UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549  FORM
10-K (Mark one) [X] ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.  For the
Fiscal Year Ended December 31, 2008  OR  [  ] TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.  VALLEY FORGE COMPOSITE TECHNOLOGIES, INC. (Exact
name of registrant as specified in its charter)  Florida

20-3061892(State or other jurisdiction of

(IRS Employerincorporation or organization)

Identification No.)50 East River Center Blvd., Suite 820, Covington,
KY

41011(Address of principal executive offices)

(Zip Code)  Issuer's telephone
number: (859) 581-5111  Securities to be
registered under Section 12(b) of the Act:   None  Securities to be
registered under Section 12(g) of the Act:  Common Stock, Par Value $.001 Per Share (Title
of class)  Indicate by check
mark if the registrant is a well-known seasoned issuer, as defined in Rule 405
of the Securities Act.        [  ] Yes
   [ X No  Indicate by check
mark if the registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act.     [  ] Yes
   [X] No  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.    [X] Yes
   [  ] No  Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K.    [X]  1     Indicate by checkmark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company.  Large accelerated filer [  ]

Accelerated filer [  ]Non-accelerated filer [  ]

Smaller reporting company [X]  Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Act).     [   ]
Yes    [X] No  The
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold as of March 30, 2009 was $3,597,587.  The
number of shares outstanding of the issuers common stock as of latest
practicable date was 51,415,349shares.    2    Safe
Harbor Statement under the Private Securities Litigation Reform Act of
1995  Information included in this Form 10-K contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended (Securities Act), and Section 21E of the Securities Exchange Act of
1934, as amended (Exchange Act).  This information may involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of Valley Forge Composite Technologies,
Inc. (the Company), to be materially different from future results,
performance or achievements expressed or implied by any forward-looking
statements.  Forward-looking statements, which involve assumptions and
describe future plans, strategies and expectations of the Company, are generally
identifiable by use of the words may, will, should, expect,
anticipate, estimate, believe, intend, or project or the negative of
these words or other variations on these words or comparable terminology.
 These forward-looking statements are based on assumptions that may be
incorrect, and there can be no assurance that these projections included in
these forward-looking statements will come to pass.  Actual results of the
Company could differ materially from those expressed or implied by the
forward-looking statements as a result of various factors.  Except as
required by applicable laws, the Company has no obligation to update publicly
any forward-looking statements for any reason, even if new information becomes
available or other events occur in the future.  PART
I  ITEM
1. BUSINESS.  General Lines of Business  Since its inception in November 1996, VLYF has positioned itself
to develop and acquire advanced technologies.  Between 1996 and
approximately 2003, the Company won numerous contracts to produce various
mechanical devices for special aerospace projects.  Historically, all of
the Companys revenues have been derived from such projects, and this continues
to be true through the filing date of this Form 10-K.  Since September 11, 2001 the Company has focused much of its
energy on the development and commercialization of its counter-terrorism
products.  Such products include an advanced detection capability for
illicit narcotics, explosives, and bio-chemical weapons hidden in cargo
containers, the THOR LVX photonuclear detection system (THOR).  The
Company also has a distributor agreement to sell a passenger weapons scanning
device, the ODIN-ULDRIS (Ultra-Low Dose Resonance Imaging System), and has
contributed to the commercial development and testing of ODIN.  VLYF is also actively engaged in the electronic components
business.  We manufacture prototype mechanical and electronic devices to
customer specifications.  The Company has been engaged in this
business in excess of eight years.  Our recent manufacturing activities
have involved the development of bearings and star cameras for aerospace
applications.  Although this is an established business segment, the
Companys primary focus remains with the development of counter-terrorism
products.  THOR  At present, and for the last six years, the Company has focused on
the acquisition of the rights to manufacture and distribute THOR in the United
States and to certain other countries and to develop THOR.  THOR is based
on a high energy miniature particle accelerator.  THOR creates photo
nuclear reactions in carbon and nitrogen isotopes present in modern explosive
devices as well as in oxygen present in narcotics.  The reactions follow a
predictable determined pattern or chemical signature that can  3    be used to identify the substance.  THOR can also be enhanced
with a fast neutron detector in order to detect fissile material.  To the best of the Companys knowledge, no existing device can
effectively screen for explosives, drugs, micro organisms and nuclear materials,
such as plutonium and weapons grade uranium. The Companys partners for the
development of next generation Explosives Detection Systems (EDS) are the
Lawrence Livermore National Laboratory (LLNL), which has been designated the
Center of Excellence for EDS technologies, and the P. N. Lebedev Physical
Institute (LPI), the premiere physics laboratory in the Russian Federation,
which has developed THOR, a device that clearly exceeds current requirements for
screening of explosives and is the only system of its kind.  Because of its small size and demonstrated effectiveness at
detecting explosive, narcotic and bio weapon substances concealed in attempted
concealment barriers, the THOR technology can be applied in many security
contexts including the external scanning of an entire cargo container or truck
container, and can be outfitted to scan airport bags, land mines, and for
protection of high value targets.  The data produced can be instantly
transmitted to the U.S. Department of Homeland Security and other agencies for
accurate threat detection, assessment, and knowledge dissemination.  Technology
Protection  The Company holds the exclusive worldwide rights to THOR until
2014, but not the rights to manufacture or sell THOR in the former Soviet Union.
 The Company has an option to indefinitely extend its rights to THOR.
 The Company estimates that is has at least five years advantage over any
competition who may attempt to build and bring to market a particle accelerator
of similar size and function.  This is because THOR has ten years of
research and development behind its prototype.  Each THOR unit is estimated
to have an operational life of ten years.  Thus, once THOR is introduced to
the market and implemented in the field, the Company believes that THOR owners
for several years are more likely than not to not purchase a competitive
product.  In the meantime, the Company will be taking steps to improve THOR
and to customize it for new applications.  Research and
Development  The Company was previously awarded a $1.8 million grant from U.S.
Department of Energy (DOE) for continued research, design, and production of the
first THOR unit.  The grant funds were allocated to the LLNL and have
been reflected in the Company's financial statements as research and development
costs.  The Company has contributed research and development expenses to
facilitate the commercialization of THOR.  These expenses are set forth in
the Companys financial statements in this Form 10-K.  The technology used to manufacture the THOR units is made possible
through an exclusive rights agreement with the P.N. Lebedev Physical Institute
of the Russian Academy of Sciences.  Production equipment for initial
accelerator detector complex (ADC) units, the heart of our detection systems, is
in place and operational, and a prototype unit has been designed.  The THOR technology is still under review by the LLNL, but the
project completion awaits only the receipt from LPI of final payment of grant
funding and LPIs release to LLNL of its final progress report.  Since THOR
represents a new technology, there are no available standards by which to
evaluate its safe operation.  Meanwhile, the Company has been working to
create such standards for DOEs use, but there is no set timetable when such
standards may be enacted.  The Company will need DOE approval of THORs
compliance with the newly written standards and possibly Transportation Safety
Administration approval before THOR can be commercially developed for use at
airports in the United States of  4    America.  However, such approvals are not required for the
Company to build and sell THOR units to other U.S. customers abroad or foreign
buyers, but U.S. Department of State approval will be required to sell a unit to
a foreign buyer.  Delay in
Development  Projected completion of THOR has been delayed a total of more than
two years due to factors beyond our control.  As the U.S. commercial
