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, 2010

Commission file Number 0-28416

or

oTransition 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 xNO 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).

oYesoNo.

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
| |                            |  

---



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 August 18, 2010, the issuer had 50,138,158 shares of
its $0.001 par value common stock outstanding.

VALCOM, INC. 
FORM 10-Q

Page

|                               
|-------------------------------
|PART I - FINANCIAL
 INFORMATION
|Item 1.                        
|Item 2.                        
|Item 3.                        
|Item 4.                        
|                               
|PART II - OTHER
 INFORMATION   
|Item 1.                        
|Item 1A.                       
|Item 2.                        
|Item 3.                        
|Item 4.                        
|Item 5.                        
|Item 6.                        
|SIGNATURES                     

---



PART I 
FINANCIAL INFORMATION 
ITEM 1. FINANCIAL STATEMENTS

These financial statements have not been reviewed by an independent accountant.

VALCOM, INC. 
CONSOLIDATED BALANCE SHEETS 
(UNAUDITED)

|                                                                                                                                       |  |                |             |                     |            |             |  
|-------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ----------- | ------------------- | ---------- | ----------- | -
|                                                                                                                                       |  | June 30,
 2010 |             | September 30,
 2009 |           
|                                                                                                                                       |  |                |             |                     |            |            
|                                                                                                                                       |  |                |             |                     | (Restated) |            
|ASSETS                                                                                                                                 |  |                |             |                     |            |             |  
|CURRENT
 ASSETS                                                                                                                        |  |                |             |                     |            |             |  
|Cash                                                                                                                                   |  | $              | 12,598      |                     | $          | 81,410      |  
|Restricted cash                                                                                                                        |  |                |            |                     |            | 60,230      |  
|Accounts receivable, net                                                                                                               |  |                | 30,862      |                     |            | 33,553      |  
|Deferred costs                                                                                                                         |  |                | 275,000     |                     |            |            |  
|Inventory                                                                                                                              |  |                | 73,484      |                     |            | 73,784      |  
|Current assets from discontinued operations                                                                                            |  |                |            |                     |            | 453,726     |  
|                                                                                                                                       |  |                |             |                     |            |             |  
|Total Current Assets                                                                                                                   |  |                | 391,944     |                     |            | 702,703     |  
|                                                                                                                                       |  |                |             |                     |            |             |  
|Property, equipment and film library, net
 of accumulated depreciation depreciation of $97,843 and $50,690, respectively               |  |                | 192,601     |                     |            | 238,664     |  
|Intangible assets, net of accumulated
 amortization of $202,938 and $104,211, respectively                                             |  |                | 191,968     |                     |            | 290,695     |  
|                                                                                                                                       |  |                |             |                     |            |             |  
|                                                                                                                                       |  |                |             |                     |            |             |  
|TOTAL ASSETS                                                                                                                           |  | $              | 776,513     |                     | $          | 1,232,062   |  
|                                                                                                                                       |  |                |             |                     |            |             |  
|                                                                                                                                       |  |                |             |                     |            |             |  
|LIABILITIES AND STOCKHOLDERS DEFICIT                                                                                                  |  |                |             |                     |            |             |  
|CURRENT
 LIABILITIES                                                                                                                   |  |                |             |                     |            |             |  
|Accounts payable and accrued expenses                                                                                                  |  | $              | 764,243     |                     | $          | 633,605     |  
|Due to related parties                                                                                                                 |  |                | 176,334     |                     |            | 161,334     |  
|Derivative liabilities                                                                                                                 |  |                | 206,454     |                     |            |            |  
|Notes payable, net of unamortized discounts
 of $525,556 and $82,411, respectively                                                     |  |                | 892,684     |                     |            | 378,839     |  
|Related party debt, net of unamortized
 discounts of $15,000 and $0, respectively                                                      |  |                | 10,000      |                     |            |            |  
|Deferred revenue                                                                                                                       |  |                | 250,000     |                     |            |            |  
|Current liabilities from discontinued
 operations                                                                                      |  |                |            |                     |            | 738,714     |  
|                                                                                                                                       |  |                |             |                     |            |             |  
|Total Current Liabilities                                                                                                              |  |                | 2,299,715   |                     |            | 1,912,492   |  
|                                                                                                                                       |  |                |             |                     |            |             |  
|Derivative liabilities                                                                                                                 |  |                | 228,136     |                     |            |            |  
|                                                                                                                                       |  |                |             |                     |            |             |  
|Total Liabilities                                                                                                                      |  |                | 2,527,851   |                     |            | 1,912,492   |  
|                                                                                                                                       |  |                |             |                     |            |             |  
|STOCKHOLDERS
 DEFICIT                                                                                                                 |  |                |             |                     |            |             |  
|                                                                                                                                       |  |                |             |                     |            |             |  
|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 and 39,064,158 shares issued and
 outstanding, respectively |  |                | 50,138      |                     |            | 39,064      |  
|Treasury
 stock, 35,000 shares                                                                                                         |  |                | (23,522     | )                   |            | (23,522     | )
|Additional
 paid-in capital                                                                                                            |  |                | 21,216,441  |                     |            | 20,010,218  |  
|Accumulated
 deficit                                                                                                                   |  |                | (23,013,124 | )                   |            | (20,724,919 | )
|                                                                                                                                       |  |                |             |                     |            |             |  
|Total Stockholders Deficit                                                                                                            |  |                | (1,751,338  | )                   |            | (680,430    | )
|                                                                                                                                       |  |                |             |                     |            |             |  
|                                                                                                                                       |  |                |             |                     |            |             |  
|TOTAL
 LIABILITIES AND STOCKHOLDERS DEFICIT                                                                                           |  | $              | 776,513     |                     | $          | 1,232,062   |  
|                                                                                                                                       |  |                |             |                     |            |             |  

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

---



These financial statements have not been reviewed by an independent accountant.

