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)
|
Large accelerated filer
|
[ ]
|
|
Accelerated filer
|
[ ]
|
|
Non-accelerated filer
|
[ ]
|
|
Smaller reporting company
|
[X]
|
Page | ||
PART I - FINANCIAL INFORMATION
|
||
Item 1.
|
Financial Statements
|
3 |
Item 2.
|
Management’s Discussion and Analysis or Plan of Operation
|
14 |
Item 3.
|
Quantitative and Qualitative Market Risk
|
23 |
Item 4.
|
Controls and Procedures
|
23 |
PART II - OTHER INFORMATION
|
||
Item 1.
|
Legal Proceedings
|
23 |
Item 1A.
|
Risk Factors
|
24 |
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
24 |
Item 3.
|
Defaults Upon Senior Securities
|
24 |
Item 4.
|
Removed and Reserved
|
24 |
Item 5.
|
Other Information
|
24 |
Item 6.
|
Exhibits
|
25 |
SIGNATURES
|
June 30,
2011
|
September 30,
2010
|
|||||||
As Restated
|
||||||||
ASSETS
|
||||||||
Cash
|
$ | 319,498 | $ | 2,426 | ||||
Accounts receivable, net
|
738,520 | 593,548 | ||||||
Royalties receivable
|
2,000,000 | 2,000,000 | ||||||
Loans receivable
|
62,500 | 62,500 | ||||||
Film costs, net of accumulated amortization
|
2,504,362 | 2,504,362 | ||||||
Production costs
|
620,651 | 595,651 | ||||||
Prepaid expenses
|
20,511 | - | ||||||
Deferred credits
|
225,000 | 225,000 | ||||||
Property, equipment, net of accumulated depreciation
|
2,744,147 | 2,744,147 | ||||||
Inventory
|
18,775,150 | 1,653,495 | ||||||
TOTAL ASSETS
|
$ | 28,010,339 | $ | 10,381,129 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Accounts payable
|
$ | 983,678 | $ | 392,497 | ||||
Accrued expenses
|
36,573 | 69,687 | ||||||
Due to Foster
|
- | 1,500 | ||||||
Due to Sin City
|
- | 35,000 | ||||||
Notes payable
|
1,352,890 | 1,565,140 | ||||||
Total Liabilities
|
2,373,141 | 2,063,824 | ||||||
SHAREHOLDERS’ EQUITY
|
||||||||
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 | 38 | ||||||
Series C preferred stock, 25,000,000 shares authorized, $0.001 par value, 18,691,395 shares issued and outstanding
|
18,691 | 18,691 | ||||||
Common stock, 500,000,000 shares authorized, $0.001 par value, 178,151,158 and 50,138,158 issued and outstanding as of June 30, 2011 and September 30, 2010 respectively
|
178,151 | 50,138 | ||||||
Treasury stock, 35,000 shares
|
(23,522 | ) | (23,522 | ) | ||||
Additional paid-in capital
|
10,576,396 | 8,965,046 | ||||||
Retained earnings (deficit)
|
14,837,444 | (693,086 | ) | |||||
Total Shareholder’s Equity
|
25,043,322 | 8,317,305 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$ | 28,010,339 | $ | 10,381,129 | ||||
For the three months ended
June 30,
|
For the nine months ended
June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010 | |||||||||||||
REVENUES
|
||||||||||||||||
Advertising
|
$ | 25,290 | $ | - | $ | 119,463 | $ | |||||||||
Programming
|
7,156 | 98,354 | 71,131 | - | ||||||||||||
Distribution
|
126,944 | - | 128,822 | - | ||||||||||||
Ticket sales
|
- | - | 89,328 | - | ||||||||||||
Miscellaneous
|
7,500 | - | 86,803 | - | ||||||||||||
Total revenues
|
166,890 | 98,354 | 459,547 | - | ||||||||||||
Expenses
|
||||||||||||||||
Depreciation and amortization
|
31,292 | 48,604 | 93,876 | 145,880 | ||||||||||||
General and administrative
|
199,153 | 629,970 | 1,534,182 | 1,743,291 | ||||||||||||
Total expenses
|
230,445 | 678,574 | 1,628,058 | 1,889,171 | ||||||||||||
Loss before other income (expenses)
|
(63,555 | ) | (580,220 | ) | (1,132,511 | ) | (1,889,171 | ) | ||||||||
Other income (expenses)
|
||||||||||||||||
Interest expense
