonus to our Chief Executive Officer, James Ammons, in consideration for entering into his employment agreement with us (as described below).
On February 8, 2006, we entered into an Employment Agreement with James Ammons, our Chief Executive Officer, which Employment Agreement is described in greater detail under "Directors, Executive Officers and Control Persons," above. In connection with the Employment Agreement, we granted Mr. Ammons Options exercisable into 3,000,000 shares of our common stock at $0.10 per share, which Options are described in greater detail under "Directors, Executive Officers and Control Persons," above.
EXECUTIVE COMPENSATION
ANNUAL COMPENSATION
--------------------------------------------------------------------------------------
NAME AND
PRINCIPAL POSITION FISCAL YEAR SALARY OTHER ANNUAL RESTRICTED OPTIONS
COMPENSATION STOCK AWARDS
James Ammons 2006(2) $ 120,000 $35,000(3) -- 3,000,000(4)
Chief Executive Officer, 2005 $ 78,070 -- -- --
Secretary, Treasurer and 2004 $ 80,500 -- -- --
Director (1) 2003 $ 47,450 -- -- --
Larry Mosley 2006(5) $ 75,000* -- -- --
Chief Financial Officer 2005 $ 30,500 -- 950,000 --
and Director 2004 $ 10,525 -- 50,000 --
2003 $ 2,750 -- -- --
Terry Breedlove 2006(6) $ 80,000* -- 2,500,000 --
Controller 2005 $ 67,750 -- -- --
2004 $ 73,500 -- 250,000 --
2003 $ 13,000 -- 2,250,000 --
Richard Clemens 2003 $ 5,650 -- -- --
Former Chief Executive 2002 $ 47,313 -- -- --
Officer (1)
|
The individuals listed above have not received any LTIP payouts over the past three completed fiscal years as compensation from us.
Salary amounts listed above do not include perquisites and other personal benefits in amounts less than 10% of the total annual salary and other compensation.
Other than the individuals listed above, we have no other executive employees who have received more than $100,000 in compensation, including bonuses and options, during each of the last three (3) fiscal years.
(1) Mr. Clemens served as our Chief Executive Officer, Secretary and Treasurer from the date of our incorporation on April 4, 2002, until June 19, 2003, when James Ammons was elected Chief Executive Officer, Secretary and Treasurer by our Board of Director.
(2) Mr. Ammons salary for 2006 is estimated. In February 2006, we entered into a five year employment agreement with Mr. Ammons, which is to pay him $120,000 for the fiscal year ended 2006, and increase by 5% for each of the additional four years of the agreement. Mr. Ammons' employment agreement, including provisions which take effect upon Mr. Ammons termination, is described in greater detail under "Directors, Executive Officers and Control Persons," above.
(3) Mr. Ammons received a $35,000 bonus in consideration for entering into his employment agreement with us in February 2006.
(4) Mr. Ammons' Options are described in greater detail under "Directors, Executive Officers and Control Persons," above.
(5) Mr. Mosley has served as our Chief Financial Officer since October 11, 2004. He entered into a three year employment agreement with us, with an effective date of October 1, 2005, which effective date was subsequently changed to January 1, 2006 pursuant to an addendum to the employment agreement entered into on February 14, 2006. Mr. Mosley is to be paid $75,000 per year pursuant to his employment agreement, which is described in greater detail under "Directors, Executive Officers and Control Persons," above.
CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures. Our Chief Executive Officer and Principal Financial Officer, after evaluating the effectiveness of our "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of December 31, 2005 (the "Evaluation Date"), have concluded that as of the Evaluation Date, our disclosure controls and procedures were effective to provide reasonable
assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
(b) Changes in internal control over financial reporting. There were no significant changes in our internal control over financial reporting during the last fiscal year and/or up to and including the date of this filing that we believe materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
DESCRIPTION OF CAPITAL STOCK
COMMON STOCK
We are authorized to issue up to 75,000,000 shares of Common Stock. As of February 8, 2006, there were 55,462,100 shares of Common Stock issued and outstanding.
The holders of shares of Common Stock are entitled to one vote per share on each matter submitted to a vote of shareholders. In the event of liquidation, holders of Common Stock are entitled to share prorata in the distribution of assets remaining after payment of liabilities, if any. Holders of Common Stock have no cumulative voting rights, and, accordingly, the holders of a majority of the outstanding shares have he ability to elect all of the Directors. Holders of Common Stock have no preemptive or other rights to subscribe for shares. Holders of Common Stock are entitled to such dividends as may be declared by the board of Directors out of funds legally available therefore. The outstanding Common Stock is validly issued, fully paid and non-assessable.
OPTIONS
We currently have 3,000,000 Options outstanding, which Options are held by our Chief Executive Officer and President, James Ammons. The Options were granted on February 8, 2006, and expire on February 11, 2011. The Options vested imediately and are exercisable for shares of our Common Stock at $0.10 per share and contain a cashless exercise provision. No Options had been exercised by Mr. Ammons as of the date of this Prospectus.
SHARES AVAILABLE FOR FUTURE SALE
As of the filing of this Prospectus, there are 55,462,100 shares of Common Stock issued and outstanding. Of the 38,462,100 shares of Common Stock which are being registered pursuant to this Prospectus, 7,466,000 shares of our outstanding Common Stock offered herein by Milford L. and Ruth L. Mast, will be
subject to the resale provisions of Rule 144 upon effectiveness of our Registration Statement and the remaining 30,996,100 shares offered by the selling stockholders will be eligible for immediate resale in the public market if an when any market for our Common Stock develops.
The remaining 17,000,000 shares of Common Stock outstanding which are not being registered in this offering will be subject to the resale provisions of Rule 144. Sales of shares of Common Stock in the public markets may have an adverse effect on prevailing market prices for the Common Stock.
Rule 144 governs resale of "restricted securities" for the account of any person (other than an issuer), and restricted and unrestricted securities for the account of an "affiliate" of the issuer. Restricted securities generally include any securities acquired directly or indirectly from an issuer or its affiliates which were not issued or sold in connection with a public offering registered under the Securities Act. An affiliate of the issuer is any person who directly or indirectly controls, is controlled by, or is under common control with, the issuer. Affiliates of us may include our Directors, executive officers, and persons directly or indirectly owning 10% or more of our outstanding Common Stock. Under Rule 144 unregistered resales of restricted Common Stock cannot be made until it has been held for one year from the later of its acquisition from us or our affiliate.
Thereafter, shares of Common Stock may be resold without registration subject to Rule 144's volume limitation, aggregation, broker transaction, notice filing requirements, and requirements concerning publicly available information about us ("Applicable Requirements"). Resales by our affiliates of restricted and unrestricted Common Stock are subject to the Applicable Requirements. The volume limitations provide that a person (or persons who must aggregate their sales) cannot, within any three-month period, sell more than the greater of one percent of the then outstanding shares, or the average weekly reported trading volume during the four calendar weeks preceding each such sale. A non-affiliate may resell restricted Common Stock which has been held for two years free of the Applicable Requirements.
PLAN OF DISTRIBUTION AND SELLING STOCKHOLDERS
This Prospectus relates to the resale of 38,462,100 shares of Common Stock by the selling stockholders. The table below sets forth information with respect to the resale of shares of Common Stock by the selling stockholders. We will not receive any proceeds from the resale of Common Stock by the selling stockholders for shares currently outstanding. The selling shareholders will sell their common shares at the fixed price of $0.10 per share until our shares are quoted on the OTC Bulletin Board and thereafter, shares will be sold at the prevailing market prices or at privately negotiated prices.
SELLING STOCKHOLDERS
-------------------------------------------------
SHARES OWNED SHARES OWNED
PRIOR TO SUBSEQUENT TO
SHAREHOLDER NAME ISSUE DATE CONSIDERATION* OFFERING OFFERING (1)
---------------- ---------- ------------- ------------ --------------
Adams, Blaine H. August - 2005 Cash 100,000 --
Ali Ahmed, Salar (2) August - 2004 Services 100,000 --
Ali Ahmed, Salar (2) March - 2005 Services 50,000 --
Allen, Jeff July - 2005 Cash 200,000 --
Allen, Tim L. July - 2004 Cash 75,000 --
Allen, Tim L. November - 2004 Cash 50,000 --
Ammon, Lance July - 2002 Release (3) 250,000 --
Argo, Derek (4) April - 2002 Services 100,000 --
Arms, Larry October - 2002 Cash 10,000 --
Arms, Larry August - 2002 Release (3) 31,000 --
Arms, Larry (5) February - 2006 Services 10,000 --
Armstrong, Daniel June - 2002 Cash 50,000 --
Armstrong, Donald R. September - 2005 Cash 160,000 --
Armstrong, Sharon (5) November - 2005 Services 50,000 --
Babits, Shawn (5) October - 2004 Services 10,000 --
Bagget, Gary (5) July - 2004 Services 10,000 --
Bagley, Walter June - 2002 Release (3) 250,000 --
Baker, Woody and Lucy July - 2002 Release (3) 10,000 --
Bellewood Corporation (A) September - 2005 Cash 250,000 --
Bellewood Corporation (A) December - 2005 Cash 100,000 --
Benvenuto, Beverly June - 2002 Release (3) 320,000 --
Bette Lynn Ryan Trust (B) February - 2003 Cash 25,000 --
Bette Lynn Ryan Trust (B) June - 2003 Cash 50,000 --
Bette Lynn Ryan Trust (B) June - 2002 Release (3) 6,000 --
Bigler, Vance June - 2002 Release (3) 222,600 --
Blomberg, Robert Jr.
and Robert Sr. September - 2005 Cash 50,000 --
Bloome, Amanda (2) January - 2003 Services 1,000 --
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Bloome, Jared & Sara (2) January - 2003 Services 125,000 --
Bloome, Jared (2) August - 2005 Services 25,000 --
Bluemel, Rita M. July - 2002 Release (3) 100,000 --
Bonanza Pacific (C) December - 2003 Cash 100,000 --
Bonanza Pacific (C) October - 2004 Cash 100,000 --
Bonanza Pacific (C) September - 2005 Cash 100,000 --
Bonanza Pacific (C) June - 2002 Release (3) 220,000 --
Bonanza Pacific (5) (C) September - 2005 Services 106,000 --
Braden, Mike (5) October - 2003 Services 13,000 --
Bradshaw, Gary September - 2005 Cash 10,000 --
Bremerman, Keith and Mary February - 2005 Cash 50,000 --
Bremerman, Keith July - 2005 Cash 25,000 --
Brister, Donald R. and Linda September - 2003 Cash 100,000 --
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Burghart, Bernard J
&/or Kathryn M. July - 2005 Cash 100,000 --
Busch, Charles April - 2004 Cash 100,000 --
Carlson, Jack and Julianne June - 2002 Release (3) 40,000 --
Carlson, Rick June - 2002 Release (3) 70,000 --
Carrick, Bill May - 2005 Cash 100,000 --
Christian, Maureen June - 2002 Release (3) 100,000 --
Clairmont, Linda June - 2002 Release (3) 16,000 --
Dandamudi, Nagamini May - 2003 Cash 80,000 --
Dandamudi, Nagamini June - 2004 Cash 170,000 --
Davis, Charles April - 2004 Cash 100,000 --
Davis, Lori January - 2003 Release (3) 10,000 --
Divizia, Mary Jo September - 2005 Cash 50,000 --
Divizia, Mary Jo &
Venti, Anthony September - 2005 Cash 50,000 --
Dohle, Julie August - 2002 Cash 200,000 --
Dohle, Ralph June - 2002 Release (3) 60,000 --
Donald Brister IRA February - 2005 Cash 50,000 --
Donald Brister IRA
Charles Schwab & Co., Inc. Cust. March - 2004 Cash 50,000 --
Donovan, John T January - 2003 Cash 90,000 --
Donovan, John T June - 2002 Release (3) 67,000 --
Dunn, Thomas June - 2002 Release (3) 40,000 --
DW Jones Defined Benefit
Pension Plan (D) September - 2005 Cash 100,000 --
DW Jones Defined Benefit
Pension Plan (D) December - 2005 Cash 50,000 --
Ellebracht, Dyan November - 2003 Cash 150,000 --
Ellebracht, Dyan & Robert November - 2002 Cash 50,000 --
Ellebracht, Dyan & Robert April - 2004 Cash 100,000 --
Ellebracht, Dyan & Robert June - 2004 Cash 200,000 --
Elleson, Richard September - 2005 Cash 5,000 --
Feghali, Taline November - 2003 Cash 50,000 --
Flagg, Katherine September - 2005 Cash 110,000 --
Franz, Leon October - 2003 Cash 100,000 --
Franz, Leon December - 2003 Cash 50,000 --
Franz, Leon October - 2004 Cash 50,000 --
French, Ronald L. September - 2004 Cash 30,000 --
French, Ronald L. November - 2004 Cash 50,000 --
French, Ronald L. May - 2005 Cash 30,000 --
French, Ronald L. June - 2002 Release (3) 154,000 --
French, Ronald L. (5) May - 2005 Services 23,000 --
Gadbois, Gordon December - 2005 Cash 100,000 --
Gamble, Pat December - 2003 Release (3) 5,000 --
Gaura, Billie D. and Kevin September - 2005 Cash 200,000 --
Goodrum, Doug April - 2004 Cash 200,000 --
Green, Dr. Bob August - 2005 Cash 25,000 --
Green, Dr. Bob (5) August - 2005 Services 25,000 --
Green, Dr. Bob (5) September - 2005 Services 50,000 --
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Hall, William June - 2002 Release (3) 20,000 --
Heberlein, Tom December - 2002 Cash 50,000 --
Heberlein, Tom June - 2002 Release (3) 100,000 --
Helms, Jr. William, F. August - 2004 Cash 150,000 --
Helms, Jr. William, F. November - 2004 Cash 300,000 --
Helms, Jr. William, F. July - 2002 Release (3) 100,000 --
Hernandez, Sayda August - 2002 Release (3) 200,000 --
Hiestand, C. James (5) September - 2005 Services 15,000 --
Hiestand, C. James &
Denise A. August - 2005 Cash 300,000 --
Hoffman, Dr. Carl February - 2002 Cash 340,000 --
Hoffman, Dr. Carl April - 2002 Cash 500,000 --
Hoffman, Dr. Carl August - 2003 Cash 160,000 --
Hoffman, Dr. Carl December - 2003 Cash 85,000 --
Hoffman, Dr. Carl November - 2004 Cash 418,500 --
Hoffman, Dr. Carl February - 2005 Cash 71,500 --
Hoffman, Dr. Carl March - 2005 Cash 300,000 --
Hoffman, Dr. Carl (6) February - 2006 Cash 650,000 --
Holland, Curtis (5) November - 2003 Services 100,000 --
House, Garth August - 2002 Release (3) 50,000 --
Hughes, Jim and/or Susan June - 2002 Cash 50,000 --
Iverson, Ordean April - 2002 Cash 50,000 --
Jarrell, Roger and Sandra November - 2002 Cash 100,000 --
Jasnoski, James Thomas Banks August - 2005 Cash 100,000 --
Johnson, Loren G. February - 2006 Cash 250,000 --
Johnson, Marshall February - 2005 Cash 60,000 --
Johnson, Marshall June - 2002 Release (3) 50,000 --
Johnson, Marshall (5) June - 2005 Services 10,000 --
Johnson, Marshall (5) August - 2005 Services 40,000 --
Johnson, Marshall (5) September - 2005 Services 61,000 --
Johnson, Marshall (5) December - 2005 Services 500,000 --
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Jones, Jimmy May - 2002 Cash 25,000 --
Jones, Jimmy October - 2004 Cash 50,000 --
Just Holdings, Ltd. (E) June - 2002 Cash 50,000 --
Kaminsky, Larry April - 2003 Cash 100,000 --
Karlin, Gerald, J September - 2003 Cash 50,000 --
Karlin, Gerald, J February - 2004 Cash 50,000 --
Karlin, Gerald, J July - 2004 Cash 50,000 --
Kenney, David April - 2004 Cash 400,000 --
King-Schmidt, Barbara September - 2005 Cash 50,000 --
Kirkland, Harvey September - 2005 Cash 50,000 --
Kroeger, Gaylen October - 2003 Cash 100,000 --
Kroger, Chad May - 2005 Cash 85,000 --
Kuckerman, Larry July - 2004 Cash 50,000 --
Kuckerman, Larry November - 2004 Cash 50,000 --
Lachs, Ellen March - 2005 Cash 100,000 --
Lachs, Ellen September - 2005 Cash 50,000 --
Lamont, Chris April - 2004 Cash 50,000 --
Lamont, Chris December - 2004 Cash 40,000 --
Lapthorn, Colin June - 2002 Release (3) 50,000 --
Linda Brister IRA February - 2005 Cash 50,000 --
Linda Brister IRA Charles
Schwab & Co., Inc. Cust. April - 2002 Cash 50,000 --
Lorol Trust (F) September - 2002 Release (3) 50,000 --
Lynch, Lorraine June - 2002 Release (3) 50,000 --
Magenheim, Jane Ann September - 2005 Cash 50,000 --
Malone, Lisa June - 2002 Cash 50,000 --
Malone, Lisa June - 2002 Release (3) 50,000 --
Manchego, Frank November - 2002 Cash 50,000 --
Manchego, Frank January - 2003 Cash 30,000 --
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Manchego, Frank December - 2003 Cash 25,000 --
Manchego, Frank November - 2004 Cash 30,000 --
Manchego, Frank January - 2003 Release (3) 30,000 --
Marks, Lynn G. October - 2002 Cash 275,000 --
Marks, Lynn G. July - 2002 Release (3) 725,000 --
Marshall, Diana (2) August - 2005 Services 25,000 --
Marshall, Diana (2) January - 2003 Services 125,000 --
Mary Alice Novak Trust (G) November - 2004 Cash 200,000 --
Mary G. Tannahill
Living Trust (H) June - 2005 Cash 75,000 --
Mast, Milford L. & Ruth L. November - 2005 Cash 5,016,000 --
Mast, Milford L. & Ruth L. December - 2005 Cash 1,450,000 --
Mast, Milford L. & Ruth L. January - 2006 Cash 50,000 --
Mast, Milford L. & Ruth L. February - 2006 Cash 950,000 --
Mathews, Tom August - 2002 Cash 100,000 --
Mathews, Tom February - 2003 Cash 50,000 --
Mathews, Tom February - 2003 Cash 50,000 --
Mathews, Tom August - 2003 Cash 100,000 --
Mathews, Tom August - 2003 Cash 100,000 --
Mathews, Tom July - 2004 Cash 100,000 --
Mathews, Tom June - 2005 Cash 100,000 --
Mathews, Tom June - 2002 Release (3) 45,000 --
Mathews, Tom (5) March - 2005 Services 25,000 --
Mathews, Tom (5) July - 2005 Services 30,000 --
Mathews, Tom (5) August - 2005 Services 10,000 --
Mathews, Tom (5) September - 2005 Services 67,500 --
Mathews, Tom (5) September - 2005 Services 55,000 --
Matthews, Adrian (5) December - 2005 Services 50,000 --
Matthews, Terry A. (5) December - 2005 Services 50,000 --
Matthews, Thomas III (5) December - 2005 Services 50,000 --
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Matthews, Tom (5) November - 2005 Services 501,600 --
Matthews, Tom (5) December - 2005 Services 75,000 --
Matthews, Tom (5) February - 2006 Services 100,000 --
McGugan, Gerald June - 2002 Release (3) 10,000 --
Miller, Marc & Cynthia September - 2005 Cash 50,000 --
Morford, Karla March - 2005 Cash 50,000 --
Morford, Woodrow March - 2005 Cash 100,000 --
Morford, Woodrow and Karla March - 2004 Cash 100,000 --
Murphy, Jennifer August - 2005 Cash 20,000 --
Murphy, Peter (7) December - 2004 Services 250,000 --
Nelson, Joe September - 2005 Cash 50,000 --
Nelson, John W. September - 2005 Cash 300,000 --
Nelson, John W.