VALCOM, INC. 
CONSOLIDATED STATEMENTS OF OPERATIONS 
(UNAUDITED)

|                                               |  |                              |            |                             |   |            |   |      |            |   |   |            |  
|---------------------------------------------- |  | ---------------------------- | ---------- | --------------------------- | - | ---------- | - | ---- | ---------- | - | - | ---------- | -
|                                               |  | Three Months Ended
 June 30, |            | Nine Months Ended
 June 30, |  
|                                               |  | 2010                         |            | 2009                        |   | 2010       |   | 2009 |           
|REVENUES                                       |  | $                            | 112,492    |                             | $ | 262,692    |   | $    | 397,927    |   | $ | 647,896    |  
|COST OF GOODS SOLD                             |  |                              | 14,138     |                             |   |           |   |      | 418,172    |   |   | 107        |  
|                                               |  |                              |            |                             |   |            |   |      |            |   |   |            |  
|GROSS PROFIT (LOSS)                            |  |                              | 98,354     |                             |   | 262,692    |   |      | (20,245    | ) |   | 647,789    |  
|                                               |  |                              |            |                             |   |            |   |      |            |   |   |            |  
|OPERATING EXPENSES                             |  |                              |            |                             |   |            |   |      |            |   |   |            |  
|Depreciation and amortization                  |  |                              | 48,604     |                             |   | 32,588     |   |      | 145,880    |   |   | 87,965     |  
|General and administrative                     |  |                              | 629,970    |                             |   | 553,987    |   |      | 1,723,046  |   |   | 1,623,252  |  
|                                               |  |                              |            |                             |   |            |   |      |            |   |   |            |  
|Total Operating Expenses                       |  |                              | 678,574    |                             |   | 586,575    |   |      | 1,868,926  |   |   | 1,711,217  |  
|                                               |  |                              |            |                             |   |            |   |      |            |   |   |            |  
|                                               |  |                              |            |                             |   |            |   |      |            |   |   |            |  
|LOSS FROM OPERATIONS                           |  |                              | (580,220   | )                           |   | (323,883   | ) |      | (1,889,171 | ) |   | (1,063,428 | )
|                                               |  |                              |            |                             |   |            |   |      |            |   |   |            |  
|OTHER INCOME (EXPENSES)                        |  |                              |            |                             |   |            |   |      |            |   |   |            |  
|Interest expense                               |  |                              | (282,882   | )                           |   | (22,793    | ) |      | (512,649   | ) |   | (74,190    | )
|Gain (loss) on derivative liabilities          |  |                              | (118,980   | )                           |   |           |   |      | 78,076     |   |   |           |  
|Gain on extinguishment of liabilities          |  |                              | 2,200      |                             |   |           |   |      | 2,200      |   |   |           |  
|Interest income and other                      |  |                              | 15,413     |                             |   | 200        |   |      | 16,634     |   |   | 552,835    |  
|                                               |  |                              |            |                             |   |            |   |      |            |   |   |            |  
|TOTAL OTHER INCOME (EXPENSES)                  |  |                              | (384,249   | )                           |   | (22,593    | ) |      | (415,739   | ) |   | 478,645    |  
|                                               |  |                              |            |                             |   |            |   |      |            |   |   |            |  
|                                               |  |                              |            |                             |   |            |   |      |            |   |   |            |  
|LOSS FROM CONTINUING OPERATIONS                |  |                              | (964,469   | )                           |   | (346,476   | ) |      | (2,304,910 | ) |   | (584,783   | )
|                                               |  |                              |            |                             |   |            |   |      |            |   |   |            |  
|DISCONTINUED OPERATIONS:                       |  |                              |            |                             |   |            |   |      |            |   |   |            |  
|Loss from discontinued operations              |  |                              |           |                             |   |           |   |      | (19,174    | ) |   |           |  
|                                               |  |                              |            |                             |   |            |   |      |            |   |   |            |  
|NET LOSS                                       |  | $                            | (964,469   | )                           | $ | (346,476   | ) | $    | (2,324,084 | ) | $ | (584,783   | )
|                                               |  |                              |            |                             |   |            |   |      |            |   |   |            |  
|                                               |  |                              |            |                             |   |            |   |      |            |   |   |            |  
|BASIC AND DILUTED LOSS PER SHARE               |  |                              |            |                             |   |            |   |      |            |   |   |            |  
|Loss from continuing operations                |  | $                            | (0.02      | )                           | $ | (0.01      | ) | $    | (0.06      | ) | $ | (0.02      | )
|Loss from discontinued operations              |  |                              |           |                             |   |           |   |      | (0.00      | ) |   |           |  
|                                               |  |                              |            |                             |   |            |   |      |            |   |   |            |  
|NET LOSS PER SHARE - basic and diluted         |  | $                            | (0.02      | )                           | $ | (0.01      | ) | $    | (0.06      | ) | $ | (0.02      | )
|                                               |  |                              |            |                             |   |            |   |      |            |   |   |            |  
|                                               |  |                              |            |                             |   |            |   |      |            |   |   |            |  
|WEIGHTED AVERAGE NUMBER OF SHARES
 OUTSTANDING |  |                              |            |                             |   |            |   |      |            |   |   |            |  
|Basic and diluted                              |  |                              | 44,450,288 |                             |   | 29,443,658 |   |      | 41,612,121 |   |   | 28,320,129 |  
|                                               |  |                              |            |                             |   |            |   |      |            |   |   |            |  