|
(26 | ) | (282,882 | ) | (7,166 | ) | (512,649 | ) | ||||||||
Gain (loss) on derivative liabilities
|
- | (118,980 | ) | - | 78,076 | |||||||||||
Film library inventory adjustment
|
- | - | 16,669,164 | - | ||||||||||||
Other income
|
- | 17,613 | 10,558 | 18,834 | ||||||||||||
Other expenses
|
(8,486 | ) | - | (9,515 | ) | - | ||||||||||
Total other income (expenses)
|
(8,512 | ) | (384,249 | ) | 16,663,041 | (415,739 | ) | |||||||||
Net gain (loss) from operations
|
(72,067 | ) | (964,469 | ) | 15,530,530 | (2,304,910 | ) | |||||||||
Loss from discontinued operations
|
(19,174 | ) | ||||||||||||||
Net income (loss)
|
$ | (72,067 | ) | $ | (964,469 | ) | $ | 15,530,530 | $ | (2,324,084 | ) | |||||
Weighted average shares outstanding
|
174,009,158 | 44,450,288 | 124,895,158 | 41,612,121 | ||||||||||||
LOSS PER SHARE – basic and diluted
|
$ | (0.00 | ) | $ | (0.02 | ) | $ | 0.12 | $ | (0.06 | ) | |||||
For the nine months ended
June 30, |
||||||||
2011
|
2010
|
|||||||
OPERATING ACTIVITIES
|
||||||||
Net gain (loss)
|
$ | 15,530,530 | $ | (2,324,084 | ) | |||
Adjustments to reconcile net loss to net cash provided by operating activities:
|
||||||||
Stock issued for debt
|
667,996 | 459,346 | ||||||
Depreciation and amortization expense
|
93,876 | 145,880 | ||||||
Amortization of debt discounts
|
- | 439,792 | ||||||
Gain on derivative contracts
|
- | (78,076 | ) | |||||
Gain on extinguishment of liabilities
|
- | (2,200 | ) | |||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(144,972 | ) | 2,691 | |||||
Production costs
|
(25,000 | ) | - | |||||
Prepaid expenses
|
(20,511 | ) | (275,000 | ) | ||||
Inventory
|
(16,669,164 | ) | 300 | |||||
Accounts payable
|
591,181 | 136,713 | ||||||
Accrued expenses
|
(33,114 | ) | - | |||||
Due to Foster
|
(1,500 | ) | 15,000 | |||||
Due to Sin City
|
(35,000 | ) | - | |||||
Deferred revenue
|
- | 250,000 | ||||||
Net cash used in continuing operations
|
(45,678 | ) | (1,229,638 | ) | ||||
Net cash provided by discontinued operations
|
- | 18,746 | ||||||
Net cash used in operating activities:
|
(45,678 | ) | (1,210,892 | ) | ||||
INVESTING ACTIVITIES
|
||||||||
Purchase of property and equipment
|
- | (1,090 | ) | |||||
Increase in restricted assets
|
- | 60,230 | ||||||
Net cash provided by investing activities
|
- | 59,140 | ||||||
FINANCING ACTIVITIES
|
||||||||
Proceeds from the sale of common stock
|
575,000 | 100,950 | ||||||
Proceeds/payments on notes payable, net
|
(212,250 | ) | 956,990 | |||||
Proceeds from related party debt, net
|
- | 25,000 | ||||||
Net cash provided by financing activities
|
362,750 | 1,082,940 | ||||||
NET INCREASE (DECREASE) IN CASH
|
317,072 | (68,812 | ) | |||||
CASH AT BEGINNING OF PERIOD
|
2,426 | 81,410 | ||||||
CASH AT END OF PERIOD
|
$ | 319,498 | $ | 12,598 | ||||
SUPPLEMENTAL DISCLOSURES OF
|
||||||||
CASH FLOW INFORMATION
|
||||||||
CASH PAID FOR:
|
||||||||
Interest
|
$ | - | $ | 2,500 | ||||
Income taxes
|
- | - |
Production Equipment
|
5 years
|
Office Furniture and Equipment
|
5 to 7 years
|
Leasehold Improvements
|
5 years
|
Autos and Trucks
|
5 years
|
June 30, 2011
|
||||||||
Life
|
||||||||
2010
|
(in years)
|
|||||||
Studio equipment and computers
|
$
|
1,439,188
|
$
|
5
|
||||
Film video equipment
|
1,750,913
|
5-7
|
||||||
Office equipment
|
43,121
|
5-7
|
||||||
Subtotal
|
3,233,222
|
|||||||
Less: accumulated depreciation and amortization
|
(484,032
|
)
|
||||||
Property and equipment, net
|
$
|