and Evelyn M. June - 2005 Cash 200,000 --
Novak, James H. April - 2004 Cash 100,000 --
Novak, James H. September - 2004 Cash 50,000 --
Novak, Jim September - 2005 Cash 50,000 --
Novak, Roger November - 2003 Cash 50,000 --
Novak, Roger February - 2004 Cash 500,000 --
Oben, Marc B. June - 2002 Release (3) 50,000 --
Ourichian, Seta November - 2003 Cash 50,000 --
Parker, Kay & Hicks, Morris August - 2005 Cash 100,000 --
Pasko, Dana June - 2002 Release (3) 10,000 --
Paskus, Stephen September - 2005 Cash 105,000 --
Patterson, Larry April - 2005 Cash 30,000 --
Patterson, Larry June - 2002 Release (3) 20,000 --
Peterson, David, A. June - 2002 Cash 30,000 --
Poe, Everett (10) December - 2005 Services 250,000 --
Porter, Rick (7) May - 2004 Services 90,000 --
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Porter, Rick (7) December - 2003 Services 10,000 --
Post, Steven Michael August - 2005 Cash 150,000 --
Powell, Shirley May - 2002 Cash 90,000 --
Powell, Shirley December - 2003 Cash 236,000 --
Powell, Shirley August - 2002 Cash 200,000 --
Powell, Shirley June - 2002 Release (3) 130,000 --
Purcell, Chris January - 2003 Release (3) 20,000 --
Robert C. Knuppel Trust (I) February - 2003 Cash 50,000 --
Robert C. Knuppel Trust (I) June - 2003 Cash 50,000 --
Robert C. Knuppel Trust (I) November - 2003 Cash 50,000 --
Robert C. Knuppel Trust (I) August - 2002 Release (3) 46,000 --
Roger Novak Trust (J) October - 2003 Cash 50,000 --
Roger Novak Trust (J) December - 2003 Cash 50,000 --
Roger Novak Trust (J) July - 2004 Cash 200,000 --
Roger Novak Trust (J) September - 2004 Cash 200,000 --
Roger Novak Trust (J) July - 2005 Cash 100,000 --
Roohinian, Edmond November - 2003 Cash 100,000 --
Roskilly, James D. August - 2005 Cash 245,000 --
Russell, Susan (7) June - 2003 Services 15,000 --
Russell, Susan (7) October - 2003 Services 15,000 --
Russell, Susan (7) October - 2003 Services 10,000 --
Salvatore, Angela June - 2002 Release (3) 80,000 --
Sampson, Carol June - 2002 Release (3) 519,400 --
Sauer, Karen October - 2003 Cash 50,000 --
Smith, Donald, J. June - 2005 Cash 100,000 --
Smith, Donald, J. June - 2002 Release (3) 120,000 --
Smith, Randy (8) December - 2003 Services 100,000 --
Soeatert, Barbara June - 2002 Cash 50,000 --
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Spoor, Conrad August - 2005 Cash 50,000 --
Spoor, Conrad September - 2005 Cash 50,000 --
Spoor, Conrad November - 2005 Cash 200,000 --
Springer, Terry August - 2003 Cash 100,000 --
Springer, Terry August - 2003 Cash 30,000 --
Stafford, Thomas October - 2003 Cash 50,000 --
Steider,Timothy D. September - 2005 Cash 110,000 --
Steider,Timothy D. - IRA September - 2005 Cash 140,000 --
Sun, Der Mean September - 2005 Cash 50,000 --
Sunrise International
Trust (K) October - 2002 Cash 200,000 --
Sunrise International
Trust (K) December - 2004 Cash 475,000 --
Sunrise International
Trust (K) August - 2005 Cash 100,000 --
Sunrise International
Trust (K) July - 2002 Release (3) 200,000 --
Swaren, Brian K January - 2003 Cash 60,000 --
Swaren, Brian K June - 2002 Release (3) 40,000 --
Tevis, Jim (9) April - 2002 Services 500,000 --
Tevis, Jim (9) August - 2003 Services 1,000,000 --
The Irrevocable Trust of
Jenna E. Wilson as Grantor and
Margaret Wilson and
David Wilson as
Co-Trustees September - 2005 Cash 150,000 --
Thomas, Robert E. and
Shirley M. September - 2005 Cash 210,000 --
Thompson, Ryan (5) December - 2005 Services 250,000 --
Tripp, Toby September - 2005 Cash 20,000 --
Turner, Larry August - 2002 Cash 114,000 --
Turner, Michael Lee August - 2005 Cash 75,000 --
U.B.T. Investment (L) April - 2004 Cash 250,000 --
U.B.T. Investment (L) December - 2004 Cash 250,000 --
Uecker, Mike (7) January - 2005 Services 50,000 --
Vance, Jim (11) May - 2005 Services 50,000 --
-39-
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Vance, Jim (11) November - 2005 Services 50,000 --
Vanepp, John June - 2002 Release (3) 10,000 --
Vanepp, John August - 2003 Release (3) 50,000 --
Veasey, Bud June - 2002 Release (3) 80,000 --
Venti, Anthony J. September - 2005 Cash 50,000 --
Venti, Anthony J. &
Mary T. September - 2005 Cash 50,000 --
Ward, Stephen April - 2004 Cash 150,000 --
Whitley, John November - 2002 Cash 70,000 --
Whitley, John February - 2003 Cash 100,000 --
Whitley, John June - 2003 Cash 400,000 --
Whitley, John August - 2002 Release (3) 40,000 --
Williams, Kent May - 2002 Cash 50,000 --
Williams, Ronald August - 2005 Cash 961,500 --
Williams, Ronald September - 2005 Cash 30,000 --
Wilson, Bradley December - 2005 Cash 100,000 --
Wilson, David September - 2005 Cash 20,000 --
Wilson, James & Marget September - 2005 Cash 95,000 --
Windscheffel, Stephen January - 2003 Cash 100,000 --
Windscheffel, Stephen February - 2003 Cash 100,000 --
Windscheffel, Stephen April - 2003 Cash 100,000 --
Windscheffel, Stephen May - 2003 Cash 100,000 --
Windscheffel, Stephen June - 2003 Cash 100,000 --
Windscheffel, Stephen (5) December - 2004 Services 50,000 --
Windscheffel, Stephen June - 2005 Services 12,500 --
Windscheffel, Stephen July - 2005 Services 10,000 --
Windscheffel, Stephen August - 2005 Services 42,000 --
Windscheffel, Stephen September - 2005 Services 75,000 --
Windscheffel, Stephen January - 2003 Services 85,000 --
-40-
|
Windscheffel, Stephen November - 2003 Services 40,000 --
Woods, Steven, M. August - 2002 Cash 70,000 --
Wunderlich, Jeff & Mary (5) December - 2005 Services 85,000 --
TOTAL SHARES
REGISTERED 38,462,100
|
* All shares sold for cash were sold for $0.10 per share.
(1) Assuming all Shares offered are sold.
(2) Former attorneys of the Company.
(3) In June 2002, our Chief Executive Officer, James Ammons, transferred approximately 40 QVS Wireless Corporation ("QVS") shareholders an aggregate of approximately 4,610,000 shares of our restricted Common Stock in consideration for each of those QVS shareholders signing a Release, whereby they agreed to release us, our Chief Executive Officer, James Ammons, and our officers and Directors and employees from any and all claims, rights, obligations, demands and causes of action arising from or relating to QVS (QVS is explained in greater detail above under "Description of Business").
(4) Derek Argo served as our Director and officer from April 2, 2002 until March 14, 2003, when he resigned.
(5) Individuals who received shares in connection with consulting services rendered.
(6) Dr. Carl Hoffman subscribed for 650,000 shares of our Common Stock for aggregate consideration of $65,000 ($0.10 per share) in February 2006. While this subscription amount was not immediately paid by Mr. Hoffman, he has certified to us in writing that he will pay us the $65,000 subscription price by March 31, 2006, and that the payment of such subscription amount is not contingent on any event occurring or dependent on any future occurrence. As Dr. Hoffman cannot revoke his subscription for shares of our Common Stock, we have included all 650,000 shares for which Dr. Hoffman subscribed in February 2006 in this Prospectus.
(7) Former employees.
(8) Mr. Smith has served as our patent attorney.
(9) Mr. Tevis is our Director of Customer support.
(10) Everett Poe is our Strategic Accounts Manager.
(11) Jim Vance is one of our employees and is also the father of our Director, Tim Vance.
Other than the shareholders listed below, none of the selling shareholders listed above have had a material relationship with us within the past three years.
(A) The beneficial owner of Bellewood Corporation is its President, Donald W. Jones.
(B) The beneficial owner of the Bette Lynn Ryan Trust is Bette Lynn Ryan, the trustee.
(C) The beneficial owner of Bonanza Pacific is Dick Armstrong.
(D) The beneficial owner of DW Jones Defined Benefit Pension Plan is its Trustee, Donald W. Jones.
(E) The beneficial owner of Just Holdings, Inc. is Steve Nelson.
(F) The beneficial owners of the Lorol Trust are Robert O. Lynch, Sr.
and Lorraine C. Lynch, trustees.
(G) The beneficial owner of the Mary Alice Novak Trust is Mary Alice Novak, the trustee.
(H) The beneficial owner of the Mary G. Tanahill Living Trust is Mary
G. Tanahill, the trustee.
(I) The beneficial owner of the Robert C. Knuppel Trust is Robert C. Knuppel, the trustee.
(J) The beneficial owner of the Roger Novak Trust is Roger Novak, Trustee.
(K) The beneficial owner of Sunrise International Trust is Tom Matthews.
(L) The beneficial owner of UBT Investment is Tim Allen.
Of the 38,462,100 shares of Common Stock which are being registered pursuant to this Prospectus, 7,466,000 shares of our outstanding Common Stock offered herein by Milford L. and Ruth L. Mast, will be subject to the resale provisions of Rule 144 upon effectiveness of our Registration Statement and the remaining 30,996,100 shares offered by the selling stockholders pursuant to this Prospectus may be sold upon effectiveness of our Registration Statement by one or more of the following methods, without limitation:
o ordinary brokerage transactions and transactions in which the broker-dealer solicits the purchaser;
o block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
o an exchange distribution in accordance with the rules of the applicable exchange;
o privately-negotiated transactions;
o broker-dealers may agree with the Selling Security Holders to sell a specified number of such shares at a stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The Selling Security Holders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this Prospectus.
We currently lack a public market for our Common Stock. Selling shareholders who wish to sell their shares prior to or after our Registration Statement is effective with the SEC will sell at a price of $0.10 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices.
The Selling Security Holders may pledge their shares to their brokers under the margin provisions of customer agreements. If a Selling Security Holder defaults on a margin loan, the broker may, from time to time, offer and sell the pledged shares.
The Selling Security Holders may sell their shares of Common Stock short and redeliver our Common Stock to close out such short positions; however, the Selling Security Holders may not use shares of our Common Stock being registered in the Registration Statement to which this Prospectus is a part to cover any short positions entered into prior to the effectiveness of such Registration Statement. If the Selling Security Holders or others engage in short selling it may adversely affect the market price of our Common Stock.
Broker-dealers engaged by the Selling Security Holders may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Security Holders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. It is not expected that these commissions and discounts will exceed what is customary in the types of transactions involved.
The anti-manipulation provisions of Regulation M under the Securities Exchange Act of 1934 will apply to purchases and sales of shares of Common Stock by the Selling Security Holders. Additionally, there are restrictions on market-making activities by persons engaged in the distribution of the shares. Under Regulation M, the Selling Security Holders or their agents may not bid for, purchase, or attempt to induce any person to bid for or purchase, shares of our Common Stock while they are distributing shares covered by this Prospectus.
Accordingly, the Selling Security Holders are not permitted to cover short sales by purchasing shares while the distribution is taking place. We will advise the Selling Security Holders that if a particular offer of Common Stock is to be made on terms materially different from the information set forth in this Plan of Distribution, then a post-effective amendment to the accompanying registration statement must be filed with the Securities and Exchange Commission.
The Selling Security Holders may be deemed to be an "underwriter" within the meaning of the Securities Act in connection with such sales. Therefore, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.
We are required to pay all fees and expenses incident to the registration of the shares, including fees and disbursements of counsel to the Selling Security Holders, but excluding brokerage commissions or underwriter discounts. The Selling Security Holders and we have agreed to indemnify each other against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
MARKET FOR COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
No established public trading market exists for our Common Stock. Other than the 3,000,000 Options held by our Chief Executive Officer and President, James Ammons (described above under "Directors, Executive Officers and Control Persons"), we have no shares of Common Stock subject to outstanding options or warrants to purchase, or securities convertible into, our Common Stock. Except for this offering, there is no Common Stock that is being, or has been proposed to be, publicly offered. As of February 8, 2006, we had 55,462,100 shares of Common Stock outstanding, which shares were held by approximately 150 shareholders of record.
LEGAL MATTERS
Certain legal matters with respect to the issuance of shares of Common Stock offered hereby will be passed upon by David M. Loev, Attorney at Law, of Houston, Texas. (See "Interests of Named Experts and Counsel" above)
ADDITIONAL INFORMATION
Our fiscal year ends on December 31. In addition, we intend to become a reporting company and file annual, quarterly and current reports, proxy statements, or other information with the SEC. The public may read and copy any materials we file with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Investors may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Additionally, the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC (http://www.sec.gov), where investors can view information we electronically file with the SEC.
[Remainder of page left intentionally blank.]
The Company's audited year ended December 31, 2005 financial statements follow on pages F-1 to F-11 , and potential investors are encouraged to read that information thoroughly before deciding on whether to invest in us.
AUDITED YEAR ENDED DECEMBER 31, 2005 AND DECEMBER 31, 2004 FINANCIAL STATEMENTS
--------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F-1
BALANCE SHEETS -
December 31, 2005 and 2004 F-2
STATEMENTS OF OPERATIONS -
Years ended December 31, 2005 and 2004 F-3
STATEMENTS OF STOCKHOLDERS' EQUITY -
Years ended December 31, 2005 and 2004 F-4
STATEMENTS OF CASH FLOWS -
Years ended December 31, 2005 and 2004 F-5
NOTES TO FINANCIAL STATEMENTS F-6
|
R. E. BASSIE & CO.
CERTIFIED PUBLIC ACCOUNTANTS
6671 Southwest Freeway, Suite 550
Houston, Texas 77074-2220
Tel: (713) 272-8500 Fax: (713) 272-8515
E-Mail: Rebassie@aol.com
The Board of Directors and Stockholders Data Call Technologies:
We have audited the accompanying balance sheets of Data Call Technologies (a development stage company - the Company) as of December 31, 2005 and 2004, and related statements of operations, stockholders' equity, and cash flows for each of the years in the two-year period ended December 31, 2005. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Data Call Technologies as of December 31, 2005 and 2004, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2005, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 5 to the financial statements, the Company has limited capital. Successful development and marketing of the Company's products and the procurement of additional financing is necessary for the Company to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ R. E. Bassie & Co.
Houston, Texas
January 16, 2006
|
DATA CALL TECHNOLOGIES
(A Development Stage Company)
BALANCE SHEETS
December 31, 2005 and 2004
Assets 2005 2004
------ --------------- ---------------
Current assets:
Cash $ 671,228 $ 15,122
Prepaid expenses - 10,537
--------------- ----------------
Total current assets 671,228 25,659
--------------- ----------------
Property and equipment 103,000 32,559
Less accumulated depreciation 12,202 3,428
--------------- ----------------
Net property and equipment 90,798 29,131
Other assets 5,255 1,295
--------------- ----------------
Total assets $ 767,281 $ 56,085
=============== ================
Liabilities and Stockholders' Equity
------------------------------------
Liabilities:
Accounts payable and accrued expenses $ 66,792 $ 55,000
--------------- ----------------
Total liabilities - current 66,792 55,000
--------------- ----------------
Stockholders' equity:
Common stock, $.001 par value. Authorized 75,000,000
shares: 50,952,100 shares issued and outstanding
at December 31, 2005, 33,199,500 shares issued
and outstanding at December 31, 2004 50,952 33,200
Additional paid-in capital 5,044,258 3,286,750
Deficit accumulated during the development stage (4,394,721) (3,318,865)
--------------- ----------------
Total stockholders' equity 700,489 1,085
Commitments and contingencies
--------------- ----------------
Total liabilities and stockholders' equity $ 767,281 $ 56,085
=============== ================
|
See accompanying notes to financial statements.
DATA CALL TECHNOLOGIES
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Years ended December 31, 2005 and 2004
Cumulative
totals from
inception to
December 31,
2005 2004 2005
------------------- -------------------- ---------------
Revenues
Sales $ 365 $ 16,823 $ 17,188
Cost of sales - 12,191 12,191
------------------- -------------------- ---------------
Gross margin 365 4,632 4,997
Operating expenses:
Contractual services 680,826 774,828 3,541,255
Legal and accounting 135,005 59,190 264,142
Product development costs 74,360 65,413 139,773
Travel 88,980 19,026 122,231
Office and equipment rental 24,705 21,637 68,142
Office supplies and expenses 30,952 74,943 146,114
Telephones 16,571 13,054 40,565
Trade show expenses 1,150 14,600 15,750
Advertising 13,032 6,147 19,179
Other 1,866 14,100 30,365
Depreciation expense 8,774 2,541 12,202
------------------- -------------------- ---------------
Total operating expenses 1,076,221 1,065,479 4,399,718
------------------- -------------------- ---------------
Net loss before income taxes (1,075,856) (1,060,847) (4,394,721)
Provision for income taxes - - -
------------------- -------------------- ---------------
Net loss $ (1,075,856) $ (1,060,847) $ (4,394,721)
=================== ==================== ===============
Net loss per common share - basic and diluted:
Net loss applicable to common shareholders $ (0.03) $ (0.04)
=================== ====================
Weighted average common shares - basic and diluted 38,229,357 26,273,580
==================== ====================
|
See accompanying notes to financial statements.
DATA CALL TECHNOLOGIES
(A Development Stage Company)
STATEMENT OF STOCKHOLDER'S EQUITY
Years ended December 31, 2005 and 2004
Total
Additional stockholders'
Common Stock paid in Accumulated equity
shares amount capital deficit (deficit)
-------------------------------- ---------- ----------- -------------
Balance, December 31, 2001 - $ - $ - $ - $ -
Issuance of common shares under
private placement 2,486,000 2,486 246,114 - 248,600
Issuance of common shares for services 11,235,000 11,235 1,112,265 - 1,123,500
Net loss - - - (1,420,518) (1,420,518)
---------- -------- ---------- ----------- ------------
Balance, December 31, 2002 13,721,000 13,721 1,358,379 (1,420,518) (48,418)
Issuance of common shares under
private placement 2,600,000 2,600 257,400 - 260,000
Issuance of common shares for services 5,820,000 5,820 576,180 - 582,000
Net loss - - - (837,500) (837,500)
---------- -------- ---------- ----------- -----------
Balance, December 31, 2003 22,141,000 22,141 2,191,959 (2,258,018) (43,918)
Issuance of common shares under
private placement 5,398,500 5,399 534,451 - 539,850
Issuance of common shares for services 5,660,000 5,660 560,340 - 566,000
Net loss - - - (1,060,847) (1,060,847)
---------- -------- ---------- ------------ -----------
Balance, December 31, 2004 33,199,500 33,200 3,286,750 (3,318,865) 1,085
Issuance of common shares under
private placement 14,034,000 14,034 1,389,366 - 1,403,400
Issuance of common shares for services 3,718,600 3,718 368,142 - 371,860
Net loss - - - (1,075,856) (1,075,856)
----------- --------- ---------- ----------- -------------
Balance, December 31, 2005 50,952,100 $ 50,952 $5,044,258 $(4,394,721) $ 700,489
=========== ========= ========== =========== =============
|
See accompanying notes to financial statements.