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

---



These financial statements have not been reviewed by an independent accountant.

VALCOM, INC. 
CONSOLIDATED STATEMENT OF STOCKHOLDERS DEFICIT 
(UNAUDITED) 
For the Nine Months Ended June 30, 2010

|                                                                                                                                                                              |  |                           |        |                           |   |              |  |          |            |                     |   |             |  |                      |            |         |   |         |  |           |         |   |   |            |   |   |             |   |   |            |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- | ------ | ------------------------- | - | ------------ |  | -------- | ---------- | ------------------- | - | ----------- |  | -------------------- | ---------- | ------- | - | ------- |  | --------- | ------- | - | - | ---------- | - | - | ----------- | - | - | ---------- | -
|                                                                                                                                                                              |  | Series B
 Preferred Stock |        | Series C
 Preferred Stock |   | Common Stock |  | Treasury |            | Additional
 Paid-In |   | Accumulated |  | Total
 Stockholders |           
|                                                                                                                                                                              |  |                           |        |                           |   |              |  |          |            |                     |   |             |  |                      |           
|                                                                                                                                                                              |  | Shares                    |        | Amount                    |   | Shares       |  | Amount   |            | Shares              |   | Amount      |  | Stock                |            | Capital |   | Deficit |  | (Deficit) |        
|                                                                                                                                                                              |  |                           |        |                           |   |              |  |          |            |                     |   |             |  |                      |            |         |   |         |  |           |        
|                                                                                                                                                                              |  |                           |        |                           |   |              |  |          |            |                     |   |             |  |                      |            |         |   |         |  |           |         |   |   |            |   |   |             |   |   |            |  
|Balances, September 30, 2009                                                                                                                                                  |  |                           | 38,000 |                           | $ | 38           |  |          | 18,691,395 |                     | $ | 18,691      |  |                      | 39,064,158 |         | $ | 39,064  |  | $         | (23,522 | ) | $ | 20,010,218 |   | $ | (20,724,919 | ) | $ | (680,430   | )
|                                                                                                                                                                              |  |                           |        |                           |   |              |  |          |            |                     |   |             |  |                      |            |         |   |         |  |           |         |   |   |            |   |   |             |   |   |            |  
|Cumulative effect of change in accounting principle - October 1, 2009
 reclassification of embedded feature of equity-linked financial instruments
 to derivative liabilities |  |                           |       |                           |   |             |  |          |           |                     |   |            |  |                      |           |         |   |        |  |           |        |   |   | (475,533   | ) |   | 35,879      |   |   | (439,654   | )
|                                                                                                                                                                              |  |                           |        |                           |   |              |  |          |            |                     |   |             |  |                      |            |         |   |         |  |           |         |   |   |            |   |   |             |   |   |            |  
|Stock-based compensation                                                                                                                                                      |  |                           |       |                           |   |             |  |          |           |                     |   |            |  |                      | 9,454,000  |         |   | 9,454   |  |           |        |   |   | 449,892    |   |   |            |   |   | 459,346    |  
|                                                                                                                                                                              |  |                           |        |                           |   |              |  |          |            |                     |   |             |  |                      |            |         |   |         |  |           |         |   |   |            |   |   |             |   |   |            |  
|Sale of common stock                                                                                                                                                          |  |                           |       |                           |   |             |  |          |           |                     |   |            |  |                      | 1,520,000  |         |   | 1,520   |  |           |        |   |   | 99,430     |   |   |            |   |   | 100,950    |  
|                                                                                                                                                                              |  |                           |        |                           |   |              |  |          |            |                     |   |             |  |                      |            |         |   |         |  |           |         |   |   |            |   |   |             |   |   |            |  
|Debt discount due to profit interest given with debt                                                                                                                          |  |                           |       |                           |   |             |  |          |           |                     |   |            |  |                      |           |         |   |        |  |           |        |   |   | 825,000    |   |   |            |   |   | 825,000    |  
|                                                                                                                                                                              |  |                           |        |                           |   |              |  |          |            |                     |   |             |  |                      |            |         |   |         |  |           |         |   |   |            |   |   |             |   |   |            |  
|Stock issued for accounts payable                                                                                                                                             |  |                           |       |                           |   |             |  |          |           |                     |   |            |  |                      | 100,000    |         |   | 100     |  |           |        |   |   | 3,700      |   |   |            |   |   | 3,800      |  
|                                                                                                                                                                              |  |                           |        |                           |   |              |  |          |            |                     |   |             |  |                      |            |         |   |         |  |           |         |   |   |            |   |   |             |   |   |            |  
|Sale of discontinued operations to related party                                                                                                                              |  |                           |       |                           |   |             |  |          |           |                     |   |            |  |                      |           |         |   |        |  |           |        |   |   | 303,734    |   |   |            |   |   | 303,734    |  
|                                                                                                                                                                              |  |                           |        |                           |   |              |  |          |            |                     |   |             |  |                      |            |         |   |         |  |           |         |   |   |            |   |   |             |   |   |            |  
|Net Loss                                                                                                                                                                      |  |                           |       |                           |   |             |  |          |           |                     |   |            |  |                      |           |         |   |        |  |           |        |   |   |           |   |   | (2,324,084  | ) |   | (2,324,084 | )
|                                                                                                                                                                              |  |                           |        |                           |   |              |  |          |            |                     |   |             |  |                      |            |         |   |         |  |           |         |   |   |            |   |   |             |   |   |            |  
|                                                                                                                                                                              |  |                           |        |                           |   |              |  |          |            |                     |   |             |  |                      |            |         |   |         |  |           |         |   |   |            |   |   |             |   |   |            |  
|Balances, June 30, 2010                                                                                                                                                       |  |                           | 38,000 |                           | $ | 38           |  |          | 18,691,395 |                     | $ | 18,691      |  |                      | 50,138,158 |         | $ | 50,138  |  | $         | (23,522 | ) | $ | 21,216,441 |   | $ | (23,013,124 | ) | $ | (1,751,338 | )
|                                                                                                                                                                              |  |                           |        |                           |   |              |  |          |            |                     |   |             |  |                      |            |         |   |         |  |           |         |   |   |            |   |   |             |   |   |            |  