2,749,190
|
Documentary in release
|
$
|
1,070,316
|
||
Accumulated amortization
|
$
|
(31,258
|
)
|
|
Film costs, net
|
$
|
1,039,058
|
June 30,
|
June 30,
|
|||||||
2011
|
2010
|
|||||||
Tax Expense (Benefit) at Statutory Rate
|
(34 | )% | (34 | )% | ||||
State Tax Rate, Net of Federal
|
(6 | ) | (6 | ) | ||||
Change In Valuation Allowance
|
40 | 40 | ||||||
Effective Tax Rate
|
0 | % | 0 | % | ||||
The components of the net deferred tax asset are summarized below:
|
||||||||
June 30,
|
June 30,
|
|||||||
2011 | 2010 | |||||||
Deferred Tax Asset:
|
||||||||
Net Operating Losses
|
$ | 7,115,059 | $ | 7,115,059 | ||||
Less: Valuation Allowance
|
(7,115,059 | ) | (7,115,059 | ) | ||||
Total
|
$ | — | $ | — |
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.
|
C.
|
On May 11, 2011 the Company held a Shareholders meeting to approve the election of the following members to the Board of Directors of the Company: Vince Vellardita, Chairman of the Board of Directors; Frank O’Donnell, Director; Timothy Harrington, Director; Silvana Costa Manning, Director; and Michael Vredegoor, Director. Finally the shareholders voted approval of an additional amendment to the Company’s Certificate of Incorporation allowing for a reverse stock split of the outstanding shares of the Company’s Common Stock at a ratio of either: one-for-two, one-for-five, one-for-ten, or one-for-twenty to be determined by the Board of Directors of the Company without further approval from the shareholders. With respect to the items on the proxy, a majority of shareholders of the Company voted in favor of the appointment of the Board of Directors, the discretionary authority to effect a reverse stock split, and the appointment of Labrozzi & Company, PA as auditors of the Company for the fiscal year commencing December 31, 2010.
|
Dated: August 15, 2011
|
|
VALCOM, INC., A DELAWARE CORPORATION
|
|
By: /s/ Vince Vellardita
|
|
Vince Vellardita
|
|
Chief Executive Officer
(Principal Executive Officer) |
|
and Chief Financial Officer
(Principal Accounting and Financial Officer) |
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
|
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
REVENUES | Â | Â | Â | Â |
Advertising | $ 25,290 | Â | $ 119,463 | Â |
Programming | 7,156 | 98,354 | 124,897 | Â |
Royalties | Â | Â | 125,000 | Â |
Distribution | 126,944 | Â | 134,331 | Â |
Ticket sales | Â | Â | 89,328 | Â |
Miscellaneous | 7,500 | Â | 33,037 | (20,245) |
Total revenues | 166,890 | 98,354 | 626,056 | (20,245) |
Expenses | Â | Â | Â | Â |
Depreciation and amortization | 31,292 | 48,604 | 93,876 | 145,880 |
Bad debt | 435,531 | Â | 435,531 | Â |
General and administrative | 233,832 | 629,970 | 1,637,051 | 1,723,046 |
Total expenses | 700,655 | 678,574 | 2,166,458 | 1,868,926 |
Loss before other income (expenses) | (533,765) | (580,220) | (1,540,402) | (1,888,171) |
Other income (expenses) | Â | Â | Â | Â |
Interest expense | (26) | (282,882) | (32,562) | (512,649) |
Gain (loss) on derivative liabilities | Â | (118,980) | 78,076 | |
Film library inventory adjustment | 16,621,655 | |||
Other income | Â | 17,613 | 10,974 | 18,834 |
Other expenses | (8,511) | Â | (9,515) | Â |
Total other income (expenses) | (8,537) | (384,249) | 16,590,552 | (415,739) |
Net gain (loss) from operations | (542,302) | (964,469) | 15,050,150 | (2,304,910) |
Loss from discontinued operations | Â | Â | Â | (19,174) |
Net income (loss) | $ (542,302) | $ (964,469) | $ 15,050,150 | $ (2,324,084) |
