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 JUNE 30, 2009
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
------------------------------------ -----------------------
(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 [ ]
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).
[ ] Yes [X] 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 [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
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 [ ]
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 August 15, 2009, the
issuer had 33,864,158 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 June 30, 2009 and the results of their operations and
their cash flows for the nine months ended June 30, 2009. These consolidated
financial statements include the accounts of ValCom, Inc. and its subsidiary
companies (together "the Company"). Results for the nine months ended June 30,
2009, are not necessarily indicative of the operations, which may occur during
the year ending September 30, 2008. Refer to the Company's Annual Report on
Form 10- K for the year ended September 30, 2008 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......8
Item 3. Quantitative and Qualitative Market Risk.......................11
Item 4. Controls and Procedures........................................11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings..............................................12
Item 1A. Risk Factors...................................................12
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds....12
Item 3. Defaults Upon Senior Securities................................13
Item 4. Submission of Matters to a Vote of Security Holders............13
Item 5. Other Information..............................................13
Item 6. Exhibits.......................................................13
SIGNATURES..............................................................14
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VALCOM, INC.
Condensed Consolidated Balance Sheets
ASSETS
June 30, September 30,
2009 2008
(unaudited)
-------------- --------------
CURRENT ASSETS
Cash $ 91,092 $ 86,416
Accounts receivable, net 229,873 -
Prepaid expense 126,934 24,434
-------------- --------------
Total Current Assets 447,899 110,850
-------------- --------------
PROPERTY and EQUIPMENT, net 252,407 76,020
-------------- --------------
OTHER ASSETS
Deposits - -
Goodwill 366,278 -
Other assets 1,250,000 1,000,000
-------------- --------------
Total Other Assets 1,616,278 1,000,000
-------------- --------------
TOTAL ASSETS $ 2,316,584 $ 1,186,870
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 581,165 $ 468,364
Accrued interest payable 227,150 166,061
Deferred income - -
Due to related parties 376,775 86,181
Notes payable 690,000 412,173
-------------- --------------
Total Current Liabilities 1,875,090 1,132,779
-------------- --------------
LONG-TERM
LIABILITIES
Notes payable - -
Total Long-Term Liabilities - -
TOTAL LIABILITIES 1,875,090 1,132,779
-------------- --------------
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, 14,691,395 shares issued and outstanding 14,691 9,591
Common stock, 250,000,000 shares authorized at par value
of $0.001, 33,864,158 and 22,776,099 shares
issued and outstanding, respectively 33,864 22,776
Treasury stock, 35,000 shares (23,522) (23,522)
Additional paid-in capital 18,734,312 17,778,314
Accumulated deficit (18,317,889) (17,733,106)
-------------- --------------
Total Stockholders' Equity (Deficit) 441,494 54,091
-------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY (DEFICIT) $ 2,316,584 $ 1,186,870
============== ==============
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
VALCOM, INC.
Condensed Consolidated Statements of Operations
(unaudited)
For the Three Months Ended For the Nine Months Ended
June 30, June 30,
2009 2008 2009 2008
------------ ------------ ------------- ------------
REVENUES $ 262,692 $ 190,961 $ 647,896 $ 839,918
COST OF GOODS SOLD - 230 107 1,453
------------ ------------ ------------- ------------
GROSS MARGIN 262,692 190,731 647,789 838,465
OPERATING EXPENSES
Advertising and marketing 53,141 906 27,036 2,219
Depreciation expense 32,588 6,335 87,965 19,005
General and administrative 500,846 309,420 1,596,216 1,272,568
------------ ------------ ------------- ------------
Total Operating Expenses 586,575 316,661 1,711,217 1,293,792
------------ ------------ ------------- ------------
LOSS FROM OPERATIONS (323,883) (125,930) (1,063,428) (455,327)
------------ ------------ ------------- ------------
OTHER INCOME (EXPENSE)
Gain (loss) on sale of equipment - - - -
Interest expense (22,793) (15,278) (74,190) (45,834)
Other income 200 - 552,835 -
------------ ------------ ------------- ------------
TOTAL OTHER INCOME (EXPENSE) (22,593) (15,278) 478,645 (45,834)
------------ ------------ ------------- ------------
INCOME (LOSS) BEFORE (346,476) (141,208) (584,783) (501,161)
INCOME TAXES
INCOME TAX EXPENSE - - - -
------------ ------------ ------------- ------------
NET INCOME (LOSS) $ (346,476) $ (141,208) $ (584,783) $ (501,161)
============ ============ ============= ============
BASIC INCOME (LOSS) PER SHARE $ (0.01) $ (0.01) $ (0.02) $ (0.04)
============ ============ ============= ============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 29,443,658 15,078,599 28,320,129 13,627,349
============ ============ ============= ============
The accompanying notes are a integral part of these condensed consolidated financials statements.
