UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
FORM 10-Q
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(Mark one)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
FOR THE FISCAL QUARTER ENDED MARCH 31, 2008
Commission file Number 0-28416
or
[ ] 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
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(State or other jurisdiction of (IRS Employer
incorporation or organization) 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 [ ]
As of October 16th, 2008 the issuer had 22,774,369 shares of its $0.001 par
value common stock outstanding.
UNAUDITED INTERIM FINANCIAL STATEMENTS
The accompanying financial statements are unaudited and are prepared in
accordance with rules and regulations of the Securities and Exchange Commission
for interim quarterly reporting. Accordingly, these financial statements do not
include all disclosures required under generally accepted accounting
principles.
In the opinion of management, the accompanying consolidated financial
statements contain all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position of ValCom, Inc.
and subsidiaries as of March 31, 2008 and the results of their operations and
their cash flows for the three months ended March 31, 2008. These consolidated
financial statements include the accounts of ValCom, Inc. and its subsidiary
companies (together "the Company"). Results for the three months ended March
31, 2007, are not necessarily indicative of the operations, which may occur
during the year ending September 30, 2007. Refer to the Company's Annual Report
on Form 10- K for the year ended September 30, 2007 for further information.
VALCOM, INC.
FORM 10-Q
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements 2
Item 2. Management's Discussion and Analysis or Plan of Operation 9
Item 3. Quantitative and Qualitative Market Risk 12
Item 4. Controls and Procedures 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 1A. Risk Factors 15
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits
SIGNATURES 16
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MOORE & ASSOCIATES, CHARTERED
ACCOUNTANTS AND ADVISORS
PCAOB REGISTERED
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF DIRECTORS
VALCOM, INC.
We have reviewed the accompanying consolidated balance sheet of ValCom, Inc. as
of June 30, 2008, and the related consolidated statements of operations,
stockholders' equity (deficit), and cash flows for the three-month and nine-
month periods ended June 30, 2008 and 2007. These interim financial statements
are the responsibility of the Corporation's management.
We conducted our review in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists of principally applying analytical procedures and making
inquiries of persons responsible for the financials and accounting matters. It
is substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board (United States), the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such consolidated financial statements for them to be in conformity
with accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with standards of the Public Company
Accounting Oversight Board (United States), the balance sheet of ValCom, Inc.
as of September 30, 2007, and the related statements of operations,
stockholders' equity (deficit) and cash flows for the year then ended (not
presented herein); and in our report dated October 8, 2008, we expressed an
unqualified opinion with a going concern paragraph on those financial
statements. In our opinion, the information set forth in the accompanying
balance sheet as of September 30, 2007 is fairly stated, in all material
respects, in relations to the balance sheet from which it has been derived.
/S/ MOORE & ASSOCIATES, CHARTERED
- ---------------------------------
Moore & Associates, Chartered
Las Vegas, Nevada
October 17, 2008
2675 S. JONES BLVD. SUITE 109, LAS VEGAS, NEVADA 89146
(702) 253-7499 FAX: (702)253-7501
2
VALCOM, INC.
Balance Sheets
ASSETS
March 31, September 30,
2008 2007
-------------- --------------
(unaudited)
CURRENT ASSETS
Cash $ 213,728 $ 5,926
Accounts receivable, net 54,604 173,328
Prepaid expense 31,683 -
-------------- --------------
Total Current Assets 300,015 179,254
-------------- --------------
FIXED ASSETS, net 88,690 101,360
-------------- --------------
OTHER ASSETS
Deposits 160,850 158,853
Other assets 1,000,000 1,000,000
-------------- --------------
Total Other Assets 1,160,850 1,158,853
-------------- --------------
TOTAL ASSETS $ 1,549,555 $ 1,439,467
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 833,359 $ 906,974
Accrued interest payable 194,346 163,790
Deferred income 265,000 -
Due to related parties 1,968,388 1,950,288
Notes payable 691,153 641,153
-------------- --------------
Total Current Liabilities 3,952,246 3,662,205
-------------- --------------
LONG-TERM LIABILITIES
Notes payable - -
Total Long-Term Liabilities - -
-------------- --------------
TOTAL LIABILITIES 3,952,246 3,662,205
-------------- --------------
STOCKHOLDERS' EQUITY (DEFICIT)
Series B Preferred stock, 1,000,000 shares authorized
at par value of $0.001, 38,000 shares issued and
outstanding 38 38
Series C Preferred stock, 25,000,000 shares authorized
at par value of $0.001, 7,921,666 shares issued and
outstanding 7,921 7,921
Common stock, 250,000,000 shares authorized at par
value of $0.001, 13,976,099 and 10,376,099 shares
issued and outstanding, respectively 13,976 10,376
Treasury stock, 35,000 shares (23,522) (23,522)
Additional paid-in capital 15,258,139 15,081,739
Accumulated deficit
(17,659,243) (17,299,290)
-------------- --------------
Total Stockholders' (2,402,691) (2,222,738)
Equity (Deficit)
-------------- --------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) $ 1,549,555 $ 1,439,467
============== ==============
The accompanying notes are an integral part of these financial statements.
