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 March 31, 2011

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 x   NO
o

Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of
Regulation S-T (§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).

oYes
oNo.

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 o 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 May 23, 2011, the issuer had 159,700,143 shares of its $0.001 par value
common stock outstanding.

VALCOM, INC. 
FORM 10-Q

|                               |  |  |  |                                                             |  | Page
|------------------------------ |  |  |  | ----------------------------------------------------------- |  | ----
|PART I  FINANCIAL INFORMATION
|Item
1.                        |  |  |  | Financial Statements                                        |  |     
|Item
2.                        |  |  |  | Managements Discussion and Analysis or Plan of Operation   |  |     
|Item
3.                        |  |  |  | Quantitative and Qualitative Market Risk                    |  |     
|Item
4.                        |  |  |  | Controls and Procedures                                     |  |     
|                               |  |  |  |                                                             |  |     
|PART II  OTHER INFORMATION   
|Item
1.                        |  |  |  | Legal
Proceedings                                           |  |     
|Item
1A.                       |  |  |  | Risk
Factors                                                |  |     
|Item
2.                        |  |  |  | Unregistered Sales of Equity Securities and Use of Proceeds |  |     
|Item
3.                        |  |  |  | Defaults Upon Senior Securities                             |  |     
|Item
4.                        |  |  |  | Removed and Reserved                                        |  |     
|Item
5.                        |  |  |  | Other
Information                                           |  |     
|Item
6.                        |  |  |  | Exhibits                                                    |  |     
|SIGNATURES                     |  |  |  |                                                             |  |     



---

PART I 
FINANCIAL INFORMATION 
ITEM 1. FINANCIAL STATEMENTS



VALCOM, INC. CONSOLIDATED BALANCE SHEETS
(UNAUDITED)







|                                                                                                                                                                           |  |  |  | March 31, 2011 |            | September 30, 2010
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | -------------- | ---------- | ------------------
|ASSETS                                                                                                                                                                     |  |  |  |                |            |                   
|Cash                                                                                                                                                                       |  |  |  | $              | 113,206    |                   
|Accounts
receivable, net                                                                                                                                                   |  |  |  |                | 48,434     |                   
|Audio and
film library royalties receivable                                                                                                                                |  |  |  |                | 1,875,000  |                   
|Due from New
Zoo Review                                                                                                                                                    |  |  |  |                | 20.898     |                   
|Film costs,
net of accumulated amortization                                                                                                                                |  |  |  |                | 1,039,058  |                   
|Deferred
credits  PTL Productions                                                                                                                                         |  |  |  |                | 200,000    |                   
|Property,
equipment, net of accumulated depreciation                                                                                                                       |  |  |  |                | 2,482,228  |                   
|Audio and
film library                                                                                                                                                     |  |  |  |                | 18,275,150 |                   
|TOTAL
ASSETS                                                                                                                                                               |  |  |  | $              | 24,053,974 |                   
|LIABILITIES
AND RETAINED EARNINGS                                                                                                                                          |  |  |  |                |            |                   
|Accounts
payable                                                                                                                                                           |  |  |  | $              | 740,665    |                   
|Accrued
expenses                                                                                                                                                           |  |  |  |                | 56,278     |                   
|Due to
Foster                                                                                                                                                              |  |  |  |                | 1,500      |                   
|Due to Sin
City                                                                                                                                                            |  |  |  |                | 35,000     |                   
|Deferred
revenue  royalties                                                                                                                                               |  |  |  |                | 1,875,000  |                   
|Due to
related parties                                                                                                                                                     |  |  |  |                | 681,000    |                   
|Notes
payable                                                                                                                                                              |  |  |  |                | 950,390    |                   
|Total
Liabilities                                                                                                                                                          |  |  |  |                | 4,339,833  |                   
|                                                                                                                                                                           |  |  |  |                |            |                   
|RETAINED
EARNINGS                                                                                                                                                          |  |  |  |                |            |                   
|                                                                                                                                                                           |  |  |  |                |            |                   
|Series A
preferred stock, 50,000,000 shares authorized, $0.001 par value, 50,000,000 shares issued and outstanding                                                         |  |  |  |                | 50,000     |                   
|Series B
preferred stock, 1,000,000 shares authorized, $0.001 par value, 38,000 shares issued and outstanding                                                              |  |  |  |                | 38         |                   
|Series C
preferred stock, 25,000,000 shares authorized, $0.001 par value, 18,691,395 shares issued and outstanding                                                         |  |  |  |                | 18,691     |                   
|Common stock,
500,000,000 shares authorized, $0.001 par value, 159,700,143 and 50,138,158 issued and outstanding as of March 31, 2011 and September 30, 2010
respectively, |  |  |  |                | 159,700    |                   
|Treasury
stock, 35,000 shares                                                                                                                                              |  |  |  |                | (23,522    | )                 
|Additional
paid-in capital                                                                                                                                                 |  |  |  |                | 16,136,533 |                   
|Accumulated
deficit                                                                                                                                                        |  |  |  |                | 3,372,701  |                   
|Total
Retained Earnings                                                                                                                                                    |  |  |  |                | 19,714,141 |                   
|TOTAL
LIABILITIES AND RETAINED EARNINGS                                                                                                                                    |  |  |  | $              | 24,053,974 |                   