5
VALCOM, INC.
Condensed Consolidated Statements of Stockholders' Equity (Deficit)
(unaudited)
Total
Series B Series C Additional Stockholders'
Preferred Stock Preferred Stock Common Stock Treasury Paid-In Accumulated Equity
Shares Amount Shares Amount Shares Amount Stock Capital Deficit (Deficit)
------ ------ ---------- ------ ---------- ------- -------- ----------- ------------ ----------
Balance,
September 30,
2008 38,000 38 9,861,666 9,591 22,776,099 22,776 (23,522) 17,778,314 (17,733,106) 54,091
Preferred stock
issued for
purchase of
Faith TV - - 100,000 100 - - - 8,900 - 9,000
Preferred stock
issued for cash - - 5,000,000 350 - - - 249,750 - 250,100
Common stock
issued for
services - - - - 2,313,059 2,313 - 188,436 - 190,749
Common stock
issued for cash - - - - 5,000,000 5,000 - 95,000 - 100,000
Common stock
issued for
debt - - - - 3,775,000 3,775 - 418,662 - 422,437
Net (Loss)
for the nine
months ended
June 30, 2009 - - - - - - - - (584,783) (584,783)
------ ------ ---------- ------ ---------- ------- -------- ----------- ------------ ----------
Balance,
June 30,
2009 38,000 $ 38 14,961,666 $14,691 33,864,158 $33,864 $(23,522) $18,734,312 $(18,317,889) $ 441,494
====== ====== ========== ====== ========== ======= ======== =========== ============ ==========
The accompanying notes are an integral part of these condensed consolidaetd financial statements.
6
VALCOM, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited)
For the Nine Months Ended
June 30,
2009 2008
--------- -----------
OPERATING ACTIVITIES
Net loss (584,783) $ (501,161)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation expense 87,965 19,005
Common stock issued for services 190,749 312,300
Impairment of asset - -
Changes in operating assets and liabilities
(Increase) decrease in accounts receivable (229,873) 100,473
(Increase) decrease in prepaid expenses (102,500) (57,159)
(Increase) decrease in other assets (57,829)
Increase (decrease) in accrued interest payable 61,089 45,834
Increase (decrease) in accounts payable 114,086 (77,716)
Increase (decrease) in deferred income - 265,000
--------- -----------
Net Cash Used in Operating Activities (463,267) 48,747
INVESTING ACTIVITIES
Purchase of Other Assets 616,278 -
Purchase of property and equipment 264,352 -
--------- -----------
Net Cash Used in Investing Activities 880,630 -
--------- -----------
FINANCING ACTIVITIES
Proceeds from preferred and common stock 584,212 -
Proceeds from note payable 140,000 68,100
Increase/Decrease in Related Parties Payables 213,094 -
Repayment of notes payable 411,267 -
--------- -----------
Net Cash Provided by Financing Activities 1,348,573 68,100
--------- -----------
NET INCREASE IN CASH 4,676 116,847
CASH AT BEGINNING OF YEAR 86,416 5,926
--------- -----------
CASH AT END OF YEAR 91,092 $ 122,773
======= ===========
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
CASH PAID FOR:
Interest - $ -
Income Taxes - $ -
NON CASH FINANCING ACTIVITIES:
Common stock issued for debt - $ -
The accompanying notes are an integral part of these condensed consoldiated financial statements.
7
VALCOM, INC.
Notes to the Condensed Consolidated 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 June 30, 2009
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, 2008 audited financial statements. The
results of operations for the period ended June 30, 2009 are not
necessarily indicative of the operating results for the full years.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amount of revenues and expenses
during the reported period. Actual results could differ from those
estimates.
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.
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 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 15, 2008, the Company purchased all shares of FaithTV, LLC
making it a wholly owned subsidiary of the Company. The purchase is
reflected in the financial statements along with the operating results of
FaithTV, LLC from December 16, 2008 through December 31, 2008. The
purchase price was 100,000 shares of the Company's preferred stock valued
at $0.09 per share. The Company also paid cash of $150,000 and issued a
note payable for $750,000 for a total purchase price of $909,000. The
NOTE 3 - SIGNIFICANT EVENTS (Continued)
preferred stock is convertible to shares of the Company's common stock on
a one share for one share basis. The purchase price was allocated based
upon the fair value of the assets purchased as follows:
Equipment $ 250,000
Film Library 250,000
Goodwill 281,732
Net Operating Assets of Faith TV 127,268
---------
Total $ 909,000
=========
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 agrees to pay the Company
five hundred and fifty thousand dollars ($550,000) which was received by
the Company's attorney on March 30th. 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' with full accrual made for legal costs relating to the settlement.