DATA CALL TECHNOLOGIES
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Years ended December 31, 2005 and 2004
Cumulative
totals from
inception to
December 31,
2005 2004 2005
-------------- ---------------- ----------------
Cash flows from operating activities:
Net loss $ (1,075,856) $ (1,060,847) $ (4,394,721)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation expense 8,774 2,541 12,202
Stock issued for services 371,860 566,000 2,643,360
(Increase) decrease in operating assets:
Prepaid expenses 10,537 (10,537) -
Other assets (3,960) (1,295) (5,255)
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses 11,792 5,000 66,792
-------------- ---------------- ----------------
Net cash used in operating activities (676,853) (499,138) (1,677,622)
-------------- ---------------- ----------------
Cash flows from investing activities
Capital expenditure for equipment (70,441) (28,657) (103,000)
-------------- ---------------- ----------------
Net cash used in investing activities (70,441) (28,657) (103,000)
-------------- ---------------- ----------------
Cash flows from financing activities:
Proceeds from issuance of common shares under private placement 1,403,400 539,850 2,451,850
-------------- ---------------- ----------------
Net cash provided by financing activities 1,403,400 539,850 2,451,850
-------------- ---------------- ----------------
Net increase in cash 656,106 12,055 671,228
Cash at beginning of year 15,122 3,067 -
-------------- ---------------- ----------------
Cash at end of year $ 671,228 $ 15,122 $ 671,228
============== ================ ================
|
See accompanying notes to financial statements.
DATA CALL TECHNOLOGIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENT
December 31, 2005 and 2004
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION, OWNERSHIP AND BUSINESS
Data Call Technologies (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, within one building or 10,000, local or thousands of miles away. The Company is as development stage company.
ACCOUNTS RECEIVABLE
Accounts receivable consist primarily of trade receivables, net of a valuation allowance for doubtful accounts.
INVENTORIES
Inventories are valued at the lower-of-cost or market on a first-in, first-out basis.
INVESTMENT SECURITIES
The Company accounts for its investments in accordance with Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities." Management determines the appropriate classification of its investments in marketable securities at the time of purchase and reevaluates such determination at each balance sheet date. Securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities. Debt securities for which the Company does not have the intent or ability to hold to maturity and equity securities not classified as trading securities are classified as available-for-sale. The cost of investments sold is determined on the specific identification or the first-in, first-out method. Trading securities are reported at fair value with unrealized gains and losses recognized in earnings, and available-for-sale securities are also reported at fair value but unrealized gains and losses are shown in the caption "unrealized gains (losses) on shares available-for-sale" included in stockholders' equity. Management determines fair value of its investments based on quoted market prices at each balance sheet date.
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.
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.
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
The Company has chosen to continue to account for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related Interpretations and to elect the disclosure option of SFAS No. 123, "Accounting for Stock-Based Compensation." Accordingly, compensation cost for stock options issued to employees is measured as the excess, if any, of the quoted market price of the Company's stock at the date of the grant over the amount an employee must pay to acquire the stock.
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.
NEW PRONOUNCEMENTS
In May 2005, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standard ("SFAS") No. 154, Accounting Changes and Error Corrections. SFAS No. 154 replaces Accounting Principles Board Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes in Internal Financial Statements, and changes the requirements for the accounting for and reporting of a change in accounting principle. SFAS No. 154 requires retrospective application of changes in accounting principle to prior periods' financial statements, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. We will adopt SFAS No. 154 on January 1, 2006. Any impact on the Company's consolidated results of operations and earnings per share will be dependent on the amount of any accounting changes or corrections of errors whenever recognized.
In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 153. This statement addresses the measurement of exchanges of nonmonetary assets. The guidance in APB Opinion No. 29, "Accounting for Nonmonetary Transactions," is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged.
The guidance in that opinion; however, included certain exceptions to that principle. This statement amends Opinion 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. This statement is effective for financial statements for fiscal years beginning after June 15, 2005. Earlier application is permitted for nonmonetary asset exchanges incurred during fiscal years beginning after the date of this statement is issued. Management believes the adoption of this statement will have no impact on the financial statements of the Company.
In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 152, which amends FASB statement No. 66, "Accounting for Sales of Real Estate," to reference the financial accounting and reporting guidance for real estate time-sharing transactions that is provided in AICPA Statement of Position (SOP) 04-2, "Accounting for Real Estate Time-Sharing Transactions." This statement also amends FASB Statement No. 67, "Accounting for Costs and Initial Rental Operations of Real Estate Projects," to state that the guidance for (a) incidental operations and (b) costs incurred to sell real estate projects
does not apply to real estate time-sharing transactions. The accounting for those operations and costs is subject to the guidance in SOP 04-2. This statement is effective for financial statements for fiscal years beginning after June 15, 2005. Management believes the adoption of this statement will have no impact on the financial statements of the Company.
In November 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 151, "Inventory Costs- an amendment of ARB No. 43, Chapter 4." This statement amends the guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that "under some circumstances, items such as idle facility expense, excessive spoilage, double freight, and rehandling costs may be so abnormal as to require treatment as current period charges." This statement requires that those items be recognized as current-period charges regardless of whether they meet the criterion of "so abnormal." In addition, this statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. This statement is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. Management does not believe the adoption of this statement will have any immediate material impact on the Company.
(2) RELATED PARTY TRANSACTIONS
During the year ended December 31, 2005, the Company issued 950,000 shares of the Company's restricted common stock to an officer/director of the Company for services rendered. The shares issued were valued at $95,000.
During the year ended December 31, 2004, the Company issued 4,760,000 shares of the Company's restricted common stock to officers and directors of the Company for services rendered. The shares issued were valued at $476,000.
During the year ended December 31, 2003, the Company issued 750,000 shares of the Company's restricted common stock to an officer/director of the Company for services rendered. The shares issued were valued at $75,000.
During the year ended December 31, 2002, the Company issued 4,540,000 shares of the Company's restricted common stock to officers and directors of the Company for services rendered. The shares issued were valued at $454,000.
(3) INCOME TAXES
A reconciliation of income taxes at the federal statutory rate to amounts provided for the period ended December 31, 2005 is as follows:
December 31
-----------
2005 2004
---------- --------
Tax expense/(benefit) computed at
statutory rate for continuing operations $ (363,000) $(360,000)
Tax effect (benefit) of operating loss carryforwards 363,000 360,000
---------- ---------
Tax expense/(benefit) for continuing operations $ - $ -
========== =========
|
The Company has current net operating loss carryforwards in excess of $4,386,000 as of December 31, 2005, to offset future taxable income, which expire 2025.
Deferred taxes are determined based on the temporary differences between the financial statement and income tax bases of assets and liabilities as measured by the enacted tax rates, which will be in effect when these differences reverse. The components of deferred income tax assets are as follows:
December 31
===========
2005 2004
---------- -----------
Deferred tax assets:
Net operating loss $1,491,000 $ 1,128,000
---------- -----------
Total deferred tax asset 1,491,000 1,128,000
Valuation allowance (1,491,000) (1,128,000)
---------- -----------
Net deferred asset $ - $ -
========== ===========
|
At December 31, 2005, the Company provided a 100% valuation allowance for the deferred tax asset because given the volatility of the current economic climate, it could not be determined whether it was more likely than not that the deferred tax asset/(liability) would be realized.
(4) LEASE AGREEMENT
The Company leases office space under noncancellable-operating leases which expire in various years through March 2008. Future minimum lease payments under the operating lease are as follows:
Year
December 31, Amount
------------- --------
2006 $ 34,471
2007 34,606
2008 24,122
--------
$ 93,199
========
|
(5) GOING CONCERN
The Company is a development stage corporation with limited capital. Successful development and marketing of the Company's products and the procurement of additional financing is necessary for the Company to continue as a going concern.
In view of these matters, realization of a major portion of the assets in the accompanying balance sheet is dependent upon continued operations of the Company. Management believes that actions presently being taken to obtain additional equity financing will provide the opportunity to continue as a going concern.
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
See Indemnification of Directors and Officers above.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses in connection with this registration statement. All of such expenses are estimates, other than the filing fees payable to the Securities and Exchange Commission.
Description Amount to be Paid
----------------------------------------------- --------------
Filing Fee - Securities and Exchange Commission $ 452.70*
Attorney's fees and expenses $ 45,000.00*
Accountant's fees and expenses $ 15,000.00*
Transfer agent's and registrar fees and expenses $ 1,500.00*
Printing and engraving expenses $ 1,500.00*
Miscellaneous expenses $ 5,000.00*
--------------
Total $ 68,464.36*
===============
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* Estimated
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
In April 2002, we issued an aggregate of 10,200,000 shares of our restricted Common Stock, as follows, our Chief Executive Officer, James Ammons was issued 9,000,000 shares of our restricted Common Stock, our Director Timothy Vance was issued 150,000 shares of our restricted Common Stock, an employee was issued 50,000 shares of our restricted Common Stock and our attorney, David M. Loev, was issued 1,000,000 shares of our restricted Common Stock in consideration for services rendered to us. We claim an exemption from registration afforded by Section 4(2) of the Securities Act of 1933 (the "Act") since the foregoing issuances did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuances and no underwriting discounts or commissions were paid by us.
In April 2002, we issued our former Director and officer Derek Argo 1,000,000 shares of our restricted Common Stock. Mr. Argo later returned 900,000 of those shares to us and they were cancelled. In October 2005, Mr. Argo and us entered into a Settlement Agreement and Mutual Release, whereby we agreed to release, acquit and forever discharge each other and Mr. Argo's current and former agents, servants representatives, successors and assigns and Mr. Argo agreed to release our current and former agents, officers, Directors, servants, representatives, successors, employees and assigns from any and all rights, obligations, claims, demands and causes of action, whether in contract, tort, or state and/or federal securities regulations including all obligations arising therefrom, and omissions and/or conduct of each other. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuance did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuance and no underwriting discounts or commissions were paid by us.
From April 2003 to February 2006, we sold an aggregate of 27,917,500 restricted shares of our Common Stock to approximately eighty (81) accredited and approximately twenty-six (26) non-accredited investors pursuant to private placements of our Common Stock, in consideration for $0.10 per share. We claim an exemption from registration afforded by Rule 506 of Regulation D under the Act, for the issuances of these shares (see also our December 2005 Rescission Offer below).
In June 2002, our Chief Executive Officer, James Ammons transferred approximately 40 QVS Wireless ("QVS") shareholders an aggregate of approximately 4,610,000 shares of our restricted Common Stock in return for each of those QVS
shareholder signing a Release, whereby they agreed to release us, our Chief Executive Officer, James Ammons, and our officers, Directors and employees from any and all claims, rights, obligations, demands and causes of action arising from or relating to QVS (see "Description of Business" section above for a more detailed description of QVS). We claim an exemption from registration afforded by Rule 506 of Regulation D under the Act, for the issuances of these shares.
In January 2003, we issued an aggregate of 336,000 restricted shares of
Common Stock to three former attorneys and consultants, in consideration for
services rendered to us. We claim an exemption from registration afforded by
Section 4(2) of the Act since the foregoing issuances did not involve a public
offering, the recipients took the shares for investment and not resale and we
took appropriate measures to restrict transfer. No underwriters or agents were
involved in the foregoing issuances and no underwriting discounts or commissions
were paid by us.
In June 2003, we issued 15,000 restricted shares of Common Stock to an employee in consideration for services rendered to us. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuance did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuance and no underwriting discounts or commissions were paid by us.
In August 2003, we issued 2,000,000 shares of our restricted Common Stock to employees of us, in consideration for services rendered. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuances did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuances and no underwriting discounts or commissions were paid by us.
In October 2003, we issued 13,000 restricted shares of Common Stock to a consultant in consideration for services rendered to us. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuance did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuance and no underwriting discounts or commissions were paid by us.
In October 2003, we issued 25,000 restricted shares of Common Stock to an employee in consideration for services rendered to us. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing
issuance did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuance and no underwriting discounts or commissions were paid by us.
In November 2003, we issued 40,000 restricted shares of Common Stock to a consultant in consideration for services rendered to us. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuance did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuance and no underwriting discounts or commissions were paid by us.
In December 2003, we issued 100,000 restricted shares of Common Stock to a patent attorney in consideration for services rendered to us. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuance did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuance and no underwriting discounts or commissions were paid by us.
In November 2003, we issued 100,000 restricted shares of our Common Stock to an employee of us; 750,000 shares of our restricted Common Stock to our employee and Director, Timothy Vance; and 1,250,000 shares of our restricted Common Stock to an employee, in consideration for services rendered to us. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuances did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuances and no underwriting discounts or commissions were paid by us.
In December 2003, we issued 10,000 restricted shares of Common Stock to an employee in consideration for services rendered to us. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuance did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuance and no underwriting discounts or commissions were paid by us.
In April 2004, we issued 100,000 shares of our restricted Common Stock to our employee and Director, Timothy Vance, in consideration for services rendered to us. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuance did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuance and no underwriting discounts or commissions were paid by us.
In December 2003, we issued 90,000 restricted shares of Common Stock to an employee in consideration for services rendered to us. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuance did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuance and no underwriting discounts or commissions were paid by us.
In June 2004, our Chief Financial Officer and Director, Larry Mosley was
issued 50,000 shares of our restricted Common Stock in consideration for
services rendered to us. We claim an exemption from registration afforded by
Section 4(2) of the Act since the foregoing issuance did not involve a public
offering, the recipients took the shares for investment and not resale and we
took appropriate measures to restrict transfer. No underwriters or agents were
involved in the foregoing issuance and no underwriting discounts or commissions
were paid by us.
In June 2004, we issued 250,000 shares of our restricted Common Stock to an employee, in consideration of services rendered. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuance did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuance and no underwriting discounts or commissions were paid by us.
In July 2004, we issued 10,000 restricted shares of Common Stock to a consultant in consideration for services rendered to us. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuance did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuance and no underwriting discounts or commissions were paid by us.
In August 2004, we issued 100,000 restricted shares of Common Stock to an attorney in consideration for services rendered to us. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuance did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuance and no underwriting discounts or commissions were paid by us.
Effective September 1, 2004, we issued 4,610,000 shares of our restricted common stock to our Chief Executive Officer, James Ammons in consideration for his personal shares issued to QVS shareholders in consideration for the QVS shareholders release of us, Mr. Ammons, and our officers, Directors and employees from any and all claims, rights, obligations, demands and causes of action arising from or relating to QVS (as described above). We claim an
exemption from registration afforded by Section 4(2) of the Act since the foregoing issuance did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuance and no underwriting discounts or commissions were paid by us.
In October 2004, we issued 10,000 restricted shares of Common Stock to a consultant in consideration for services rendered to us. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuance did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuance and no underwriting discounts or commissions were paid by us.
In December 2004, we issued 250,000 restricted shares of Common Stock to an employee in consideration for services rendered to us. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuance did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuance and no underwriting discounts or commissions were paid by us.
In December 2004, we issued 50,000 restricted shares of Common Stock to a consultant in consideration for services rendered to us. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuance did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuance and no underwriting discounts or commissions were paid by us.
In January 2005, we issued 50,000 restricted shares of Common Stock to an employee in consideration for services rendered to us. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuance did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuance and no underwriting discounts or commissions were paid by us.
In January 2005, we issued an aggregate of 950,000 shares of our restricted Common Stock to our Chief Financial Officer and Director, Larry Mosley, in consideration for services rendered to us. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuance did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuance and no underwriting discounts or commissions were paid by us.
In March 2005, we issued 50,000 restricted shares of Common Stock to an attorney in consideration for services rendered to us. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing
issuance did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuance and no underwriting discounts or commissions were paid by us.
In March 2005, we issued 25,000 restricted shares of Common Stock to a consultant in consideration for services rendered to us. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuance did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuance and no underwriting discounts or commissions were paid by us.
In May 2005, we issued 23,000 restricted shares of Common Stock to a consultant in consideration for services rendered to us. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuance did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuance and no underwriting discounts or commissions were paid by us.
In May 2005, we issued 50,000 restricted shares of Common Stock to our employee and Director, Timothy Vance, in consideration for services rendered to us. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuance did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuance and no underwriting discounts or commissions were paid by us.
In June 2005, we issued an aggregate of 22,500 restricted shares of Common Stock to two (2) consultants in consideration for services rendered to us. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuances did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuances and no underwriting discounts or commissions were paid by us.
In July 2005, we issued an aggregate of 40,000 restricted shares of Common Stock to two (2) consultants in consideration for services rendered to us. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuances did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuances and no underwriting discounts or commissions were paid by us.
In August 2005, we issued an aggregate of 167,000 restricted shares of Common Stock to six (6) consultants in consideration for services rendered to us. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuances did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuances and no underwriting discounts or commissions were paid by us.
In September 2005, we issued an aggregate of 479,500 restricted shares of Common Stock to eight (8) consultants in consideration for services rendered to us. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuances did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuances and no underwriting discounts or commissions were paid by us.
In October 2005, we issued 20,000 restricted shares of Common Stock to a consultant in consideration for services rendered to us. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuance did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuance and no underwriting discounts or commissions were paid by us.
In November 2005, we issued 50,000 restricted shares of Common Stock to a consultant in consideration for services rendered to us. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuance did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuance and no underwriting discounts or commissions were paid by us.
In December 2005, we offered rescission to twenty-two (22) shareholders to whom we sold approximately 2,044,000 shares of Common Stock from April 2002 to September 2005. Those shareholders purchased shares pursuant to private placements of our Common Stock, in consideration for $0.10 per share, and may not have received appropriate disclosure in connection with such purchases. All of the shareholders who were offered the chance to rescind their purchases decided to reject the rescission offer. We claim an exemption from registration for the rescission offer afforded by Rule 506 of Regulation D under the Act.
In December 2005, we issued an aggregate of 1,310,000 shares of our restricted common stock to consultants in consideration for services rendered to us. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuances did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuances and no underwriting discounts or commissions were paid by us.
In February 2006, we issued 2,500,000 shares of our restricted common stock to one of our employees in consideration for services rendered and an aggregate of 110,000 shares of our common stock to two consultants for services rendered. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuances did not involve a public offering, the recipients took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuances and no underwriting discounts or commissions were paid by us.
In February 2006, we issued 3,000,000 Options to our Chief Executive Officer and President, James Ammons in consideration for Mr. Ammons entering into a five year employment agreement with us. The Options are exercisable for $0.10 per share and are described in greater detail under "Directors, Executive Officers and Control Persons," above. We claim an exemption from registration afforded by Section 4(2) of the Act since the foregoing issuance did not involve a public offering, the recipient took the shares for investment and not resale and we took appropriate measures to restrict transfer. No underwriters or agents were involved in the foregoing issuance and no underwriting discounts or commissions were paid by us.