3
VALCOM, INC.
Statements of Operations
(unaudited)
For the Three Months Ended For the Six Months Ended
March 31, March 31,
---------------------------- ----------------------------
2008 2007 2008 2007
------------ ------------ ------------ ------------
REVENUES $ 381,321 $ 722,860 $ 648,957 $ 911,505
COST OF GOODS SOLD 1,223 - 1,223 -
------------ ------------ ------------ ------------
GROSS MARGIN 380,098 722,860 647,734 911,505
OPERATING EXPENSES
Advertising and marketing 772 887 1,313 6,739
Depreciation expense 6,335 6,335 12,670 12,670
General and administrative 298,579 1,310,400 963,148 1,798,391
------------ ------------ ------------ ------------
Total Operating Expenses 305,686 1,317,622 977,131 1,817,800
------------ ------------ ------------ ------------
LOSS FROM OPERATIONS 74,412 (594,762) (329,397) (906,295)
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE)
Gain (loss) on sale of equipment - - - -
Interest expense (15,278) (14,548) (30,556) (80,378)
Other income - 225 - 225
------------ ------------ ------------ ------------
TOTAL OTHER INCOME (EXPENSE) (15,278) (14,323) (30,556) (80,153)
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE 59,134 (609,085) (359,953) (986,448)
INCOME TAXES
INCOME TAX EXPENSE - - - -
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ 59,134 $ (609,085)$ (359,953) $ (986,448)
============ ============ ============ ============
BASIC INCOME (LOSS) PER SHARE $ 0.00 $ (0.14)$ (0.03) $ (0.23)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 13,976,099 4,319,417 12,776,099 4,308,781
============ ============ ============ ============
The accompanying notes are a integral part of these financials statements.
4
VALCOM, INC.
Statements of Stockholders' Equity (Deficit)
(unaudited)
Series B Preferred Stock Series C Preferred Stock Common Stock
------------------------ ------------------------ ----------------------
Shares Amount Shares Amount Shares Amount
------ ------ ---------- ------- ---------- -------
Balance, September 30, 2005 38,000 $ 38 9,267,416 $ 9,267 4,265,603 $ 4,266
Common stock issued for
cash - - - - 770,725 771
Common stock issued for
services - - - - 2,561,283 2,561
Common stock issued for
debt - - - - 2,711,200 2,711
Preferred stock conversion - - (1,345,750) (1,346) 67,288 67
Net loss for the year
ended September 30, 2007 - - - - - -
------ ------ ---------- ------- ---------- -------
Balance, September 30, 2007 38,000 38 7,921,666 7,921 10,376,099 10,376
Common stock issued for
services - - - - 3,600,000 3,600
Net loss for the six months
ended March 31, 2008 - - - - - -
------ ------ ---------- ------- ---------- -------
Balance, March 31, 2008 38,000 $ 38 7,921,666 $ 7,921 13,976,099 $13,976
====== ====== ========== ======= ========== =======
The accompanying notes are an integral part of these financial statements.
5
VALCOM, INC.
