VALCOM, INC - FORM 10-Q - February 24, 2011

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C., 20549

FORM 10-Q

(Mark one)

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the

SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL QUARTER ENDED December 31, 2010

Commission file Number 0-28416

o Transition Report Pursuant to Section 13 or 15(d) of the

SECURITIES EXCHANGE ACT OF 1934

VALCOM, INC.
(Name of small business issuer specified in its charter)



Delaware		58-1700840

(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

2113A Gulf Boulevard, Indian Rocks Beach, Florida 33785
(Address of Principal executive offices) (Zip code)

(727) 953 - 9778

Issuer’s telephone number

Securities registered pursuant to 12(b) of the Act: None Securities to
be registered pursuant to Section 12(g) of the Act:
COMMON STOCK $0.001 PAR VALUE
(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES x NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T ({section}232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

o Yes o No.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



	Large accelerated filer	o
	Accelerated filer	o
	Non-accelerated filer	o
	Smaller reporting company	x

Explanatory paragraph

This amendment filed on Form 10-Q/A is being filed to include the review report from our independent accountant and to correct certain errors reported in our previously filed Form 10-Q. The errors pertain to the recognition of revenue and expense related to the sale of the Michel Legrand to PBS and to correct the reporting of the discount related to the net profits interest assigned to certain note holders. See Note 3 in the notes to the financial statements for a description of the errors.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes x No o

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of February 18, 2010, the issuer had 109,700,158 shares of its $0.001 par value common stock outstanding.

VALCOM, INC.
FORM 10-Q

Page



PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements
Item 2.	Management’s Discussion and Analysis or Plan of Operation
Item 3.	Quantitative and Qualitative Market Risk
Item 4.	Controls and Procedures

PART II - OTHER INFORMATION
Item 1.	Legal Proceedings
Item 1A.	Risk Factors
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.	Defaults Upon Senior Securities
Item 4.	Removed and Reserved
Item 5.	Other Information
Item 6.	Exhibits
SIGNATURES

PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

VALCOM, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)



	December 31, 2010			September 30, 2010

ASSETS
Cash	$	10,212		$	18,318
Accounts receivable, net		97,638			413,635
Audio and film library royalties receivable		1,875,000			2,000,000
Due from New Zoo Review		20.898			20,898
Film costs, net of accumulated amortization		965,304			965,304
Deferred salary		925,000			-
Deferred credits – PTL Productions		200,000			200,000
Property, equipment, net of accumulated depreciation		2,513,520			2,544,812
Audio and film library		1,653,495			1,653,495

TOTAL ASSETS	$	8,261,067		$	7,816,462

LIABILITIES AND RETAINED EARNINGS
Accounts payable	$	1,584,487		$	688,116
Accrued expenses		49.181			70,672
Due to Foster		1,500			1,500
Due to Sin City		35,000			35,000
Deferred revenue - royalties		1,875,000			2,000,000
Due to related parties		375.000			681,000
Notes payable		950,390			912,990
Total Liabilities		4,870,558			4,389,278

RETAINED EARNINGS

Series B preferred stock, 1,000,000 shares authorized, $0.001 par value, 38,000 shares issued and outstanding		38			38
Series C preferred stock, 25,000,000 shares authorized, $0.001 par value, 18,691,395 shares issued and outstanding		18,691			18,691
Common stock, 250,000,000 shares authorized, $0.001 par value, 50,138,158 shares issued and outstanding		50,138			50,138
Treasury stock, 35,000 shares		(23,522	)		(23,522	)
Additional paid-in capital		16,266,533			16,136,533
Accumulated deficit		(12,921,369)			(12,754,694	)
Total Retained Earnings		3,390,509			3,427,184

TOTAL LIABILITIES AND RETAINED EARNINGS	$	8,261,067		$	7,816,462

The accompanying notes are an integral part of these consolidated financial statements.

VALCOM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)



	For the three months ended December 31,
	2010		2009
REVENUES
Advertising	$	32,370	$	-
Programming		91,441		67,721
Royalties		125,000		-
Ticket sales		89,328		-
Miscellaneous		22,711

Total revenues		360,850		67,721
Expenses
Depreciation and amortization		31,292		48,672
General and administrative		496,233		363,663
Total expenses		527,525		412,335-
Loss before other income (expenses)		(166,675)		(344,614)
Other income (expenses)
Interest expense		-		(5,666	)
Gain on derivative liabilities		-		112,347
Other expenses		-		(47,172)
Total other income (expenses)		-		59,509	)

Net loss		(166,675)		(285,105	)


Weighted average shares outstanding		41,612,121		39,913,506


LOSS PER SHARE – basic and diluted	$	(0.00)	$	(0.01)

The accompanying notes are an integral part of these consolidated financial statements.

VALCOM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)



	For the three months ended December 31,
	2010			2009
OPERATING ACTIVITIES
Net loss	$	(166,675	)	$	(285,105	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock paid for services		130,000			78,000
Depreciation and amortization expense		31,292			95,854
Gain on derivative liability					(112,347)
Changes in operating assets and liabilities:
Accounts receivable		315,997			(52,073	)
Royalties receivable		125,000			-
Deferred salaries		(925,000)			-
Prepaid assets		-			(275,000	)
Inventory					63,115
Accounts payable and accrued expenses		896,371			443,522
Accrued expenses		(21,491)			-
Deferred revenue		(125.000)			-
Due to related parties		(306,000)			21,979

Net Cash Used In Operating Activities		(45,506	)		(22,055	)

INVESTING ACTIVITIES
Purchase of property and equipment		-			(1,090	)
Increase (decrease) in restricted cash		-			(83	)

Net Cash Used in Investing Activities		-			(1,173	)

FINANCING ACTIVITIES
Proceeds from the sale of common stock		-			16,000
Proceeds (payments) on notes payable, net		37,400			-
Net Cash Provided by Financing Activities		18,709			16,000

NET INCREASE (DECREASE) IN CASH		(8,106	)		(7,228)
CASH AT BEGINNING OF YEAR		18,318			110,846
CASH AT END OF YEAR	$	10,212		$	103,618

SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
CASH PAID FOR:
Interest	$	—		$	2,500
Income taxes		—			—

The accompanying notes are an integral part of these consolidated financial statements.

VALCOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1. DESCRIPTION OF BUSINESS

ValCom, Inc and its subsidiaries' (collectively the “Company”) businesses include television production for network and syndication programming, motion pictures, and real estate holdings, however, revenue is primarily generated through the lease of the sound stages and production, a TV network and live event broadcasting including real estate auctions. The Company's past and present clients include movie studios and television networks. In addition to leasing its sound stages, the Company also has a library of television content for worldwide distribution and acquired a further library of film and television series with the acquisition of Faith TV (now renamed My Family TV).

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). This summary of significant accounting policies of the Company is presented to assist in understanding the consolidated financial statements. The consolidated financial statements and notes are representations of the Company's management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the consolidated financial statements.

Principles of Consolidation

The consolidated financial statements include the accounts of Valcom, Inc. and ITS two wholly-owned subsidiaries, Valencia Entertainment, Inc. (VEI), which was acquired effective February 2001, and My Family TV, LLC (formerly known as Faith TV) which was acquired in December 2008. Investments in affiliated companies over which the Company has a significant influence or ownership of more than 20% but less than or equal to 50% are accounted for under the equity method. The Company has no equity affiliates as of December 31, 2010.

Fair Value Measurements and Disclosures

ASC820 "Fair Value Measurements and Disclosures", adopted January 1, 2008, defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The carrying amounts reported in the balance sheets for current receivables and payables qualify as financial instruments. Management concluded the carrying values are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and if applicable, their stated interest rate approximates current rates available. The three levels are defined as follows:

Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the Full term of the financial instruments.

Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Reclassifications

Certain amounts from prior periods have been reclassified to conform to the current year presentation.

Depreciation and Amortization

For financial and reporting purposes, the Company follows the policy of providing depreciation and amortization on the straight-line method over the estimated useful lives of the assets, which are as follows:

Production Equipment

5 years

Office Furniture and Equipment

5 to 7 years

Leasehold Improvements

5 years

Autos and Trucks

5 years

Income Taxes

The Company accounts for income taxes in accordance with ASC740 "Accounting for Income Taxes". ASC 740 requires an asset and liability approach for financial accounting and reporting for income taxes and allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.

The Company adopted the accounting standard for uncertainty in income taxes which prescribes a comprehensive model for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the Company has taken or expects to take on a tax return (including a decision whether to file or not to file a return in a particular jurisdiction).

Shared Based Compensation

The Company accounts for stock options in accordance with FASB ASC 718, "Share-Based Payment" and FASB ASC 505-50, "Equity-Equity-Based Payments to Non-Employees."

Revenue Recognition

Revenue from the sales or licensing of films is recognized upon meeting all recognition requirements of Accounting Standard Codification 926, Entertainment — Films (“ASC 926”) (formerly Statement of Position 00-2). These requirements are a) persuasive evidence of a sale or licensing arrangement with a customer exists, b) the film is complete and, in accordance with the terms of the arrangement, has been delivered or is available for immediate and unconditional delivery, c) the license period of the arrangement has begun and the customer can begin its exploitation, exhibition, or sale, d) the arrangement fee is fixed or determinable, and e) collection of the arrangement fee is reasonably assured.

Cash and Cash Equivalents

Cash and cash equivalents include highly liquid investments with original maturities of three months or less that are readily convertible into cash and are not subject to significant risk from fluctuations in interest rates. As a result, the carrying amount of cash and cash equivalents approximates fair value.

The Company places its cash and cash equivalents with major financial institutions. At times, cash balances may be in excess of the amounts insured by the Federal Deposit Insurance Corporation (“FDIC”).

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Accounts Receivable

Accounts receivable represent customer obligations due under contractual obligations where the conditions stated above in respect of revenue recognition have been fulfilled and where the customer has been invoiced for the amount payable.

The Company evaluates accounts receivable where it believes that there may be a possibility that the license agreement concerned may be at risk of being cancelled in the future. In these cases, the Company uses its judgment, based on the available facts and circumstances, and records a specific reserve for that customer against amounts due to reduce the receivable to the amount that is expected to be collected. These specific reserves are re-evaluated and adjusted as additional information is received that impacts the amount reserved.

If circumstances change (for example, the Company experiences higher than expected defaults or an unexpected material adverse change in a major customer’s ability to meet its financial obligation to the Company), estimates of the recoverability of amounts due to the Company could be reduced by a material amount. There was no allowance for doubtful accounts at December 31, 2010.

Property and Equipment

Property and equipment is recorded at historical cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. When property and equipment is sold or otherwise disposed of, the cost and related accumulated depreciation or amortization is removed from the accounts and any resulting gain or loss is included in income. The costs of normal maintenance and repairs are charged to expense when incurred.

In the event that facts and circumstances indicate that the cost of an asset may be impaired, an evaluation of recoverability would be performed. There was no impairment recorded at December 31, 2010.

Film Costs

Film costs are capitalized in accordance with ASC 926. Film costs represent capitalized costs for the production of films and other entertainment projects. These costs will be amortized when the films that the Company is producing meet all the requirements listed in ASC 926 and the Company is recognizing revenues for the Films.

Film costs are amortized in the same proportion that the current revenue bears to the estimated remaining unrecognized revenue as of the beginning of the current year. Revenue and cost forecasts are periodically reviewed by management and revised when warranted.

The carrying value of the film costs are periodically reviewed for impairment. If events or changes in circumstance indicate that the fair value of the capitalized costs on a specific film are less than their carrying value, an impairment charge is recognized in the amount by which the unamortized costs exceed the project’s fair value. No impairment charge was recognized for the year ended December 31, 2010.