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

---



These financial statements have not been reviewed by an independent accountant.

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

|                                                                             |  |                             |            |      |   |           |  
|---------------------------------------------------------------------------- |  | --------------------------- | ---------- | ---- | - | --------- | -
|                                                                             |  | Nine Months Ended
 June 30, |           
|                                                                             |  | 2010                        |            | 2009 |  
|OPERATING ACTIVITIES                                                         |  |                             |            |      |   |           |  
|Net loss                                                                     |  | $                           | (2,324,084 | )    | $ | (584,783  | )
|Adjustments to reconcile net loss to net
 cash used in operating activities: |  |                             |            |      |   |           |  
|Stock-based compensation                                                     |  |                             | 459,346    |      |   | 190,749   |  
|Depreciation expense                                                         |  |                             | 47,153     |      |   | 87,965    |  
|Amortization of intangible assets                                            |  |                             | 98,727     |      |   |          |  
|Amortization of debt discounts                                               |  |                             | 439,792    |      |   |          |  
|Gain on derivative contracts                                                 |  |                             | (78,076    | )    |   |          |  
|Gain on extinguishment of liabilities                                        |  |                             | (2,200     | )    |   |          |  
|Changes in operating assets and
 liabilities:                                |  |                             |            |      |   |           |  
|Accounts receivable                                                          |  |                             | 2,691      |      |   | (229,873  | )
|Deferred costs                                                               |  |                             | (275,000   | )    |   | (102,500  | )
|Inventory                                                                    |  |                             | 300        |      |   |          |  
|Accounts payable and accrued expenses                                        |  |                             | 136,713    |      |   | 175,175   |  
|Deferred revenue                                                             |  |                             | 250,000    |      |   |          |  
|Accounts payable to related party                                            |  |                             | 15,000     |      |   |          |  
|                                                                             |  |                             |            |      |   |           |  
|Net cash used in continuing operations                                       |  |                             | (1,229,638 | )    |   | (463,267  | )
|Net cash provided by discontinued
 operations                                |  |                             | 18,746     |      |   |          |  
|                                                                             |  |                             |            |      |   |           |  
|Net Cash Used In Operating Activities                                        |  |                             | (1,210,892 | )    |   | (463,267  | )
|                                                                             |  |                             |            |      |   |           |  
|INVESTING ACTIVITIES                                                         |  |                             |            |      |   |           |  
|Purchase of property and equipment                                           |  |                             | (1,090     | )    |   | (616,278  | )
|Increase (decrease) in restricted cash                                       |  |                             | 60,230     |      |   | (264,352  | )
|                                                                             |  |                             |            |      |   |           |  
|Net Cash Provided by (Used in) Investing
 Activities                         |  |                             | 59,140     |      |   | (880,630  | )
|                                                                             |  |                             |            |      |   |           |  
|FINANCING ACTIVITIES                                                         |  |                             |            |      |   |           |  
|Proceeds from sale of common stock                                           |  |                             | 100,950    |      |   | 584,212   |  
|Proceeds from notes payable                                                  |  |                             | 956,990    |      |   | 551,267   |  
|Payments made on related party debt                                          |  |                             | (20,000    | )    |   |          |  
|Proceeds from related party debt                                             |  |                             | 45,000     |      |   | 213,094   |  
|                                                                             |  |                             |            |      |   |           |  
|Net Cash Provided by Financing Activities                                    |  |                             | 1,082,940  |      |   | 1,348,573 |  
|                                                                             |  |                             |            |      |   |           |  
|                                                                             |  |                             |            |      |   |           |  
|NET INCREASE (DECREASE) IN CASH                                              |  |                             | (68,812    | )    |   | 4,676     |  
|CASH AT BEGINNING OF YEAR                                                    |  |                             | 81,410     |      |   | 86,416    |  
|                                                                             |  |                             |            |      |   |           |  
|CASH AT END OF YEAR                                                          |  | $                           | 12,598     |      | $ | 91,092    |  
|                                                                             |  |                             |            |      |   |           |  
|                                                                             |  |                             |            |      |   |           |  
|SUPPLEMENTAL DISCLOSURES OF                                                  |  |                             |            |      |   |           |  
|CASH FLOW INFORMATION                                                        |  |                             |            |      |   |           |  
|CASH PAID FOR:                                                               |  |                             |            |      |   |           |  
|Interest                                                                     |  | $                           |           |      | $ |          |  
|Income taxes                                                                 |  |                             |           |      |   |          |  
|                                                                             |  |                             |            |      |   |           |  
|NON CASH INVESTING AND FINANCING
 ACTIVITIES:                                |  |                             |            |      |   |           |  
|Cumulative effect of change in accounting
 principal                         |  | $                           | 439,654    |      | $ |          |  
|Common stock issued for liabilities                                          |  |                             | 6,000      |      |   |          |  
|Debt discounts due to profit interests
 given with debt                      |  |                             | 825,000    |      |   |          |  
|Debt discounts due to derivative
 liabilities                                |  |                             | 57,299     |      |   |          |  
|Sale of discontinued operations to a
 related party                          |  |                             | 303,734    |      |   |          |  
|                                                                             |  |                             |            |      |   |           |  