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




---



VALCOM, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)


|                                    |  |  |  | For the three months ended March 31, |            | For the six months ended March 31, | 
|----------------------------------- |  |  |  | ------------------------------------ | ---------- | ---------------------------------- | 
|
|REVENUES                            |  |  |  |                                      |            |                                    | 
|                                    |  |  |  |                                      |            |                                    | 
|Advertising                         |  |  |  | $                                    | 39,261     |                                    | 
|Programming                         |  |  |  |                                      | 26,300     |                                    | 
|Royalties                           |  |  |  |                                      |           |                                    | 
|Ticket
sales                        |  |  |  |                                      |           |                                    | 
|Miscellaneous                       |  |  |  |                                      | 83,638     |                                    | 
|                                    |  |  |  |                                      |            |                                    | 
|Total
revenues                      |  |  |  |                                      | 149,199    |                                    | 
|                                    |  |  |  |                                      |            |                                    | 
|Expenses                            |  |  |  |                                      |            |                                    | 
|                                    |  |  |  |                                      |            |                                    | 
|Depreciation
and amortization       |  |  |  |                                      | 31,292     |                                    | 
|General and
administrative          |  |  |  |                                      | 285,899    |                                    | 
|Total
expenses                      |  |  |  |                                      | 317,191    |                                    | 
|Loss before
other income (expenses) |  |  |  |                                      | (167,992   | )                                  | 
|                                    |  |  |  |                                      |            |                                    | 
|Other income
(expenses)             |  |  |  |                                      |            |                                    | 
|                                    |  |  |  |                                      |            |                                    | 
|Interest
expense                    |  |  |  |                                      | (18,751    | )                                  | 
|Gain on
derivative liabilities      |  |  |  |                                      |           |                                    | 
|Film library
inventory adjustment   |  |  |  |                                      | 16,621,655 |                                    | 
|Other
expenses                      |  |  |  |                                      |           |                                    | 
|Total other
income (expenses)       |  |  |  |                                      | 16,602,904 |                                    | 
|Net gain
(loss)                     |  |  |  |                                      | 16,434,912 |                                    | 
|Weighted
average shares outstanding |  |  |  |                                      | 50,138,158 |                                    | 
|LOSS PER
SHARE  basic and diluted  |  |  |  | $                                    | 0.33       |                                    | 