Statements of Stockholders' Equity (Deficit)
(unaudited)
(Continued)
Total
Additional Stockholders'
Treasury Paid-In Accumulated Equity
Stock Capital Deficit (Deficit)
--------- ------------ ------------- ------------
Balance, September 30, 2005 $ (23,522) $ 14,097,995 $ (15,293,188) $ (1,205,144)
Common stock issued for
cash - 130,715 - 131,486
Common stock issued for
services - 185,447 - 188,008
Common stock issued for
debt - 666,303 - 669,014
Preferred stock conversion - 1,279 - -
Net loss for the year
ended September 30, 2007 - - (2,006,102) (2,006,102)
--------- ------------ ------------- ------------
Balance, September 30, 2007 (23,522) 15,081,739 (17,299,290) (2,222,738)
Common stock issued for
services - 176,400 - 180,000
Net loss for the six months
ended March 31, 2008 - - (359,953) (359,953)
--------- ------------ ------------- ------------
Balance, March 31, 2008 $ (23,522) $ 15,258,139 $ (17,659,243) $ (2,402,691)
========= ============ ============= ============
The accompanying notes are an integral part of these financial statements.
6
VALCOM, INC.
Statements of Cash Flows
(unaudited)
For the Six Months Ended
March 31,
-------------------------
2008 2007
---------- ----------
OPERATING ACTIVITES
Net loss $ (359,953) $ (986,448)
Adjustments to reconcile net loss
to net cash used by operating
activities:
Depreciation expense 12,670 12,670
Common stock issued for services 180,000 69,787
Impairment of asset - -
Changes in operating assets and liabilities
(Increase) decrease in accounts receivable 118,724 (64,354)
(Increase) decrease in prepaid expenses (33,680) 1,258
Increase (decrease) in accrued interest payable 30,556 80,379
Increase (decrease) in accounts payable (73,615) 561,508
Increase (decrease) in deferred income 265,000 -
---------- ----------
Net Cash Used in Operating Activities 139,702 (325,200)
---------- ----------
INVESTING ACTIVITIES
Proceeds from sale of equipment - -
Purchase of property and equipment - -
---------- ----------
Net Cash Used in Investing Activities - -
---------- ----------
FINANCING ACTIVITIES
Proceeds from preferred and common stock - 66,486
Proceeds from note payable 68,100 225,000
Repayment of notes payable - -
---------- ----------
Net Cash Provided by Financing Activities 68,100 291,486
---------- ----------
NET DECREASE IN CASH 207,802 (33,714)
CASH AT BEGINNING OF YEAR 5,926 71,612
---------- ----------
CASH AT END OF YEAR $ 213,728 $ 37,898
========== ==========
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
CASH PAID FOR:
Interest $ - $ -
Income Taxes $ - $ -
NON CASH FINANCING ACTIVITIES:
Common stock issued for debt $ - $ 482,939
The accompanying notes are an integral part of these financial statements.
7
VALCOM, INC.
(A Development Stage Company)
Notes to the Financial Statements
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Company without
audit. In the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to present fairly the financial
position, results of operations and cash flows at March 31, 2008 and for all
periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted. It is suggested
that these condensed financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's September 30,
2007 audited financial statements. The results of operations for the period
ended March 31, 2008 are not necessarily indicative of the operating results
for the full years.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. The Company has had no revenues and has generated losses from
operations.
In order to continue as a going concern and achieve a profitable level of
operations, the Company will need, among other things, additional capital
resources and to develop a consistent source of revenues. Management's plans
include of investing in and developing all types of businesses related to the
entertainment industry.
The ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plan described in the preceding
paragraph and eventually attain profitable operations. The accompanying
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.
NOTE 3 - SIGNIFICANT EVENTS
On December 11, 2006, the Company completed a 1 for 20 reverse split of its
common stock. The reverse stock split is reflected in the financial statements
on a retroactive basis.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our consolidated financial
statements and related notes included elsewhere in this report. References in
this section to "ValCom, Inc.," the "Company," "we," "us," and "our" refer to
ValCom, Inc. and our direct and indirect subsidiaries on a consolidated basis
unless the context indicates otherwise.