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

---



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

NOTE 1 - BASIS OF
PRESENTATION

The unaudited interim
consolidated financial statements of ValCom, Inc., have been prepared in
accordance with accounting principles generally accepted in the United States
of America and the rules of the Securities and Exchange Commission, and should
be read in conjunction with the audited consolidated financial statements and
notes thereto contained in ValComs Form 10-K/A filed on February22, 2010. In
the opinion of management, all adjustments (which consist of normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows at June 30, 2010 and for all periods presented have
been made.

Notes to the consolidated
financial statements that would substantially duplicate the disclosures
contained in the audited consolidated financial statements for fiscal 2009 as
reported in the Form 10K, have been omitted. The results of operations for the
periods ended June 30, 2010 and 2009 are not necessarily indicative of the
operating results for the full years.

Reclassifications

Certain prior period amounts
have been reclassified to conform to current period presentation.

NOTE 2 - GOING CONCERN

ValComs consolidated
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. As of
June 30, 2010, ValCom has an accumulated deficit of $23 million and an excess
of current liabilities over current assets of $1.9 million. These factors raise
doubt as to the ValComs ability to continue as a going concern.

In order to continue as a
going concern and achieve a profitable level of operations, ValCom 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 ValCom 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 consolidated financial statements do
not include any adjustments that might be necessary if ValCom is unable to
continue as a going concern.

NOTE 3  RESTATEMENT AND
CORRECTION OF ERROR

In the third quarter of
fiscal 2010, ValCom identified 4,000,000 Series C preferred shares which were
not shown as issued and outstanding as of September 30, 2009. The adjustments
to correct this resulted in a reduction to the previously reported additional
paid-in capital and an increase to the previously reported Series C preferred
stock at September 30, 2009 of $4,000.

The following table reflects
the impact of the above error to the consolidated balance sheet at September
30, 2009:

|                            |  |                         |            |             |   |             |   |   |            | 
|--------------------------- |  | ----------------------- | ---------- | ----------- | - | ----------- | - | - | ---------- | 
|                            |  | September 30, 2009      |           
|                            |  |                         |           
|                            |  | As Previously
 Reported |            | Adjustments |   | As Restated |  
|                            |  |                         |            |             |   |             |  
|STOCKHOLDERS DEFICIT       |  |                         |            |             |   |             |   |   |            | 
|Series C preferred stock    |  | $                       | 14,691     |             | $ | 4,000       |   | $ | 18,691     | 
|Additional paid-in capital  |  |                         | 20,014,218 |             |   | (4,000      | ) |   | 20,010,218 | 
|                            |  |                         |            |             |   |             |   |   |            | 
|Total Stockholders Deficit |  | $                       | 20,028,909 |             | $ |            |   | $ | 20,028,909 | 

NOTE 4  DISCONTINUED
OPERATIONS

On May 24, 2010, ValCom sold
its 51% interest in Sun Investments to a related party for an aggregate
consideration of $1. The sale of Sun Investments resulted in an increase to
additional paid-in capital on the sale of the discontinued operation of
$303,734. The sale was recorded as a capital transaction due to it being to a
related party.