---



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


|                                                                                          |  |  |  | For the six months ended March 31, |            
|----------------------------------------------------------------------------------------- |  |  |  | ---------------------------------- | -----------
|
|OPERATING
ACTIVITIES                                                                      |  |  |  |                                    |            
|Net gain
(loss)                                                                           |  |  |  | $                                  | 16,127,395 
|Adjustments
to reconcile net loss to net cash provided by (used in) operating activities: |  |  |  |                                    |            
|Stock paid
for services                                                                   |  |  |  |                                    | 159,562    
|Depreciation
and amortization expense                                                     |  |  |  |                                    | 62,584     
|Gain on
derivative liability                                                              |  |  |  |                                    |           
|Changes in
operating assets and liabilities:                                              |  |  |  |                                    |            
|Accounts
receivable                                                                       |  |  |  |                                    | 365,201    
|Royalties
receivable                                                                      |  |  |  |                                    | 125,000    
|Film
costs                                                                                |  |  |  |                                    | (73,754    
|Inventory                                                                                 |  |  |  |                                    | (16,621,655
|Prepaid
assets                                                                            |  |  |  |                                    |           
|Accounts
payable                                                                          |  |  |  |                                    | 52,549     
|Accrued
expenses                                                                          |  |  |  |                                    | (14,394    
|Deferred
revenue                                                                          |  |  |  |                                    | (125.000   
|                                                                                          |  |  |  |                                    |            
|Net Cash
Provided by (Used In) Operating Activities                                       |  |  |  |                                    | 57,488     
|                                                                                          |  |  |  |                                    |            
|INVESTING
ACTIVITIES                                                                      |  |  |  |                                    |            
|Purchase of
property and equipment                                                        |  |  |  |                                    |           
|Increase in
restricted assets                                                             |  |  |  |                                    |           
|Net Cash Used
in Investing Activities                                                     |  |  |  |                                    |           
|                                                                                          |  |  |  |                                    |            
|FINANCING
ACTIVITIES                                                                      |  |  |  |                                    |            
|Proceeds from
the sale of common stock                                                    |  |  |  |                                    |           
|Proceeds from
notes payable, net                                                          |  |  |  |                                    | 37,400     
|Proceeds from
related party payable                                                       |  |  |  |                                    |           
|Net Cash
Provided by Financing Activities                                                 |  |  |  |                                    | 37,400     
|                                                                                          |  |  |  |                                    |            
|NET INCREASE
(DECREASE) IN CASH                                                           |  |  |  |                                    | 94,888     
|CASH AT
BEGINNING OF YEAR                                                                 |  |  |  |                                    | 18,318     
|CASH AT END
OF YEAR                                                                       |  |  |  | $                                  | 113,206    
|                                                                                          |  |  |  |                                    |            
|SUPPLEMENTAL
DISCLOSURES OF                                                               |  |  |  |                                    |            
|CASH FLOW
INFORMATION                                                                     |  |  |  |                                    |            
|CASH PAID
FOR:                                                                            |  |  |  |                                    |            
|Interest                                                                                  |  |  |  | $                                  | 37,431     
|Income
taxes                                                                              |  |  |  |                                    |           



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




---

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



NOTE 1. DESCRIPTION OF BUSINESS



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



NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Basis of Presentation



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



Principles of Consolidation



The consolidated financial statements include the accounts of ValCom, Inc. and its two  wholly-owned
 subsidiaries,  Valencia Entertainment, Inc. (VEI),  which  was acquired in February 2001, and My Family TV, LLC
(formerly known as Faith TV) which was acquired in December 2008. Investments in affiliated companies over which the Company has a
significant influence or ownership of more than 20% but less than or equal to 50% are accounted for under the equity method. The
Company has no equity affiliates as of March 31, 2011.





Fair Value Measurements and Disclosures



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



---



NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



and if  applicable,  their  stated  interest  rate approximates current rates
available. The three levels are defined as follows:



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



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

full term of the financial instruments.



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



Reclassifications



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



Depreciation and Amortization



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



Production Equipment

5 years

Office Furniture and Equipment

5 to 7 years

Leasehold Improvements

5 years

Autos and Trucks

5 years



Income Taxes



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



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



Shared Based Compensation



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



Revenue Recognition



Revenue from the sales or licensing of films is recognized upon meeting all recognition requirements of
Accounting Standard Codification 926, Entertainment  Films (ASC 926) (formerly Statement of Position 00-2). These
requirements are a.) persuasive evidence of a sale or licensing arrangement with a customer exists, b.) the film is complete and, in
accordance with the terms of the arrangement, has been delivered or is available for immediate and



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NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



unconditional delivery, c.) the license period of the arrangement has begun and the customer can begin its
exploitation, exhibition, or sale, d.) the arrangement fee is fixed or determinable, and e) collection of the arrangement fee is
reasonably assured. .



Cash and Cash Equivalents



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



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



Accounts Receivable



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



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



If circumstances change (for example, the Company experiences higher than expected defaults or an unexpected
material adverse change in a major customers ability to meet its financial obligation to the Company), estimates of the
recoverability of amounts due to the Company could be reduced by a material amount. There was no allowance for doubtful accounts at
March 31, 2011.



Property and Equipment



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



In the event that facts and circumstances indicate that the cost of an asset may be impaired, an evaluation of
recoverability would be performed. There was no impairment recorded at March 31, 2011.





Film Costs



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





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







---

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



The carrying value of the film costs are periodically reviewed for impairment. If events or changes in
circumstance indicate that the fair value of the capitalized costs on a specific film are less than their carrying value, an
impairment charge is recognized in the amount by which the unamortized costs exceed the projects fair value. No impairment
charge was recognized for the year ended March 31, 2011.