Development Costs

Development costs are capitalized costs related to projects not in production. If the project is greenlit, the costs are reclassified as Film Costs. The Company evaluates on a monthly basis, all projects in development. If the Company decides to abandon any project, an expense for the costs incurred to date will be included in the Company’s consolidated statements of operations. There were no development costs as of December 31, 2010.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the financial statement date and the reported amount of revenues and expenses during the reporting year. Actual results may differ from those estimates.

NOTE 3. PROPERTY AND EQUIPMENT

Property and equipment are comprised of the following:



	September, 30
				Life
	2010			(in years)


Studio equipment and computers	$	1,078,350		$	3
Film video equipment		1,750,913			3
Office equipment		43,121			3

Subtotal		2,872,384
Less: accumulated depreciation and amortization		(358,864	)

Property and equipment, net	$	2,513,520

Depreciation and amortization expense related to property and equipment was $31,292 for the three month period ending December 31. 2010.

NOTE 4. FILM COSTS

The Company has completed a documentary on Michael Legrand. The documentary was released in March of 2010.

Film costs at December 31, 2010 consist of the following:





Documentary in release	$	996,562

Accumulated amortization	$	(31,258	)

Film costs, net	$	965,304

Based on the Company’s estimates of projected gross revenues as of December 31, 2010, the Company expects approximately 80% of completed films, net of accumulated amortization, will be amortized during the next three years.

NOTE 5. NOTES PAYABLE

The Company has entered into note agreements with various individual lenders to fund a concert by Michel Legrand (the Concert). The notes earn 0% interest and are collateralized by a 2.5% of the outstanding shares of Valencia for every $25,000 borrowed. In addition, for every $25,000 borrowed, the note holder receives 2.5% of the net profits of the Concert (after all costs related to the Concert are recovered). As of December 31, 2010, the balance owed lenders was $950,390.

NOTE 6. CONVERTIBLE NOTES

On January 6, 2009, we entered into a convertible note agreement. The terms of the note are as follows: principal amount $100,000; annual interest rate of 10%; maturity date of January 6, 2011. The note is convertible into common shares at a rate of $0.10. In connection with the note, we issued 1,000,000 warrants with an exercise price of $0.20. These warrants, which vested immediately, were valued using the Black Scholes Option Pricing Model.

NOTE 7. AUDIO AND FILM LIBRARY

The Company holds a library of video productions for exploitation and broadcast which are carried at cost of $1,635,495.

According to an appraisal being conducted subsequent to December 31, 2010, the “ VideoLibrary will have a certified value of no less than $6,900,000 for the copyrights and digital formatting. A higher of value of 19,020,000 can be expected based on the potential income that can be generated over the next 7 years…In addition to valuing the Video Library we have started compiling the information necessary for a valuation of the Audio Library which consists of Master Tapes, Demo Tapes, Misc. Tapes as well as copyrights to most of the works along with copyrights on over 800 song titles. This appraisal will take a great deal of work to sort through all the material available but we have already identified well over $2,500,000 in royalties that have not been paid over the last 19 years on a few of the artists in the library. This does not include the copyrights on both published and non-published works.

This appraisal will in the opinion of the appraisers far exceed the value of the Video Library by as much as 3 or 4 times in value”.

NOTE 8. INCOME TAXES

No provision for Federal and state income taxes has been recorded as the Company has incurred net operating losses through December 31, 2010. At December 31, 2010, the Company had approximately $21,991,285 of net operating loss carry-forwards for Federal income tax reporting purposes available to offset future taxable income. Such carry-forwards expire beginning in 2011.

Deferred tax assets at December 31, 2010 consist primarily of the tax effect of net operating loss carry-forwards, which amounted to approximately $7,115,059. Other deferred tax assets and liabilities are not significant. We

provided a full valuation allowance on the deferred tax assets at December 31, 2010 to reduce such deferred income tax assets to zero, as we believe that realization of such amounts is not considered more likely than not.

The following is a reconciliation of the provision for income taxes at the U.S. federal income tax rate to the income taxes reflected in the Consolidated Statement of Operations:

	December 31, 2010			December 31, 2009
Tax Expense (Benefit) at Statutory Rate		(34	)%		(34	)%
State Tax Rate, Net of Federal		(6	)		(6	)
Change In Valuation Allowance		40			40
Effective Tax Rate		0	%		0	%

NOTE 8. INCOME TAXES (Continued)

The components of the net deferred tax asset are summarized below:

	December 31, 2010			December 31, 2009
Deferred Tax Asset:
Net Operating Losses	$	7,115,059		$	7,115,059
Less: Valuation Allowance		(7,115,059	)		(7,115,059	)
Total	$	-		$	-

NOTE 9. STOCK ACTIVITY

a. CONVERTIBLE PREFERRED STOCK

At December 31, 2010, our authorized shares of convertible Preferred Stock were as follows:

Series B Preferred Stock with no voting rights, is entitled to receive cumulative dividends in preference to any dividend on the common stock at a rate of 10% per share, per year, to be issued if and when declared by the Board of Directors and can be converted at any time into common stock on a 1 for 5 basis. In the event of any liquidation, the holders of shares of Series B Preferred Stock then outstanding shall be entitled to receive an amount equal to the purchase price per share, plus an amount equal to declared but unpaid dividends thereon, if any, to the date of payment. As of December 31, 2010, 38,000 shares of preferred stock with a par value of $38 were issued and outstanding.

