SOLUTION:
I have been trying to figure this out for a couple days now and finally came across the issue. I believe it is not the Zenwatch as the issue.
On your phone, go to Settings>Applications>Application Manager>Android Wear>Permissions>and allow all of the permissions
This should have come up by default when I opened Android Wear for the first time but for some reason it did not and I was unnable to do phone calls, navigation, and contacts.
I have a Samsung Galaxy S7 and a Asus Zenwatch 1