This quarterly report contains forward looking statements relating to our
Company's future economic performance, plans and objectives of management for
future operations, projections of revenue mix and other financial items that
are based on the beliefs of, as well as assumptions made by and information
currently known to, our management. The words "expects, intends, believes,
anticipates, may, could, should" and similar expressions and variations thereof
are intended to identify forward-looking statements. The cautionary statements
set forth in this section are intended to emphasize that actual results may
differ materially from those contained in any forward looking statement.
OVERVIEW
The Company is a diversified entertainment company with the following operating
activities:
As of March 31, 2008, ValCom, Inc. operations were comprised of five divisions.
1. Studio Division
2. Rental Division
3. Broadcast Television
4. Film and Television Production
5. Live Theater
1. STUDIO RENTAL
ValCom's revenue is primarily generated through the lease of the sound stages
and production. ValCom's 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 and BET. In January 2008, ValCom opened its Florida office at
2113A Gulf Blvd., Indian Rock Beach, Florida.
2. RENTAL DIVISION
As part of the rental of sound stages and production facilities, Valcom rents
productions equipment including cameras, lighting and grip packages both for
productions using its studio facilities and for location shoots.
3. BROADCAST TELEVISION
Through our joint venture with New Global Communications, Inc., ValCom owns 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.
9
4. FILM AND TELEVISION PRODUCTION
In addition to producing our own television and motion picture programming,
ValCom also owns a small library of television content, which it distributes
through Valencia Entertainment International. It's television series, "A.J.'s
Time Travelers', a 40 episode x one hour episode TV series was licensed to
Porchlight International for world-wide distribution in November 2007.
5. LIVE THEATER
In 2006 ValCom, Inc. launched its Live Theatre Division. The first venture
undertaken was `Headlights and Tailpipes' which opened at the Stardust Hotel
and Casino, Las Vegas in April 2006 and ran until July 2006. The company is did
not produce any further Live Theatre projects in the period to March 2008.
THREE MONTHS ENDED MARCH 31, 2008 VS. MARCH 31, 2007
Revenues for the three months March 31, 2008 decreased by $341,539 or47% from
$722,860 for the three months ended March 31, 2007 to $381,321for the same
period in 2008. The decrease in revenue was principally due to reduced studio
rentals.
Production costs for the three months ended March 31, 2008 increased by
$1,223from $0 for the three months ended March 31, 2007 to $1,223 for the same
period in 2008. The increase in production costs was principally due to
productions completed during 2008. Depreciation and amortization expense for
the three months ended March 31, 2008 was constant at $6,335 compared to
$6,335for the three months ended March 31, 2007.
General and administrative expenses for the three months ended March 31, 2008
decreased by $1,011,821or 77% from $1,310,400 in the three months ended March
31, 2008 to $298,579 for the same period in 2007. The decrease was due
principally to reduced asset impairments in 2008.
Interest expense for the three months ended March 31, 2008 increased by $730 or
5% from $14,548 for the three months ended March 31, 2007 to $15,278for the
same period in 2008.
SIX MONTHS ENDED MARCH 31, 2008 VS. MARCH 31, 2007
Revenues for the six months March 31, 2008 decreased by $262,548 or 29% from
$911,505 for the six months ended March 31, 2007 to $648,957for the same period
in 2008. The decrease in revenue was principally due to reduced studio rentals.
10
Production costs for the six months ended March 31, 2008 increased by $1,223
from $0 for the six months ended March 31, 2007 to $1,223 for the same period
in 2008. The increase in production costs was principally due to productions
completed during 2008.
Depreciation and amortization expense for the six months ended March 31, 2008
was constant at $12,670 compared to $12,670 for the six months ended March 31,
2007.
General and administrative expenses for the six months ended March 31, 2008
decreased by $835,243 or 46% from $1,798,391 for the six months ended March 31,
2007 to $963,148 for the same period in 2008. The decrease was due principally
to reduced asset impairments during 2008.
Interest expense for the six months ended March 31, 2008 decreased by $49,822
or 62 % from $80,378 for the six months ended March 31, 2007 to $30,556 for the
same period in 2008. The decrease was due principally to conversion of debt to
equity.
Due to the factors described above, the Company's net loss decreased by
$626,495 from $986,448 for the six months ended March 31, 2007 to $359,953 for
the same period in 2008.