Development Costs



Development costs are capitalized costs related to projects not in production. If the project is greenlit, the
costs are reclassified as Film Costs. The Company evaluates on a monthly basis, all projects in development. If the Company decides
to abandon any project, an expense for the costs incurred to date will be included in the Companys consolidated statements of
operations. There were no development costs as of March 31, 2011.



Use of Estimates



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



NOTE 3. PROPERTY AND EQUIPMENT



Property and equipment are comprised of the following:

|                                                |  |               |           |   |            |      |   | 
|----------------------------------------------- |  | ------------- | --------- | - | ---------- | ---- | - | 
|                                                |  |               |           |   |            |      |   | 
|                                                |  | September, 30 |          
|                                                |  |               |           |   |            | Life |  
|                                                |  | 2010          |           |   | (in years) |     
|                                                |  |               |          
|Studio equipment
and computers                  |  | $             | 1,078,350 |   |            | $    | 3 | 
|Film video equipment                            |  |               | 1,750,913 |   |            |      | 3 | 
|Office equipment                                |  |               | 43,121    |   |            |      | 3 | 
|                                                |  |               |           |   |            |     
|Subtotal                                        |  |               | 2,872,384 |   |            |      |   | 
|Less: accumulated depreciation and amortization |  |               | (390,156  | ) |            |      |   | 
|                                                |  |               |           |   |            |      |  
|Property and equipment, net                     |  | $             | 2,482,228 |   |            |      |   | 
|                                                |  |               |           |   |            |      |  



Depreciation and amortization expense related to property and equipment was $31,292 for the three month period
ending March 31. 2011.





NOTE 4. FILM COSTS



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



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

|                         |  |   |         |  
|------------------------ |  | - | ------- | -
|                         |  |   |         |  
|                         |  |   |        
|                         |  |   |        
|Documentary in
release   |  | $ | 996,562 |  
|                         |  |   |        
|Accumulated amortization |  | $ | (31,258 | )
|                         |  |   |        
|Film costs, net          |  | $ | 965,304 |  
|                         |  |   |        





---

NOTE 4. FILM COSTS (Continued)



Based on the Companys estimates of projected gross revenues as of March 31, 2011, the Company expects
approximately 80% of completed films, net of accumulated amortization, will be amortized during the next three years.



NOTE 5. NOTES PAYABLE



The Company has entered into note agreements with various individual lenders to fund a concert by Michel
Legrand (the Concert).  The notes earn 0% interest and are collateralized by a 2.5% of the outstanding shares of Valencia for
every $25,000 borrowed. In addition, for every $25,000 borrowed, the note  holder  receives  2.5%  of  the
 net  profits  of  the Concert (after all  costs  related  to  the  Concert  are
 recovered).  As of March 31, 2011, the balance owed lenders was $950,390.



NOTE 6. CONVERTIBLE NOTES



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



NOTE 7. AUDIO AND FILM LIBRARY



An independent appraisal service has prepared a valuation on
the Companys film library.  The library is composed of a largecollection of videos, movies and TV shows.
 The appraisers considered multiple factors in determining fair market value of $23,206,942 and a net present value of
$161,572,209. These factors used in the valuation process were as follows:

Cost - $18,275,150. Cost has been calculated by the
appraiser and confirmed by an independent certified public accountant working with the appraiser. The film library inventory was
adjusted accordingly resulting in a gain on the Statement of Operations.

Historical Earnings Earning  To date, the
appraiser has identified earnings of $14,865,000. This amount was used in the calculation of the future and current value of the
library.

Network Value This amount is determined by the
appraiser to be 40% of the potential annual income if 100% of the advertising time were sold at $1,000 per minute of commercials.
The Network Valueis calculated as$1,698,948 for the first year.  This amount may fluctuate annually as revenues
increase/decrease.

Competition A certain number of the total films
and TV Shows are unique to this library.  For this reason the appraiser took an approach to the valuation of determining a mean
value for the titles based on what other film distributors and library owners are currently selling or renting these titles.
 From this calculation, the appraiser determined a value based on the potential sales of the programming, use of the
programming on ValComs own network, and on advertising generated over the next ten years.  Using a discount rate of 10%
over ten years, a netpresent value of $161,572,209 was calculated.