development partner in the agreement between LLNL and LPI, we are subject to
delays caused by unforeseeable bureaucratic events in two countries, and we are
usually the last to receive notice of delays.  Cumulative delays have been
a function of LLNLs failure to pay timely LPI for its work progress, resulting
in work stoppage by LPI.  We learned recently that LLNL had failed to pay
LPI for a period of over one year due to an internal reorganization at LLNL.
 Final payment to LPI is currently delayed due to governmental issues
internal to the Russian Federation, but such issues are anticipated to be soon
resolved.  Raw Material
Sources and Availability  THOR materials and parts can be manufactured to the Companys
specifications on an as needed basis from a variety of sources in the United
States of America.  Accordingly, the Company does not expect to encounter
problems in acquiring the commercial quantities of components required to build
THOR.  Homeland
Security  The Company expects that design and manufacture of homeland
security and anti-terrorism systems will grow to become the major component of
the Companys business over the next five years as the U. S. Department of
Homeland Security and the United States Military launch and ramp up efforts to
protect ports, rail, truck, and airline cargo, high value assets, and ships from
terrorists.  The THOR technology is designed to detect all typical
chemical, nuclear, and bio weapon threats to these strategic interests.  The THOR
Market  Each year more than 16 million cargo containers arrive in the
United States by ship, truck, and rail with no effective EDS machines currently
available to inspect them. Demand for accurate inspection units is increasing
monthly.  Ensuring the security of the maritime trade system is essential,
given that approximately 90 percent of the world's cargo moves by container.
 The United States Government will increase technology spending 8.5%
through FY08.  That is $68.2 billion in five years, up from $45.5 billion.
 Most important, the Administration's funding priorities dovetail well with
the critical mission areas established in the national homeland security
strategy.  The
likely market for THOR includes: ·  Ports,
cargo hubs, and rail yards·  World-wide
express cargo facilities·  United
States postal facilities·  United
States border crossings·  United
States military field applications·  World-wide
markets; and·  Technology
licensing opportunities.   5    Major
Customer Dependency and Competition  The Companys successful production and sales of THOR will
initially depend to a great extent on the United States Governments interest in
THOR.  The Company will seek other buyers worldwide both to increase market
share and to reduce its dependence on the United States Government and of any
branch or agency of the United States Government.  The Company believes
that it will have a competitive advantage over every known product available on
the market today.  The Companys THOR is more powerful than any known
competitors products, is portable, and is less expensive to operate.
 There is no way to estimate customer dependency at this time.  Traditional detection systems are based on X-rays of various
energy levels, including Nuclear Magnetic Resonance (NMR) and Quadropole
Magnetic Resonance (QMR).  However, it has been determined that X-rays lack
sufficient strength to penetrate all barriers and are often absorbed or
deflected before they can properly penetrate a container.  Utilizing
high-energy gamma rays overcomes this problem and as a result the Companys
device can penetrate any container.  To generate these high-energy gamma
rays, a particle accelerator is required.  Typical high energy particle accelerators are generally the size
of a warehouse.  Russian scientists, through decades of dedicated research,
have developed a miniature particle accelerator the size of a small table top.
 The special performance of this machine cannot be stressed enough.
 It takes focused energy to penetrate 8 feet through a cargo container and
to return a discernable signal.  To the Companys knowledge, only the
Companys EDS system can generate the necessary power levels and generate the
necessary return signals to accurately determine the amount and composition of
explosives, drugs or other illicit material.  Rather than using weak X-ray
sources or low level gamma energies created by radioactive isotopes, the Company
utilizes its miniature particle acceleratorto create high energy
gamma rays capable of penetrating any barrier and detecting explosives, unlike
any other available device.  As a comparison, typical EDS machines operate
at 0.5 to 1.5 million electron volts (MeV). The Companys THOR generates 55
MeV.  Equally important, the Companys device, via photo-nuclear
reactions, can also determine the exact chemical nature and quantity of any
explosives within the sealed container.  The system accurately penetrates
concealment media and performs to 99.6% accuracy.  THOR can be fully automated including the scanning and analysis of
the nature and volume of explosive materials, devices or their components,
meaning that no human operator is required, and it can be operated from a remote
location.  This reduces the operation costs of THOR compared to any other
product.  Also, THORs energy consumption is approximately 30 kilowatts vs.
50 kilowatts consumedby other detection
systems.  Distribution of
THOR  The Company intends to sell THOR through direct sales means in the
United States, Canada, and Europe.  The Company anticipates that it will
sell THOR units through unaffiliated dealers in the Middle East and Far East.
 The Company does not have any written distribution agreements.  Effect of
Existing or Probable Government Regulations  There is no effect on the Company's potential sales arising from
government regulations, and the Company does not anticipate any change to this
in the future.   6    Research
and Development Cost Estimate  The Company estimates that during 2008, 2007, and 2006
it incurred $0, $0, and $600,000, respectively, on research and development
activities.  Costs and
Effects of Compliance with Environmental Laws  The Company has incurred no costs nor suffered any effects to
maintain compliance with any environmental laws.  Environmental
Impact  Food and other objects scanned with the THOR prototype have
returned to below background radiation levels within approximately fifteen
minutes.  No long term effects were evidenced.  ODIN-ULDRIS  ODIN-ULDRIS is a Russian technology that is used as the airport
passenger weapons scanning system in several airports in Russia.  The
Company believes the technology is more accurate than any system in use in the
United States (articles hidden inside or on the backside of a passenger are
detected in a single scan with near medical quality imaging), is faster (each
passenger is scanned in five seconds), and is less inconvenient (passengers do
not need to remove clothing or shoes).  Between approximately April
2007 and February 2008, the Company developed a prototype of ODIN for employment
at U.S. airports and passenger terminals.  In February 2008 ODIN
passed independent radiation examination by the Radiation Safety Academy and is
certified as ANSI/NIST compliant.  Compliance with ANSI/NIST standards
means that ODIN is classified as uncontrolled and can be sold domestically and
internationally without additional TSA or Department of Energy permission.
 All results for operator, cabinet leakage, bystander exposure, and person
being examined were well below U.S. Government guidelines and standards.  Raw Material
Sources and Availability  Most ODIN materials and parts are available on an as needed basis
from a variety of sources in the United States of America and Western Europe
Accordingly, the Company does not expect to encounter problems in acquiring the
commercial quantities of components required to maintain ODIN.  The ODIN
Market  Because ODIN has both anti-terrorism and anti-crime applications,
the potential ODIN market extends to include potentially every civilian
application where quick, accurate, full-body non-intrusive personnel scanning is
necessary.  Applications could include use at schools, government
offices, sports complexes, passenger cruise liners, airports, rail and bus
terminals, corporate offices, and any number of other circumstances where
security screening is important.  However, a single ODIN unit requires
ample floor and ceiling space and can be utilized only in suitable
locations.  ODIN units are competitively priced but are not
inexpensive and therefore are suitable primarily for institutional and large
enterprise applications.  Major Customer
Dependency and Competition  The Company believes that the ODIN is the best available personnel
screening device.  ODIN is more accurate and more efficient than any known
competitors product.  However, the Company has not made  7    its first sale; so there is no way to estimate customer dependency
at this time.  Also we compete with many established systems for which
the owners may not be willing or may be unable to justify incurring the
significant per unit expense to replace their existing screening
technology.  Further, our competition is often from large or
well-financed domestic manufacturers able to spend large amounts of funds on
advertising, and having established sales forces with existing clientele.
 Therefore, we expect to have significant domestic