Series C Preferred Stock has no voting rights, is entitled to receive cumulative dividends in preference to any dividend on the common stock at a rate of 10% per share, per year, to be issued if and when declared by the Board of Directors and can be converted at any time into common stock on a 1 for 1 basis. In the event of any liquidation, the holders of shares of Series C Preferred Stock then outstanding shall be entitled to receive an amount equal to the purchase price per share, plus an amount equal to declared but unpaid dividends thereon, if any, to the date of payment. In connection with the acquisition of Faith TV, we issued 100,000 shares of Series C Preferred Stock valued at $9,000. We also sold 5,000,000 shares of Series C Preferred Stock for $250,000. As of December 31, 2010, 18,691,395 shares of preferred stock with a par value of $18,691 were issued and outstanding.

b. COMMON STOCK

Stock for cash

During fiscal year 2007, we issued an aggregate 5,070,000 shares of common stock for $507,000.

During fiscal year 2008, we issued an aggregate 9,625,000 shares of common stock for $957,500.

Stock for services

During fiscal year 2009, we granted 3,532,059 shares of common stock for various services. These shares vested immediately and had an aggregate fair value of $287,447, which was recorded as share-based compensation. The fair value was determined based on the quoted stock price on the date of grant.

NOTE 9. STOCK ACTIVITY (Continued)

During fiscal year 2008, we granted 6,595,000 shares of common stock for various services. These shares vested immediately and had an aggregate fair value of $937,600, which was recorded as share-based compensation. The fair value was determined based on the quoted stock price on the date of grant.

During fiscal year 2010, 9,454,000 common shares for services valued at $459,246.

The Company retired twenty million shares of common stock effective November 15, 2010. The shares were issued as restricted shares in anticipation of a private financing that never took effect. The certificate for these shares was never out of the personal control of The Company’s management.

Stock for debt

On February 1, 2009, we issued 75,000 shares of common stock in return for an extension on a note payable. We concluded that the debt was modified under FASB ASC 470-50. The fair value ($4,875) of the shares issued was recorded as a discount on the debt.

During fiscal year 2008, we issued 500,000 shares of common stock to settle $50,000 in debt. The common shares were valued at $80,000 based on the quoted stock price on the date of grant. The difference between the fair value of the common shares and the book value of the loan was recorded as additional expense.

During fiscal year 2008, we issued 600,000 shares of common stock in lieu of cash for payment of interest on two notes.

During the fiscal year ended September 30, 2010, ValCom sold 1,520,000 common shares for $100,950, issued 100,000 to pay $6,000 of accounts payable resulting in a gain on the extinguishment of liabilities of $2,200.The shares were valued using the closing price of ValCom’s common stock on the commitment date.

Stock for acquisition

On December 15, 2008, we purchased 100% of the outstanding shares of FaithTV, LLC. In connection with the acquisition, we issued 1,500,000 shares of common stock, in aggregate, valued at $67,500 based on the Company's quoted stock price. We also issued 100,000 shares of preferred stock valued at $9,000.

Stock for registration rights penalty

On April 17, 2009, we issued 1,191,000 shares of common stock to settle certain registration rights penalty associated with warrants issued in prior years.

NOTE 10. SEGMENTS

The following is a discussion of our operating segments:

- MyFamily TV - is a TV network and broadcasting division centered primarily on Christian ministry paid programming, older and public domain movies, and family programming such as Here's Lucy and the Beverly Hillbillies.

- Film & TV Productions - has over 1000 movie titles and 200 television episodes and 5000 songs which are typically licensed out for seven years.

- Real Estate Auctions - is primarily designed to sell discounted foreclosed properties to a TV audience through a live auction.

NOTE 11. BANKRUPTCY FILING

On August 5, 2008, the United States Bankruptcy Court for the Central District of California entered an Order Confirming Second Amended Plan of Reorganization under Chapter 11 of the Bankruptcy Code (the "Plan") of the Company. The Plan classifies claims and interest in various Classes according to their right to priority of payments as provided in the United States Bankruptcy Code, 11 U.S.C.{section} 101 et seq. (the "Bankruptcy Code"). The Plan provides that upon payment of all obligations pursuant to the Plan, the Company shall be discharged of liability for payment of debts, claims and liabilities incurred before confirmation of the Plan, to the extent specified in {section}1141 of the Bankruptcy Code.

The Plan provided for the treatment of each Class, and for the cash payments that each Class of creditors will receive (and for the existing equity interests and rights that equity security holders will retain under the Plan. The effective date of the Plan was August 15, 2008 (the "Effective Date"). The Company has been funding the Plan through cash on hand and accumulated by the Effective Date to pay off the allowed Priority Unsecured Tax claims.

On the Effective Date, unexpired leases and executory contracts were assumed as obligations of the reorganized Company. The Order of the Court approving the Plan constitutes an order approving the assumption of each lease and contract. Within 120 days of the entry of the order confirming the Plan, the Company filed a status report with the Court explaining what progress has been made toward consummation of the confirmed Plan. The status report shall was served on the United States Trustee, the twenty largest unsecured creditors, and those parties who have requested notice. Status reports are filed every 120 days and served on the same entities until the Plan is fully consummated.

All persons or entities holding preferred or common stock in the Company are referred to in the Plan as "Interest Holders". The pre-existing pre-petition equity ownership interests and rights of all Interest Holders will be left Intact and unimpaired. Of the total amount of common shares issued, a majority of the common shares were issued to insiders of the Company. However, the Directors and President of the company elected to convert their debt of $1,670,000 to Preferred Convertible Stock rather than issue approximately 33,400,000 shares of common stock as stated in the Plan.