In the opinion of the appraiser and staff, the values
published in the appraisal are conservative and have the potential to increase as additional work is completed on the library and
restoration of many of the unique and historical films continue.  There are also additional films which have not been valued as
of the appraisal date which need to be added to the library and valued separately.





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NOTE 8. INCOME TAXES



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



Deferred tax assets at March 31, 2011consist primarily of the tax effect of the net operating loss;
carry-forwards, which amounted to approximately $7,115,059.  Other deferred tax assets and liabilities are not significant.
 We provided a full valuation allowance on the deferred tax assets at March 31, 2011 to reduce  such
 deferred  income  tax  assets to zero, as we believe that realization of such amounts is not considered more
likely than not.



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



|                                        |  |  |  | March 31,2011 |     | March 31, 2010
|--------------------------------------- |  |  |  | ------------- | --- | --------------
|Tax Expense
(Benefit) at Statutory Rate |  |  |  |               | (34 | )%            
|State Tax
Rate, Net of Federal          |  |  |  |               | (6  | )             
|Change In
Valuation Allowance           |  |  |  |               | 40  |               
|Effective Tax
Rate                      |  |  |  |               | 0   | %             



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



|                          |  |  |  | March 31,2011 |            | March 31, 2010
|------------------------- |  |  |  | ------------- | ---------- | --------------
|Deferred Tax
Asset:       |  |  |  |               |            |               
|Net Operating
Losses      |  |  |  | $             | 7,115,059  |               
|Less:
Valuation Allowance |  |  |  |               | (7,115,059 | )             
|Total                     |  |  |  | $             |           |               

NOTE 9. STOCK ACTIVITY



a. CONVERTIBLE PREFERRED STOCK



At March 31, 2011, our authorized shares of convertible Preferred Stock were as follows:



Series A: Solomed PTE Ltd

The Company, in accordance with filing amended Articles of Incorporation, has added a class of preferred stock
related to an agreement the company has entered into with Solomed PTE Ltd. The Company has issued 50 million shares of Series A
preferred stock that can be converted 1:1 on a non-diluted basis. The shares have been posted as collateral with Solomed PTE Ltd for
a line of credit  available to the Company.



Solomed will provide an initial line of credit of $1 million at
10% interest with an option to secure an additional $2 million. $300,000 of the initial line will be used for strategic
acquisitions, $200,000 will be used for a buy-back of ValCom stock, and $500,000 for the funding of additional operations. The $1
million interest-bearing line of credit will be held in escrow where ValCom can draw down the funds as needed. The additional $2
million line will be available to the company based on ValComs fulfilling obligations to Solomed. ValComs is obligated
to draw down a minimum of $150,000 of the funds.

Series  B  Preferred  Stock  with no voting  rights,  is  entitled  to
 receive cumulative dividends in preference  to  any  dividend  on the common stock at a rate of 10% per
share, per year, to be issued if and when declared by the Board of Directors and can be converted at any time into common
 stock  on  a 1 for 5 basis.  In  the  event  of  any liquidation, the holders of shares of
Series B Preferred Stock then outstanding  shall  be entitled to receive an amount equal to the purchase price per share,
plus an amount  equal  to  declared but unpaid dividends  thereon, if any, to the date of payment, as of March
31, 2011. As of March 31, 2011, 38,000 shares of Series B preferred stock with a par value of $0.001 were issued and outstanding.









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Series  C  Preferred  Stock  has  no  voting
 rights and  is entitled  to  receive cumulative dividends in preference to any dividend on the common
 stock at  a rate of 10% per share, per year, to be issued if and when declared by the Board of  Directors
and  can be converted at any time into common stock on a 1 for 1 basis. In the event of any  liquidation,
 the holders of  shares of Series C Preferred Stock then outstanding shall be entitled to receive  an
 amount equal to  the  purchase price per share, plus an amount equal to declared but  unpaid dividends
 thereon, if  any,  to  the  date of payment. In connection with the acquisition of Faith TV, we
issued 100,000  shares  of Series C Preferred Stock valued at $9,000. We also sold 5,000,000 shares of Series C Preferred
Stock for $250,000. As of March 31, 2011, 18,691,395 shares of Series C preferred stock with a par value of $0.001 were issued and
outstanding.



b. COMMON STOCK



Stock for services



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



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



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



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



In February 2011, the Company amended its Articles of Incorporation authorizing an additional 250,000,000
shares.