---



The activity of Sun
Investments has been reclassified to present the activity as a discontinued
operation. There was no activity related to Sun Investments prior to June 30,
2009. Discontinued operations for the nine months ended June 30, 2010 is
summarized below:

|                                   |  |                                  |         |  
|---------------------------------- |  | -------------------------------- | ------- | -
|                                   |  | Nine Months Ended
 June 30, 2010 |        
|                                   |  |                                  |        
|Revenues                           |  | $                                | 49,750  |  
|                                   |  |                                  |         |  
|Cost of goods sold                 |  |                                  | (68,496 | )
|Operating expenses                 |  |                                  | (428    | )
|                                   |  |                                  |         |  
|Loss from discontinued
 operations |  | $                                | (19,174 | )
|                                   |  |                                  |         |  

NOTE 5 - DERIVATIVE
LIABILITIES

In June 2008, the FASB
finalized FASB ASC 815-15, which specifies a procedure to determine if an
equity-linked financial instrument (or embedded feature) is indexed to its own
common stock. FASB ASC 815-15 is effective for fiscal years beginning after
December 15, 2008. A total of 5,209,000 of ValComs warrants that were
previously classified in equity were reclassified to derivative liabilities on
October 1, 2009 as a result of FASB ASC 815-15. In addition certain embedded
features related to convertible debt were bifurcated and recorded as derivative
liabilities on October 1, 2009. ValCom estimated the fair value of these liabilities
as of October 1, 2009 to be $455,366. In addition, ValCom recorded a reduction
of $475,533 to Additional Paid-in Capital; $35,879 to Accumulated Deficit and
an increase in debt discount of $15,638. The effect of this adjustment is
recorded as a cumulative effect of change in accounting principle in ValComs
consolidated statement of stockholders deficit. At June 30, 2010 the
derivative liability was marked-to-market and had a market value of $283,136.
The valuation of the above warrant derivatives are determined primarily using
the Black-Scholes option pricing model. To determine the fair value of the
derivatives, ValCom evaluates assumptions regarding the probability of certain
future events. The fair values of the derivatives as of June 30, 2010 were estimated
using the Black-Sholes model with the following assumption: $0.055 quoted stock
price; $0.05 to $0.20 exercise price; 244.91% to 277.53% volatility; 3.52 to
5.40 years estimated life; zero dividends and a 1.28 to 1.79% discount rate.
During the nine months ended June 30, 2010, a gain of $172,231 was recorded on
these derivatives.

On April 9, 2010 and May 3,
2010, ValCom issued two convertible notes that are convertible at a variable
rate based upon the closing price of ValComs common stock (see Note 7). The
convertible notes qualify as derivatives under FASB ASC 815-15 as ValCom cannot
assert they have sufficient authorized shares to stock-settle these instruments
due to the indeterminate number of shares that may be required. In addition,
the instruments tainted ValComs other convertible instruments that were not
already accounted for as derivatives as in evaluating those instruments all
other stock arrangements must be taken into consideration. Two previously
issued convertible notes were fair valued and recorded as derivative
liabilities. The total fair value of these convertible instruments was
determined to be $98,025 on the issuance or taint date of each instrument.
$57,299 of the fair value was recorded as a discount on the notes and the remaining
$40,726 was expensed. These derivative liabilities were market-to-market on
June 30, 2010 and the fair value was determined to be $154,454 resulting in a
loss being recorded of $53,429. The valuation of the above derivative
instruments are determined primarily using the Black-Scholes option pricing
model. To determine the fair value of the derivatives, ValCom evaluates
assumptions regarding the probability of certain future events. The fair values
of the derivatives as of June 30, 2010 were estimated using the Black-Sholes
model with the following assumption: $0.055 quoted stock price; $0.03 to $0.10
exercise price; 225% to 237% volatility; less than 1 year estimated life; zero
dividends and a 0.18% discount rate.

The net gain recorded on the
above derivative liabilities for the nine months ended June 30, 2010 was
$78,076.

NOTE 6  FAIR VALUE
MEASUREMENTS

Fair value is defined as the
exchange price that would be received for an asset or paid to transfer a
liability (an exit price) in the principal or most advantageous market for the
asset or liability in an orderly transaction between market participants on the
measurement date. A fair value hierarchy is used which requires an entity to
maximize the use of observable inputs and minimize the use of unobservable
inputs when measuring fair value. The three levels of inputs that may be used
to measure fair value are described as follows:

Level 1  Inputs are
unadjusted quoted prices in active markets for identical assets or liabilities
that ValCom has the ability to access at the measurement date.

Level 2  Inputs include
quoted prices for similar assets and liabilities in active markets, quoted
prices for identical or similar assets or liabilities in markets that are not
active, inputs other than quoted prices that are observable for the asset or
liability and inputs that are derived principally from or corroborated by
observable market data by correlation or other means (market corroborated
inputs).

Level 3  Unobservable
inputs reflect ValComs judgments about the assumptions market participants
would use in pricing the asset of liability since limited market data exists.
These inputs are developed based on the best information available, using
internal and external data.