During the second quarter Valcom tested the concept of using television
promotions and the auction format, both live-television and on-line, to
promote the sale of real estate properties. The company's primary focus
has been on REO properties utilizing its production and media promotion
capabilities. On June 19, 2009, Valcom entered into an agreement with
Florida Opportunities, Inc. ("FOI"), an investor in real estate
properties, to sell REO properties in an on-line auction format promoted
by television advertising. The company has an agreement with FOI to share
in the profits of the sale of properties on a 50:50 basis after expenses
are deducted through a joint venture, Sun Investment Services, LLC
("Sun"). Sun is jointly owned (50:50) by Valcom and FOI. The Parties are
currently negotiating an operating agreement for Sun with FOI for future
auctions. Valcom is also in active discussion with other entities to
market and promote properties utilizing its real estate promotion and
auction format.
During the nine months ended June 30, 2009, the Company issued 11,088,059
shares of its common stock and 5,100,000 shares of its Preferred Stock.
NOTE 4 - NEW ACCOUNTING PRINCIPLES
In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 163, "Accounting for Financial Guarantee Insurance Contracts-and
interpretation of FASB Statement No. 60". SFAS No. 163 clarifies how
Statement 60 applies to financial guarantee insurance contracts, including
the recognition and measurement of premium revenue and claims liabilities.
This statement also requires expanded disclosures about financial
guarantee insurance contracts. SFAS No. 163 is effective for fiscal years
beginning on or after December 15, 2008, and interim periods within those
years. SFAS No. 163 has no effect on the Company's financial position,
statements of operations, or cash flows at this time.
In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 162, "The Hierarchy of Generally Accepted Accounting Principles".
SFAS No. 162 sets forth the level of authority to a given accounting
pronouncement or document by category. Where there might be conflicting
guidance between two categories, the more authoritative category will
prevail. SFAS No. 162 will become effective 60 days after the SEC approves
the PCAOB's amendments to AU Section 411 of the AICPA Professional
Standards. SFAS No. 162 has no effect on the Company's financial position,
statements of operations, or cash flows at this time.
NOTE 5 - SUBSEQUENT EVENTS
Valcom entered into a Letter of Intent with ABEX Capital Inc. on July 25,
2009 to invest $2,000,000 into the Company. The agreement is subject to
ABEX satisfactory due diligence and a final agreement with the initial
investment into the Company no later than September 15, 2009. ABEX will
acquire 51% of the fully diluted share-capital of Valcom and receive 2
board seats.
6
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
PLAN OF OPERATION
As of June 30, 2009, ValCom, Inc. ("Valcom" or the "Company") operations were
comprised of the following divisions:
1. Studio Rental Division
2. TV Stations and Broadcast Division
3. Film and Television Production
4. Distribution
5. Real Estate Promotion and Auctions
Corporate offices are located at 2113A Indian Rocks Beach, Florida.
1. STUDIO DIVISION
ValCom's business includes 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.
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, BET Home Shopping Network and Sullivan Studios. ValCom's Studio
Division is composed of its studio at 14375 Myerlake Circle, Clearwater,
Florida which houses a state-of- the art production studio, broadcast
facilities, recording studios, production design construction, animation and
post-production.
ValCom, Inc. manages and operates the Tele-Production Center in Clearwater,
Florida. This multi-million dollar state of the art facility in Clearwater,
Florida, is a 33,000 square foot facility that sits on 5 1/2 acres and is a
favorite of all major film studios and television networks. It houses two sound
stages and a Broadcast Center. ValCom offers several flexible studio
configuration options. It offers digital control rooms and studios that are
perfectly suited for music video productions, commercials, television programs,
industrial and training productions, direct response, media and satellite
tours, web casting events and videoconferencing.
2. TV STATIONS AND BROADCAST DIVISION
On December 15, 2008, Valcom acquired a 100% interest in Faith TV LLC, now re-
branded and launched as "MyFamily TV", a new family focused TV network
broadcasting through 75 affiliate TV stations , with plans to add significantly
more to this. The re-branding has continued with a new range of programming
begun in June 2009. The first such new programming MyFamily TV has secured is
the joint venture with Porchlight Entertainment, one of the world's leading
independent suppliers of high quality entertainment, and will see the launch of
a new children's programming block called KidMango. This will feature major
kids titles such as Jay Jay the Jet Plane, Four Eyes and My Goldfish is Evil.