Stock for debt



Stock for acquisition



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



Stock for registration rights penalty



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



NOTE 10. SEGMENTS



The following is a discussion of our operating segments:



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



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



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



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NOTE 11. BANKRUPTCY FILING



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

discharged of liability for payment of debts, claims and liabilities incurred before confirmation of the Plan,
 to  the extent specified in {section}1141 of the Bankruptcy Code.



The Plan provided for the treatment of each  Class,  and  for the cash payments that  each
 Class  of  creditors  will  receive  (and  for the existing  equity interests and rights
that equity security holders will retain  under the Plan.

The effective date of the Plan was August 15, 2008 (the "Effective Date"). The Company has been
funding the Plan through cash on hand and accumulated by the Effective Date to pay off the allowed Priority Unsecured Tax claims.



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



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





NOTE 12. LITIGATION, CONTINGENCIES AND COMMITMENTS



Laurus Master Fund Settlement



On  March  24,  2009,  ValCom and Laurus Master Fund, Ltd, a company  organized under
the laws of the Cayman  Islands  and  Chicago Title Company, a California Corporation entered into a Settlement
Agreement  whereby  ValCom  resolved  its previously asserted claims against Laurus and Chicago Title.
 Pursuant  to  the terms of the Agreement, Laurus agreed to pay the Company five hundred and fifty  thousand
 dollars  ($556,000)  which  was  received  by  the Company's  attorney  on  March
 30,  2009.  Within ten calendar days after the Company receives



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NOTE 12. LITIGATION, CONTINGENCIES AND COMMITMENTS (Continued)



payment from Laurus, the Company filed a Request for Dismissal of its claims, with prejudice, of its actions
against Laurus and Chicago Title and Chicago Title. This settlement is reflected as `Other Income in the consolidated
statements of operations.



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



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



The Company filed suit in January 2011 against Chameleon Communications and Frankie Buddy Winsett
for non-payment of 14 months of rent, six months of employee payroll and 10% ownership in the studio in which ValCom managed
including other miscellaneous expenses.  No trial date has been set.





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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 was purchased by one of the top Television Networks
in the United States. The show will generate a minimum of $500,000 of revenue to the Company and it anticipates bringing millions
over the next five years worldwide.

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

As far as the Real Estate Auction, we have finally figured out how to successfully run the program after the
previous attempts that were unsuccessful. In November 2010, the company entered into a 3 year agreement with United Country Auction
Services to develop a series of televised real estate auctions.  United Country Auctions Services is the nation's largest
integrated real estate & auction company. The company has a national network of over 700



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offices, 4000 agents nationwide, over 2.5 Billion in annual sales, and is rated #1
Global Real Estate Franchise by Dun & Bradstreet. The company will begin the auctions in March 2011 and carry them through the
rest of the year.

PLAN OF OPERATION

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

1. TV Stations and Broadcast Division

2. Film and Television Production

3. Live Theater Event Division

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

1. BROADCASTING UPDATE

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

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

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.



My Family TV continues its rapid expansion. In 1st quarter, the network started distributing
programming to multiple markets including Detroit, MI , Fresno, CA , Sacramento, CA, and Springfield, MO. ValCom also announced a
joint venture with Chattanooga based Luken Communications related to the operations, programming, distribution, and marketing of the
network.



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My Family TV will be part of a bundle of television networks originated and
distributed by Luken from their state-of-the-art facility in Chattanooga. The venture allows ValCom and Luken to leverage multiple
television networks when negotiating the content for My Family TV. The relationship has brought new programming to My Family
TV including a morning talk-show; classic television programs like Route 66, Lassie, I Spy, The Saint, The Cosby Show and The
Rifleman; and fresh crime dramas like Cold Squad , Da Vinci's Inquest, Merv Griffons Crosswords.  Negotiations are
already underway to obtain additional television programs that are expected to premiere on My Family TV throughout 2011. The venture
has reduced overall costs at My Family TV through economies of scale that exist when multiple television networks operate within the
same facility. The relationship with Luken Communications also creates additional distribution and sales opportunities
for ValCom's content library. My Family TV is also in active negotiations with 28 television
stations and will be launching in New York, Boston, and San Francisco in June 2011.

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.

2. FILM AND TV PROGRAM PRODUCTION DIVISION / DISTRIBUTION UPDATE

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

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

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

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



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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 started 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.

ValCom, through Valencia Entertainment International, operates a complete
distribution and syndication service to producers and thus acquired 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
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 6,000 films
and it also acquires third party film and TV programming which it distributes through Valencia Entertainment International.