ITEM 27. EXHIBITS
Exhibit 3.1* Articles of Incorporation
Exhibit 3.2* Certificate of Amendment to Articles of Incorporation
Exhibit 3.3* Amended Bylaws
Exhibit 5.1* Opinion and consent of David M. Loev, Attorney at Law
re: the legality of the shares being registered
Exhibit 10.1* James Ammons Employment Agreement
Exhibit 10.2* James Ammons Option Agreement
Exhibit 10.3* Larry Mosley Employment Agreement
Exhibit 10.4* Addendum to Larry Mosley's Employment Agreement
Exhibit 10.5* Tim Vance Employment Agreement
Exhibit 10.6* Addendum to Tim Vance's Employment Agreement
Exhibit 23.1* Consent of R.E. Bassie and Company, Certified Public
Accountants
Exhibit 23.2* Consent of David M. Loev, Attorney at Law (included in
Exhibit 5.1)
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* Filed as an exhibit to this SB-2 Registration Statement
ITEM 28. UNDERTAKINGS
The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a post effective amendment to this Registration Statement:
(a) To include any prospectus required by Section 10(a)(3) of the Securities Act;
(b) To reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and rise represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and
(c) To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material changes as such information in the Registration Statement.
2. For determining any liability under the Securities Act, treat each post-effective amendment shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of the securities at the time as the initial bona fide offering of those securities.
3. To file a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.
4. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer of controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
5. For determining any liability under the Securities Act, treat the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant under Rule 424(b)(1) or (4) or 497(h) under the Securities Act as part of this registration statement as of the time the Commission declared it effective.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements of filing on Form SB-2 and authorized this Registration Statement to be signed on its behalf by the undersigned in the City of Houston, State of Texas, February 17, 2006.
DATA CALL TECHNOLOGIES
By: /s/ James Ammons -------------------- JAMES AMMONS |
In accordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following persons in the capacities and on the dates stated.
By: /s/ James Ammons February 17, 2006 ------------------------------------- JAMES AMMONS, Chief Executive Officer, President, Secretary and Treasurer By: /s/ Larry Mosley February 17, 2006 ------------------------------------- LARRY MOSLEY, Chief Financial Officer |
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints James Ammons his true and lawful attorney-in-fact and agent, with full power of substitution and revocation, for him and in his name, place and stead, in any and all capacities (until revoked in writing), to sign any and all amendments (including post-effective amendments) to this Registration Statement and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully for all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or is substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been duly signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ James Ammons Chief Executive Officer, ---------------- President, Secretary, James Ammons Treasurer and Director February 17, 2006 /s/ Larry Mosley -------------------------- Chief Financial Officer and Director Larry Mosley February 17, 2005 /s/ Tim Vance -------------------------- Director February 17, 2006 Tim Vance |
Exhibit 3.1
ARTICLES OF INCORPORATION
(PURSUANT TO NRS 78)
1. Name of Corporation:
Data Call Wireless
2. Resident Agent Name and Street Address:
Melanie Scott
750 Royal Crest Circle #325
Las Vegas, Nevada 89109
3. Shares:
Number of shares with par value: 75,000,000 Par Value: $0.001
Number of shares without par value: - 0 -
4. Governing Board
|
Names, Addresses, Number of Board of Directors/Trustee
Richard Clemens
7816 Kristina Lane,
Frisco, Texas 75034
5. Purpose:
The purpose of this Corporation shall be:
Sales
6. Other Matters:
7. Names, Addresses and Signatures of Incorporators
Richard Clemens
7816 Kristina Lane,
Frisco, Texas 75034
/s/ Richard Clemens ------------------------- Signature |
Notary:
This Instrument was acknowledged before me on:
As Incorporator
/s/ Melanie Beth Scott ----------------------- Notary Public Signature |
8. Certificate of Acceptance of Appointment of Registered Agent:
I, Melanie Scott hereby accept appointment as Resident Agent for
the above /s/ Melanie Scott 4/4/02 ----------------------------------- ------------------------- Signature of Resident Agent Date |
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
FOR NEVADA PROFIT CORPORATIONS
(PURSUANT TO NRS 78.385 AND 78.390 - AFTER ISSUANCE OF STOCK)
Data Call Wireless (File # 8430-2002)
1. Name of corporation:
2. The articles have been amended as follows:
1. THE NAME OF THE CORPORATION IS: Data Call Technologies
3. The vote by which the stockholders holding shares in the corporation Entitling them to exercise at least a majority of the voting power, or such Greater proportion of the voting power as may be required in the case of a vote By classes or series, or as may be required by the provisions of the articles of Incorporation have voted in favor of the amendment is: OVER 50%
4. Officer Signature (required):
/s/ Terry Breedlove ---------------------------- Terry Breedlove |
* If any proposed amendment would alter or change any preference or any relative or other right given to any class or series of outstanding shares, then the amendment must be approved by the vote, in addition to the affirmative vote otherwise required, of the holders of shares representing a majority of the voting power of each class or series affected by the amendment regardless of limitations or restrictions on the voting power thereof.
IMPORTANT: Failure to include any of the above information and remit the proper fees may cause this filing to be rejected.
Exhibit 3.3
AMENDED BYLAWS
OF
DATA CALL TECHNOLOGIES
A NEVADA CORPORATION
ARTICLE 1.
DEFINITIONS
1.1 Definitions. Unless the context clearly requires otherwise, in these Bylaws:
(a) "Board" means the board of directors of the Company.
(b) "Bylaws" means these bylaws as adopted by the Board and includes amendments subsequently adopted by the Board or by the Stockholders.
(c) "Articles of Incorporation" means the Articles of Incorporation of Data Call Technologies, as filed with the Secretary of State of the State of Nevada and includes all amendments thereto and restatements thereof subsequently filed.
(d) "Company" means Data Call Technologies, a Nevada corporation.
(e) "Section" refers to sections of these Bylaws.
(f) "Stockholder" means stockholders of record of the Company.
ARTICLE 2.
OFFICES
ARTICLE 3.
MEETINGS OF STOCKHOLDERS
Every notice of a meeting of the Stockholders shall state the place, date and hour of the meeting and, in the case of a special meeting, also shall state the purpose or purposes of the meeting. Furthermore, if the Company will maintain the list at a place other than where the meeting will take place, every notice of a meeting of the Stockholders shall specify where the Company will maintain the list of Stockholders entitled to vote at the meeting.
must be delivered to or mailed and received at the principal executive offices
of the Company not less than 50 days nor more than 90 days prior to the date of
such meeting; provided, however, that in the event that less than 75 days'
notice of the date of the meeting is given or made to Stockholders, notice by
the Stockholder to be timely must be received not later than the close of
business on the 15th day following the date on which such notice of the date of
the annual meeting was mailed. Such notice must be in writing and must include a
(i) a brief description of the business desired to the brought before the annual
meeting and the reasons for conducting such business at the meeting; (ii) the
name and record address of the Stockholder proposing such business; (iii) the
class, series and number of shares of capital stock of the Company which are
beneficially owned by the Stockholder; and (iv) any material interest of the
Stockholder in such business. The Board of Directors reserves the right to
refuse to submit any such proposal to stockholders at an annual meeting if, in
its judgment, the information provided in the notice is inaccurate or
incomplete.
If the chairman of the meeting gives notice of any adjourned special meeting of Stockholders to all Stockholders entitled to vote thereat, stating that the minimum percentage of stockholders for a quorum as provided by Nevada law shall constitute a quorum, then, except as otherwise required by law, that percentage at such adjourned meeting shall constitute a quorum and a majority of the votes cast at such meeting shall determine all matters.
presence of a quorum, and act as chairman of the meeting. In the absence of the Secretary or an Assistant Secretary of the Company, the chairman shall appoint someone to act as the secretary of the meeting.
The Secretary shall produce and keep the list at the time and place of the meeting during the entire duration of the meeting, and any Stockholder who is present may inspect the list at the meeting. The list shall constitute presumptive proof of the identity of the Stockholders entitled to vote at the meeting and the number of shares each Stockholder holds.
A determination of Stockholders entitled to vote at any meeting of Stockholders pursuant to this Section shall apply to any adjournment thereof.
proper purpose, the Board or a committee of the Board may fix in advance a date as the record date for any such determination of Stockholders. However, the Board shall not fix such date, in any case, more than 60 days nor less than 10 days prior to the date of the particular action.
If the Board or a committee of the Board does not fix a record date for the determination of Stockholders entitled to notice of or to vote at a meeting of Stockholders, the record date shall be at the close of business on the day next preceding the day on which notice is given or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held or the date on which the Board adopts the resolution declaring a dividend.
A plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote shall determine all elections and, except when the law or Articles of Incorporation require otherwise, the affirmative vote of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote shall determine all other matters.
Where a separate vote by a class or classes is required, a majority of the outstanding shares of such class or classes, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to that vote on that matter and the affirmative vote of the majority of shares of such class or classes present in person or represented by proxy at the meeting shall be the act of such class.
The Stockholders may vote by voice vote on all matters. Upon demand by a Stockholder entitled to vote, or his proxy, the Stockholders shall vote by ballot. In that event, each ballot shall state the name of the Stockholder or proxy voting, the number of shares voted and such other information as the Company may require under the procedure established for the meeting.
A proxy is not valid after the expiration of 13 months after the date of its execution, unless the person executing it specifies thereon the length of time for which it is to continue in force (which length may exceed 12 months) or limits its use to a particular meeting. Each proxy is irrevocable if it expressly states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power.
The attendance at any meeting of a Stockholder who previously has given a proxy shall not have the effect of revoking the same unless he notifies the Secretary in writing prior to the voting of the proxy.
Every written consent shall bear the date of signature of each stockholder who signs the consent, and no written consent shall be effective to take the corporate action referred to therein unless, within 50 days of the earliest dated consent delivered in the manner required by this section to the Company, written consents signed by a sufficient number of holders to take action are delivered to the Company by delivery to its registered office, its principal place of business or an officer or agent of the Company having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Company's registered office shall be by hand or by certified or registered mail, return receipt requested.
Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.
ARTICLE 4.
BOARD OF DIRECTORS
ARTICLE 5.
MEETINGS OF DIRECTORS
ARTICLE 6.
COMMITTEES
ARTICLE 7.
OFFICERS
ARTICLE 8.
CONTRACTS, LOANS, DRAFTS,
DEPOSITS AND ACCOUNTS
ARTICLE 9.
CERTIFICATES FOR SHARES AND THEIR TRANSFER
ARTICLE 10.
INDEMNIFICATION
10.1 Definitions. In this Article:
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(a) "Indemnitee" means (i) any present or former Director, advisory
director or officer of the Company, (ii) any person who while serving
in any of the capacities referred to in clause (i) hereof served at
the Company's request as a director, officer, partner, venturer,
proprietor, trustee, employee, agent or similar functionary of another
foreign or domestic corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, and (iii) any person
nominated or designated by (or pursuant to authority granted by) the
Board of Directors or any committee thereof to serve in any of the
capacities referred to in clauses (i) or (ii) hereof.
(b) "Official Capacity" means (i) when used with respect to a
Director, the office of Director of the Company, and (ii) when used
with respect to a person other than a Director, the elective or
appointive office of the Company held by such person or the employment
or agency relationship undertaken by such person on behalf of the
Company, but in each case does not include service for any other
foreign or domestic corporation or any partnership, joint venture,
sole proprietorship, trust, employee benefit plan or other enterprise.
(c) "Proceeding" means any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative, any appeal in such an action, suit or
proceeding, and any inquiry or investigation that could lead to such
an action, suit or proceeding.
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10.2 Indemnification. The Company shall indemnify every Indemnitee against
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all judgments, penalties (including excise and similar taxes), fines, amounts
paid in settlement and reasonable expenses actually incurred by the Indemnitee
in connection with any Proceeding in which he was, is or is threatened to be
named defendant or respondent, or in which he was or is a witness without being
named a defendant or respondent, by reason, in whole or in part, of his serving
or having served, or having been nominated or designated to serve, in any of the
capacities referred to in Section 10.1, if it is determined in accordance with
Section 10.4 that the Indemnitee (a) conducted himself in good faith, (b)
reasonably believed, in the case of conduct in his Official Capacity, that his
conduct was in the Company's best interests and, in all other cases, that his
conduct was at least not opposed to the Company's best interests, and (c) in the
case of any criminal proceeding, had no reasonable cause to believe that his
conduct was unlawful; provided, however, that in the event that an Indemnitee is
found liable to the Company or is found liable on the basis that personal
benefit was improperly received by the Indemnitee the indemnification (i) is
limited to reasonable expenses actually incurred by the Indemnitee in connection
with the Proceeding and (ii) shall not be made in respect of any Proceeding in
which the Indemnitee shall have been found liable for willful or intentional
misconduct in the performance of his duty to the Company. Except as provided in
the immediately preceding proviso to the first sentence of this Section 10.2, no
indemnification shall be made under this Section 10.2 in respect of any
Proceeding in which such Indemnitee shall have been (a) found liable on the
basis that personal benefit was improperly received by him, whether or not the
benefit resulted from an action taken in the Indemnitee's Official Capacity, or
(b) found liable to the Company. The termination of any Proceeding by judgment,
order, settlement or conviction, or on a plea of nolo contendere or its
equivalent, is not of itself determinative that the Indemnitee did not meet the
requirements set forth in clauses (a), (b) or (c) in the first sentence of this
Section 10.2. An Indemnitee shall be deemed to have been found liable in respect
of any claim, issue or matter only after the Indemnitee shall have been so
adjudged by a court of competent jurisdiction after exhaustion of all appeals
therefrom. Reasonable expenses shall, include, without limitation, all court
costs and all fees and disbursements of attorneys for the Indemnitee. The
indemnification provided herein shall be applicable whether or not negligence or
gross negligence of the Indemnitee is alleged or proven.
shareholders or disinterested Directors, or otherwise, or under any policy or policies of insurance purchased and maintained by the Company on behalf of any Indemnitee, both as to action in his Official Capacity and as to action in any other capacity, (b) continue as to a person who has ceased to be in the capacity by reason of which he was an Indemnitee with respect to matters arising during the period he was in such capacity, (c) inure to the benefit of the heirs, executors and administrators of such a person and (d) not be required if and to the extent that the person otherwise entitled to payment of such amounts hereunder has actually received payment therefor under any insurance policy, contract or otherwise.
offer to all present and future Indemnitees. The Company, by its adoption of these Bylaws, (a) acknowledges and agrees that each Indemnitee of the Company has relied upon and will continue to rely upon the provisions of this Article in becoming, and serving in any of the capacities referred to in Section 10.1 of this Article, (b) waives reliance upon, and all notices of acceptance of, such provisions by such Indemnitees and (c) acknowledges and agrees that no present or future Indemnitee shall be prejudiced in his right to enforce the provisions of this Article in accordance with its terms by any act or failure to act on the part of the Company.
ARTICLE 11.
TAKEOVER OFFERS
In the event the Company receives a takeover offer, the Board of Directors shall consider all relevant factors in evaluating such offer, including, but not limited to, the terms of the offer, and the potential economic and social impact of such offer on the Company's stockholders, employees, customers, creditors and community in which it operates.
ARTICLE 12.
NOTICES
ARTICLE 13.
MISCELLANEOUS
ARTICLE 14.
AMENDMENTS
14.1 Subject to the provisions of the Articles of Incorporation, the Stockholders or the Board may amend or repeal these Bylaws at any meeting.
The undersigned hereby certifies that the foregoing constitutes a true and correct copy of the Bylaws of the Company as adopted by the Directors on the 19th day of June 2003.
Executed as of this 19th day of June 2003.
/s/ Jim Ammons ------------------------------------- James Ammons, Chief Executive Officer |
Exhibit 5.1
David M. Loev,
Attorney at Law
2777 Allen Parkway
Suite 1000
Houston, Texas 77019
713-524-4110 PHONE
713-524-4122 FACSIMILE
February 17, 2006
Data Call Technologies
600 Kenrick, Suite B-12
Houston, Texas 77060
Re: Form SB-2 Registration Statement
Gentlemen:
You have requested that we furnished you our legal opinion with respect to the legality of the following described securities of Data Call Technologies (the "Company") covered by a Form SB-2 Registration Statement, (the "Registration Statement"), filed with the Securities and Exchange Commission for the purpose of registering such securities under the Securities Act of 1933:
1. 38,462,100 shares of common stock, $.001 par value (the "Shares").
In connection with this opinion, we have examined the corporate records of the Company, including the Company's Articles of Incorporation; as amended, Bylaws, and the Minutes of its Board of Directors, the Registration Statement, and such other documents and records as we deemed relevant in order to render this opinion.
Based on the foregoing, it is our opinion that the Shares are validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement and further consent to statements made therein regarding our firm and use of our name under the heading "Legal Matters" in the Prospectus constituting a part of such Registration Statement.
Sincerely, David M. Loev
/s/ David M. Loev, Attorney at Law |
Exhibit 10.1
DATA CALL TECHNOLOGIES
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is entered into between Data Call Technologies, a Nevada corporation (the "Company"), and James Ammons, an individual ("Executive"), collectively referred to as the "Parties" and individually referred to as a "Party," on this 8th day of February 2006, with an Effective Date as defined below. Unless otherwise indicated, all references to Sections are to Sections in this Agreement. This Agreement is effective as of the "Effective Date" set forth in Section 14 below.
W I T N E S S E T H:
WHEREAS, the Company desires to obtain the services of Executive, and Executive desires to be employed by the Company upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises, the agreements herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as of the date hereof as follows:
1. Employment. The Company hereby agrees to employ Executive, and Executive
hereby agrees to serve the Company, as its Chief Executive Officer and President
("Employment") for a period of five (5) years (the "Term") beginning on January
1, 2006 (the "Effective Date"). This Agreement shall automatically renew for
subsequent one-year periods after the expiration of the Term, if notice is not
given by the Party wishing to not to renew the Agreement at least thirty (30)
days prior to the expiration of the Term or in the event the Agreement has been
renewed for additional one-year periods, if notice is not given at least thirty
(30) days prior to the end of such one year period.
2. Scope of Employment.
(a) During the Employment, Executive will serve as Chief Executive Officer and President. In that connection, Executive will (i) devote his full-time, attention, and energies to the business of the Company and will diligently and to the best of his ability perform all duties incident to his employment hereunder; (ii) use his best efforts to promote the interests and goodwill of the Company; and (iii) perform such other duties commensurate with his office as the Board of Directors of the Company may from time-to-time assign to him.
(b) Section 2(a) shall not be construed as preventing Executive from
(i) serving on corporate, civic or charitable boards or committees, or (ii)
making investments in other businesses or enterprises; provided that in no
event shall any such service, business activity or investment require the
provision of substantial services by Executive to the operations or the
affairs of such businesses or enterprises such that the provision thereof
would interfere in any respect with the performance of Executive's duties
hereunder; and subject to Section 6.
[Remainder of page left intentionally blank.]
3. Compensation and Benefits During Employment. During the Employment, the Company shall provide compensation to Executive as follows.
(a) Executive shall receive a different "Yearly Salary" depending on the year which Executive is employed under this Agreement. Executive's first Yearly Salary shall be $120,000 and such Yearly Salary shall increase 5% per year (rounded to the nearest dollar) which Executive is employed under this Agreement. Executive's Yearly Salary's shall therefore be:
(i) $120,000 for the first year that Executive is employed under this Agreement (the twelve month period beginning January 1, 2006 and ending December 31, 2006);
(ii) $126,000 for the second year that Executive is employed under this Agreement (the twelve month period beginning January 1, 2007 and ending on December 31, 2007);
(iii) $132,500 for the third year that Executive is employed under this agreement (the twelve month period beginning January 1, 2008 and ending on December 31, 2008);
(iv) $138,915 for the fourth year that Executive is employed under this agreement (the twelve month period beginning January 1, 2009 and ending on December 31, 2009); and
(v) $145,861 for the fifth year that Executive is employed under this agreement (the twelve month period beginning January 1, 2010 and ending on December 31, 2010).
In the event this Agreement is automatically renewed for successive one-year periods in connection with Section 1 above, Executive's Yearly Salary will continue to increase 5% each year (rounded to the nearest dollar), starting with Executive's Yearly Salary from the previous year. For example, if this Agreement is extended for an additional year after the expiration of the original Term of this Agreement, Executive's Yearly Salary for such year shall be $153,155 ($145,861 + ($145,861 x .05)).