Valcom has grown MyFamily TV carriage from 12 million households to 57 million
households in six months and is continuing to look for opportunities to expand.
In addition Valcom has a joint venture with New Global Communications, Inc. and
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.
3. FILM PRODUCTION DIVISION
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 A.J.'s Time Travelers. 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.
In the quarter to March 09, Valcom provided production support for the 51st
Annual Grammy Awards Live Charity Auction and is scheduled to provide the
production support and live web-cast production for the NBC Universal Propworks
`Battlestar Galactica', both events handled by Valcom under its agreement with
the Auction Network.
4. DISTRIBUTION
ValCom also owns a small library of television content, which it distributes
through Valencia Entertainment International. On November 6, 2007, Valencia
Entertainment signed an agreement with Porchlight Distribution Inc. from Santa
Monica Blvd., Los Angeles, for the worldwide distribution of all 40 episodes of
A.J.'s Time Travelers. In December 2008, Valencia signed an agreement with
Xtreme Fighting Championships (XFC) to produce and distribute 13 episodes of
XFC's mixed martial arts fighting championships worldwide and also to
distribute future XFC promoted events for TV broadcast and home entertainment.
In January 2009, XFC also contracted with HD Net to promote and broadcast new
events during 2009 which Valencia will distribute worldwide outside of the HD
Net broadcast.
5. REAL ESTATE PROMOTION AND AUCTIONS
Valcom has tested the concept of using television promotions and the auction
format, both live-television and on-line, to promote the sale of real estate
properties. The company's primary focus has been on REO properties utilizing
its production and media promotion capabilities. Valcom entered into an
agreement dated June 19, 2009 with Florida Opportunities, Inc. ("FOI"), an
investor in real estate properties, to sell REO properties in an on-line
auction format promoted by television advertising. The company has an
agreement with FOI to share in the profits of the sale of properties on a 50:50
basis after expenses are deducted through a joint venture. The company intends
to expend its capabilities in real estate promotions and auctions.
RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 2009 VS. JUNE 30, 2008
Revenues for the three months June 30, 2009 increased by $71,731 or 38% from
$190,961 for the three months ended June 30, 2008 to $262,692 for the same
period in 2009. The increase in revenue was principally due to revenues
generated by MyFamilyTV.
Depreciation and amortization expense for the three months ended June 30, 2009
increased to $32,588for the three months ended June 30, 2009 compared to
6,335for the same period in 2008 due to the increased asset base purchased
from FaithTV.
General and administrative expenses for the three months ended June 30, 2009
increased by $191,426 or 62% from $309,420 for the three months ended June 30,
2008 to $500,846 for the same period in 2009. The increase was due principally
to higher operating costs in preparation for the Company's entry into real
estate promotion and auctions.
Interest expense for the three months ended June 30, 2009 increased by $7,515
or 49% from $15,278 for the three months ended June 30, 2008 to $22,793for the
same period in 2009. The increase was due principally to the note for the
purchase of FaithTV.
RESULTS OF OPERATIONS - NINE MONTHS ENDED JUNE 30, 2009 VS. JUNE 30, 2008
Revenues for the nine months June 30, 2009 decreased by $192,022 or 23% from
$839,918 for the nine months ended June 30, 2008 to $647,896 for the same
period in 2009. The decrease in revenue was principally due to the drop in
television production and advertising revenues related to the general economic
slowdown.
Depreciation and amortization expense for the nine months ended June 30, 2009
increased to $87,965 for the nine months ended June 30, 2009 compared to
$19,005 for the same period in 2009 due to the increased asset base purchased
from FaithTV.
General and administrative expenses for the nine months ended June 30, 2009
increased by $323,648 or 25% from $1,272,568 for the nine months ended June 30,
2008 to $1,596,216for the same period in 2009. The increase was due principally
to.
Interest expense for the nine months ended June 30, 2009 increased by $28,356
or 62% from $45,834 for the nine months ended June 30, 2008 to $74,190 for the
same period in 2009. The increase was due principally to the note for the
purchase of FaithTV.
Due to the factors described above, the Company's net loss increased by $83,622
from $501,161 for the nine months ended June 30, 2008 to $584,783for the same
period in 2009.