competition.  We have, however, focused our marketing efforts abroad
where domestic U.S. manufacturers are not as well accepted and where European
manufactured systems such as ODIN may have easier acceptance.  We do have competition internationally.  ODIN is manufactured
in Russia.  A Chinese company is licensed by the manufacturer to sell
a version of ODIN in China.  We do not believe that the Chinese company
represents a competitive threat because we do not anticipate marketing ODIN in
the Russian Federation or China.  The ODIN manufacturer is a potential
threat to our international sales because it has competed with us directly.
 However, potential international buyers have indicated to us that they
prefer to buy from an American company; we offer better technical support and a
warranty, and our prototype unit is a better product overall than the version
marketed by the manufacturer.  Distribution of
ODIN  The Company intends to sell ODIN through direct sales means in
Eurasia and India, but sales are anticipated to be made through unaffiliated
dealers in the Middle East.  The Companys three-year  reseller
agreement with Advanced Technology Development, Inc. (ATD), dated April 30,
2007, which granted the Company a three-year exclusive license to sell ODIN in
the United States, Canada, Iraq, Jordan, Saudi Arabia, Yemen, Libya, Morocco,
Kuwait, United Arab Emirates, Bahrain, Qatar, Lebanon, Oman, and Egypt, was
terminated by ATD in January 2009.However, after the reporting period, on February 1, 2009, the Company
entered into an exclusive three-year distribution agreement with a company in
Saudi Arabia.  Effect of
Existing or Probable Government Regulations  There is no effect on the Company's potential sales arising from
government regulations, and the Company does not anticipate any change to this
in the future.  Research and
Development Cost Estimate  The Company estimates that during 2008 it incurred $226,769
on research and development activities.  Costs and
Effects of Compliance with Environmental Laws  The Company has incurred no costs nor suffered any effects to
maintain compliance with any environmental laws.  Environmental
Impact  No
environmental impact has been identified.  Employees  The Company has four employees, of which two are executive
managers; one is an administrator, and  8    one is a salesman.  Louis J. Brothers is the Companys only
full-time managerial employee.  Larry K. Wilhide, an officer and a
director, is a part-time employee.  Rosemary A. Brothers, the wife of Louis
J. Brothers, is currently the Companys only administrative employee. The
Company has a fourth home-based employee who concentrates on sales of
products.  Former Shell Company  During fiscal year 2006, Quetzal Capital 1, Inc. (Quetzal), a
shell company domiciled in Florida, executed a share exchange agreement with the
shareholders of Valley Forge Composite Technologies, Inc., a Pennsylvania
corporation, whereby the shareholders of the Pennsylvania corporation took
control of Quetzal, and the Pennsylvania corporation became a wholly-owned
subsidiary of Quetzal.  The share exchange transaction occurred on July 6,
2006.  Quetzals common stock was registered pursuant to section 12(g) of
the Exchange Act, on or about August 1, 2005.  As a result of the share exchange, Quetzals status as a shell
corporation ceased, and the consolidated companys business was that of the
Pennsylvania subsidiary.  Simultaneously with the share exchange, the sole
director of Quetzal resigned, and the Pennsylvania corporations management
assumed control of Quetzal. Also on July 6, 2006, Quetzal changed its name to
Valley Forge Composite Technologies, Inc., a Florida corporation.
 (Hereafter, in this Form 10-K, the consolidated operations of the parent
and subsidiary will be referred to as the Company or VLYF).  The
Company has not materially reclassified, merged, consolidated, purchased or sold
any significant amount of assets other than in the ordinary course of business,
and the Company has not been the subject of any bankruptcy, receivership or
similar proceedings.   Risks
Relating to an Investment in the Company  Investment in our securities involves a high degree of risk.
 Investors should carefully consider the possibility that he or she may
lose his or her entire investment.  Given this possibility, we encourage
investors to evaluate the following risk factors and all other information
contained in this report and its attachments factors, in addition to other
publicly available information in our reports filed with the Securities and
Exchange Commission (SEC), before engaging in transactions in our securities.
 Any of the following risks, alone or together, could adversely affect our
business, our financial condition, or the results of our operations, and
therefore the value of your Company securities.  ·
Because the
Company had a net loss from operations of $1,643,502 and $1,998,412for the years ended December 31, 2008 and
December 31, 2007, respectively, we face a risk of insolvency.·
The Company has
never earned substantial operating revenue. We have been dependent on
equity financing to pay operating costs and to cover operating
losses.·
Because we have
no significant sales history and are substantially dependent on a major
contractor to generate future sales, our future is uncertain if our
relationship with that major contractor fails.·
The auditors
reports for our December 31, 2008, December 31, 2007 and December 31, 2006
financial statements include additional paragraphs that identify
conditions which raise substantial doubt about our ability to continue as
a going concern, which means that we may not be able to continue
operations unless we obtain additional funding. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.·
The Company had
no sales revenues in 2005 and 2007.   9    Risks Related to the Companys Business  There is
substantial doubt about the Companys ability to continue as a going concern due
to insufficient revenues to cover our operating costs.  Our
independent auditors included a going concern paragraph in their
reports issued in connection with their audits of our December 31, 2008,
December 31, 2007 and 2006 financial statements.  The auditors noted in
their reports that the Company has suffered recurring losses from operations.
 The Company had accumulated deficits of $6,267,598 and $4,418,843 as
of December 31, 2008 and December 31, 2007, respectively.  The Company had
working capital of $148,258 and $201,225 at December 31, 2008 and December 31,
2007, respectively, largely due to proceeds received from a private offering of
its securities.  These factors raise substantial doubt about our ability to
continue as a going concern.  We
incurred a net loss for the year end results for December 31, 2008 and December
31, 2007.  To the extent that we do not generate revenue from the sale of
THOR or ODIN units, then the Company may not have the ability to continue as a
going concern.  The financial statements which accompany this report do not
include any adjustments that might result from the outcome of this
uncertainty.  We are dependent on agencies of the U.S. Government and the
Lawrence Livermore National Laboratory to timely fund the development of our
THOR technology. We are also dependent on the P. N. Lebedev Physical Institute
to release the THOR prototype unit in their possession. This has resulted in
significant delay in the introduction of the THOR technology to the marketplace.
Delays beyond our control have also negatively impacted our ability to project
when the THOR project will be completed.  The
centerpiece of our homeland security technology product line is THOR. We
believed in 2006 that necessary federal government testing and approvals would
be completed before year end 2006.  Our projections were optimistic, but we
perceived no reason for delay in obtaining approvals.  In hindsight, we
were naïve, because the government review process is entirely out of our
control.  The
federal governments approval process for THOR depends on the Livermore Labs
timely payment to LPI to complete research reports.  We have learned that
LPI has stopped work on more than one occasion due to the failure of the
Livermore Lab to pay them.  However, we are not privy to when payments are
made or when a work stoppage has occurred in Russia. At present, we understand
that LPI is owed a mere $20,000 from the original $1.8 million in grant money
allocated for the THOR project.  We have not been assured when the final
payment will be made.  Completion of THOR depends on the Lawrence Livermore National
Laboratory releasing funds on a timely basis to the Russian counter-part of the
development team, LPI. Once the final research report is released by LPI to the
Livermore Lab, we expect that the Livermore Lab will conclude the THOR project.
Approval by the U.S. Department of Homeland Security is anticipated, but cannot
be guaranteed, to follow immediately thereafter.  Our
inability to know when a delay in research or payment has occurred or is
occurring has hindered our ability to predict with accuracy when the project
will be completed.  On more than one occasion we have received incorrect
information and have believed that payments were being made automatically only
to learn months later that LPI had stopped work for non-payment.  Thus,
investors should be concerned that until the completion of the THOR project has