(b) In Addition to Executive's Yearly Salary, Executive may be granted bonus payments of cash or shares of the Company's common stock from time to time at the discretion of the Company's Board of Directors.
(d) The Company shall reimburse Executive for business expenses incurred by Executive in connection with the Employment in accordance with the Company's then-current policies.
(e) Executive may be provided a car allowance by the Company, not to exceed $600.00 per month to be spent on obtaining and maintaining transportation for Executive.
(f) Executive will be entitled to participate in any health insurance or other employee benefit plan which the Company may adopt in the future.
(g) Executive will be entitled to fourteen (14) days of paid time off (PTO) per year. PTO days shall begin on the 1st of January for each successive year. PTO days shall begin on the 1st of January for each successive year. Unused PTO days shall roll-over into the next year. Other than the use of PTO days for illness or personal emergencies, PTO days must be pre-approved by the Company.
(h) Executive will be entitled to participate in any incentive program or discretionary bonus program of the Company which may be implemented in the future by the Board of Directors.
(i) Executive will be entitled to participate in any stock option plan of the Company which may be approved in the future by the Board of Directors.
Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by Executive in good faith and in the best interests of the Company and thus shall not be deemed grounds for Termination for Cause.
4. Confidential Information.
(a) Executive acknowledges that the law provides the Company with protection for its trade secrets and confidential information. Executive will not disclose, directly or indirectly, any of the Company's confidential business information or confidential technical information to anyone without authorization from the Company's management. Executive will not use any of the Company's confidential business information or confidential technical information in any way, either during or after the Employment with the Company, except as required in the course of the Employment.
(b) Executive will strictly adhere to any obligations that may be owed to former employers insofar as Executive's use or disclosure of their confidential information is concerned.
(c) Information will not be deemed part of the confidential information restricted by this Section 4 if Executive can show that: (i) the information was in Executive's possession or within Executive's knowledge before the Company disclosed it to Executive; (ii) the information was or became generally known to those who could take economic advantage of it; (iii) Executive obtained the information from a party having the right to disclose it to Executive without violation of any obligation to the Company, or (iv) Executive is required to disclose the information pursuant to legal process (e.g., a subpoena), provided that Executive notifies the Company immediately upon receiving or becoming aware of the legal process in question. No combination of information will be deemed to be within any of the four exceptions in the previous sentence, however, whether or not the component parts of the combination are within one or more exceptions, unless the combination itself and its economic value and principles of operation are themselves within such an exception or exceptions.
(d) All originals and all copies of any drawings, blueprints, manuals, reports, computer programs or data, notebooks, notes, photographs, and all other recorded, written, or printed matter relating to research, manufacturing operations, or business of the Company made or received by Executive during the Employment are the property of the Company. Upon Termination of the Employment,
whether or not for Cause, Executive will immediately deliver to the Company all property of the Company which may still be in Executive's possession. Executive will not remove or assist in removing such property from the Company's premises under any circumstances, either during the Employment or after Termination thereof, except as authorized by the Company's management.
(e) For a period of one (1) year after the date of Termination of the Employment, Executive will not, either directly or indirectly, hire or employ or offer or participate in offering employment to any person who at the time of such Termination or at any time during such one year period following the time of such Termination was an employee of the Company without the prior written consent of the Company.
5. Ownership of Intellectual Property.
(a) The Company will be the sole owner of any and all of Executive's Trade Secrets all of which enable the Company to compete successfully in its business. As an express condition of this Agreement, Executive covenants and agrees: to treat all such matters relating to the Company's business, including all technology, equipment and contracts relating to any of the Company's business operations, methods, procedures, or activities as trade secrets and confidential information entrusted to Executive, solely for use in his capacity as an employee under the terms of this Agreement, and Executive will not divulge such information in any way to persons outside of the Company or utilize such information other than in his capacity as an employee under the terms of this Agreement during or after the expiration or termination of this Agreement for any reason whatsoever.
(b) For purposes of this Agreement, "Trade Secret" means all inventions, discoveries, prospects and improvements (including, without limitation, any information relating to manufacturing techniques, processes, formulas, developments or experimental work, work in progress, or business trade secrets), along with any and all other work product relating thereto.
(c) A Trade Secret is "related to the Company's business" ("Company-Related Trade Secret") if it is made, conceived, or reduced to practice by Executive (in whole or in part, either alone or jointly with others, whether or not during regular working hours), whether or not potentially patentable or copyrightable in the U.S. or elsewhere, and it either: (i) involves equipment, supplies, facilities, or trade secret information of the Company; (ii) involves the time for which Executive was or is to be compensated by the Company; (iii) relates to the business of the Company or to its actual or demonstrably anticipated research and development; or (iv) results, in whole or in part, from work performed by Executive for the Company.
(d) Executive will promptly disclose to the Company, or its nominee(s), without additional compensation, all Company-Related Trade Secrets.
(e) Executive will assist the Company, at the Company's expense, in protecting any intellectual property rights that may be available anywhere in the world for such Company-Related Trade Secrets, including signing U.S. or foreign patent applications, oaths or declarations relating to such patent applications, and similar documents.
(f) To the extent that any Company-Related Trade Secret is eligible under applicable law to be deemed a "work made for hire," or otherwise to be owned automatically by the Company, it will be deemed as such, without additional compensation to Executive. In some jurisdictions, Executive may have a right, title, or interest ("Right," including without limitation all right, title, and interest arising under patent law, copyright law,
trade-secret law, or otherwise, anywhere in the world, including the right to sue for present or past infringement) in certain Company-Related Trade Secrets that cannot be automatically owned by the Company. In that case, if applicable law permits Executive to assign Executive's Right(s) in future Company-Related Trade Secrets at this time, then Executive hereby assigns any and all such Right(s) to the Company, without additional compensation to Executive; if not, then Executive agrees to assign any and all such Right(s) in any such future Company-Related Trade Secrets to the Company or its nominee(s) upon request, without additional compensation to Executive.
6. Non-competition. As a condition to, and in consideration of, the Company's entering into this Agreement, and giving Executive access to certain confidential and proprietary information, which Executive recognizes is valuable to the Company and, therefore, its protection and maintenance constitutes a legitimate interest to be protected by the provisions of this Section 6 as applied to Executive and other employees similarly situated to Executive, and for ten dollars ($10) and other good and valuable consideration, the receipt and sufficiency of which Executive hereby acknowledges, Executive acknowledges and hereby agrees as follows:
(a) that Executive is and will be engaged in the business of the Company;
(b) that Executive has occupied a position of trust and confidence with the Company prior to the Effective Date, and that during the period of Executive's Employment under this Agreement, Executive has, and will, become familiar with the Company's trade secrets and with other proprietary and confidential information concerning the Company;
(c) that the obligations of this Agreement are directly related to the
Employment and are necessary to protect the Company's legitimate business
interests; and that the Company's need for the covenants set forth in this
Agreement is based on the following: (i) the substantial time, money and
effort expended and to be expended by the Company in developing oil and gas
investment, acquisition, exploration and drilling opportunities and similar
confidential information; (ii) the fact that Executive will be personally
entrusted with the Company's confidential and proprietary information;
(iii) the fact that, after having access to the Company's data and other
confidential information, Executive could become a competitor of the
Company; and (iv) the highly competitive nature of the Company's industry,
including the premium that competitors of the Company place on acquiring
proprietary and competitive information; and
(d) that for a period commencing on the Effective Date and ending twelve (12) months following Termination as provided in Section 11, Executive will not, directly or indirectly, serve as employee, agent, consultant, stockholder, director, co-partner or in any other individual or representative capacity, own, operate, manage, control, engage in, invest in or participate in any manner in, act as consultant or advisor to, render services for (alone or in association with any person, firm, corporation or entity), or otherwise assist any person or entity that directly or indirectly engages or proposes to engage in (i) the same, or a substantially similar, type of business as that in which the Company engages; or (ii) the business of distribution or sale of (A) products and services distributed, sold or license by the Company at the time of termination; or (B) products and services proposed at the time of Termination to be distributed, sold or licensed by the Company, anywhere in Harris County, Montgomery County, Waller County, Liberty County, Chambers County, Galveston County, Brazoria County or Fort Bend County, Texas (the "Territory"); provided, however
(e) that nothing contained herein shall be construed to prevent Executive from investing in the stock or securities of any competing corporation listed on any recognized national securities exchange or traded
in the over the counter market in the United States, but only if (i) such investment is of a totally passive nature and does not involve Executive devoting time to the management or operations of such corporation and Executive is not otherwise involved in the business of such corporation; and if (ii) Executive and his associates (as such term is defined in Regulation 14(A) promulgated under the Securities Exchange Act of 1934, as in effect on the Effective Date), collectively, do not own, directly or indirectly, more than an aggregate of two percent (2%) of the outstanding stock or securities of such corporation.
7. Legal Fees and Expenses. In the event of a lawsuit, arbitration, or other dispute-resolution proceeding between the Company and Executive arising out of or relating to this Agreement, the prevailing party, in the proceeding as a whole and/or in any interim or ancillary proceedings (e.g., opposed motions, including without limitation motions for preliminary or temporary injunctive relief) will be entitled to recover its reasonable attorneys' fees and expenses unless the court or other forum determines that such a recovery would not serve the interests of justice.
8. Successors.
(a) This Agreement shall inure to the benefit of and be binding upon
(i) the Company and its successors and assigns; (ii) Executive and
Executive's heirs and legal representatives, except that Executive's duties
and responsibilities under this Agreement are of a personal nature and will
not be assignable or delegable in whole or in part; and (iii) Executive
Parties as provided in Section 10.
(b) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation, Acquisition or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "the Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.
9. Arbitration.
(a) Except as set forth in paragraph (b) of this Section 9 or to the
extent prohibited by applicable law, any dispute, controversy or claim
arising out of or relating to this Agreement will be submitted to binding
arbitration before a single arbitrator in accordance with the National
Rules for the Resolution of Employment Disputes of the American Arbitration
Association in effect on the date of the demand for arbitration. If a
dispute should arise under this Agreement, either party may, within sixty
(60) days after the dispute arises, make a demand for arbitration by
sending a demand in writing to the other. The question(s) to be decided by
the arbitrators shall be stated in writing in the written request for
arbitration and the jurisdiction of the arbitrators shall be limited to a
decision of the question so stated in writing.
The parties may agree upon one arbitrator, but in the event they cannot do so within fifteen days, there shall be three arbitrators, one named in writing by each of the parties within thirty days after the demand for arbitration is made, and a third to be chosen by the two so named within the following fifteen days. There shall be no communication between any party and an arbitrator other than at oral hearings or in documents that are currently provided to the parties by certified mail or, if the documents are presented during the hearing, by hand delivery.
Arbitration shall take place before the arbitrator, who will preferably but not necessarily be a lawyer but who shall have at least ten (10) years' experience in working in or with internet companies. The arbitration may proceed in the absence of any party that, after due notice, fails to be present. An award shall not be made solely on the default of a party. The arbitrators shall require the party who is present to submit such evidence as the arbitrators may require for the making of an award.
Unless otherwise agreed by the parties, the arbitration shall take place in Houston, Texas where Executive's principal office space is located at the time of the dispute or was located at the time of Termination of the Employment (if applicable). The arbitrator is hereby directed to take all reasonable measures not inconsistent with the interests of justice to expedite, and minimize the cost of, the arbitration proceedings. The award shall be made promptly and, unless otherwise agreed by all the parties, no later than thirty days from the date of closing of the arbitration hearing. If there is only one arbitrator, his decision shall be binding and conclusive on the parties. If there are three arbitrators, the decision of any two shall be binding and conclusive
(b) To protect inventions, trade secrets, or other confidential information of Section 4, and/or to enforce the non-competition provisions of Section 6, the Company may seek temporary, preliminary, and/or permanent injunctive relief in a court of competent jurisdiction, in each case, without waiving its right to arbitration.
(c) At the request of either party, the arbitrator may take any
interim measures s/she deems necessary with respect to the subject matter of the dispute, including measures for the preservation of confidentiality set forth in this Agreement. |
(d) Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction.
10. Indemnification.
(a) The Company agrees to indemnify and hold harmless Executive, his nominees and/or assigns (a reference in this Section 10 to Executive also includes a reference to Executive's nominees and/or assigns) against any and all losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses and disbursements (incurred in any and all actions, suits, proceedings and investigations in respect thereof and any and all legal and other costs, expenses and disbursements in giving testimony or furnishing documents in response to a subpoena or otherwise), including without limitation, the costs, expenses and disbursements, as and when incurred, of investigating, preparing or defending any such action, suit, proceeding or investigation that is in any way related to the Executive's employment with the Company (whether or not in connection with any action in which the Executive is a party). Such indemnification does not apply to acts performed by Executive, which are criminal in nature or a violation of law. The Company also agrees that Executive shall not have any liability (whether direct or indirect, in contract or tort, or otherwise) to the Company, for, or in connection with, the engagement of the Executive under the Agreement, except to the extent that any such liability resulted primarily and directly from Executive's gross negligence and willful misconduct.
(b) These indemnification provisions shall be in addition to any liability which the Company may otherwise have to Executive or the persons indemnified below in this sentence and shall extend to the following: the Executive, his affiliated entities, partners, employees, legal counsel,
agents, and controlling persons (within the meaning of the federal securities laws), and the officers, directors, employees, legal counsel, agents, and controlling persons of any of them (collectively, the "the Executive Parties").
(c) If any action, suit, proceeding or investigation is commenced, as to which any of the Executive parties propose indemnification under the Agreement, they shall notify the Company with reasonable promptness; provided however, that any failure to so notify the Company shall not relieve the Company from its obligations hereunder. The Executive Parties shall have the right to retain counsel of their own choice (which shall be reasonably acceptable by the Company) to represent them, and the Company shall pay fees, expenses and disbursements of such counsel; and such counsel shall, to the extent consistent with its professional responsibilities, cooperate with the Company and any counsel designated by the Company. The Company shall be liable for any settlement of any claim against the Executive Parties made with the Company's written consent, which consent shall not be unreasonably withheld. The Company shall not, without the prior written consent of the party seeking indemnification, which shall not be reasonably withheld, settle or compromise any claim, or permit a default or consent to the entry of any judgment in respect thereof, unless such settlement, compromise or consent includes, as an unconditional term thereof, the giving by the claimant to the party seeking indemnification of an unconditional release from all liability in respect of such claim.
(d) The indemnification provided by this Section 10 shall not be deemed exclusive of, or to preclude, any other rights to which those seeking indemnification may at any time be entitled under the Company's Articles of Incorporation, Bylaws, any law, agreement or vote of shareholders or disinterested Directors, or otherwise, or under any policy or policies of insurance purchased and maintained by the Company on behalf of Executive, both as to action in his Employment and as to action in any other capacity.
(e) Reasonable expenses (including court costs and attorneys' fees) incurred by Executive due to the fact that Executive serves as a witness or is threatened to be made a named defendant or respondent in a threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative, any appeal in such an action, suit or proceeding, and any inquiry or investigation that could lead to such an action, suit or proceeding (each a "Proceeding"), shall be paid by the Company at reasonable intervals in advance of the final disposition of such Proceeding after receipt by the Company of:
(i) a written affirmation by Executive of his good faith belief that he has met the standard of conduct necessary for indemnification by the Company; and
(ii) a written undertaking by or on behalf of the Executive to repay the amount paid or reimbursed by the Company if it shall ultimately be determined that he is not entitled to be indemnified by the Company. Such written undertaking shall be an unlimited obligation of the Executive but need not be secured and it may be accepted without reference to financial ability to make repayment.
Notwithstanding any other provision of this Section 10, the Company may pay or reimburse expenses incurred by Executive in connection with his appearance as a witness or other participation in a Proceeding at a time when he is not named a defendant or respondent in the Proceeding.
(f) Neither Termination nor completion of the Employment shall effect these indemnification provisions which shall then remain operative and in full force and effect.
11. Termination
This Agreement and the employment relationship created hereby will
terminate (i) upon the disability or death of Executive under Section 11 (a) or
11(b); (ii) with cause under Section 11 (c); (iii) for good reason under Section
11 (d); or (iv) without cause under Section 11(e).
(a) Disability. The Company shall have the right to terminate the employment of Executive under this Agreement for disability in the event Executive suffers an injury, illness, or incapacity of such character as to prevent him from performing his duties without reasonable accommodation by Executive hereunder for a period of more than thirty (30) consecutive days upon Company giving at least thirty (30) days written notice of termination.
(b) Death. This Agreement will terminate on the Death of the Executive.
(c) With Cause. The Company may terminate this Agreement at any time because of, (i) the conviction of Executive of an act or acts constituting a felony or other crime involving moral turpitude, dishonesty or theft or fraud; or (ii) Executive's gross negligence in the performance of his duties hereunder.
(d) Good Reason. The Executive may terminate his employment for "Good Reason" by giving Company ten (10) days written notice if:
(i) he is assigned, without his express written consent, any duties materially inconsistent with his positions, duties, responsibilities, or status with Company as of the date hereof, or a change in his reporting responsibilities or titles as in effect as of the date hereof;
(ii) his compensation is reduced; or
(iii) The Company does not pay any material amount of compensation due hereunder and then fails either to pay such amount within the ten (10) day notice period required for termination hereunder or to contest in good faith such notice. Further, if such contest is not resolved within thirty (30) days, the Company shall submit such dispute to arbitration under Section 9.
(e) Without Cause. Company may terminate this Agreement without cause.
Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Company's Board of Directors or based upon the
advice of counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, by Executive in good faith and in the best interests of the
Company and thus shall not be deemed grounds for Termination for Cause under
Section 10(c) above.
12. Obligations of Company Upon Termination.
(a) In the event of the termination of Executive's employment pursuant to Section 11 (a), (b) or (c), Executive will be entitled only to the compensation earned by him hereunder as of the date of such termination (plus life insurance or disability benefits).
(b) In the event of the termination of Executive's employment pursuant
to Section 11 (d) or (e), Executive will be entitled to receive as
severance pay, a one time lump sum payment equal to 150% of the full Yearly
Salary then in effect (for example, if Executive is terminated under
Section 12(b) in the second year covered by this Agreement, Executive shall
be entitled to a lump sum payment of $189,000 [$126,000 x 150%]), in
addition to all payments of salary earned through the date of termination,
which shall be immediately due and payable. Provided however that any
payment of severance under this Section 12(b) is contingent upon execution
of a Settlement Agreement and Mutual Release releasing the Company from any
and all obligations under this Agreement.
(c) In the event of termination of Executive's employment, the indemnification provisions of Section 10. Indemnification., shall survive the termination of the Executive in respect to ongoing obligations of the Company to pay legal and other costs in any action, suit, proceeding or investigation in accordance with Section 10.
13. Other Provisions.
(a) All notices and statements with respect to this Agreement must be in writing. Notices to the Company shall be delivered to the Chairman of the Board or any vice president of the Company, if any. Notices to Executive may be delivered to Executive in person or sent to Executive's then-current mailing address as indicated in the Company's records.
(b) This Agreement sets forth the entire agreement of the parties concerning the subjects covered herein; there are no promises, understandings, representations, or warranties of any kind concerning those subjects except as expressly set forth in this Agreement.
(c) Any modification of this Agreement must be in writing and signed by all parties; any attempt to modify this Agreement, orally or in writing, not executed by all parties will be void.
(d) If any provision of this Agreement, or its application to anyone or under any circumstances, is adjudicated to be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability will not affect any other provision or application of this Agreement which can be given effect without the invalid or unenforceable provision or application and will not invalidate or render unenforceable such provision or application in any other jurisdiction.