NOTE 12. LITIGATION, CONTINGENCIES AND COMMITMENTS

Laurus Master Fund Settlement

On March 24, 2009, Valcom and Laurus Master Fund, Ltd, a company organized under the laws of the Cayman Islands and Chicago Title Company, a California Corporation entered into a Settlement Agreement whereby Valcom resolved its previously asserted claims against Laurus and Chicago Title. Pursuant to the terms of the Agreement, Laurus agreed to pay the Company five hundred and fifty thousand dollars ($556,000) which was received by the Company's attorney on March 30, 2009. Within ten calendar days after the Company receives payment from Laurus, the Company filed a Request for Dismissal of its claims, with prejudice, of its actions against Laurus and Chicago Title and Chicago Title. This settlement is reflected as `Other Income’ in the consolidated statements of operations.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements in “Management’s Discussion and Analysis or Plan of Operation” below, and elsewhere in this quarterly report, are not related to historical results, and are forward-looking statements. Forward-looking statements present our expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward- looking statements. Forward-looking statements frequently are accompanied by such words such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,”

“potential” or “continue,” or the negative of such terms or other words and terms of similar meaning. Although we believe that the expectations reflected in the forward- looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, achievements, or timeliness of such results. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of such forward-looking statements. We are under no duty to update any of the forward-looking statements after the date of this quarterly report. Subsequent written and oral forward looking statements attributable to us or to persons acting in our behalf are expressly qualified in their entirety by the cautionary statements and risk factors set forth below and elsewhere in this quarterly report, and in other reports filed by us with the SEC.

INTRODUCTION AND COMPANY UPDATE

Valcom is a fully integrated Entertainment Company that has been in business for over 25 years and has gone through its ups and downs. It looks like it’s turning the corner within the Broadcast Division by paying off its Television Network and has found a niche in the Live Events Television Production Division by successfully producing a hit show; Michel Legrand and Friends, which received great reviews and was purchased by one of the top Television Networks in the United States. The show will generate a minimum of $500,000 of revenue to the Company and it anticipates bringing millions over the next five years worldwide.

The Company’s subsidiary, Valencia Entertainment entered into a distribution deal with Kultur International to handle the DVDs from the Michel Legrand Special to air on PBS. The deal is programmed to pay the Company an advance and a royalty of all sales in North America. Valencia Entertainment also finished the sound track of the Special which will be released this fall in stores and has made a deal with Crest Digital. On another note, Valencia Entertainment delivered the Michel Legrand Special foreign master version to DLT Entertainment, who has already started to pursue sales with interest from Japan, China, France, Brazil, United Kingdom and Germany. The show tested very well in choice markets in the United States and the network plans on rolling out throughout the country this fall.

As far as for the Real Estate Auction we have finally figured out how to successfully run the program after the previous attempts that did show success, but had some mistakes. In November 2010, the company entered into a 3 year agreement with United Country Auction Services to develop a series of televised real estate auctions. United Country Auctions Services is the nation's largest integrated real estate & auction company. The company has a national network of over 700 offices, 4000 agents nationwide, over 2.5 Billion in annual sales, and is rated #1 Global Real Estate Franchise by Dun & Bradstreet. The company will begin the auctions in March 2011 and carry them through the rest of the year.

PLAN OF OPERATION

As of December 31, 2010, ValCom, Inc. (“Valcom” or the “Company”) operations were comprised of the following activities:

1. TV Stations and Broadcast Division

2. Film and Television Production

3. Live Theater Event Division

Corporate offices are located at 2113A Indian Rocks Beach, Florida.

1. BROADCASTING UPDATE

Following the 100% acquisition of the Christian Television Network, Faith TV LLC on December 15 2008, ValCom began an immediate rebranding to “My Family TV”. The network which had been operating through 65 broadcast, IPTV and cable affiliates at the time of acquisition has now grown to over 88 affiliates. With a primary focus on family friendly programming, management has engaged a strategic plan of growth through quality programming, distribution through organic growth and acquisition leading to a strong foundation for sales. My Family TV is a strong family friendly network with a core established audience and broadcasts to over 50m households through its extensive affiliate network of full and part time affiliates. My Family TV is an emerging network created for American families.

With the acquisition of My Family TV, Valcom now has a library of over 1,000 films, over 200 episodic TV series and more than 500 individual TV one-off specials and documentary programs.

A major revenue stream for ValCom is network television. The vision of the company is to follow the path of ABC Family; a network that was purchased for $1.6 Billion and was later sold for $5.1 Billion. The first network being built by ValCom is My Family TV, which was acquired by the company in 2008.

ValCom has made significant changes to My Family TV that has increased the overall value of the network. Some of these changes include: New programming blocks of health and lifestyle, classic television, comedies, children’s and primetime entertainment and over 80 movies per month; Increasing carriage to include major growth markets such as: Charlotte, Dallas, Denver, Phoenix, San Francisco and Tampa. The implementation of an aggressive effort to secure cable and broadcast coverage in additional major markets will lead to improved ratings and increased revenues.

In less than one year ValCom has eliminated all debt from the acquisition and is operating My Family TV with almost no debt load. Short term plans include the acquisition and launching of new channels that will grow in value based on 4 factors: Programming, Distribution, Ad Sales and Low Operational Expenses. The company has positioned itself to be a U.S. market leader in live interactive televised auctions, traditional and innovative family programming, and sports, and will launch this successful formula to major international markets in 2010.

Through our joint venture with New Global Communications, Inc., we own a 45% equity interest in ValCom Broadcasting, LLC, a New York limited liability company, which operates KVPS (Channel 8), an independent television broadcaster in the Palm Springs, California market. Valcom has not realized significant revenues from this joint venture to date.

2. FILM AND TV PROGRAM PRODUCTION DIVISION / DISTRIBUTION UPDATE

ValCom’s business includes television production for network and syndication programming, motion pictures, and real estate holdings. Revenue is primarily generated through the lease of the sound stages and production. Our past and present clients include Paramount Pictures, Don Belisarious Productions, Warner Brothers, Universal Studios, MGM, HBO, NBC, 20th Century Fox, Disney, CBS, Sony, Showtime, the USA Network, the Game Show Network, Endemol, BET Home Shopping Network and Sullivan Studios.