Valencia Entertainment is on the cusp of generating millions of dollars of revenue for the company. ValCom has
over 6,000 video and audio titles in its library. In 1st quarter 2011 an appraisal was conducted by DOS Broadcast and
Appraisal Services to determine an accurate value of the content owned by the company. DOS has estimated that the value of the
library exceeds $128 million. The library contains rare and unique video and audio content including 13 master recordings of Elvis
Presley with The Platters; masters from Ike & Tina Turner before they were stars; and a very rare 3 Stooges film. The library
also contains films starring the top names in Hollywood like Denzel Washington, Anthony Hopkins, Robert DiNiro, Jodi Foster, Russell
Crowe and Mel Gibson.



In addition to utilizing the content to leverage the growth of My Family TV, the content can be licensed
via various distribution channels including broadcast stations, cable networks, video on demand, and internet streaming. There is
major revenue potential due to the overall expansion of new media and the growth of the international marketplace. For example,
Netflix recently did a 5 year license of another companys library of 250 titles for $750 million. Valencia has started the
process of licensing the content in the syndication marketplace and has already lined up buyers.

3. LIVE THEATRE AND EVENT DIVISION UPDATE

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

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

The Michel Legrand and Friends Special had a very successful turnout with over
3,000 attendees at the show, while the Box Office generated over $150,000 in Sales, of which approximately $87,000 belongs to the
Company; topping it off with the sale to Public Broadcast Network, who will air the show in August. The Network will pay the



---

Company a $250,000 fee and a Backend participation of
$12.00 for every DVD sold and $8.00 for every CD sold over the next 26 months. The Contract is for the United States only.

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

4. REAL ESTATE AND OTHER BROADCAST EVENT AUCTIONS UPDATE

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

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

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

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

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

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

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

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

RESULTS OF OPERATIONS

THREE MONTHS ENDED March 31, 2011 VS. March 31, 2010

Revenues for the three months December 31, 2011 was $149,199, a decrease of
$21,772 from $170,971 for the three months ended December 31, 2010. The decrease in revenue was principally due to the revenue
received from the Michel Legrand and Friends show during March 2010.



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Depreciation and amortization expense for the three months ended March 31, 2011
decreased by $17,312 or 36% from $48,604 for the three months ended March 31, 2011 to $31,292 for the same period in 2010.

General and administrative expenses for the three months ended March 31, 2011
decreased by $819,979 or 74% from $1,105,878 for the three months ended March 31, 2010 to $285,899 for the same period in 2010. The
decrease was due principally to increased professional fees and other expenses associated with the Michel Legrand show produced in
March 2010.

Interest expense for the three months ended March 31, 2011 decreased by $24,467
from $43,218 for the three months ended March 31, 2010 to $18,751 for the same period in 2010. The decrease was due to suspension of
payments during the current fiscal year.

Due to the inventory valuation, the Companys net income increased by
$17,509,425 from a loss of $1,074,510 for the three months ended March 31, 2010 to a net income of $16,434,915 for the same period
in 2011.



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 7, 2010 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.





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

For over 25 years, ValCom has accumulated a substantial
library of content that will be monetized through worldwide distribution. The library is comprised of over 6,000 titles that include
films, television programs, and music. This content library has been recently appraised by an independent auditor that placed a
minimum value of the library with a value of over $128 million.  Years ago the company had a distribution arm that was
extremely successful in selling content. The company has rebuilt its distribution arm and has implemented an aggressive sales and
marketing effort to sell broadcast rights to the content in 2011 to numerous media outlets domestically and internationally.

Valencia Entertainment is on the cusp of generating millions
of dollars of revenue for the company. ValCom has over 6,000 video and audio titles in its library. In 1st quarter 2011
an appraisal was conducted by DOS Broadcast and Appraisal Services to determine an accurate value of the content owned by the
company. DOS has estimated that the value of the library exceeds $128 million. The library contains rare and unique video and audio
content including 13 master recordings of Elvis Presley with The Platters; masters from Ike & Tina Turner before they were
stars; and a very rare 3 Stooges film. The library also contains films starring the top names in Hollywood like Denzel Washington,
Anthony Hopkins, Robert Di Niro, Jodi Foster, Russell Crowe and Mel Gibson.