(e) This Agreement will be governed and interpreted under the laws of the United States of America and the laws of the State of Texas as applied to contracts made and carried out in Texas by residents of Texas.
(f) No failure on the part of any party to enforce any provisions of this Agreement will act as a waiver of the right to enforce that provision.
(g) Section headings are for convenience only and shall not define or limit the provisions of this Agreement.
(h) This Agreement may be executed in several counterparts, each of which is an original. It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts. A copy of this Agreement signed by one party and faxed to another party shall be deemed to have been executed and delivered by the signing party as though an original. A photocopy of this Agreement shall be effective as an original for all purposes.
14. Summary of Terms of Employment
Effective Date January 1, 2006 Term & Commitment Five Years, full-time, renewable Office / Position Chief Executive Officer and President Salary As described under Section 3(a) herein |
This Agreement contains provisions requiring binding arbitration of disputes. By signing this Agreement, Executive acknowledges that he (i) has read and understood the entire Agreement; (ii) has received a copy of it (iii) has had the opportunity to ask questions and consult counsel or other advisors about its terms; and (iv) agrees to be bound by it.
Executed to be effective as of the Effective Date.
DATA CALL TECHNOLOGIES EXECUTIVE: /s/ Larry Mosley /s/ James Ammons ------------------------- ----------------------------- LARRY MOSLEY JAMES AMMONS Chief Financial Officer |
Exhibit 10.2
DATA CALL TECHNOLOGIES
Date: February 8, 2006
To Whom It May Concern:
DATA CALL TECHNOLOGIES (the "Company"), for value received, hereby agrees to
issue common stock purchase options entitling James Ammons ("Holder") and his
assigns to purchase an aggregate of 3,000,000 shares of the Company's common
stock ("Common Stock"). Such option is evidenced by an option certificate in
the form attached hereto as Schedule 1 (such instrument being hereinafter
referred to as an "Option," and such Option and all instruments hereafter issued
in replacement, substitution, combination or subdivision thereof being
hereinafter collectively referred to as the "Option"). The Option is issued in
consideration for services rendered. The number of shares of Common Stock
purchasable upon exercise of the Option is subject to adjustment as provided in
Section 5 below. The Option will be exercisable by the Option Holder (as
defined below) as to all or any lesser number of shares of Common Stock covered
thereby, at an initial purchase price of US $0.10 per share (the "Purchase
Price"), subject to adjustment as provided in Section 5 below, for the exercise
period defined in Section 3(a) below. The term "Option Holder" refers to the
person whose name appears on the signature page of this agreement and any
transferee or transferees of any of them permitted by Section 2(a) below.
The Company represents and warrants to the Option Holder as follows:
[Remainder of page left intentionally blank.]
hereunder shall be extinguished Five (5) years from the date
first written above.
(b) EXERCISE IN FULL. Subject to Section 3(a), an Option may be
------------------
|
exercised in full by the Option Holder by surrender of the Option, with the Form of Subscription attached hereto as Schedule 3 executed by such Option Holder, to the Company, accompanied by payment as determined by 3(d) below, in the amount obtained by multiplying the number of Shares represented by the respective Option by the Purchase Price per share (after giving effect to any adjustments as provided in Section 5 below).
(i) In cash, by wire transfer, by certified or cashier's check, or by money order; or
(ii) By delivery to the Company of an exercise notice that requests the Company to issue to the Option Holder the full number of shares as to which the Option is then exercisable, less the number of shares that have an aggregate Fair Market Value, as determined by the Board in its sole discretion at the time of exercise, equal to the aggregate purchase price of the shares to which such exercise relates. (This method of exercise allows the Option Holder to use a portion of the
shares issuable at the time of exercise as payment for the shares to which the Option relates and is often referred to as a "cashless exercise." For example, if the Option Holder elects to exercise 1,000 shares at an exercise price of $0.25 and the current Fair Market Value of the shares on the date of exercise is $1.00, the Option Holder can use 250 of the 1,000 shares at $1.00 per share to pay for the exercise of the entire Option (250 x $1.00 = $250.00) and receive only the remaining 750 shares).
For purposes of this section, "Fair Market Value" shall be defined as the average closing price of the Common Stock (if actual sales price information on any trading day is not available, the closing bid price shall be used) for the five trading days prior to the date of exercise of this Option (the "Average Closing Bid Price"), as reported by the National Association of Securities Dealers Automated Quotation System ("NASDAQ"), or if the Common Stock is not traded on NASDAQ, the Average Closing Bid Price in the over-the-counter market; provided, however, that if the Common Stock is listed on a stock exchange, the Fair Market Value shall be the Average Closing Bid Price on such exchange; and, provided further, that if the Common Stock is not quoted or listed by any organization, the fair value of the Common Stock, as determined by the Board of Directors of the Company, whose determination shall be conclusive, shall be used). In no event shall the Fair Market Value of any share of Common Stock be less than its par value.
Any exercise of the Option pursuant to Section 3 shall be deemed to have been effected immediately prior to the close of business on the date on which the Option together with the Form of Subscription and the payment for the aggregate Purchase Price shall have been received by the Company. At such time, the person or persons in whose name or names any certificate or certificates representing the Shares or Other Securities (as defined below) shall be issuable upon such exercise shall be deemed to have become the holder or holders of record of the Shares or Other Securities so purchased. As soon as practicable after the exercise of any Option in full or in part, and in any event within Ten (10) business days thereafter, the Company at its expense (including the payment by it of any applicable issue taxes) will cause to be issued in the name of, and delivered to the purchasing Option Holder, a certificate or certificates representing the number of fully paid and nonassessable shares of Common Stock or Other Securities to which such Option Holder shall be entitled upon such exercise, plus in lieu of any fractional share to which such Option Holder would otherwise be entitled, cash in an amount determined pursuant to Section 6(e). The term "Other Securities" refers to any stock (other than Common Stock), other securities or assets (including cash) of the Company or any other person (corporate or otherwise) which the Option Holder at any time shall be entitled to receive, or shall have received, upon the exercise of the Option, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock or Other Securities pursuant to Section 5 below or otherwise.
The Purchase Price and the number of Shares are subject to adjustment from time to time as set forth in this Section 5.
(a) In case the Company shall at any time after the date of this Option Agreement (i) declare a dividend on the Common Stock in shares of its capital stock, (ii) subdivide the outstanding Common Stock, (iii) combine the outstanding Common Stock into a smaller number of Common Stock, or (iv) issue any shares of its capital stock by reclassification of the Common Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation), then in each case the Purchase Price, and the number and kind of Shares receivable upon exercise, in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination, or reclassification shall be proportionately adjusted so that the holder of any Option exercised after such time shall be entitled to receive the aggregate number and kind of Shares which, if such Option had
been exercised immediately prior to such record date, he would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, combination, or reclassification. Such adjustment shall be made successively whenever any event listed above shall occur.
(b) No adjustment in the Purchase Price shall be required if
such adjustment is less than US $.01; provided, however, that any
adjustments which by reason of this subsection (b) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this
Section 5 shall be made to the nearest cent or to the nearest
one-thousandth of a share, as the case may be.
(c) Upon each adjustment of the Purchase Price as a result of the calculations made in subsection (a) of this Section 5, the Option outstanding prior to the making of the adjustment in the Purchase Price shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of Shares (calculated to the nearest thousandth) obtained by (i) multiplying the number of Shares purchasable upon exercise of the Option immediately prior to adjustment of the number of Shares by the Purchase Price in effect prior to adjustment of the Purchase Price and (ii) dividing the product so obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price.
(i) shall at all times reserve and keep available, solely for issuance and delivery upon the exercise of the Option, all shares of Common Stock (or Other Securities) from time to time issuable upon the exercise of the Option and shall take all necessary actions to ensure that the par value per share, if any, of the Common Stock (or Other Securities) is at all times equal to or less than the then effective Purchase Price per share; and
(ii) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock or Other Securities upon the exercise of the Option from time to time outstanding.
reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, upon surrender and cancellation of such Option, the Company, at the expense of the Option Holder, will execute and deliver, in lieu thereof, a new Option of like tenor.
The Option is issued upon the following terms, to all of which each Option Holder by the taking thereof consents and agrees: (a) any person who shall become a transferee, within the limitations on transfer imposed by Section 2(a) hereof, of an Option properly endorsed shall take such Option subject to the provisions of Section 2(a) hereof and thereupon shall be authorized to represent himself, herself or itself as absolute owner thereof and, subject to the restrictions contained in this Option Agreement, shall be empowered to transfer absolute title by endorsement and delivery thereof to a permitted bona fide purchaser for value; (b) any person who shall become a holder or owner of Shares shall take such shares subject to the provisions of Section 2(b) hereof; (c) each prior taker or owner waives and renounces all of his equities or rights in such Option in favor of each such permitted bona fide purchaser, and each such permitted bona fide purchaser shall acquire absolute title thereto and to all rights presented thereby; and (d) until such time as the respective Option is transferred on the books of the Company, the Company may treat the registered holder thereof as the absolute owner thereof for all purposes, notwithstanding any notice to the contrary.
All notices, certificates and other communications from or at the request of the Company to any Option Holder shall be mailed by first class, registered or certified mail, postage prepaid, to such address as may have been furnished to the Company in writing by such Option Holder, or, until an address is so furnished, to the address of the last holder of such Option who has so furnished an address to the Company, except as otherwise provided herein. This Option Agreement and any of the terms hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. This Option Agreement shall be construed and enforced in accordance with and governed by the laws of the State of Texas. The headings in this Option Agreement are for purposes of reference only and shall not limit or otherwise affect any of the terms hereof. This Option Agreement, together with the forms of instruments annexed hereto as schedules, constitutes the full and complete agreement of the parties hereto with respect to the subject matter hereof. For purposes of this Option Agreement, a faxed signature shall constitute an original signature. A photocopy or faxed copy of this Agreement shall be effective as an original for all purposes.
IN WITNESS WHEREOF, the Company has caused this Option Agreement to be executed on this 8th day of February 2006, in Houston, Texas, by its proper corporate officers, thereunto duly authorized.
DATA CALL TECHNOLOGIES
By /s/ Larry Mosley ----------------------------------------- Larry Mosley, Chief Financial Officer |
SCHEDULE 1
THIS OPTION AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER: (A) THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), IN RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION PROVIDED IN SECTIONS 3 AND 4 OF SUCH ACT AND REGULATION S PROMULGATED THEREUNDER; OR (B) ANY STATE SECURITIES LAWS IN RELIANCE UPON APPLICABLE EXEMPTIONS THEREUNDER. THIS OPTION MAY NOT BE EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON UNLESS REGISTERED UNDER THE ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THIS OPTION MUST BE ACQUIRED FOR INVESTMENT ONLY FOR THE ACCOUNT OF THE INVESTOR, AND NEITHER THE OPTION NOR THE UNDERLYING STOCK MAY BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE PROVISIONS OF REGULATION S AND OTHER LAWS OR PURSUANT TO REGISTRATION UNDER THE ACT OR AN AVAILABLE EXEMPTION FROM REGISTRATION. HEDGING TRANSACTIONS INVOLVING THIS OPTION OR THE SECURITIES TO BE ISSUED UPON ITS EXERCISE MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.
To Purchase 3,000,000 Shares
of Common Stock
DATA CALL TECHNOLOGIES
This certifies that, for value received, the hereafter named registered owner is entitled, subject to the terms and conditions of this Option, until the expiration date, to purchase the number of shares (the "Shares") set forth above of the common stock ("Common Stock"), of DATA CALL TECHNOLOGIES (the "Company") from the Company at the purchase price per share hereafter set forth below, on delivery of this Option to the Company with the exercise form duly executed and payment of the purchase price (in cash or by certified or bank cashier's check payable to the order of the Company) for each Share purchased. This Option is subject to the terms of the Option Agreement between the parties thereto dated as of February 8, 2006, the terms of which are hereby incorporated herein. Reference is hereby made to such Option Agreement for a further statement of the rights of the holder of this Option.
Registered Owner: James Ammons Date: February 8, 2006
Purchase Price
Per Share: US $0.10
Expiration Date: Subject to Section 3(a) of the Option Agreement, 5:00 p.m. Central Standard Time.
WITNESS the signature of the Company's authorized officer:
DATA CALL TECHNOLOGIES
By /s/ Larry Mosley ----------------------------------------- Larry Mosley, Chief Financial Officer |
SCHEDULE 2
The undersigned represents and warrants that the transfer of the enclosed Option is permitted by the terms of the Option Agreement pursuant to which the enclosed Option has been issued, and the transferee hereof, by his, her or its acceptance of this Agreement, represents and warrants that he, she or it is familiar with the terms of said Option Agreement and agrees to be bound by the terms thereof with the same force and effect as if a signatory thereto.
Signed in the presence of:
SCHEDULE 3
To DATA CALL TECHNOLOGIES:
(*) Insert here the number of shares called for on the face of the Option or, in the case of a partial exercise, the portion thereof as to which the Option is being exercised, in either case without making any adjustment for additional Common Stock or any other stock or other securities or property which, pursuant to the adjustment provisions of the Option Agreement pursuant to which the Option was granted, may be delivered upon exercise.
Exhibit 10.3
DATA CALL TECHNOLOGIES
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is made between Data Call Technologies, a Nevada corporation (the "Company"), and Larry Mosley ("Executive") (collectively sometimes referred to as the "Parties" and individually sometimes referred to as "Each Party"). Unless otherwise indicated, all references to Sections are to Sections in this Agreement. This Agreement is effective as of the "Effective Date" set forth in Section 14 below.
W I T N E S S E T H:
WHEREAS, the Company desires to obtain the services of Executive, and Executive desires to be employed by the Company upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises, the agreements herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as of the date hereof as follows:
1. Employment. The Company hereby agrees to employ Executive, and Executive hereby agrees to serve the Company, as Chief Financial Officer ("Employment") for a period of three (3) years beginning on the Effective Date. This Agreement is renewable for successive one-year terms upon the mutual acceptance of both parties.
2. Scope of Employment.
(a) During the Employment, Executive will serve as Chief Financial Officer. In that connection, Executive will (i) devote his full-time, attention, and energies to the business of the Company and will diligently and to the best of his ability perform all duties incident to his employment hereunder; (ii) use his best efforts to promote the interests and goodwill of the Company; and (iii) perform such other duties commensurate with his office as the Board of Directors of the Company may from time-to-time assign to him.
(b) Section 2(a) shall not be construed as preventing Executive from (i) serving on corporate, civic or charitable boards or committees, or (ii) making investments in other businesses or enterprises; provided that in no event shall any such service, business activity or investment require the provision of substantial services by Executive to the operations or the affairs of such businesses or enterprises such that the provision thereof would interfere in any respect with the performance of Executive's duties hereunder; and subject to Section 6.
3. Compensation and Benefits During Employment. During the Employment, the Company shall provide compensation to Executive as follows.
(a) The Company shall pay Executive base compensation of $75,000 per year.
(b) The Company shall reimburse Executive for business expenses incurred by Executive in connection with the Employment in accordance with the Company's then-current policies and shall include reimbursement for that portion of Executive's cell phone expenses which correspond to his Employment. Pre-approval in writing will be required for any amounts in excess of $500.00.
(c) Executive will be entitled to health insurance and life insurance when and if a policy is adopted by the Company.
(d) Executive will be entitled to participate in a 401k retirement plan when and if a policy is enacted by the Company.
(e) Executive will be entitled to Two (2) weeks of paid time off ("PTO") per year. PTO days shall begin on the 1st of January for each successive year. Unused PTO days shall roll-over into the next year. Other than the use of PTO days for illness or personal emergencies, PTO days must be pre-approved by the Company. All unused PTO shall expire on the third anniversary of the date first granted hereunder.
(f) Executive will be entitled to participate in any incentive program or discretionary bonus program of the Company which may be implemented in the future by the Board of Directors.
(g) Executive will be entitled to participate in any stock option plan of the Company which may be approved in the future by the Board of Directors.
(h) Executive shall be entitled to up to $500 per month to be used by Executive for car payments on a car to be used by Executive in connection with his employment hereunder.
Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by Executive in good faith and in the best interests of the Company and thus shall not be deemed grounds for Termination for Cause.
4. Confidential Information.
(a) Executive acknowledges that the law provides the Company with protection for its trade secrets and confidential information. Executive will not disclose, directly or indirectly, any of the Company's confidential business information or confidential technical information to anyone without authorization from the Company's management. Executive will not use any of the Company's confidential business information or confidential technical information in any way, either during or after the Employment with the Company, except as required in the course of the Employment.
(b) Executive will strictly adhere to any obligations that may be owed to former employers insofar as Executive's use or disclosure of their confidential information is concerned.
(c) Information will not be deemed part of the confidential
information restricted by this Section 4 if Executive can show that:
(i) the information was in Executive's possession or within
Executive's knowledge before the Company disclosed it to Executive;
(ii) the information was or became generally known to those who could
take economic advantage of it; (iii) Executive obtained the
information from a party having the right to disclose it to Executive
without violation of any obligation to the Company, or (iv) Executive
is required to disclose the information pursuant to legal process
(e.g., a subpoena), provided that Executive notifies the Company
immediately upon receiving or becoming aware of the legal process in
question. No combination of information will be deemed to be within
any of the four exceptions in the previous sentence, however, whether
or not the component parts of the combination are within one or more
exceptions, unless the combination itself and its economic value and
principles of operation are themselves within such an exception or
exceptions.
(d) All originals and all copies of any drawings, blueprints, manuals, reports, computer programs or data, notebooks, notes, photographs, and all other recorded, written, or printed matter relating to research, manufacturing operations, or business of the Company made or received by Executive during the Employment are the property of the Company. Upon Termination of the Employment, whether or not for Cause, Executive will immediately deliver to the Company all property of the Company which may still be in Executive's possession. Executive will not remove or assist in removing such property from the Company's premises under any circumstances, either during the Employment or after Termination thereof, except as authorized by the Company's management.
(e) For a period of one (1) year after the date of Termination of the Employment, Executive will not, either directly or indirectly, hire or employ or offer or participate in offering employment to any person who at the time of such Termination or at any time during such one year period following the time of such Termination was an employee of the Company without the prior written consent of the Company.
5. Ownership of Intellectual Property.
(a) The Company will be the sole owner of any and all of Executive's Inventions that are related to the Company's business, as defined in more detail below.
(b) For purposes of this Agreement, "Inventions" means all inventions, discoveries, and improvements (including, without limitation, any information relating to manufacturing techniques, processes, formulas, developments or experimental work, work in progress, or business trade secrets), along with any and all other work product relating thereto.
(c) An Invention is "related to the Company's business" ("Company-Related Invention") if it is made, conceived, or reduced to practice by Executive (in whole or in part, either alone or jointly with others, whether or not during regular working hours), whether or not potentially patentable or copyrightable in the U.S. or elsewhere, and it either: (i) involves equipment, supplies, facilities, or trade secret information of the Company; (ii) involves the time for which Executive was or is to be compensated by the Company; (iii) relates to the business of the Company or to its actual or demonstrably anticipated research and development; or (iv) results, in whole or in part, from work performed by Executive for the Company.
(d) Executive will promptly disclose to the Company, or its nominee(s), without additional compensation, all Company-Related Inventions.
(e) Executive will assist the Company, at the Company's expense, in protecting any intellectual property rights that may be available anywhere in the world for such Company-Related Inventions, including signing U.S. or foreign patent applications, oaths or declarations relating to such patent applications, and similar documents.