been announced they cannot rely entirely on managements information about when
the project should be completed.     10    The reason that Livermore Lab and not the Department of Homeland
Security is the primary approving authority in the United States is because the
gamma ray technology used in THOR is regulated primarily by the Department of
Energy of which the Livermore Lab is a part. Once the Department of Energy
concludes the THOR project, we anticipate that the Department of Homeland
Security will authorize THOR for sale to institutions that it closely regulates,
such as airports, ports, and border crossings.  The sales and
production of our ODIN personnel screening technology are dependent on the
approvals of foreign governments, which are out of our control.  The
Companys prototype personnel screening device is being marketed for sale in
foreign countries, particularly in the Middle East, Asia Minor, and India.
 Obtaining the permission of foreign governments has been challenging and
slow.  Certain countries in the Middle East prohibit non-Muslims from doing
business directly with their governments, and we are required to negotiate with
government-authorized middle men. This adds an additional layer of bureaucracy
that we must penetrate in order to sell our products. Middle men also will
resell ODIN units at a price higher than we would charge for direct sales,
making ODIN less competitive on a price basis to other screening products.  Due to personal
privacy concerns, in its current version, ODIN will not be saleable in the
United States and perhaps other countries.  Although we believe ODIN to be a best of breed technology, and
having passed United States radiation safety tests, personal privacy issues
prevent us from selling the current prototype ODIN in the United States and
perhaps other countries. This is because the prototype ODIN provides a near
medical quality image that reveals the contours of the person being scanned.
 Without software modification, ODIN will not be saleable in the United
States and perhaps other countries that share its citizens personal privacy
concerns.  At this time, we have no intention of modifying the current
prototype ODIN to meet personal privacy concerns, although we may do so in the
future.  Delays in the
introduction of THOR and ODIN may have significantly impacted our ability to
compete for market share for these technologies.  Because
we have not sold any THOR or ODIN units, other vendors of less sophisticated but
competing screening technologies may be selling their products and limiting our
potential market share. Due to budgetary concerns or other factors, such
customers may not be interested in purchasing THOR or ODIN units when they
become available until their existing units are retired. This will hurt our
ability to penetrate the screening technology market when we are ready to do so.  Because we do
not have an exclusive license to develop or market or distribute ODIN, we
compete against the manufacturer and possibly other competitors who may have
ODIN units and may be redeveloping them for commercial use.  The
manufacturer of ODIN is in Russia. To our knowledge, no other person or entity
outside of Russia or China possesses an ODIN unit or possesses an exclusive
license to develop or distribute ODIN in any geographic region other than the
Russian Federation or China. Nevertheless, it is possible that potential
competitors could acquire and develop an ODIN unit and compete against us. We
have encountered one instance where the ODIN manufacturer directly competed with
us for an ODIN purchase and sale contract.  11    .  We expect to
experience significant growth in the future and may not be able to adapt our
management and operational systems to adequately handle the potential demand for
the THOR system without unanticipated significant disruption or
expense.  We
anticipate a very positive reception from potential customers to the
introduction of our THOR units into the security marketplace.  It is
possible that the demand for our product will outpace our ability to meet timely
the market demand.  Since we currently have a few full time employees, our
management and labor capacity could experience a disruption in our ability to
service our customer demands, and we may not be able to resolve this situation
without significant disruption or expense.  This in turn could negatively
impact our image and the value of our common stock.  We are
dependent on key personnel, specifically Louis J. Brothers and Larry K. Wilhide,
and have no employment agreements with them.  We are
a small company with a few employees and are dependent on the services of Louis
J. Brothers, our president, and Larry K. Wilhide, our vice-president.
 Messrs. Brothers and Wilhide are equal shareholders and their combined
voting rights are equal to 75.6% of our outstanding common stock.  We do
not have employment agreements with them, and losing either of their services
would likely have an adverse effect on our ability to conduct business.
 Messrs. Brothers and Wilhide serve as Officers and Directors of the
Company.  Messrs. Brothers and Wilhide are our founders.  Both men
have contributed to the survival and growth of the Company for eleven years.
 Mr. Brothers government and scientific contacts are essential to the
Companys ability to diversify its product line, including our ability to
license, develop, and market future additional products unrelated to the THOR
technology.  Mr. Wilhides engineering and drafting capabilities are
essential to our ability to manufacture the technology that we license.
 Therefore, there is a risk that if either Mr. Brothers or Mr. Wilhide left
the Company, there is no guarantee that we could survive.  We cannot
predict our future capital needs and may not be able to secure additional
funding.  We may
need to raise additional funds within the next twelve months in order to fund
our installation of manufacturing facilities and dealer network.  We expect
that the majority of these funds will come from the sale of our common shares to
public or private investors, which could result in a significant dilution of
ownership interests by the holders of our common stock.  Also, we cannot
assure you that we will be able to obtain the funding we deem necessary to
sustain our operations.  Failure on our
part to anticipate, identify, and respond effectively to changing marketplace
demands for the THOR technology may open doors for competitors to manufacture a
similar technology or to manufacture peripheral items used to implement the THOR
in various situations.  If we
are unable to obtain raw materials, or find manufacturing facilities, or respond
to our customers intended uses for their THOR units, our financial condition
may be harmed.  Presently, we do not own any manufacturing facilities and
are searching for suitable sites.  The materials used to build THOR units
could become scarce as supply issues may develop from time to time.  We do
not have long term contracts with any suppliers, and even if we did, there is no
guarantee that any particular supplier would not have its own supply or
financial difficultiesmaking it hard for
them to perform their contracts.  Similarly, our customers intended
applications for their THOR units may require the manufacture and delivery of
peripheral items that we are unable to produce or deliver timely.  Any of
these situations could be detrimental to our overall business and could
encourage competitors to attempt to service our customer base and reduce our
market share.  Any of these situations could negatively impact our stock
price.  12    Our
success depends on our ability to attract and retain key employees in order to
support our existing business and future expansion.  We are
actively recruiting qualified candidates to fill key executive positions within
the Company.  There is substantial competition for experienced personnel,
which we expect to continue.  We will compete for experienced personnel
with companies who have substantially greater financial resources than we do.
 If we fail to attract, motivate and retain qualified personnel, it could
harm our business and limit our ability to be successful.  If we are not
able to successfully protect our intellectual property, our ability to
capitalize on the value of the THOR technology may be
impaired.  Even
though we believe that there is no competitor currently close to being able to
introduce a security technology with the portability and accuracy of the THOR
technology, it is certain that imitators will appear who may create adaptive
technologies that achieve similar results to THOR.  We have tried to
minimize the deconstruction and adaptation of the THOR technology by potential
competitors by deliberately not patenting the core technology because we do not
want to make a public record available that will allow anyone to easily see our
methods.  However, it is certain that new technologies will appear in the
marketplace eventually, and we cannot know for certain how long our lead time
will be over potential competition.  If we are not successful at protecting
our intellectual property, our ability to capitalize on the value of the THOR
technology may be impaired.  Our products
and technologies may not qualify for protection under the SAFETY
Act.  Under
the SAFETY Act provisions of The Homeland Security Act of 2002, the federal
government provides liability limitations and the government contractor