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. On December 15, 2008, Valcom acquired 100% interest in
Faith TV LLC, now re-branded and launched as "My Family TV," a new family
focused TV network broadcasting through 75 affiliate TV stations as of August
2009 and with plans to add significantly more affiliates. Currently
broadcasting to over 57 million households, MyFamily TV has also secured
significant program blocks such as the joint venture with Porchlight
Entertainment, one of the world's leading independent suppliers of high quality
entertainment, to launch a new children's programming block called KidMango,
which has been well received.
During the second quarter Valcom tested the concept of using television
promotions and the auction format, both live-television and on-line, to promote
the sale of real estate properties. The company's primary focus has been on
REO properties utilizing its production and media promotion capabilities.
Valcom entered into an agreement dated June 19, 2009 with Florida
Opportunities, Inc. ("FOI"), an investor in real estate properties, to sell REO
properties in an on-line auction format promoted by television advertising.
The company has an agreement with FOI to share in the profits of the sale of
properties on a 50:50 basis after expenses are deducted through a joint
venture, Sun Investment Services, LLC ("Sun"). Sun is jointly owned (50:50) by
Valcom and FOI and the Parties are currently negotiating an operating
agreement for future auctions. Valcom is also in active discussion with other
entities to market and promote properties utilizing its auction promotion
format.
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 $584,783and a negative cash flow from operations of $463,267for the
nine months ended June 30, 2009, a working capital deficiency of $1,427,191and
an accumulated deficit of $18,317,889 at June 30, 2009. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
Cash totaled $91,092 on June 30, 2009 compared to $ 122,773 as at June 30,
2008. During the nine months ended June 30, 2009, net cash used by operating
activities totaled $(463,267) compared to net cash used in operating activities
of $48,747 for the comparable nine-month period in 2008. A significant portion
of operating activities included payments for interest and production
development costs. Net cash provided by financing activities for the nine
months ended June 30, 2009 totaled $1,348,573compared to $68,100for the
comparable nine-month period in 2008.
The above cash flow activities yielded a net cash increase of $4,676 during the
nine months ended June 30, 2009 compared to an increase of $116,847 during the
comparable prior period in 2008.
Net working capital (current assets less current liabilities) was a deficit of
$1,427,191 as of June 30, 2009. The Company will need to raise funds through
various financings or find a suitable merger partner 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.
SUBSEQUENT EVENTS
Valcom entered into a Letter of Intent with ABEX Capital Inc. on July 25, 2009
to invest $2,000,000 into the Company. The agreement is subject to ABEX
satisfactory due diligence and a final agreement with the initial investment
into the Company no later than September 15, 2009. ABEX will acquire 51% of
the full diluted share-capital of Valcom and receive 2 board seats.
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 June 30, 2009. 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
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 2009
Quarter ended June 30, 2009. Based on that evaluation, the Company's CEO/CFO
concluded that no change occurred in the Company's internal controls over
financial reporting during the 2009 Quarter ended June 30, 2009 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
None
ITEM 1A. RISK FACTORS
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, 2008.
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On April 28, 2009 Valcom issued 1,000,000 shares of its Common Stock at $0.10
per share in lieu of payment of $100,000 toward the note for the acquisition of
FaithTV.
On May 4, 2009 Valcom issued 1,428,571 shares of its Common Stock at $0.07 per
share for cash from Asia Pacific Holdings LTD.
On May 14, 2009 Valcom issued 1,191,000 shares of its Common Stock at $0.05 per
share in a negotiated settlement of $59,550 shared equally between Venturetek
and Krovim related to a violation of their registration rights agreement.
On May 14, 2009 Valcom issued 1,500,000 shares of its Common Stock at $0.05 per
share in lieu of payment of $75,000 toward the note for the acquisition of
FaithTV.
On June 5, 2009 Valcom entered a Participation Agreement with Bay-Gulf
Partners, LLC for a Convertible Note for $100,000. The note is convertible
into Valcom Common Stock at a conversion rate of $0.10 per share or 1,000,000
shares if converted in total. The note has a one-year term and a 10% interest
rate and may be repaid or converted at the option of Bay-Gulf Partners, LLC.
On June 9, 2009 Valcom entered a Participation Agreement with Bay-Gulf Homes,
LLC for a Convertible Note for $40,000. The note is convertible into Valcom
Common Stock at a conversion rate of $0.10 per share or 40,000 shares if
converted in total. The note has a one-year term and a 10% interest rate and
may be repaid or converted at the option of Bay-Gulf Homes, LLC.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4 - SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
NONE
ITEM 5 - OTHER INFORMATION
NONE.
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 20, 2009
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)