---



The following table sets forth
by level within the fair value hierarchy of ValComs financial assets and
liabilities that were accounted for at fair value as of June 30, 2010.

|                               |  |          |   |          |                |          |  |       |   |  |   |         | 
|------------------------------ |  | -------- | - | -------- | -------------- | -------- |  | ----- | - |  | - | ------- | 
|                               |  |          |   |          | June
 30, 2010 |          |  |       |  
|                               |  |          |  
|                               |  | Level
 1 |   | Level
 2 |                | Level
 3 |  | Total |  
|                               |  |          |   |          |                |          |  |       |  
|Recurring Fair Value
 Measures |  |          |   |          |                |          |  |       |   |  |   |         | 
|Assets                         |  |          |   |          |                |          |  |       |   |  |   |         | 
|None                           |  | $        |  |          | $              |         |  | $     |  |  | $ |        | 
|Liabilities                    |  |          |   |          |                |          |  |       |   |  |   |         | 
|Convertible debt               |  | $        |  |          | $              | 206,454  |  | $     |  |  | $ | 206,454 | 
|Warrants                       |  |          |  |          |                | 228,136  |  |       |  |  |   | 228,136 | 

NOTE 7 - NOTES PAYABLE

During the nine months ended
June 30, 2010, ValCom entered into note agreements with various lenders for an
aggregate of $625,000. The proceeds of the notes were used to fund a concert by
Michel Legrand (the Concert). As per the agreements, the notes earn 0% interest
and the note holders have the option to redeem or convert such notes to a 2.5%
interest in the outstanding shares of Valencia Entertainment, a wholly-owned
subsidiary of ValCom, for every $25,000 borrowed, when income from the Concert
has reached $300,000 for one note holder, who holds approximately 48% of the
total notes, and $600,000 for all other noteholders. In addition, for every
$25,000 borrowed, the note holder receives 2.5% interest in the net profits of
the Concert (after all costs related to the Concert are recovered). The fair
value of the profit interests, up to the face value of the debt, of $625,000
was recorded as a discount on the notes and is being amortized over the life of
the loans using the effective interest rate method. During the nine months
ended June 30, 2010, amortization of $250,000 was recorded on the discounts.
The notes mature on December 31, 2010.

During the nine months ended
June 30, 2010, ValCom borrowed an aggregate of $101,990 from various lenders
where the related loans are unsecured, due on demand and bear no interest.

During the nine months ended
June 30, 2010, ValCom issued unsecured notes for an aggregate amount of
$175,000 to one lender. The note amounting to $100,000 is due on demand while
the other note of $75,000 matured on April 17, 2010. Upon maturity, ValCom is
required to repay a total of $57,500 in addition to the principal amounts as
loan interest costs. In addition, the note holders are entitled to 10% of the
net proceeds earned on the Michel Legrand PBS Special. The fair value of the
net profit interests, up to the face value of the debt, was recorded as a
discount on the notes. As a result, ValCom recorded a discount of $175,000,
which was equal to the face value of the notes. The discount is being amortized
over the life of the loans using the effective interest rate method. During the
nine months ended June 30, 2010, amortization of $70,000 was recorded on the
discounts.

During April and May 2010,
ValCom issued two notes for an aggregate amount of $55,000. The notes mature on
January 1, 2011 and February 3, 2011 and bear interest at 8% per annum. The
notes are convertible into ValComs common stock at a rate equal to 55% of the
average of the lowest three trading prices of ValComs common stock during the
10 trading day period ending one trading day prior to the date of conversion.
ValCom evaluated the conversion options under FASB ASC 815-15 and determined
that they qualify as derivative liabilities (see Note 5).

NOTE 8 - RELATED PARTY
TRANSACTIONS

On March 25, 2010, ValCom
borrowed $25,000 from its President and Chief Executive Officer. The note is
unsecured and matured on May 17, 2010. The note does not have a stated interest
rate. Upon maturity, ValCom is required to repay a total of $2,500 in addition
to the principal as loan interest cost. In addition, the note holder is
entitled to 10% of the net proceeds earned on the Michel Legrand PBS Special.
The fair value of the profit interest, up to the face value of the debt, was
recorded as a discount on the note. As a result, ValCom recorded a discount of
$25,000, which was equal to the face value of the note. The discount is being
amortized over the life of the loan using the effective interest rate method.
During the nine months ended June 30, 2010, amortization of $10,000 was
recorded on the discount.

During the nine months ended
June 30, 2010, ValCom borrowed an aggregate of $20,000 from a Director of
ValCom where the related loans are unsecured, due on demand and bear no
interest. These notes were repaid in full during the nine months ended June 30,
2010.

NOTE 9 - STOCKHOLDERS
EQUITY

During the nine months ended
June 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 and issued 9,454,000 common shares for services valued at
$459,246. The shares issued for accounts payable and for services were valued
using the closing price of ValComs common stock on the commitment date.

NOTE 10  COMMITMENTS AND
CONTINGENCIES

---



As discussed in Note 7, the
Company is required to make net profit payments to certain note holders who
funded the Concert on a monthly basis. These net profit payments total to
62.5%. For the nine months ended June 30, 2010, the Concert has generated a net
loss of approximately $202,000 which will need to be recovered before any of
the net profit payments can be made.

---



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.

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. We have now entered into a 3 year deal with Direct Shopping Network
that does over $60 Million in Annual Sales. The company will begin the auctions
in June 2010 and carry them through the rest of the year.

Valcoms July
Auction was pushed back to August 7th 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.

PLAN OF OPERATION

As of June 30,
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

4. Real Estate
Channel Auctions

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.

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

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.

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 4 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 channel
auctions. Beginning in August, we are starting with a series of Auctions on the
DSN Network, where 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 June, we hope to quickly ramp up
the frequency of the auctions to a minimum of 2 per month.