defense applies if the Department of Homeland Security designates or
certifies technologies or products as qualified anti-terrorism technologies,
and if certain other conditions apply.  We may seek to qualify some or all
of our products and technologies under the SAFETY Acts provisions in order to
obtain such liability protections, but there is no guarantee that the U.S.
Department of Homeland Security will designate or certify our products and
technologies as a qualified anti-terrorism technology.  To the extent we
sell products not designated as qualified anti-terrorism technology, we will not
be entitled to the benefit of the SAFETY Acts cap on tort liability or U.S.
government indemnification.  Any indemnification that the U.S. government
may provide may not cover certain potential claims.  Risks
Related to Investment  We expect the price of our common stock to be volatile. As a
result, investors could suffer greater market losses in a down market than they
might experience with a more stable stock. Volatility in our stock may also
increase the risk of having to defend a securities class action suit, which
could be expensive and divert managements attention from managing our
business.  The
stock markets generally, and the Over-The-Counter (OTC) Bulletin Board in
particular, have experienced extreme price and volume fluctuations that are
often unrelated and disproportionate to the operating performance of a
particular company.  These market fluctuations, as well as general
economic, political and market conditions such as recessions or interest rate or
international currency fluctuations, may adversely affect the market for the
common stock of the company.  In the past, class action litigation has
often been brought against companies after periods of volatility in the market
price of their securities.  If such a class action suit is brought against
the Company, it could result in substantial costs and a diversion of
managements attention and resources, which would hurt business operations.   13    Our
stock value is dependent on our ability to generate net cash flows.  A large
portion of any potential return on our common stock will be dependent on our
ability to generate net cash flows.  If we cannot operate our business at a
net profit, there will be no return on shareholders equity, and this could
result in a loss of share value.  No assurance can be given that we will be
able to operate at a net profit now or in the future.  Our common
stock value may decline after the exercise of warrants or from the Companys
future capital raising events.  As of
December 31, 2008, there are 2,800,000 Class A warrants, 958,500 Class B
warrants, 1,000,000 Class C warrants, and 1,857,146 Class D warrants outstanding
that remain unexercised..  It is our belief that warrant holders will
begin to exercise their warrants and sell their underlying shares when the
Company begins selling its ODIN units or when the Company obtains its final
approval and certification from the U.S. Department of State to manufacture and
sell the THOR LVX in the United States and abroad, or when the Company receives
its first contract to purchase THOR LVX units, or other factors may trigger
warrant exercises, provided that the price of our common stock exceeds the
strike price on outstanding warrants.  Regardless of the conditions or
events that trigger the exercise of the warrants, if a large warrant exercise
event occurs, there will certainly be an increase in supply of our common stock
available and a corresponding downward pressure on our stock
price.  The sales may also make it more difficult for the Company or
its investors to sell current securities in the future at a time and price that
the Company or its current investors deem acceptable or even to sell such
securities at all.  The risk factors discussed in this Risk Factors
section may significantly affect the market price of our stock.  A low
price of our stock may result in many brokerage firms declining to deal in our
stock.  Even if a buyer finds a broker willing to effect a transaction in
our common stock, the combination of brokerage commissions, state transfer
taxes, if any, and other selling costs may exceed the selling price.
 Further, many lending institutions will not permit the use of this stock
as collateral for loans.  Thus, investors may be unable to sell or
otherwise realize the value of their investments in our securities.  We may
also enter the capital markets to raise money by selling securities.  The
number of shares that could be issued for our immediate capital requirements
could lead to a large number of shares being placed on the market which could
exert a downward trend on the price per share.  If the supply created by
these events exceeds the demand for purchase of the shares the market price for
the shares of common stock will decline.  The number of
shares to be made available in the registered offering could encourage short
sales by third parties, which could contribute to a future decline in the price
of our stock.  In
our circumstances, the provision of a large number of common shares to be issued
upon the exercise of warrants or sold outright by existing shareholders has the
potential to cause a significant downward pressure on the price of common stock,
such as ours.  This would be especially true if the shares being placed
into the market exceeds the markets ability to take up the increased number of
shares or if the Company has not performed in such a manner to encourage
additional investment in the market place.  Such events could place further
downward pressure on the price of the common stock.  As a result of the
number of shares that could be made available on the market, an opportunity
exists for short sellers and others to contribute to the future decline of our
stock price.  Persons engaged in short-sales first sell shares that they do
not own and, thereafter, purchase shares to cover their previous sales.  To
the extent the stock price declines between the time the person sells the shares
and subsequently purchases theshares, the
person engaging in short-sales will profit from the transaction, and the greater
the decline in the stock price the greater the profit to the person engaging in
such short-sales.  If there are significant short-sales of our stock, the
price decline that would result from this activity will cause our share price to  14    decline even further, which could cause any existing shareholders
of our stock to sell their shares creating additional downward pressure on the
price of the shares.  It is not possible to predict how much the share
price may decline should a short sale occur.  In the case of some companies
that have been subjected to short-sales the stock price has dropped to near
zero.  This could happen to our securities.  Our stock may be subject to significant restrictions on
resale due to federal penny stock regulations.  Our
common stock differs from many stocks because it is a penny stock.  The
SEC has adopted a number of rules to regulate penny stocks.  These rules
require that a broker or dealer, prior to entering into a transaction with a
customer, must furnish certain information related to the penny stock.  The
information that must be disclosed includes quotes on the bid and offer, any
form of compensation to be received by the broker in connection with the
transaction and information related to any cash compensation paid to any person
associated with the broker or dealer.  These
rules may affect your ability to sell our shares in any market that may develop
for our stock.  Should a market for our stock develop among dealers, it may
be inactive.  Investors in penny stocks are often unable to sell stock back
to the dealer that sold it to them.  The mark-ups or commissions charged by
broker-dealers may be greater than any profit a seller can make. Because of
large dealer spreads, investors may be unable to sell the stock immediately back
to the dealer at the same price the dealer sold it to them. In some cases, the
stock value may fall quickly.  Investors may be unable to gain any profit
from any sale of the stock, if they can sell it at all.  Potential investors should be aware that, according to the SEC
Release No. 34-29093, the market for penny stocks has suffered in recent years
from patterns of fraud and abuse.  These patterns include:  ·
control of the
market for the security by one or a few broker-dealers that are often
related to the promoter or issuer;·
manipulation of
prices through prearranged matching of purchases and sales and false and
misleading press releases;·
boiler room
practices involving high pressure sales tactics and unrealistic price
projections by inexperienced sales persons;·
excessive and
undisclosed bid-ask differentials and markups by selling broker-dealers;
and·
the wholesale
dumping of the same securities by promoters and broker-dealers after
prices have been manipulated to a desired level, along with the inevitable
collapse of those prices with consequent investor
losses.  Investors must
contact a broker-dealer to trade Over-the-Counter Bulletin Board or Pink Sheet
securities.  As a result, investors may not be able to buy or sell our
securities at the times they may wish.  Even
though our common stock is presently quoted on the OTC Bulletin Board, our
investors may not be able to sell securities when and in the manner that they