Weighted average shares outstanding (in shares) | 174,009,158 | 44,450,288 | 124,895,158 | 41,612,121 |
LOSS PER SHARE - basic and diluted (in dollars per share) | $ 0.00 | $ (0.02) | $ 0.12 | $ (0.06) |
Document and Entity Information
|
9 Months Ended | |
---|---|---|
Jun. 30, 2011
|
Aug. 12, 2011
|
|
Document and Entity Information [Abstract] | Â | Â |
Entity Registrant Name | VALCOM, INC | Â |
Entity Central Index Key | 0001013453 | Â |
Trading Symbol | vlco | Â |
Entity Current Reporting Status | Yes | Â |
Entity Voluntary Filers | No | Â |
Current Fiscal Year End Date | --09-30 | Â |
Entity Filer Category | Smaller Reporting Company | Â |
Entity Common Stock, Shares Outstanding | Â | 178,151,158 |
Document Type | 10-Q | Â |
Document Period End Date | Jun. 30, 2011 | |
Amendment Flag | false | Â |
Document Fiscal Year Focus | 2011 | Â |
Document Fiscal Period Focus | Q3 | Â |
"+ text.join( "
\n" ) +"
" + text[p] + "
\n"; } } }else{ formatted = '' + raw + '
'; } html = ''+ "\n"+''+ "\n"+''+ "\n"+' formatted: '+ ( this.Default == 'raw' ? 'as Filed' : 'with Text Wrapped' ) +''+ "\n"+' | '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
INVENTORY- AUDIO AND FILM LIBRARY
|
9 Months Ended |
---|---|
Jun. 30, 2011
|
|
Film Costs Policy [Abstract] | Â |
INVENTORY- AUDIO AND FILM LIBRARY |
NOTE 7. INVENTORY- AUDIO AND FILM LIBRARY
An independent appraisal service and an independent certified public accountant have collectively prepared a valuation on the Company’s audio and film library. The library is composed of a large collection of videos, movies, audio recordings, and TV shows. The appraisers considered multiple factors in determining fair market value of $23,206,942 with a net present value of $161,572,209. These factors used in the valuation process were as follows and have not been audited: Cost - $18,275,150. Cost has been calculated by the appraiser and confirmed by an independent certified public accountant working with the appraiser. The audio and film library inventory was adjusted accordingly resulting in an increase in net income in 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 Value is 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 net present 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 audio tracks and films which have not been valued as of the appraisal date which may be added to the library and valued separately. |
LITIGATION, CONTINGENCIES AND COMMITMENTS
|
9 Months Ended |
---|---|
Jun. 30, 2011
|
|
Commitments and Contingencies Disclosure [Abstract] | Â |
LITIGATION, CONTINGENCIES AND COMMITMENTS |
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 six thousand dollars ($556,000) which was received by the Company's attorney on March 30, 2009. Within ten calendar days after the Company receives payment from Laurus, the Company filed a Request for Dismissal of its claims, with prejudice, of its actions against Laurus and Chicago Title and Chicago Title. This settlement was reflected as `Other Income’ in the consolidated statements of operations.
In March 2010, 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 that 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. Carl Powers, Vice President of Sales and Marketing; was terminated for cause, subsequent to the termination, 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 continues to negotiate a settlement and hopes to have Mr. Powers paid off by September 30, 2011.