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2010 VS. JUNE 30,
2009

Revenues for
the three months June 30, 2010 decreased by $150,200 or 57% from $262,692 for
the three months ended June 30, 2009 to $112,492 for the same period in 2010.
The decrease in revenue was principally due to the revenue received from the
Michel Legrand and Friends show being deferred as of June 30, 2010.

Production
costs for the three months ended June 30, 2010 increased from zero for the
three months ended June 30, 2009 to $14,138 for the same period in 2010. The
increase was primarily due to production costs, satellite expenses and editing
cost.

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Depreciation
and amortization expense for the three months ended June 30, 2010 increased by
$16,016 or 49% from $32,588 for the three months ended June 30, 2009 to $48,604
for the same period in 2010. The increase was due to the acquisition of fixed
assets and intangibles in December 2008 and the related amortization and
depreciation.

General and
administrative expenses for the three months ended June 30, 2010 increased by
$75,983 or 14% from $553,987 for the three months ended June 30, 2009 to
$629,970 for the same period in 2010. The increase was due principally to
increased professional fees and other expenses associated with the Michel
Legrand show.

Amortization
of debt discounts for the three months ended June 30, 2010 increased by
$259,243 from zero for the three months ended June 30, 2009 to $259,243 for the
same period in 2010. The increase was due to the issuance of notes with
discounts during the current fiscal year.

Gain on
derivative liabilities increased for the three months ended June 30, 2010, to
$118,980 for the three months ended June 30, 2010 compared to zero for the
three months ended June 30, 2009 due to derivatives being recorded in the
current period. See Note 5 to the consolidated financial statements.

Due to the
factors described above, the Companys net loss increased by $617,933 from
$346,476 for the three months ended June 30, 2009 to a net loss of $964,469 for
the same period in 2010.

NINE MONTHS ENDED JUNE 30, 2010 VS. JUNE 30,
2009

Revenues for
the nine months ended June 30, 2010 decreased by $249,969 or 39% from $647,896
for the nine months ended June 30, 2009 to $397,927 for the same period in
2010. The decrease in revenue was principally due to revenue received from the
Michel Legrand and Friends show being deferred as of June 30, 2010.

Production
costs for the nine months ended June 30, 2010 increased from $107for the nine
months ended June 30, 2009 to $418,172 for the same period in 2010. The
increase was primarily due to increased production costs and satellite
expenses,

Depreciation
and amortization expense for the nine months ended June 30, 2010 increased by
$57,915 or 66% from $87,965for the nine months ended June 30, 2009 to $145,880
for the same period in 2010. The increase was due to the acquisition of fixed
assets and intangibles in December 2008 and the related amortization and
depreciation.

General and
administrative expenses for the nine months ended June 30, 2010 increased by
$99,794 or 6% from $1,623,252 for the nine months ended June 30, 2009 to
$1,723,046 for the same period in 2010. The increase was due principally to
increased professional fees and other expenses associated with the Michel
Legrand show.

Amortization
of debt discounts increased from zero for the three months ended June 30, 2009
to $439,792 for the same period in 2010. The increase was due to the issuance
of notes with discounts during the current fiscal year.

Gain on
derivative liabilities increased from zero for the three months ended June 30,
2009, to $78,076 for the three months ended June 30, 2010. Due to a change in
accounting principles the company began accounting for derivatives in the
current fiscal year (see Note 5 to the consolidated financial statements).

Due to the
factors described above, the Companys net loss increased by $1,739,301 from
net loss of $584,783 for the nine months ended June 30, 2009 to a net loss of
$2,324,084 for the same period in 2010.

FUTURE OUTLOOK COMPANY UPDATE

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.

Valcoms July
Auction was pushed back to August 7th 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.

There are also
several production projects Valcom is looking at and bidding on.

In August
2010, we have the next auction planned; from there on we plan to do a minimum
of 2 auctions per month. These auctions are conducted through our partnership
with DSN in California. These auctions will also demonstrate a greater variety
of the methods of auctioning where we anticipate including auctioning off the
down payment and offer financing.

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 $2,324,084
and negative cash flows from operations of $1,210,892 for the nine months ended
June 30, 2010 and had a working capital deficiency of $1,907,771 and an
accumulated deficit of $23,013,124 at June 30, 2010. These conditions raise
substantial doubt about the Companys ability to continue as a going concern.

Cash totaled
$12,598 on June 30, 2010 compared to $81,410 as of June 30, 2009. During the
nine months ended June 30, 2010, net cash used in operating activities totaled
$1,210,892 compared to net cash used in operating activities of $463,267 for
the comparable nine month period in 2009. Net cash provided by investing
activities for the nine months ended June 30, 2010 totaled $59,140 compared to
$880,630 used in investing activities for the comparable nine month period in
2009. Net cash provided by financing activities for the nine months ended June
30, 2010 totaled $1,082,940 compared to $1,348,573 for the comparable nine
month period in 2009.

The above cash
flow activities yielded a net cash decrease of $68,812 during the nine months
ended June 30, 2010 compared to an increase of $4,676 during the comparable
prior year period.

Net working
capital (current assets less current liabilities) was a deficit of $1,907,771
as of June 30, 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 six months ended
June 30, 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
nine months ended June 30, 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

None

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

NONE.

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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)

---