wish.  Because there are no automated systems for negotiating trades on the
OTC Bulletin Board, they are often conducted via telephone.  In times of
heavy market volume, the limitations of this process may result in a significant
increase in the time it takes to execute investor orders.  When investors
place market orders to buy or sell a specific number of shares at the current
market price it is possible for the price of a stock to go up or down
significantly during the lapse of time between placing a market order and its
execution.  15    Our
warrants may not develop a trading market before their time of
expiration.  Only
our common stock is traded in the over-the-counter
market.  We are not aware of any over-the-counter market for our
warrants, although a private sale of our warrants has
occurred.  Purchasers of a Class A or Class B warrant may not be able
to resell the warrant before it expires.  The six-month lifetime of our
Class B warrants has been extended by the Company to April 4, 2009, and Class A
warrants have a lifetime of two (2) years from May 13, 2010, the date that the
Form SB-2 registration statement in which they were registered was declared
effective by the SEC.  There is no guarantee that the Company will
extend the expiration of either the Class A or Class B warrants.  In
the event a warrant is acquired by a new purchaser, that purchaser may not be
able to resell the warrant, and, if the purchaser does not exercise the warrant
before the expiration date then in effect, the purchaser will suffer a complete
capital loss of his or her entire investment in the warrant.  If we fail to
remain current on the reporting requirements that apply to us, we could be
removed from the OTC Bulletin Board, which would limit the ability of
broker-dealers to sell our securities and the ability of stockholders to sell
their securities.  Companies with securities quoted on the OTC Bulletin Board must be
reporting issuers under Section 12 of the Exchange Act, and must be current in
their reports under Section 13 of the Exchange Act, in order to maintain price
quotation privileges on the OTC Bulletin Board.  If we fail to remain
current on our reporting requirements, shares of our common stock could be
removed from quotation on the OTC Bulletin Board.  As a result of that
removal, the market liquidity for our securities could be severely adversely
affected by limiting the ability of broker-dealers to sell our securities and
the ability of stockholders to sell their securities in the secondary
market.  ITEM 1A.
 RISK FACTORS.  Not
applicable to smaller reporting companies.  ITEM 1B.
 UNRESOLVED STAFF COMMENTS.  Not
Applicable.  ITEM
2. DESCRIPTION OF PROPERTY.  The Company does not own or lease a manufacturing facility for
production of THOR.  The Company intends to build at least one assembly
facility in the United States.  The Company has located several suitable
sites; however, negotiations for a lease and facility construction have ceased
pending receipt of required U.S. Government approval.  The Companys projection for the timing of production is dependent
on receiving necessary government approvals to commence production, the
Companys ability to build or obtain at least one suitable production facility,
and the ability to obtain additional capital if necessary to meet then current
production goals.  In the coming months, the Company will sharpen its
estimates of its capital requirements based on the quantities of THOR units
ordered and will then be able to better project the timing of production.
 Initial market demand for THOR will determine the Companys labor and
physical plant requirements.  The Companys headquarters office operates from leased space.
 On September 1, 2006, the Company entered into a lease of 2,985 square
feet of office space located at 50 E. River Center  16    Boulevard, Suite 820, Covington, Kentucky.  The space is
built without need of alteration.  The minimum annual lease payments
are $2,039 for 2007; $18,540 for 2008; $19,080 for 2009, and $19,575 for 2010.
 The term of the lease is for five years beginning on the first day of
September, 2006 and ending on the last day of August, 2011.  The annual
base rent increases every 12 months starting at approximately $40,484 and ending
at approximately $53,730.  Under the terms of the lease, additional rent
for operating expenses of the building shall also be payable by the Company at a
pro rata share deemed to be 0.928%.  These expenses are anticipated to
increase at a rate of 3% per year.  Minimum annual lease payments are:
$43,387 for 2007; $49,680 for 2008; $51,163 for 2009; $52,695 for 2010; and
$35,820 for 2011.  Therefore, the Companys minimum cumulative lease
obligation is $232,745 for the full five year lease period.  On December 1, 2007, the Company entered into a lease of 2,700
square feet of rentable warehouse space located at 1895 Airport Exchange Blvd,
Building A, Erlanger, Kentucky.  The space is built without
need for alteration.  The purpose of the lease is to enable the
Company to house and permit viewings of its ODIN prototype unit.  The
term of the lease is for 37 months beginning on the first day of December, 2007
and ending on the last day of December, 2010.  Minimum annual lease
payments are: $2,039 for 2007; $18,540 for 2008; $19,080 for 2009, and $19,575
for 2010.  In the opinion of Management, the Companys property and equipment
are adequately insured under its existing liability policy.  ITEM
3. LEGAL PROCEEDINGS.  On March 18, 2008, the Company filed suit in the U.S. District
Court for the Eastern District of Kentucky against National Concept Licensing,
Inc., Marvin Moore, Cindy L. Seide, and Richard S. Gold, jointly and severally,
seeking the recovery of $105,000 in funds paid to the defendants to produce a
television commercial and to obtain suitable time slots for a national
television advertising campaign.  The services promised by the defendants
were not delivered.  The Company seeks, in addition to the $105,000 paid to
the defendants, special or consequential damages, costs, pre-judgment interest,
attorneys fees, and such other and further relief that the court deems just and
proper. The suit is pending.  On August 29, 2008, the Company filed suit in Kenton Circuit
Court, Covington, Kentucky, against Randall and Mary Katherine Broadright, two
former employees of the Company.  The suit sought injunctive relief for the
return of proprietary Company property and the prevention of sale of the
defendants Company stock and for compensatory damages. The defendants removed
the suit to the U.S. District Court for the Eastern District of Kentucky and
filed a counter-claim against the Company for back pay and damages for the
refusal of the Company to release their Company common stock.  The case
settled after the reporting period in March 2009.  ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.  No
matters were submitted to a vote of securities holders during the fourth quarter
of fiscal year 2008.  17    PART II  ITEM
5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.  Registration
Statement and Use of Proceeds  On May 14, 2007, the SEC declared effective our registration
statement on Form SB-2 (the Registration Statement) which registered for
re-sale 1,296,500 units (comprised of one share of common stock and one Class B
warrant), 1,296,500 shares of common stock underlying the warrants, 1,296,500
common shares and Class B warrants, respectively, contained in the units, all of
which were owned by various investors; 5,000,000 shares of common stock owned by
promoters; and 3,000,000 Class A warrants and 3,000,000 shares underlying the
Class A warrants, owned by Coast To Coast Equity Group, Inc. (CTCEG), a
Company consultant.  Pertaining to the units registered in the
Registration Statement, the unit offering investment agreements contained use of
proceeds restrictions.  The Company received $1,296,500 in proceeds between August 2006
and November 2006 from the exempt offering of units.  The unit offering
agreements contained use of proceeds restrictions, with a minimum of 80% being
mandated for working capital and up to 20% being allowable for salary expense.
 The Company used the proceeds during 2006 and 2007 as required by the
limitations contained in the unit purchase agreements.  As of December 31,
2008, 338,000 Class B warrants have been exercised netting $507,000 in proceeds
to the Company, which were applied with the same 80/20 working capital/salary
expense limitation provided in the investor agreements.  Common
Stock  On July 20, 2007, the Company's common stock began trading on the
OTC Bulletin Board under the symbol "VLYF".  We have 59 shareholders of record.  The Company has one class
of common stock, $0.001 par value per share, and has 100,000,000 authorized
shares.  There were 52,882,016 shares of common stock issued but 51,415,349
shares outstanding at December 31, 2008 due to a cancellation of shares.  The common stock holds voting rights of
one vote per share, is entitled to dividends when and if declared out of funds
legally available therefor, but has no preemptive rights.  In each of the
two most recent fiscal years we did not issue or declare any dividends, and we
did not issue any securities under an equity compensation
plan. During 2008 and 2007, in each quarterly period the high and low
price per share transacted on the OTC Bulletin Board of our common stock
was:  18      FOURTH
QUARTER 2008Date
BID