(f) To the extent that any Company-Related Invention is eligible under applicable law to be deemed a "work made for hire," or otherwise to be owned automatically by the Company, it will be deemed as such, without additional compensation to Executive. In some jurisdictions, Executive may have a right, title, or interest ("Right," including without limitation all right, title, and interest arising under patent law, copyright law, trade-secret law, or otherwise, anywhere in the world, including the right to sue for present or past infringement) in certain Company-Related Inventions that cannot be automatically owned by the Company. In that case, if applicable law permits Executive to assign Executive's Right(s) in future Company-Related Inventions at this time, then Executive hereby assigns any and all such Right(s) to the Company, without additional compensation to Executive; if not, then Executive agrees to assign any and all such Right(s) in any such future Company-Related Inventions to the Company or its nominee(s) upon request, without additional compensation to Executive.
6. Non-competition. As a condition to, and in consideration of, the Company's entering into this Agreement, and giving Executive access to certain confidential and proprietary information, which Executive recognizes is valuable to the Company and, therefore, its protection and maintenance constitutes a legitimate interest to be protected by the provisions of this Section 6 as
applied to Executive and other employees similarly situated to Executive, and for ten dollars ($10) and other good and valuable consideration, the receipt and sufficiency of which Executive hereby acknowledges, Executive acknowledges and hereby agrees as follows:
(a) that Executive is and will be engaged in the business of the Company;
(b) that Executive has occupied a position of trust and confidence with the Company prior to the Effective Date, and that during such period and the period of Executive's Employment under this Agreement, Executive has, and will, become familiar with the Company's trade secrets and with other proprietary and confidential information concerning the Company;
(c) that the obligations of this Agreement are directly related
to the Employment and are necessary to protect the Company's
legitimate business interests; and that the Company's need for the
covenants set forth in this Agreement is based on the following: (i)
the substantial time, money and effort expended and to be expended by
the Company in developing technical designs, computer program source
codes, marketing plans and similar confidential information; (ii) the
fact that Executive will be personally entrusted with the Company's
confidential and proprietary information; (iii) the fact that, after
having access to the Company's technology and other confidential
information, Executive could become a competitor of the Company; and
(iv) the highly competitive nature of the Company's industry,
including the premium that competitors of the Company place on
acquiring proprietary and competitive information; and
(d) that for a period commencing on the Effective Date and ending nine (9) months following Termination as provided in Section 11, Executive will not, directly or indirectly, serve as employee, agent, consultant, stockholder, director, co-partner or in any other individual or representative capacity, own, operate, manage, control, engage in, invest in or participate in any manner in, act as consultant or advisor to, render services for (alone or in association with any person, firm, corporation or entity), or otherwise assist any person or entity that directly or indirectly engages or proposes to engage in (i) the same, or a substantially similar, type of business as that in which the Company engages; or (ii) the business of distribution or sale of (A) products and services distributed, sold or license by the Company at the time of termination; or (B) products and services proposed at the time of Termination to be distributed, sold or licensed by the Company, anywhere in Harris County, Montgomery County, Waller County, Liberty County, Chambers County, Galveston County, Brazoria County or Fort Bend County, Texas (the "Territory"); provided, however
(e) that nothing contained herein shall be construed to prevent Executive from investing in the stock or securities of any competing corporation listed on any recognized national securities exchange or traded in the over the counter market in the United States, but only if (i) such investment is of a totally passive nature and does not involve Executive devoting time to the management or operations of such corporation and Executive is not otherwise involved in the business of such corporation; and if (ii) Executive and his associates (as such term is defined in Regulation 14(A) promulgated under the Securities Exchange Act of 1934, as in effect on the Effective Date), collectively, do not own, directly or indirectly, more than an aggregate of two percent (2%) of the outstanding stock or securities of such corporation.
7. Legal Fees and Expenses. In the event of a lawsuit, arbitration, or other dispute-resolution proceeding between the Company and Executive arising out of or relating to this Agreement, the prevailing party, in the proceeding as a whole and/or in any interim or ancillary proceedings (e.g., opposed motions, including without limitation motions for preliminary or temporary injunctive relief) will be entitled to recover its reasonable attorneys' fees and expenses unless the court or other forum determines that such a recovery would not serve the interests of justice.
8. Successors.
(a) This Agreement shall inure to the benefit of and be binding upon (i) the Company and its successors and assigns; (ii) Executive and Executive's heirs and legal representatives, except that Executive's duties and responsibilities under this Agreement are of a personal nature and will not be assignable or delegable in whole or in part; and (iii) Executive Parties as provided in Section 10.
(b) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation, Acquisition or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "the Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.
9. Arbitration.
(a) Except as set forth in paragraph (b) of this Section 9 or to the extent prohibited by applicable law, any dispute, controversy or claim arising out of or relating to this Agreement will be submitted to binding arbitration before a single arbitrator in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association in effect on the date of the demand for arbitration. The arbitration shall take place before a single arbitrator, who will preferably but not necessarily be a lawyer but who shall have at least five years' experience in working in or with Internet companies. Unless otherwise agreed by the parties, the arbitration shall take place in the city in which Executive's principal office space is located at the time of the dispute or was located at the time of Termination of the Employment (if applicable). The arbitrator is hereby directed to take all reasonable measures not inconsistent with the interests of justice to expedite, and minimize the cost of, the arbitration proceedings.
(b) To protect inventions, trade secrets, or other confidential information of Section 4, and/or to enforce the non-competition provisions of Section 6, the Company may seek temporary, preliminary, and/or permanent injunctive relief in a court of competent jurisdiction, in each case, without waiving its right to arbitration.
(c) At the request of either party, the arbitrator may take any
interim measures s/she deems necessary with respect to the subject matter of the dispute, including measures for the preservation of confidentiality set forth in this Agreement. |
(d) Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction.
10. Indemnification.
(a) The Company agrees to indemnify and hold harmless Executive, his nominees and/or assigns (a reference in this Section 10 to Executive also includes a reference to Executive's nominees and/or assigns) against any and all losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses and disbursements (incurred in any and all actions, suits, proceedings and investigations in respect thereof and any and all legal and other costs, expenses and disbursements in giving testimony or furnishing documents in response to a subpoena or otherwise), including without limitation, the costs, expenses and disbursements, as and when incurred, of investigating, preparing or defending any such action,
suit, proceeding or investigation that is in any way related to the Executive's employment with the Company (whether or not in connection with any action in which the Executive is a party). Such indemnification does not apply to acts performed by Executive, which are criminal in nature or a violation of law. The Company also agrees that Executive shall not have any liability (whether direct or indirect, in contract or tort, or otherwise) to the Company, for, or in connection with, the engagement of the Executive under the Agreement, except to the extent that any such liability resulted primarily and directly from Executive's gross negligence and willful misconduct.
(b) These indemnification provisions shall be in addition to any liability which the Company may otherwise have to Executive or the persons indemnified below in this sentence and shall extend to the following: the Executive, his affiliated entities, partners, employees, legal counsel, agents, and controlling persons (within the meaning of the federal securities laws), and the officers, directors, employees, legal counsel, agents, and controlling persons of any of them (collectively, the "the Executive Parties").
(c) If any action, suit, proceeding or investigation is commenced, as to which any of the Executive parties propose indemnification under the Agreement, they shall notify the Company with reasonable promptness; provided however, that any failure to so notify the Company shall not relieve the Company from its obligations hereunder. The Executive Parties shall have the right to retain counsel of their own choice (which shall be reasonably acceptable by the Company) to represent them, and the Company shall pay fees, expenses and disbursements of such counsel; and such counsel shall, to the extent consistent with its professional responsibilities, cooperate with the Company and any counsel designated by the Company. The Company shall be liable for any settlement of any claim against the Executive Parties made with the Company's written consent, which consent shall not be unreasonably withheld. The Company shall not, without the prior written consent of the party seeking indemnification, which shall not be reasonably withheld, settle or compromise any claim, or permit a default or consent to the entry of any judgment in respect thereof, unless such settlement, compromise or consent includes, as an unconditional term thereof, the giving by the claimant to the party seeking indemnification of an unconditional release from all liability in respect of such claim.
(d) The indemnification provided by this Section 10 shall not be deemed exclusive of, or to preclude, any other rights to which those seeking indemnification may at any time be entitled under the Company's Articles of Incorporation, Bylaws, any law, agreement or vote of shareholders or disinterested Directors, or otherwise, or under any policy or policies of insurance purchased and maintained by the Company on behalf of Executive, both as to action in his Employment and as to action in any other capacity.
(f) Neither Termination nor completion of the Employment shall effect these indemnification provisions which shall then remain operative and in full force and effect.
11. Termination
This Agreement and the employment relationship created hereby will
terminate (i) upon the disability or death of Executive under Section 11 (a) or
11(b); (ii) with cause under Section 11 (c); or (iii) for good reason under
Section 11 (d).
(a) Disability. The Company shall have the right to terminate the employment of Executive under this Agreement for disability in the event Executive suffers an injury, illness, or incapacity of such character as to substantially disable him from performing his duties without reasonable accommodation by Executive hereunder for a period of more than thirty (30) consecutive days upon Company giving at least thirty (30) days written notice of termination.
(b) Death. This Agreement will terminate on the Death of the Executive.
(c) With Cause. The Company may terminate this Agreement at any time because of, (i) the conviction of Executive of an act or acts constituting a felony or other crime involving moral turpitude, dishonesty or theft or fraud; (ii) Executive's gross negligence in the performance of his duties hereunder; (iii) Executive's lack of performance of his duties hereunder; or (iv) Executive's failure to uphold the integrity and/or public image of the Company.
(d) Good Reason. The Executive may terminate his employment for "Good Reason" by giving Company ten (10) days written notice if:
(i) he is assigned, without his express written consent, any duties materially inconsistent with his positions, duties, responsibilities, or status with Company as of the date hereof, or a change in his reporting responsibilities or titles as in effect as of the date hereof;
(ii) his compensation is reduced; or
(iii) the Company does not pay any material amount of compensation due hereunder and then fails either to pay such amount within the ten (10) day notice period required for termination hereunder or to contest in good faith such notice. Further, if such contest is not resolved within thirty (30) days, the Company shall submit such dispute to arbitration under Section 9.
12. Obligations of Company Upon Termination.
(a) In the event of the termination of Executive's employment pursuant to Section 11 (a), (b) or (c), Executive will be entitled only to the compensation earned by him hereunder as of the date of such termination (plus life insurance or disability benefits).
(b) In the event of the termination of Executive's employment pursuant to Section 11 (d), Executive will be entitled to receive as severance pay, any amount earned by Executive through the date of termination.
13. Other Provisions.
(a) All notices and statements with respect to this Agreement must be in writing. Notices to the Company shall be delivered to the Chairman of the Board or any vice president of the Company. Notices to Executive may be delivered to Executive in person or sent to Executive's then-current mailing address as indicated in the Company's records.
(b) This Agreement sets forth the entire agreement of the parties concerning the subjects covered herein; there are no promises, understandings, representations, or warranties of any kind concerning those subjects except as expressly set forth in this Agreement.
(c) Any modification of this Agreement must be in writing and signed by all parties; any attempt to modify this Agreement, orally or in writing, not executed by all parties will be void.
(d) If any provision of this Agreement, or its application to anyone or under any circumstances, is adjudicated to be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability will not affect
any other provision or application of this Agreement which can be given effect without the invalid or unenforceable provision or application and will not invalidate or render unenforceable such provision or application in any other jurisdiction.
(e) This Agreement will be governed and interpreted under the laws of the United States of America and the laws of the State of Texas as applied to contracts made and carried out in Texas by residents of Texas.
(f) No failure on the part of any party to enforce any provisions of this Agreement will act as a waiver of the right to enforce that provision.
(g) Section headings are for convenience only and shall not define or limit the provisions of this Agreement.
(h) This Agreement may be executed in several counterparts, each of which is an original. It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts. A copy of this Agreement signed by one party and faxed to another party shall be deemed to have been executed and delivered by the signing party as though an original. A photocopy of this Agreement shall be effective as an original for all purposes.
14. Summary of Terms of Employment
Effective Date October 1, 2005 Term & Commitment Three Years, full-time, renewable Office / Position Chief Financial Officer Salary $75,000 per year |
This Agreement contains provisions requiring binding arbitration of disputes. By signing this Agreement, Executive acknowledges that he (i) has read and understood the entire Agreement; (ii) has received a copy of it (iii) has had the opportunity to ask questions and consult counsel or other advisors about its terms; and (iv) agrees to be bound by it.
Executed to be effective as of the Effective Date.
DATA CALL TECHNOLOGIES: EXECUTIVE:
James Ammons Larry Mosley
------------------------- ------------------
James Ammons Larry Mosley
Chief Executive Officer
Date: 10/4/05 Date: 10/4/05
------- -------
|
Exhibit 10.4
DATA CALL TECHNOLOGIES
ADDENDUM NO. 1
TO EXECUTIVE EMPLOYMENT AGREEMENT
THIS ADDENDUM No. 1 TO EXECUTIVE EMPLOYMENT AGREEMENT (this "Addendum") dated as of February 14, 2006, to be effective as of January 1, 2006 (the "Amended Effective Date"), is made between Data Call Technologies, a Nevada corporation (the "Company"), and Larry Mosley ("Executive") (collectively sometimes referred to as the "Parties" and individually sometimes referred to as "Each Party"). This Addendum amends an Executive Employment Agreement entered into between the Parties on October 4, 2005 (the "Agreement") for the previous effective date of October 1, 2005 (the "Effective Date").
W I T N E S S E T H:
WHEREAS, the Company and Executive desire to amend the Effective Date of the Agreement.
NOW, THEREFORE, in consideration of the premises, the agreements herein contained and other good and valuable consideration of ten dollars ($10) and other good and valuable consideration, the receipt and sufficiency of which Executive hereby acknowledges, the parties hereto agree as of the date hereof as follows:
(1) The Parties agree that Section 14 of the Agreement shall read as
follows:
14. Summary of Terms of Employment
Effective Date January 1, 2006
Term & Commitment Three Years, full-time, renewable
Office / Position Chief Financial Officer
Salary $75,000 per year
|
(2) Executive agrees that he is not entitled to any compensation under the Agreement for the period from the Effective Date of the Agreement and the Amended Effective Date of the Agreement (the "Amended Time Period"), other than the compensation Executive actually received from the Company during the Amended Time Period.
(3) Other Provisions.
(a) All notices and statements with respect to this Addendum must be in writing. Notices to the Company shall be delivered to the Chairman of the Board or any vice president of the Company. Notices to Executive may be delivered to Executive in person or sent to Executive's then-current mailing address as indicated in the Company's records.
(b) This Addendum sets forth the entire agreement of the parties concerning the subjects covered herein; there are no promises, understandings, representations, or warranties of any kind concerning those subjects except as expressly set forth in this Addendum.
(c) Any modification of this Addendum must be in writing and signed by all parties; any attempt to modify this Addendum, orally or in writing, not executed by all parties will be void.
(d) If any provision of this Addendum, or its application to anyone or under any circumstances, is adjudicated to be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability will not affect any other provision or application of this Addendum which can be given effect without the invalid or unenforceable provision or application and will not invalidate or render unenforceable such provision or application in any other jurisdiction.
(e) This Addendum will be governed and interpreted under the laws of the United States of America and the laws of the State of Texas as applied to contracts made and carried out in Texas by residents of Texas.
(f) No failure on the part of any party to enforce any provisions of this Addendum will act as a waiver of the right to enforce that provision.
(g) Section headings are for convenience only and shall not define or limit the provisions of this Addendum.
(h) This Addendum may be executed in several counterparts, each of which is an original. It shall not be necessary in making proof of this Addendum or any counterpart hereof to produce or account for any of the other counterparts. A copy of this Addendum signed by one party and faxed to another party shall be deemed to have been executed and delivered by the signing party as though an original. A photocopy of this Addendum shall be effective as an original for all purposes.
DATA CALL TECHNOLOGIES: EXECUTIVE: /s/ James Ammons /s/ Larry Mosley -------------------------- ---------------------------- James Ammons Larry Mosley Chief Executive Officer |
Exhibit 10.5
DATA CALL TECHNOLOGIES
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is made between Data Call Technologies, a Nevada corporation (the "Company"), and Tim Vance ("Executive") (collectively sometimes referred to as the "Parties" and individually sometimes referred to as "Each Party"). Unless otherwise indicated, all references to Sections are to Sections in this Agreement. This Agreement is effective as of the "Effective Date" set forth in Section 14 below.
W I T N E S S E T H:
WHEREAS, the Company desires to obtain the services of Executive, and Executive desires to be employed by the Company upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises, the agreements herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as of the date hereof as follows:
1. Employment. The Company hereby agrees to employ Executive, and Executive hereby agrees to serve the Company, as Director of Customer Support ("Employment") for a period of Three (3) years beginning on the Effective Date. This Agreement is renewable for successive one-year terms upon the mutual acceptance of both parties.
2. Scope of Employment.
(a) During the Employment, Executive will serve as Director of Customer Support. In that connection, Executive will (i) devote his full-time, attention, and energies to the business of the Company and will diligently and to the best of his ability perform all duties incident to his employment hereunder; (ii) use his best efforts to promote the interests and goodwill of the Company; and (iii) perform such other duties commensurate with his office as the Board of Directors of the Company may from time-to-time assign to him.
(b) Section 2(a) shall not be construed as preventing Executive from
(i) serving on corporate, civic or charitable boards or committees, or (ii)
making investments in other businesses or enterprises; provided that in no
event shall any such service, business activity or investment require the
provision of substantial services by Executive to the operations or the
affairs of such businesses or enterprises such that the provision thereof
would interfere in any respect with the performance of Executive's duties
hereunder; and subject to Section 6.
3. Compensation and Benefits During Employment. During the Employment, the Company shall provide compensation to Executive as follows.
(a) The Company shall pay Executive base compensation of $80,000 per year.
(b) The Company shall reimburse Executive for business expenses incurred by Executive in connection with the Employment in accordance with the Company's then-current policies and shall include reimbursement for that portion of Executive's cell phone expenses which correspond to his Employment. Pre-approval in writing will be required for any amounts in excess of $500.00.
(c) Executive will be entitled to health insurance and life insurance when and if a policy is adopted by the Company.
(d) Executive will be entitled to participate in a 401k retirement plan when and if a policy is enacted by the Company.
(e) Executive will be entitled to Two (2) weeks of paid time off ("PTO") per year. PTO days shall begin on the 1st of January for each successive year. Unused PTO days shall roll-over into the next year. Other than the use of PTO days for illness or personal emergencies, PTO days must be pre-approved by the Company. All unused PTO shall expire on the third anniversary of the date first granted hereunder.
(f) Executive will be entitled to participate in any incentive program or discretionary bonus program of the Company which may be implemented in the future by the Board of Directors.
(g) Executive will be entitled to participate in any stock option plan of the Company which may be approved in the future by the Board of Directors.
(h) Executive shall be entitled to up to $500 per month to be used by Executive for car payments on a car to be used by Executive in connection with his employment hereunder.
Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by Executive in good faith and in the best interests of the Company and thus shall not be deemed grounds for Termination for Cause.
4. Confidential Information.
(a) Executive acknowledges that the law provides the Company with protection for its trade secrets and confidential information. Executive will not disclose, directly or indirectly, any of the Company's confidential business information or confidential technical information to anyone without authorization from the Company's management. Executive will not use any of the Company's confidential business information or confidential technical information in any way, either during or after the Employment with the Company, except as required in the course of the Employment.
(b) Executive will strictly adhere to any obligations that may be owed to former employers insofar as Executive's use or disclosure of their confidential information is concerned.