ValCom has a long history of TV and film production and continuously develops projects for productions and considers proposals for co-production. ValCom has developed and produced a number of live action series pilots and full length feature film projects such as PCH (Pacific Coast Highway) and the 40 episode TV series AJ’s Time Travelers. Valcom has been commissioned to produce pilots such as Truster for Fox, It also produces development pilots itself for pitching to networks such as the New York based sitcom Fuhgedabowit and Let’s Do It Again featuring Frankie Avalon. With its integrated studio operation, studio equipment and post production facility, ValCom has the opportunity to co- produce by way of the provision of services with the opportunity to defer costs and also to provide executive producer services to assist with development, planning, financing and distribution.

October 1, 2003, we formed New Zoo Revue LLC pursuant to a joint venture agreement with O Atlas Enterprises Inc., a California corporation. New Zoo Revue LLC was formed for the development and production of “New Zoo Revue” a feature film and television series and marketing of existing episodes. The company did not proceed with the production of the new feature film or series but in 2004, it did complete a distribution agreement for the DVD with BCI Eclipse for 183 episodes of the New Zoo Revue library. Valcom has not realized significant revenues from animation to date.

In 2009, Valcom produced the documentary feature film `Michel Legrand is Music’. The documentary pays tribute to Michel Legrand’s five-decade, multiple award-winning career composing many of the most memorable film and television scores and songs of all time. ValCom Inc. will premiere the documentary in a limited week-long theatrical run in New York City on September 18th at the Coliseum Theater. In addition, the documentary will premiere in Los Angeles on September 16th at the Laemmle Grand Cineplex 4. “Michel Legrand Is Music” honors the work of the three-time Academy Award-winning French music composer, arranger, conductor and pianist Michel Legrand. Legrand composed more than 200 film and television scores and numerous jazz, popular and classical musical albums. He won Academy Awards for Best Music, Original Song for “The Windmills of Your Mind” from “The Thomas Crown Affair” (1969), Best Music, Original Dramatic Score for “Summer of ‘42” (1971) and Best Music, Original Song for Barbra Streisand Movie “Yentl” (1983). Academy Award-winning actor Jon Voight narrates the documentary.

Valcom , through Valencia Entertainment International operates a compete distribution and syndication service to producers and thus acquire content for its networks at little or no cost with its ability to guarantee TV broadcast and provide a launch for further home entertainment distribution on DVD and on- demand channels through it other relationships. ValCom also has the opportunity to co-produce film and TV programs by way of the provision of services with the opportunity to defer costs and also to provide executive producer services to assist with development, planning, financing and then be able to acquire distribution rights for these productions.

ValCom owns a substantial library of television content with over 1,000 films and it also acquires third party film and TV programming which it distributes through Valencia Entertainment International.

In December 2008, Valcom signed a production and distribution agreement with XFC, the mixed martial arts promoter for the editing and world-wide distribution of 13 one hour shows featuring live events promoted by XFC. XFC events are currently attracting the largest audiences of any mixed martial arts events promoted in the US.

To coincide with the Michel Legrand live event in Las Vegas in 2010, Valcom is planning a number of distribution opportunities including the distribution and syndication of programming based on the live event, music recordings, album and other related events.

Valencia Entertainment entered into a Distribution Agreement with DLT Entertainment to sell the Michel Legrand and Friends Special around the world. On May 17, 2010 the show was delivered to Public Broadcast Network, who bought the Project for the US rights for a $250K fee and $12.00 per DVD and $8.00 per CD sold over the next 26 months. The Show will start airing in August 2010 and the Network likes what Valencia Entertainment has produced and delivered to them. We also have several other countries interested in purchasing the project.

3. LIVE THEATRE AND EVENT DIVISION UPDATE

Valcom has a live theatre division responsible for bringing live shows and events to fruition. In 2006 Valcom produced a theater production called ‘Headlights and Tailpipes’ which was unveiled at the Las Vegas Stardust hotel and ran until July 2006. Other events produced included the 2006 Superbowl pre-game Wrap Bowl Event featuring Young Jeezy, Academy Award winner Ludacris, Juvenile and Juelz Santana.

Valcom, through its subsidiary, Valencia Entertainment produced a live theatre event based on Michel Legrand and his music that occurred in March 2010 at the MGM Grand’s Garden Arena, Las Vegas and featured a line-up of major international recording stars. The event took place over two nights on March 26th and 27th and Michel Legrand conducted a 66-piece orchestra and included guests such as Quincy Jones, Dionne Warwick, Andy Williams, George Benson, Jon Voight, Patti Page, Steve Lawrence, Melissa Manchster, Neil Sedaka and Jerry Lewis. The two-night shows paid musical tribute to come of Legrand’s Academy Award-winning MGM movies including “Yentl”, “Thomas Crown Affair” and “Summer of 42”. The superstar extravaganza will also be captured on film for a made-for-TV-Special to air at a later date.

The Michel Legrand and Friends Special had a very successful turnout with over 3,000 attendees at the show, while the Box Office generated over $150,000 in Sales, of which approximately $87,000 belongs to the Company; topping it off with the sale to Public Broadcast Network, who will air the show in August. The Network will pay the Company a $250,000 fee and a Backend participation of $12.00 for every DVD sold and $8.00 for every CD sold over the next 26 months. The Contract is for the United States only.

Valencia Entertainment has already begun discussions with other Broadcast Networks on new show ideas branching from its library. One show in particular is The Platters; the Company owns all of the masters from the late 1950’s as well as other top musical giants and plans on structuring another show similar to the successful project, Michel Legrand and Friends. The Platters’ show is planned for the Fall of 2010, which would also be another TV Special Concert and sell through a DVD and CD program, similar to the Doo Wop Special Rhino Records put out; which has grossed over 40 Million US dollars to date.