FUTURE OUTLOOK
During August 2008, the Company emerged from bankruptcy. The Company is seeking
new business opportunities and to reestablish itself in the television and film
production industry.
The WGA Writers Strike had created a major level of uncertainty in film and TV
production sector, especially in the Hollywood area and ValCom decided to close
its facility there and is now planning to concentrate its studio rental
business in Florida following the opening of a new office there and is seeking
new business opportunities in the television and film production industry in
the Florida area.
LIQUIDITY AND CAPITAL RESOURCES
The Company's condensed consolidated financial statements have been prepared,
assuming that the Company will continue as a going concern. The Company has a
net loss of $359,953 and a positive cash flow from operations of $139,702 for
the six months ended March 31, 2008, a working capital deficiency of
$3,652,231and an accumulated deficit of $17,659,243 at March 31, 2008. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern.
11
Cash totaled $213,728 on March 31, 2008 compared to $37,898 as at March 30,
2007. During the six months ended March 31, 2008, net cash used by operating
activities totaled $139,702 compared to net cash used in operating activities
of $325,200 for the comparable six-month period in 2007. A significant portion
of operating activities included payments for interest and production
development costs. Net cash provided by financing activities for the six months
ended March 31, 2008 totaled $68,100 compared to $291,486 for the comparable
six-month period in 2007.
The above cash flow activities yielded a net cash increase of $207,802 during
the six months ended March 31, 2008 compared to a decrease of $33,714 during
the comparable prior year period.
Net working capital (current assets less current liabilities) was a negative
$3,652,231as of March 31, 2008. 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 ("CEO") and Chief Financial
Officer ("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 March 31, 2008. Based upon that evaluation, the Company's
CEO and 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 and CFO, as appropriate, to allow timely decisions regarding
required disclosure.
12
CHANGES IN INTERNAL CONTROLS
Our management, with the participation the Principal Executive Officer and
Principal Accounting Officer, performed an evaluation as to whether any change
in our internal controls over financial reporting occurred during the 2008
Quarter ended March 31, 2008. Based on that evaluation, the Company's Chief
Executive Officer and Chief Financial Officer concluded that no change occurred
in the Company's internal controls over financial reporting during the 2008
Quarter ended March 31, 2008 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
CHAPTER 11 BANKRUPTCY
ValCom filed a voluntary chapter 11 bankruptcy petition on July 14st 2007 and
obtained the status of Debtor in Possession. Valcom had in initiated suit
against Chicago Title and The Laurus Master Fund in October 2005 because it
claimed that Laurus and Chicago Title had retained the $500,000 overage arising
out of the proceeding in 2003/4. Subsequently, the trial court entered summary
judgment in favor of Chicago Title and Laurus. Valcom appealed, contending
that there were triable issues as to whether: (1) Valcom suffered damages; (2)
Chicago Title and Laurus violated Civil Code sections 2924K, 2924d, and 2924h;
and (3) Chicago Title breached its duties as the foreclosure trustee.
Additionally, at the time that the trial court granted Summary Judgment against
Valcom, the trial court awarded costs and attorney fees of $562,127.30, and
Valcom argued in its appeal that Chicago Title was not entitled to attorney
fees, and the attorney fees awarded to Laurus were excessive.
Prior to the filing of the Chapter 11 bankruptcy, Valcom attempted to obtain a
stay against enforcement of the attorney fees and costs judgment awarded to
Chicago Title and Laurus pending appeal. Valcom was unable to prove to the
trial court's satisfaction that the value of Valcom's assets was sufficient to
protect Chicago Title and Laurus' judgment. The Court denied Valcom's attempt
to use its property in lieu of a cash bond, and threatened with enforcement of
the judgment, Valcom had no choice but to file for the protection of the
bankruptcy court.
Valcom, through appeals counsel, filed an appeal, and oral argument on the
appeal occurred December 17, 2007.
13
On February 13, 2008, subsequent to the Debtor's status conference in
bankruptcy court, the Court of Appeals for the Second Appellate District,
Division Two, case number B193714, ruled in favor of Valcom, Inc. and the
judgment of Laurus Master Fund and Chicago Title for $562,127.30 as an
obligation of the Debtor.