HIGH/LOW11/03/08
$0.60

LOW
BID11/24/08
0.12

HIGH
BIDTHIRD
QUARTER 2008Date
BID

HIGH/LOW07/30/07
$1.85

HIGH
BID07/07/08
0.25

LOW
BIDSECOND
QUARTER 2008Date
BID

HIGH/LOW04/14/08
$3.20

HIGH
BID06/30/08
1.50

LOW
BIDFIRST
QUARTER 2008Date
BID

HIGH/LOW03/03/08
$5.40

HIGH
BID01/22/08
2.25

LOW
BIDFOURTH
QUARTER 2007Date
BID

HIGH/LOW
*12/27/07
$2.41

LOW
BID11/13/07
5.95

HIGH
BIDTHIRD
QUARTER 2007Date
BID

HIGH/LOW
*07/30/07
$13.50

HIGH
BID07/20/07
2.00

LOW
BID  Quotations reflect inter-dealer prices, without retail mark-up,
mark-down, or commissions and may not represent actual transactions.  Source:
www.finance.yahoo.com *Source: Track Data
Corporation, Level II  19    Securities
Authorized for Issuance Under Equity Compensation Plan  Equity Compensation Plan Information  Plan
Category
Number of securities to be issued upon exercise of
outstanding options, warrants and rights
Weighted-average exercise price of outstanding options,
warrants and righs
Number of securities remaining available for future
issuance under equity compensation plans (excluding securities reflected
in column (a))Equity
compensation plans approved by security holders
-
-
-Equity
compensation plans not approved by security holders
-
-
10,000,000Total
-
-
10,000,000  Recent Sales of
Unregistered Securities  During 2008, 2007, and 2006, we sold securities in various
private, unregistered transactions. Neither the Company nor any person acting on
its behalf offered or sold securities by any form of general solicitation or
general advertising. The purchasers were known to management or were known to
business associates of management. No underwriting discounts or commissions were
paid to any party by the Company.  · On August 14, 2008, we issued 1,500,000 shares of restricted
common stock to a consultant, Daniel Katz, as payment for fees required pursuant
to a consulting agreement entered into with him. Of these shares, on November 1,
2008, we issued 100,000 shares of restricted common stock to a consultant, New
Millenium PR Communications, on October 10, 2008, we issued 50,000 shares of
restricted common stock each to consultants Jeffrey Kraws and Karen Goldfarb, as
payment for fees required pursuant to a consulting agreements entered into with
them. These sales were conducted in private transactions exempt from
registration pursuant to pursuant to Sections 4(2) or 4(6) of the Securities
Act. After the reporting period, 600,000 of these shares were cancelled because
the Company terminated the consulting agreement with Daniel Katz.  · On August 8, 2008, we issued 1,500,000 shares of restricted common
stock to a consultant, the Endeavor Group, LLC, as payment for fees required
pursuant to a consulting agreement.  · For a May 8, 2008 transaction, the Company on August 8, 2008
issued 1,200,000 shares of restricted common stock to reimburse CTCEGs
principals Charles Scimeca and Tony Frudakis for their sale of 1,200,000 shares
of registered Company stock to Daniel Katz at a discount to market to induce Mr.
Katz to enter an investment banking agreement. The Company issued an additional
360,000 shares to CTCEG to compensate it for its federal tax liability. The
issue was conducted in a private transaction exempt from registration pursuant
to pursuant to Sections 4(2) or 4(6) of the Securities Act.   20    · On March, 20, 2008, the Company issued 2,516 common shares to a
third party as a retainer for advertising services. The sales were conducted in
private transactions exempt from registration pursuant to pursuant to Sections
4(2) or 4(6) of the Securities Act.  · For a transaction on February 15, 2008, the Company on August 8,
2008 issued CTCEG 200,000 shares of restricted common stock to reimburse it for
its assignment of 200,000 registered Class A warrants to Debra Elenson without
compensation from Ms. Elenson. On or about February 15, 2008, Ms. Elenson
exercised the warrants. The issue was conducted in a private transaction exempt
from registration pursuant to pursuant to Sections 4(2) or 4(6) of the
Securities Act.  · On January, 28, 2008, the Company issued 10,000 common shares to a
third party as a retainer for investment banking services. The sales were
conducted in private transactions exempt from registration pursuant to pursuant
to Sections 4(2) or 4(6) of the Securities Act.  · On August 22, 2007, the Company entered into a Standby Equity
Agreement with CTCEG to sell 333,333 shares of common stock at $1.50 per share
on demand of the Company.  The Company established a price protection
provision relating to the selling price of common stock per the agreement.
 The provision states that parties to the agreement are entitled to receive
additional stock if the Company sells shares of stock for less than $1.50 per
share of common stock to an investor prior to the time limitations specified
which is one (1) year from the effective date of the agreement.  As of
December 31, 2007, the Company had sold 271,333 shares for
$407,000.  The Company sold an additional 62,000 shares for $93,000 on
January 10, 2008. The sales were conducted in private transactions exempt from
registration pursuant to pursuant to Sections 4(2) or 4(6) of the Securities
Act.  · On August 15, 2007, the Board of Directors of the Company issued
50,000 shares of restricted common stock to an employee of the
Company.  The Company is incurring a $242,500 expense based on the
closing price of the stock on August 15, 2007.  The employee received
an additional 25,000 shares on or about August 8, 2008.  The contractor
will also receive an additional 25,000 restricted shares on August 1, 2009,
provided that the contractor is performing services for the Company on the given
date. The sale was conducted in a
private transaction exempt from registration pursuant to pursuant to Sections
4(2) or 4(6) of the Securities Act.  · During the period between August 2006 and November 10, 2006, the
Company sold 1,296,500 units consisting of one share of $0.001 par value common
stock and one Class B warrant to purchase one share of $0.001 par value common
stock at an exercise price of $1.50 per warrant. The units were sold at a price
of $1.00 per unit and the Company raised $1,296,500 in gross proceeds from the
offering. The offering was conducted as an offering exempt from registration
pursuant to Regulation D Rule 506. We sold to 54 purchasers, and all but one of
which represented that they are accredited investors. The unaccredited
investors, a husband and wife, represented that they had such knowledge and
experience in financial and business matters that they are capable of evaluating
the merits and risks of the prospective investment.  · On August 11, 2006, the Company issued a convertible debenture to
Coast To Coast Equity Group, Inc. in the amount of $42,000 in exchange for cash
received.  The interest rate is 4% per annum and runs from August 11, 2006.
 The amounts due may be paid in cash or cash equivalents, including but not
limited to payment in the form of the Companys common  21    stock valued at $1.00 per share, or Coast To Coast Equity Group,
Inc. may apply amounts due toward the cash exercise of its Class A Warrants.
 The sale was conducted in a private transaction exempt from registration
pursuant to pursuant to Sections 4(2) or 4(6) of the Securities Act.  Other
Securities  Our Class A warrants are held by a consultant, CTCEG and two of
its former shareholders.  There are 2,800,000 unexercised Class A warrants
with each warrant being exercisable for one share of common stock.  One
million Class A warrants are exercisable when the market price per share of our
common stock reaches $1.00; one million Class A warrants are exercisable when
the market price per share of our common stock reaches $1.50, and one million
Class A warrants are exercisable when the market price per share of our common
stock reaches $2.00.  The Class A warrants expire two years after the
registration statement registering these warrants for sale becomes effective,
which is May 14, 2009. On February 8, 2008, the Board of Directors extended the
consulting and warranty agreement until May 13, 2010. CTCEG is not required to
pay cash to exercise in-the-money warrants.  The full text of the
Consulting Agreement and the Warrant Agreement that describes the Class A