For over 25 years, Valencia Entertainment has accumulated a substantial library of content that will be monetized through worldwide distribution. The library is comprised of over 6,000 titles that include films, television programs, and music. This content library has been recently appraised by an independent auditor that placed a minimum value of the library at $30 million with an upwards value of over $80 million. Years ago the company had a distribution arm that was extremely successful in selling content. The company has rebuilt its distribution arm and has implemented an aggressive sales and marketing effort to sell broadcast rights to the content in 2011 to numerous media outlets domestically and internationally.

4. REAL ESTATE AND OTHER BROADCAST EVENT AUCTIONS UPDATE

Valcom’s auction sold 41 of 46 homes and grossed over $335,000 in August 2010.

In 2009, Valcom pioneered the process of live event auctions covering a wide range of events for TV broadcast and live webcast. Combining the expertise in TV production, live event promotion and now as the owner of a broadcast TV network, the opportunity offers a synergistic approach to such events. In 2008 and 2009, Valcom produced a wide range live TV and webcast events including

1. The Hilton `Make a Wish Foundation’ broadcast live from the Hilton mansion in Beverly Hills in December 2008

2. The Universal Studios `Battlestar Galactica’ prop and memorabilia auction by live web-cast in 2009 over a number of days from the Pasadena Convention Centre

3. The Grammy Awards `Music Cares’ auction as part of the 2009 Grammy Awards

In June 2009, Valcom together with Florida Opportunities, Inc set up Sun Investments LLC, a 51% subsidiary of Valcom, Inc to develop the business opportunity of live event and regular real estate auctions on broadcast TV. Sun Investments will acquire suitable properties and together with Valcom production studios, My Family TV will produce live auction events. Valcom acquires additional TV carriage through the purchase of airtime on major networks and markets the events nationwide.

The first such event took place on June 2009 followed by an event in October 2009 with live broadcast from the Valcom studios media centre in Clearwater, Florida and broadcast live over 3 hours on My Family TV, the Ion Network with an auction of over 40 foreclosure properties acquired by Sun Investments. In November the next event was broadcasted over My Family TV and DSN (Direct Shopping Network).

During the quarter ended June 30, 2010, we divested in Sun Investments, Inc., though Valcom will continue its operations as it relates to real estate auctions. In November 2010, the company entered into a 3 year agreement with United Country Auction Services to develop a series of televised real estate auctions. United Country Auctions Services is the nation's largest integrated real estate & auction company. The company has a national network of over 700 offices, 4000 agents nationwide, over 2.5 Billion in annual sales, and is rated #1 Global Real Estate Franchise by Dun & Bradstreet. We anticipate making the auctions more exciting with the offering of financing as well as auctioning off down payments rather than the sales price. These are variants that will make the process more enticing and will create more interaction. Commencing in March 2011, we hope to quickly ramp up the frequency of the auctions to a minimum of 2 per month.

RESULTS OF OPERATIONS

THREE MONTHS ENDED December 31, 2010 VS. December 31, 2009

Revenues for the three months December 31, 2010 increased by $293,129 or 433% from $67,721 for the three months ended December 31, 2009 to $360,850 for the same period in 2010. The increase in revenue was principally due to the revenue received from the Michel Legrand and Friends show.

Production costs for the three months ended December 31, 2010 increased from zero for the three months ended December 31, 2009 to $93,183for the same period in 2010. The increase was primarily due to production costs, satellite expenses and editing cost.

Depreciation and amortization expense for the three months ended December 31, 2010 decreased by $17,380 or 36% from $48,672for the three months ended December 31, 2009 to $31,292for the same period in 2010.

General and administrative expenses for the three months ended December 31, 2010 increased by $132,570 or 36% from $363,663 for the three months ended December 31, 2009 to $496,233for the same period in 2010. The increase was due principally to increased professional fees and other expenses associated with the Michel Legrand show.

Interest expense for the three months ended December 31, 2010 decreased by $5,666 from $5,666 for the three months ended December 31, 2010 to $0 for the same period in 2010. The decrease was due to suspension of payments during the current fiscal year.

Due to the factors described above, the Company’s net loss decreased by $177,939 from $344,614 for the three months ended December 31, 2009 to a net loss of $166,675 for the same period in 2010.

FUTURE OUTLOOK COMPANY UPDATE

Valcom’s July Auction was pushed back to August 7^th and did well selling 41 of 46 homes and the company plans on doing two a month starting in September for the rest of the year.

Valcom, through its subsidiary, Valencia Entertainment just completed producing a live theatre event based on Michel Legrand and his music in March 2010 at the MGM Grand’s Garden Arena, Las Vegas and featured a line-up of major international recording stars. The event took place on March 26th and Michel Legrand conducted a 66-piece orchestra which included guests such as Quincy Jones, Dionne Warwick, Andy Williams, George Benson, Jon Voight, Patti Page, Steve Lawrence, Melissa Manchester, Neil Sedaka and Jerry Lewis. The show paid musical tribute to some of Legrand’s Academy Award-winning MGM movies including “Yentl”, “Thomas Crown Affair” and “summer of 42”. The superstar extravaganza was also captured on film for a made-for-TV-Special. Valencia Entertainment, through DLT Entertainment sold the Michel Legrand Special to Public Broadcasting Network for a License Fee of $250,000 and $12 per DVD and $8 per CD sold over the next 26 months.

Valencia Entertainment has already begun discussions with other Broadcast Networks on new show ideas branching from its library. One show in particular is The Platters; the Company owns all of the masters from the late 1950’s as well as other top musical giants and plans on structuring another show similar to the successful project, Michel Legrand and Friends. The Platters’ show is planned for the fall of 2010, which would also be another TV Special Concert and sell through a DVD and CD program, similar to the Doo Wop Special Rhino Records put out; which has grossed over 40 Million US dollars to date.