In addition to utilizing the content to leverage the
growth of My Family TV, the content can be licensed via various distribution channels including broadcast stations, cable networks,
video on demand, and internet streaming. There is major revenue potential due to the overall expansion of new media and the growth
of the international marketplace. For example, Netflix recently did a 5 year license of another companys library of 250 titles
for $750 million. Valencia has started the process of licensing the content in the syndication marketplace and has already lined up
buyers.

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.

My Family TV continues its rapid expansion. In 1st
quarter, the network started distributing programming to multiple markets including Detroit, MI , Fresno, CA , Sacramento, CA, and
Springfield, MO. ValCom also announced a joint venture with Chattanooga based Luken Communications related to the operations,
programming, distribution, and marketing of the network.

My Family TV will be part of a bundle of television
networks originated and distributed by Luken from their state-of-the-art facility in Chattanooga. The venture allows ValCom and
Luken to leverage multiple television networks when negotiating the content for My Family TV. The relationship has brought new
programming to My Family TV including a morning talk-show; classic television programs like Route 66, Lassie, I Spy, and The Rifleman; and fresh crime dramas like Cold Squad and Da Vinci's Inquest.  Negotiations are
already underway to obtain additional television programs that are expected to premiere on My Family TV throughout 2011. The venture
has reduced overall costs at My Family TV through economies of scale that exist when multiple television networks operate within the
same facility. The relationship with Luken Communications also creates additional distribution and sales
opportunities for ValCom's content library.



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My Family TV is also in active
negotiations with 28 television stations and will be launching in New York, Boston, and San Francisco in June 2011.

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 $186,704 and cash flows from
operations of $57,488 for the three months ended March 31, 2011 and had an accumulated deficit of $13,089,392 at March 31, 2011.
These conditions raise substantial doubt about the Companys ability to continue as a going concern.

Cash totaled $113,206 on March 31, 2011 compared to $352,106 as of March 31,
2010. During the three months ended March 31, 2011, net cash provided by operating activities totaled $57,488 compared to net cash
used in operating activities of $250,260 for the comparable three month period in 2010. There was no cash used in investing
activities for the three months ended March 31, 2011 compared to $880,630 used in investing activities for the comparable three
month period in 2010. Net cash provided by financing activities for the three months ended March 31, 2011 totaled $37,400 compared
to $1,396,580 for the comparable three month period in 2010.

The above cash flow activities yielded a net cash increase of $94,888 during
the three months ended March 31, 2011 compared to an increase of $265,690 during the comparable prior year period.

Net working capital (current assets less current liabilities) was a deficit of
$635,503 as of March 31, 2011. The Company will need to raise funds through various financings to maintain its operations until such
time as cash generated by operations is sufficient to meet its operating and capital requirements. There can be no assurance that
the Company will be able to raise such capital on terms acceptable to the Company, if at all.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

N/A

ITEM 4. CONTROLS AND PROCEDURES.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

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

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



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CHANGES IN INTERNAL CONTROLS

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

PART II--OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS COMPANY

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



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



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



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

ITEM 1A. RISK FACTORS

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

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

If we are unable to obtain financing on reasonable terms, we could be forced to
delay, scale back or eliminate certain product and service development programs. In addition, such inability to obtain financing on
reasonable terms could have a material negative effect on our business, operating results, or financial condition to such extent
that we are



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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

A.

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



B.

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



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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: May 23, 2011 |                                                                                                                                             
|                    |                                                                                                                                             
|                    | VALCOM, INC., A DELAWARE
CORPORATION                                                                                                        
|                    |                                                                                                                                             
|                    | By: /s/ Vince Vellardita                                                                                                                    
|                    |                                                                                                                                             
|                    | Vince VellarditaChief Executive Officer (Principal
Executive Officer)and Chief Financial Officer
(Principal Accounting andFinancial Officer)



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ACCOUNTANT'S REVIEW REPORT



















TO THE STOCKHOLDERS

VALCOM, INC.

INDIAN ROCKS, FLORIDA







We have reviewed the accompanying balance sheets of Valcom, Inc. (the "Company")
for the quarter ending March 31, 2011, and the related statements of operations and cash flows for the period then ended, in accordance with Statements on
Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. All information included in these financial
statements is the representation of the management of Valcom, Inc.



A review consists principally of inquiries of Company personnel and analytical procedures
applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.



Based on our review, we are not aware of any material modifications that should be made to
the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles.







Labrozzi & Co., PA

Miami, FL

May 23, 2011





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