During August 2008, the Company emerged from bankruptcy. The Company is seeking
new business opportunities and to reestablish itself in the television and film
production industry
POW! ENTERTAINMENT:
On August 23, 2007 Debtor filed an Adversary action (AD07-01638-ER) against
POW! Entertainment and Stan Lee individually alleging Rescission, Fraud, and
Money Had and Received.
On September 24, 2007 POW! Entertainment and Stan Lee filed a Counter-complaint
(AD07-01638-ER) against Valcom, Inc., Vince Vellardita, and Richard Shintaku
alleging Fraud, Negligent Misrepresentation, Trademark Infringement, Common Law
Trademark Infringement, Violation of Common Law Right to Publicity, Intentional
Interference with Prospective Economic Advantage, Unfair Competition,
Declaratory Relief, Breach of Contract and Restitution.
On or about October 18, 2007, the Status Conference in the Valcom v. POW!
Entertainment et. Al. adversary action came on for hearing. The Court
consolidated the Discovery Cut-off, Pre-Trial, and Trial Dates between the
Complaint and the Counter-complaint and selected April 30, 2008 for Discovery
Cut-Off, Pre-Trial for May 15, 2008 and Trial scheduled for the week of June
23, 2008. The Court also ordered all parties to mediation.
As of May 22, 2008 the parties to the Valcom v. POW! Entertainment et. Al.
litigation have settled their dispute.
VALCOM, INC. V. JEFF KUTASH ET AL.,
Case number BC372527. This matter was stayed by Debtor filing Chapter 11, and
subsequently Defendant Jeff Kutash filed Chapter 7 bankruptcy.
VALCOM, INC. V. TTL PRODUCTIONS, INC., TROY LINGER, CHRIS LENTO DBA BRENTWOOD
MAGAZINE,
Case number SC094099. This matter involves breach of contract and fraud
against the Defendants for $380,000. The matter was stayed by Debtor's filing
of bankruptcy and ValCom is in discussion and expects to settle this matter by
agreement to the company's satisfaction.
LLOYD KURTZ
Pending or Threatened Litigation, Claims and Assessments by the prior
contractor for the renovations, at ValCom Studios in Nevada has been replaced.
Mr. Lloyd Kurtz filed suit on October 25, 2004 against ValCom, Inc., A private
Nevada Corporation which is 80% owned by ValCom, Inc. a Delaware Corporation,
ValCom, Inc. a Delaware Corporation and Vincent Vellardita. The suit alleges a
violation of Securities Act of 1933 and states that Mr. Kurtz purchased 600,000
shares of ValCom - Delaware at $0.25 per share and that the shares were not
registered. He claims he is owed an additional $303,000. Mr. Kurtz has filed a
Mechanic's Lien for $303,000. A motion to dismiss the claim of Mr. Kurtz has
been filed. If the corporation does not prevail on its Motions to Dismiss the
corporation will file its full defense and counterclaims which exceed the
amount claimed by Mr. Kurtz.
BONNIE NELSON
Ms. Bonnie Nelson, a former ValCom employee and Director filed suit against
ValCom, Inc. The suit alleges a breach of oral agreement and employment
contract. ValCom, Inc. terminated Ms. Nelson for cause in breach of her
employment agreement. ValCom has reached agreement with Ms Nelson with regard
to this matter
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ITEM 1A. RISK FACTORS
Not applicable.
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
NONE
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4 - SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
NONE
ITEM 5 - OTHER INFORMATION
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-KSB for the
year ending September 30, 2006.
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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: October 17, 2008
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)
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the issuer and in the capacities and on the
dates indicated.
SIGNATURE TITLE DATE
- -------------------------- ------------------------ ----------------
By: /s/ Vince Vellardita Chief Executive Officer, October 17, 2008
---------------------- Chairman of the Board
Vince Vellardita
By: /s/ Richard Shintaku Director October 17, 2008
--------------------
Richard Shintaku
By: /s/ Frank O Donnell Director October 17, 2008
-------------------
Frank O Donnell
16