Valcom is also actively pursuing opportunities to either merge with or acquire a television network. At this moment My Family TV has no debt and is operating near breakeven, growing the network can be done through organic growth or through an acquisition or merger. Valcom is currently having discussions with potential targets and evaluating what the best course of action would be. A merger or acquisition would result in lowering our operating expenses due to cost efficiency that can be reach and increase of footprint

LIQUIDITY AND CAPITAL RESOURCES

The Company’s consolidated financial statements have been prepared, assuming that the Company will continue as a going concern. The Company incurred a net loss of $166,675 and negative cash flows from operations of $45,506 for the three months ended December 31, 2010 and had an accumulated deficit of $12,921,369 at December 31, 2010. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Cash totaled $10,212 on December 31, 2010 compared to $103,618 as of December 31, 2009. During the three months ended December 31, 2010, net cash used in operating activities totaled $45,506 compared to net cash used in operating activities of $22,055 for the comparable three month period in 2009. Net cash used in investing activities for the three months ended December 31, 2010 totaled $0_compared to $1,173 used in investing activities for the comparable three month period in 2009. Net cash provided by financing activities for the three months ended December 31, 2010 totaled $34,700 compared to $16,000 for the comparable three month period in 2009.

The above cash flow activities yielded a net cash decrease of $8,106 during the three months ended December 31, 2010 compared to a decrease of $7,228 during the comparable prior year period.

Net working capital (current assets less current liabilities) was a deficit of $1,544,000 as of December 31, 2010. The Company will need to raise funds through various financings to maintain its operations until such time as cash generated by operations is sufficient to meet its operating and capital requirements. There can be no assurance that the Company will be able to raise such capital on terms acceptable to the Company, if at all.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

N/A

ITEM 4. CONTROLS AND PROCEDURES.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Pursuant to Rule 13a-15(b) under the Exchange Act, the Company carried out an evaluation with the participation of the Company’s management, including Vince Vellardita, the Company’s Chief Executive Officer and Chief Financial Officer (“CEO/CFO”), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the three months ended December 31, 2010. Based upon that evaluation, the Company’s CEO /CFO concluded that the Company’s disclosure controls and procedures are not effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO /CFO, as appropriate, to allow timely decisions regarding required disclosure.

CHANGES IN INTERNAL CONTROLS

No change has occurred in the Company’s internal controls over financial reporting during the three months ended December 31, 2010 that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

PART II--OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS COMPANY

Any significant legal action involving the Company during the financial year and ongoing is set out below. The company also pursues legal action where appropriate in the normal course of business such as for the collection of receivables or in the defense of frivolous claims on the company.

The Company filed suit against AAN (America’s Auction Network) and Jeremiah Hartman for Breach of Agreement pertaining to Real Estate Auctions. In the first quarter, the Company advertised and introduced AAN to a third party bank the foreclosed homes and jointly marked them for three successful auctions and was to be reimbursed for advertising and expenses and 25% of the profits. No trial date has been set as of yet.

In March 2010 Mr. Powers was terminated for cause. Mr. Powers took the company to arbitration. In the first quarter of 2011, the Arbitrator ruled that the Company was to pay 1/3 of Mr. Powers’ contract. The Company is making arrangements to pay the Arbitrator’s award. Mr. Powers resigned as aboard member two weeks after his termination.

The Company filed suit in January 2011 against Chameleon Communications and Frankie “Buddy” Winsett for non payment of 14 months of rent, six months of employee payroll and 10% ownership in the studio in which ValCom managed, besides other expenses. No trail date has been set as of yet.

ITEM 1A. RISK FACTORS

WE WILL REQUIRE ADDITIONAL FUNDS TO ACHIEVE OUR CURRENT BUSINESS STRATEGY AND OUR INABILITY TO OBTAIN ADDITIONAL FINANCING COULD CAUSE US TO CEASE OUR BUSINESS OPERATIONS.

We will need to raise additional funds through public or private debt or sale of equity to achieve our current business strategy. Such financing may not be available when needed. Even if such financing is available, it may be on terms that are materially adverse to your interests with respect to dilution of book value, dividend preferences, liquidation preferences, or other terms. Our capital requirements to implement our business strategy will be significant. However, at this time, we cannot determine the amount of additional funding necessary to implement such plan. We anticipate requiring additional funds in order to fully implement our business plan to significantly expand our operations. We may not be able to obtain financing if and when it is needed on terms we deem acceptable. Our inability to obtain financing would have a material negative effect on our ability to implement our acquisition strategy, and as a result, could require us to diminish or suspend our acquisition strategy.

If we are unable to obtain financing on reasonable terms, we could be forced to delay, scale back or eliminate certain product and service development programs. In addition, such inability to obtain financing on reasonable terms could have a material negative effect on our business, operating results, or financial condition to such extent that we are forced to restructure, file for bankruptcy, sell assets or cease operations, any of which could put your investment dollars at significant risk.

Except as set forth above, there have been no material changes from the Risk Factors described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2009.

ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS UPDATE

There have been no sales of Equity Securities.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES UPDATE

No defaults

ITEM 4 – REMOVED AND RESERVED

ITEM 5 - OTHER INFORMATION

The Company is in negotiations with an International Fund to finance its business plan. If the transaction happens, the Company’s operational needs and growth will be secured for the next three years; it may cause some dilution of the Company stock.

The Company has started negotiations with a large Entertainment Communications Company about doing a joint venture with its library and television network. The Entertainment Communications Company is a very successful and well funded operation. The alliance would bring additional management, expertise and finance to Valcom.

ITEM 6 - EXHIBITS.

(A) Exhibits

31.1 Certification by Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of Sarbanes Oxley Act of 2002.

32.1 Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.

The Company incorporates by reference all exhibits to its Form 10-K for the year ending September 30, 2007.

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



Dated: August 23, 2010

	VALCOM, INC., A DELAWARE CORPORATION

	By: /s/ Vince Vellardita

	Vince Vellardita
	Chief Executive Officer (Principal Executive Officer)
	and Chief Financial Officer (Principal Accounting and Financial Officer)

VALCOM, INC Reports

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