(c) Information will not be deemed part of the confidential information restricted by this Section 4 if Executive can show that: (i) the information was in Executive's possession or within Executive's knowledge before the Company disclosed it to Executive; (ii) the information was or became generally known to those who could take economic advantage of it; (iii) Executive obtained the information from a party having the right to disclose it to Executive without violation of any obligation to the Company, or (iv) Executive is required to disclose the information pursuant to legal process (e.g., a subpoena), provided that Executive notifies the Company immediately upon receiving or becoming aware of the legal process in question. No combination of information will be deemed to be within any of the four exceptions in the previous sentence, however, whether or not the component parts of the combination are within one or more exceptions, unless the combination itself and its economic value and principles of operation are themselves within such an exception or exceptions.
(d) All originals and all copies of any drawings, blueprints, manuals, reports, computer programs or data, notebooks, notes, photographs, and all other recorded, written, or printed matter relating to research, manufacturing operations, or business of the Company made or received by Executive during the Employment are the property of the Company. Upon
Termination of the Employment, whether or not for Cause, Executive will immediately deliver to the Company all property of the Company which may still be in Executive's possession. Executive will not remove or assist in removing such property from the Company's premises under any circumstances, either during the Employment or after Termination thereof, except as authorized by the Company's management.
(e) For a period of one (1) year after the date of Termination of the Employment, Executive will not, either directly or indirectly, hire or employ or offer or participate in offering employment to any person who at the time of such Termination or at any time during such one year period following the time of such Termination was an employee of the Company without the prior written consent of the Company.
5. Ownership of Intellectual Property.
(a) The Company will be the sole owner of any and all of Executive's Inventions that are related to the Company's business, as defined in more detail below.
(b) For purposes of this Agreement, "Inventions" means all inventions, discoveries, and improvements (including, without limitation, any information relating to manufacturing techniques, processes, formulas, developments or experimental work, work in progress, or business trade secrets), along with any and all other work product relating thereto.
(c) An Invention is "related to the Company's business" ("Company-Related Invention") if it is made, conceived, or reduced to practice by Executive (in whole or in part, either alone or jointly with others, whether or not during regular working hours), whether or not potentially patentable or copyrightable in the U.S. or elsewhere, and it either: (i) involves equipment, supplies, facilities, or trade secret information of the Company; (ii) involves the time for which Executive was or is to be compensated by the Company; (iii) relates to the business of the Company or to its actual or demonstrably anticipated research and development; or (iv) results, in whole or in part, from work performed by Executive for the Company.
(d) Executive will promptly disclose to the Company, or its nominee(s), without additional compensation, all Company-Related Inventions.
(e) Executive will assist the Company, at the Company's expense, in protecting any intellectual property rights that may be available anywhere in the world for such Company-Related Inventions, including signing U.S. or foreign patent applications, oaths or declarations relating to such patent applications, and similar documents.
(f) To the extent that any Company-Related Invention is eligible under applicable law to be deemed a "work made for hire," or otherwise to be owned automatically by the Company, it will be deemed as such, without additional compensation to Executive. In some jurisdictions, Executive may have a right, title, or interest ("Right," including without limitation all right, title, and interest arising under patent law, copyright law, trade-secret law, or otherwise, anywhere in the world, including the right to sue for present or past infringement) in certain Company-Related Inventions that cannot be automatically owned by the Company. In that case, if applicable law permits Executive to assign Executive's Right(s) in future Company-Related Inventions at this time, then Executive hereby assigns any and all such Right(s) to the Company, without additional compensation to Executive; if not, then Executive agrees to assign any and all such Right(s) in any such future Company-Related Inventions to the Company or its nominee(s) upon request, without additional compensation to Executive.
6. Non-competition. As a condition to, and in consideration of, the Company's entering into this Agreement, and giving Executive access to certain confidential and proprietary information, which Executive recognizes is valuable to the Company and, therefore, its protection and maintenance constitutes a legitimate interest to be protected by the provisions of this Section 6 as applied to Executive and other employees similarly situated to Executive, and for ten dollars ($10) and other good and valuable consideration, the receipt and sufficiency of which Executive hereby acknowledges, Executive acknowledges and hereby agrees as follows:
(a) that Executive is and will be engaged in the business of the Company;
(b) that Executive has occupied a position of trust and confidence with the Company prior to the Effective Date, and that during such period and the period of Executive's Employment under this Agreement, Executive has, and will, become familiar with the Company's trade secrets and with other proprietary and confidential information concerning the Company;
(c) that the obligations of this Agreement are directly related to the
Employment and are necessary to protect the Company's legitimate business
interests; and that the Company's need for the covenants set forth in this
Agreement is based on the following: (i) the substantial time, money and
effort expended and to be expended by the Company in developing technical
designs, computer program source codes, marketing plans and similar
confidential information; (ii) the fact that Executive will be personally
entrusted with the Company's confidential and proprietary information;
(iii) the fact that, after having access to the Company's technology and
other confidential information, Executive could become a competitor of the
Company; and (iv) the highly competitive nature of the Company's industry,
including the premium that competitors of the Company place on acquiring
proprietary and competitive information; and
(d) that for a period commencing on the Effective Date and ending nine
(9) months following Termination as provided in Section 11, Executive will
not, directly or indirectly, serve as employee, agent, consultant,
stockholder, director, co-partner or in any other individual or
representative capacity, own, operate, manage, control, engage in, invest
in or participate in any manner in, act as consultant or advisor to, render
services for (alone or in association with any person, firm, corporation or
entity), or otherwise assist any person or entity that directly or
indirectly engages or proposes to engage in (i) the same, or a
substantially similar, type of business as that in which the Company
engages; or (ii) the business of distribution or sale of (A) products and
services distributed, sold or license by the Company at the time of
termination; or (B) products and services proposed at the time of
Termination to be distributed, sold or licensed by the Company, anywhere in
Harris County, Montgomery County, Waller County, Liberty County, Chambers
County, Galveston County, Brazoria County or Fort Bend County, Texas (the
"Territory"); provided, however
(e) that nothing contained herein shall be construed to prevent Executive from investing in the stock or securities of any competing corporation listed on any recognized national securities exchange or traded in the over the counter market in the United States, but only if (i) such investment is of a totally passive nature and does not involve Executive devoting time to the management or operations of such corporation and Executive is not otherwise involved in the business of such corporation; and if (ii) Executive and his associates (as such term is defined in Regulation 14(A) promulgated under the Securities Exchange Act of 1934, as in effect on the Effective Date), collectively, do not own, directly or indirectly, more than an aggregate of two percent (2%) of the outstanding stock or securities of such corporation.
7. Legal Fees and Expenses. In the event of a lawsuit, arbitration, or other dispute-resolution proceeding between the Company and Executive arising out of or relating to this Agreement, the prevailing party, in the proceeding as
a whole and/or in any interim or ancillary proceedings (e.g., opposed motions, including without limitation motions for preliminary or temporary injunctive relief) will be entitled to recover its reasonable attorneys' fees and expenses unless the court or other forum determines that such a recovery would not serve the interests of justice.
8. Successors.
(a) This Agreement shall inure to the benefit of and be binding upon
(i) the Company and its successors and assigns; (ii) Executive and
Executive's heirs and legal representatives, except that Executive's duties
and responsibilities under this Agreement are of a personal nature and will
not be assignable or delegable in whole or in part; and (iii) Executive
Parties as provided in Section 10.
(b) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation, Acquisition or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "the Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.
9. Arbitration.
(a) Except as set forth in paragraph (b) of this Section 9 or to the extent prohibited by applicable law, any dispute, controversy or claim arising out of or relating to this Agreement will be submitted to binding arbitration before a single arbitrator in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association in effect on the date of the demand for arbitration. The arbitration shall take place before a single arbitrator, who will preferably but not necessarily be a lawyer but who shall have at least five years' experience in working in or with Internet companies. Unless otherwise agreed by the parties, the arbitration shall take place in the city in which Executive's principal office space is located at the time of the dispute or was located at the time of Termination of the Employment (if applicable). The arbitrator is hereby directed to take all reasonable measures not inconsistent with the interests of justice to expedite, and minimize the cost of, the arbitration proceedings.
(b) To protect inventions, trade secrets, or other confidential information of Section 4, and/or to enforce the non-competition provisions of Section 6, the Company may seek temporary, preliminary, and/or permanent injunctive relief in a court of competent jurisdiction, in each case, without waiving its right to arbitration.
(c) At the request of either party, the arbitrator may take any
interim measures s/she deems necessary with respect to the subject matter of the dispute, including measures for the preservation of confidentiality set forth in this Agreement. |
(d) Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction.
10. Indemnification.
(a) The Company agrees to indemnify and hold harmless Executive, his nominees and/or assigns (a reference in this Section 10 to Executive also includes a reference to Executive's nominees and/or assigns) against any and all losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses and disbursements (incurred in any and all actions, suits, proceedings and investigations in respect thereof and any and all legal and other costs, expenses and disbursements in giving testimony or furnishing documents in response to a subpoena or otherwise),
including without limitation, the costs, expenses and disbursements, as and when incurred, of investigating, preparing or defending any such action, suit, proceeding or investigation that is in any way related to the Executive's employment with the Company (whether or not in connection with any action in which the Executive is a party). Such indemnification does not apply to acts performed by Executive, which are criminal in nature or a violation of law. The Company also agrees that Executive shall not have any liability (whether direct or indirect, in contract or tort, or otherwise) to the Company, for, or in connection with, the engagement of the Executive under the Agreement, except to the extent that any such liability resulted primarily and directly from Executive's gross negligence and willful misconduct.
(b) These indemnification provisions shall be in addition to any liability which the Company may otherwise have to Executive or the persons indemnified below in this sentence and shall extend to the following: the Executive, his affiliated entities, partners, employees, legal counsel, agents, and controlling persons (within the meaning of the federal securities laws), and the officers, directors, employees, legal counsel, agents, and controlling persons of any of them (collectively, the "the Executive Parties").
(c) If any action, suit, proceeding or investigation is commenced, as to which any of the Executive parties propose indemnification under the Agreement, they shall notify the Company with reasonable promptness; provided however, that any failure to so notify the Company shall not relieve the Company from its obligations hereunder. The Executive Parties shall have the right to retain counsel of their own choice (which shall be reasonably acceptable by the Company) to represent them, and the Company shall pay fees, expenses and disbursements of such counsel; and such counsel shall, to the extent consistent with its professional responsibilities, cooperate with the Company and any counsel designated by the Company. The Company shall be liable for any settlement of any claim against the Executive Parties made with the Company's written consent, which consent shall not be unreasonably withheld. The Company shall not, without the prior written consent of the party seeking indemnification, which shall not be reasonably withheld, settle or compromise any claim, or permit a default or consent to the entry of any judgment in respect thereof, unless such settlement, compromise or consent includes, as an unconditional term thereof, the giving by the claimant to the party seeking indemnification of an unconditional release from all liability in respect of such claim.
(d) The indemnification provided by this Section 10 shall not be deemed exclusive of, or to preclude, any other rights to which those seeking indemnification may at any time be entitled under the Company's Articles of Incorporation, Bylaws, any law, agreement or vote of shareholders or disinterested Directors, or otherwise, or under any policy or policies of insurance purchased and maintained by the Company on behalf of Executive, both as to action in his Employment and as to action in any other capacity.
(f) Neither Termination nor completion of the Employment shall effect these indemnification provisions which shall then remain operative and in full force and effect.
11. Termination
This Agreement and the employment relationship created hereby will
terminate (i) upon the disability or death of Executive under Section 11 (a) or
11(b); (ii) with cause under Section 11 (c); (iii) for good reason under Section
11 (d); or without cause under Section 11 (e).
(a) Disability. The Company shall have the right to terminate the employment of Executive under this Agreement for disability in the event Executive suffers an injury, illness, or incapacity of such character as to substantially disable him from performing
his duties without reasonable accommodation by Executive hereunder for a period of more than thirty (30) consecutive days upon Company giving at least thirty (30) days written notice of termination.
(b) Death. This Agreement will terminate on the Death of the Executive.
(c) With Cause. The Company may terminate this Agreement at any time because of, (i) the conviction of Executive of an act or acts constituting a felony or other crime involving moral turpitude, dishonesty or theft or fraud; (ii) Executive's gross negligence in the performance of his duties hereunder; or (iii) Executive's lack of performance of his duties hereunder.
(d) Good Reason. The Executive may terminate his employment for "Good Reason" by giving Company ten (10) days written notice if:
(i) he is assigned, without his express written consent, any duties materially inconsistent with his positions, duties, responsibilities, or status with Company as of the date hereof, or a change in his reporting responsibilities or titles as in effect as of the date hereof;
(ii) his compensation is reduced; or
(iii) the Company does not pay any material amount of compensation due hereunder and then fails either to pay such amount within the ten (10) day notice period required for termination hereunder or to contest in good faith such notice. Further, if such contest is not resolved within thirty (30) days, the Company shall submit such dispute to arbitration under Section 9.
(e) Without Cause. The Company may terminate this Agreement at any time without cause.
12. Obligations of Company Upon Termination.
(a) In the event of the termination of Executive's employment pursuant to Section 11 (a), (b), (c) or (d), Executive will be entitled only to the compensation earned by him hereunder as of the date of such termination (plus life insurance or disability benefits).
(b) In the event of the termination of Executive's employment pursuant to Section 11(e), Executive will be entitled to receive as severance pay in a one time lump sum payment payable within Thirty (30) days of his termination under Section 11(e) an amount equal to any and all of Executive's salary remaining to be paid under this Agreement. For Example, if Executive's employment was terminated on the first anniversary of the Effective Date of this Agreement pursuant to Section 11(e), Executive shall be entitled to receive as a one time lump sum payment an amount equal to the remaining two (2) years of his employment hereunder (at $80,000 a year) or a total of $160,000. If this Agreement is renewed for additional One (1) year terms pursuant to Section 1 above, Executive shall be entitled to a one time lump sum payment equal to the remaining amount of his salary to be paid under this Agreement, until the end of the then current one year term, within Thirty (30) days of his termination under Section 11(e).
13. Other Provisions.
(a) All notices and statements with respect to this Agreement must be in writing. Notices to the Company shall be delivered to the Chairman of the Board or any vice president of the Company. Notices to Executive may be delivered to Executive in person or sent to Executive's then-current mailing address as indicated in the Company's records.
(b) This Agreement sets forth the entire agreement of the parties concerning the subjects covered herein; there are no promises, understandings, representations, or warranties of any kind concerning those subjects except as expressly set forth in this Agreement.
(c) Any modification of this Agreement must be in writing and signed by all parties; any attempt to modify this Agreement, orally or in writing, not executed by all parties will be void.
(d) If any provision of this Agreement, or its application to anyone or under any circumstances, is adjudicated to be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability will not affect any other provision or application of this Agreement which can be given effect without the invalid or unenforceable provision or application and will not invalidate or render unenforceable such provision or application in any other jurisdiction.
(e) This Agreement will be governed and interpreted under the laws of the United States of America and the laws of the State of Texas as applied to contracts made and carried out in Texas by residents of Texas.
(f) No failure on the part of any party to enforce any provisions of this Agreement will act as a waiver of the right to enforce that provision.
(g) Section headings are for convenience only and shall not define or limit the provisions of this Agreement.
(h) This Agreement may be executed in several counterparts, each of which is an original. It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts. A copy of this Agreement signed by one party and faxed to another party shall be deemed to have been executed and delivered by the signing party as though an original. A photocopy of this Agreement shall be effective as an original for all purposes.
[Remainder of page left intentionally blank.]
14. Summary of Terms of Employment
Effective Date October 1, 2005 Term & Commitment Three Years, full-time, renewable Office / Position Director of Customer Support Salary $80,000 per year |
This Agreement contains provisions requiring binding arbitration of disputes. By signing this Agreement, Executive acknowledges that he (i) has read and understood the entire Agreement; (ii) has received a copy of it (iii) has had the opportunity to ask questions and consult counsel or other advisors about its terms; and (iv) agrees to be bound by it.
Executed to be effective as of the Effective Date.
DATA CALL TECHNOLOGIES: EXECUTIVE:
/s/ James Ammons /s/ Tim Vance
------------------------- --------------------------
James Ammons Tim Vance
Chief Executive Officer
Date: 10/15/05 Date: 10/14/05
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Exhibit 10.6
DATA CALL TECHNOLOGIES
ADDENDUM NO. 1
TO EXECUTIVE EMPLOYMENT AGREEMENT
THIS ADDENDUM No. 1 TO EXECUTIVE EMPLOYMENT AGREEMENT (this "Addendum") dated as of February 14, 2006, to be effective as of January 1, 2006 (the "Amended Effective Date"), is made between Data Call Technologies, a Nevada corporation (the "Company"), and Tim Vance ("Executive") (collectively sometimes referred to as the "Parties" and individually sometimes referred to as "Each Party"). This Addendum amends an Executive Employment Agreement entered into between the Parties on October 18, 2005 (the "Agreement") for the previous effective date of October 1, 2005 (the "Effective Date").
W I T N E S S E T H:
WHEREAS, the Company and Executive desire to amend the Effective Date of the Agreement.
NOW, THEREFORE, in consideration of the premises, the agreements herein contained and other good and valuable consideration of ten dollars ($10) and other good and valuable consideration, the receipt and sufficiency of which Executive hereby acknowledges, the parties hereto agree as of the date hereof as follows:
(1) The Parties agree that Section 14 of the Agreement shall read as follows:
14. Summary of Terms of Employment
Effective Date January 1, 2006 Term & Commitment Three Years, full-time, renewable Office / Position Director of Customer Support Salary $80,000 per year |
(2) Executive agrees that he is not entitled to any compensation under the Agreement for the period from the Effective Date of the Agreement and the Amended Effective Date of the Agreement (the "Amended Time Period"), other than the compensation Executive actually received from the Company during the Amended Time Period.
(3) Other Provisions.
(a) All notices and statements with respect to this Addendum must be in writing. Notices to the Company shall be delivered to the Chairman of the Board or any vice president of the Company. Notices to Executive may be delivered to Executive in person or sent to Executive's then-current mailing address as indicated in the Company's records.
(b) This Addendum sets forth the entire agreement of the parties concerning the subjects covered herein; there are no promises, understandings,
representations, or warranties of any kind concerning those subjects except as expressly set forth in this Addendum.
(c) Any modification of this Addendum must be in writing and signed by all parties; any attempt to modify this Addendum, orally or in writing, not executed by all parties will be void.
(d) If any provision of this Addendum, or its application to anyone or under any circumstances, is adjudicated to be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability will not affect any other provision or application of this Addendum which can be given effect without the invalid or unenforceable provision or application and will not invalidate or render unenforceable such provision or application in any other jurisdiction.
(e) This Addendum will be governed and interpreted under the laws of the United States of America and the laws of the State of Texas as applied to contracts made and carried out in Texas by residents of Texas.
(f) No failure on the part of any party to enforce any provisions of this Addendum will act as a waiver of the right to enforce that provision.
(g) Section headings are for convenience only and shall not define or limit the provisions of this Addendum.
(h) This Addendum may be executed in several counterparts, each of which is an original. It shall not be necessary in making proof of this Addendum or any counterpart hereof to produce or account for any of the other counterparts. A copy of this Addendum signed by one party and faxed to another party shall be deemed to have been executed and delivered by the signing party as though an original. A photocopy of this Addendum shall be effective as an original for all purposes.
DATA CALL TECHNOLOGIES: EXECUTIVE: /s/ James Ammons /s/ Tim Vance ------------------------- ------------------------ James Ammons Tim Vance Chief Executive Officer |
EXHIBIT 23.1
We hereby consent to use in this Form SB-2 Registration Statement of our report dated January 16, 2006, relating to Data Call Technologies, which is part of this Registration Statement. We also consent to the reference to our firm under the caption "Experts."
February 17, 2006
/s/ R.E. Bassie & Co. --------------------- R.E. BASSIE & CO. |