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. |
PROPERTY AND EQUIPMENT
|
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY AND EQUIPMENT |
NOTE 3. PROPERTY AND EQUIPMENT
Property and equipment are comprised of the following:
Depreciation and amortization expense related to property and equipment was $31,292 for the three month period ending June 30. 2011. |
STOCK ACTIVITY
|
9 Months Ended |
---|---|
Jun. 30, 2011
|
|
Stockholders Equity Note [Abstract] | Â |
STOCK ACTIVITY |
NOTE 9. STOCK ACTIVITY
a. CONVERTIBLE PREFERRED STOCK
At June 30, 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 executed 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 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 1for 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 June 30, 2011. As of June 30, 2011, 38,000 shares of Series B preferred stock with a par value of $0.001 were issued and outstanding.
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 1:1 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 June 30, 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. |
SEGMENTS
|
9 Months Ended |
---|---|
Jun. 30, 2011
|
|
Segment Reporting [Abstract] | Â |
SEGMENTS |
NOTE 10. SEGMENTS
The following is a discussion of our operating segments:
- MyFamily TV - is a TV network and broadcasting division centered primarily on programming that includes movies; family programming such as Highway to Heaven, The Bill Cosby Show, Route 66, & Merv Griffin’s Crosswords; children’s programming; reality TV; and lifestyle programming.
- Film & TV Productions - has over 1,000 movie titles, 200 television episodes, and 5,000 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.
- Five Platters, Inc. digitizes the audio and film library owned by the Company and licenses the rights of the library content with titles and artists like Ike and Tina Turner, The Platters Golden Anniversary with Elvis Presley and many more.
|
INCOME TAXES
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES |
NOTE 8. INCOME TAXES
No provision for Federal and state income taxes has been recorded as the Company has incurred net operating losses through June 30, 2011. At June 30, 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 commenced expiring beginning in 2011.
Deferred tax assets at June 30, 2011 consist 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 June 30, 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:
The components of the net deferred tax asset are summarized below:
|
DESCRIPTION OF BUSINESS
|
9 Months Ended |
---|---|
Jun. 30, 2011
|
|
Organization, Consolidation and Presentation Of Financial Statements [Abstract] | Â |
DESCRIPTION OF BUSINESS |
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). |
FILM COSTS
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
Entertainment [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||
FILM COSTS |
NOTE 4. FILM COSTS
The Company has completed a Documentary and Special on Michael Legrand for PBS. The Special was released in March of 2010.
Film costs at June 30, 2011 consist of the following:
Based on the Company’s estimates of projected gross revenues as of June 30, 2011, the Company expects approximately 80% of completed films, net of accumulated amortization, will be amortized during the next three years. |
NOTES PAYABLE
|
9 Months Ended |
---|---|
Jun. 30, 2011
|
|
Notes Payable [Abstract] | Â |
NOTES PAYABLE |
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).
The Company incorporated a wholly-owned subsidiary on May 31, 2011 named Five Platters, Inc. (“Platters”) in the state of Nevada. Platters mission is to digitize the audio and film library owned by the Company and to license the rights of the library content. In a financing agreement by and among the Company and Platters, and Tri-Partners, LLC, a New Jersey limited liability company, Tri-Partners agreed to provide a $600,000 loan to Platters to fund the facilitation of the transfer of the audio library to digital media along with other related uses, provided that the Company guarantees repayment of the loan proceeds. The loan bears interest of 0.46% per annum and is due on or before June 19, 2013. The loan amounts are to be provided in three $200,000 tranches; the first tranche occurring upon signature of the agreement with the second tranche to be provided September 11, 2011, and the final on January 1, 2012. As of June 30, 2011, the balance owed all lenders was $1,323,890. |
CONVERTIBLE NOTE
|
9 Months Ended |
---|---|
Jun. 30, 2011
|
|
Convertible Notes [Abstract] | Â |
CONVERTIBLE NOTE |
NOTE 6. CONVERTIBLE NOTE
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. This Note was purchased by Greystone Partners on July 8, 2010 and was extended and due July 22, 2011. The rate was increased from 10% to 14%. The interest was prepaid in stock form on September 22, 2010. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
9 Months Ended |
---|---|
Jun. 30, 2011
|
|
Accounting Policies [Abstract] | Â |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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 June 30, 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 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 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 June 30, 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 June 30, 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.
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 June 30, 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 June 30, 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. |
BANKRUPTCY FILING
|
9 Months Ended |
---|---|
Jun. 30, 2011
|
|
Reorganizations [Abstract] | Â |
BANKRUPTCY FILING |
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 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. |