warrants in detail are incorporated by reference as Exhibits (see List of
Exhibits).  The Company issued 1,296,500 Class B warrants as part of a
unit offering in 2006.  A unit contains one share of restricted common
stock and one restricted Class B warrant.  These Class B warrants are
exercisable at $1.50 per share and do not contain the cashless exercise rights
provided to CTCEG.  The Class B warrants, if not exercised, expire on April
4, 2009 by extension of the contractual expiration date by the Companys board
of directors.  The full text of the Securities Purchase Agreement that
describes the Class B warrants in detail is incorporated by reference as an
Exhibit (see List of Exhibits).  The units had price protection rights for
a period of six (6) months from May 14, 2007, while the common stock contained
in the units have price protection rights until May 14, 2008.  The price
protection mechanism enabled the holder of the common stock and/or warrant to
receive additional shares and/or warrants if during the operative time period
the price at which future common stock or warrants are sold is less than the
price per unit paid for his or her unit.  The price protection mechanism
has not been triggered and has expired.  On September 29, 2008 the Company granted seven-year Series D
Warrants to MKM and related parties to purchase 1,857,146 shares of common stock
at a price of $0.75 per share.  The sale was conducted in a private
transaction exempt from registration pursuant to pursuant to Section 4(2) of the
Securities Act and Regulation D Rule 506. On July 3, 2008, the Company granted to MKM seven-year Series C
Warrants to purchase 1,000,000 shares of common stock at a price of $1.61.
 The sale was conducted in a private transaction exempt from registration
pursuant to pursuant to Section 4(2) of the Securities Act and Regulation D Rule
506.  Neither the warrants nor the units have a market at the present
time.  The Class A and Class B warrants are freely assignable by the
buyers. The Class C, D, and E warrants are restricted securities and are
assignable by the buyers in transactions compliant with exemptions from
registration under the Securities Act and the rules promulgated thereunder.  The Company may offer additional securities during fiscal year
2008 as our capital requirements dictate or as suitable funding opportunities
present themselves.  ITEM
6.  SELECTED FINANCIAL DATA.  Not
Applicable.  22     ITEM 7.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.  This Management's Discussion and Analysis or Plan of Operation
(MD&A) contains forward-looking statements that involve known and unknown
risks, significant 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 those forward-looking statements.
 You can identify forward-looking statements by the use of the words may,
will, should, could, expects, plans, anticipates, believes, estimates, predicts,
intends, potential, proposed, or continue or the negative of those terms.
 These statements are only predictions. In evaluating these statements, you
should specifically consider various factors, including the risk factors
outlined below.  These factors may cause our actual results to differ
materially from any forward-looking statements.  Although we believe that
the exceptions reflected in the forward-looking statements are reasonable, we
cannot guarantee future results, levels of activity, performance or
achievements.  Therefore, actual results may differ materially and
adversely from those expressed in any forward-looking statements.  We
undertake no obligation to revise or update publicly any forward-looking
statements for any reason.  We
believe that the impact of inflation and changing prices on our net sales and
revenues and on income from continuing operations has been inconsequential.  Liquidity and Capital Resources  Between
December 31, 2007 and December 31, 2008, our capital requirements have largely
been met through sales of securities. We recorded $132,000 from a sale of a
momentum wheel to NASA in May, 2008.  Until we are able to generate
significant revenues from our core homeland security-related detection
technologies, we anticipate being dependent on sales of securities to finance
our ongoing capital requirements. The following liquidity events describe the
amounts and sources of our capital resources and describe how we have paid our
expenses.  We
have incurred losses for the past two fiscal years and had a net loss of
$1,848,755 for the year ended December 31, 2008. Our auditors have expressed
substantial doubt that we can continue as a going concern.  Historically, we have relied on revenues, debt financing and sales
of our common stock to satisfy our cash requirements. For the year ended
December 31, 2008 we received cash proceeds of $123,400 from revenues, $343,000
from sales of our common stock and $1,260,000 in debt financing.  For
the year ended December 31, 2007, we received cash proceeds from debt financing
of $160,000 and sales of our common stock of $914,000.  For
the year ended December 31, 2008 we issued 4,459,516 shares. For the year
ended December 31, 2007 we issued 659,333 shares for services. Management
anticipates that we will continue to issue shares for services in the short
term.  Management intends to finance our 2009 operations primarily with
the revenue from product sales and any cash short falls will be addressed
through equity financing, if available. Management expects revenues will be
realized but not to the point of profitability in the short term. We will need
to continue to raise additional capital, both internally and externally, to
cover cash shortfalls and to compete in our markets. At our current revenue
levels management believes we will require an additional $1,000,000 during the
next 12 months to satisfy our cash requirements of approximately $83,333 per
month. These  23    operating costs include cost of sales, general and administrative
expenses, salaries and benefits and professional fees. We have insufficient
financing commitments in place to meet our expected cash requirements for 2009
and we cannot assure you that we will be able to obtain financing on favorable
terms. If we cannot obtain financing to fund our operations in 2009, then we may
be required to reduce our expenses and scale back our operations.  Commitments and Contingent Liabilities  The
Company leases office and warehouse spaces in Covington, KY and Erlanger, KY
under a five-year and 37 month non-cancelable operating lease,
expiring August 2011 and December 2010, respectively. Base rent is $5,807
per month with an annual rent escalator of 3%. At December 31, 2008, future
minimum payments for operating leases related to our office and manufacturing
facilities were $178,333 through August 2011.  Our
total current liabilities increased to $615,415 at December 31, 2008 compared to
$612,939 at December 31, 2007. Our total current liabilities at December 31,
2008 included accounts payable and accrued expenses of $246,857,
convertible debentures of $42,000 and a loan from shareholder of $326,558.  Results of Operations  The
following discussions are based on the unaudited consolidated financial
statements of Valley Forge Composite Technologies and its
subsidiaries. These charts and discussions summarize our financial statements
for the years ended December 31, 2008, and 2007, and should be read in
conjunction with the financial statements, and notes thereto, included with this
report at Part II, Item 8, below.  SUMMARY COMPARISON
OPERATING RESULTSYear ended December 31,2008

2007Gross
Profit
$
59,932
$
-Total
operating expenses

1,703,434

1,998,412Loss from
operations

(1,643,502)

(1,998,412)Total other
income (expense)

(205,253)

(1,998,412)Net income
(loss)
$
(1,848,755)
$
(2,011,120)Net income
(loss) per share
$
(0.04)
$
(0.04)  Our
operating expenses have generally increased from the year ended December 31,
2008 compared with the year ended December 31,
2007.  The major components of our operating expenses consist of
selling and administrative expense and stock based consulting for the comparable
reporting periods.  For the years ended December 31, 2008 and December
31, 2007, our selling and administrative expenses were $1,560,984 and
$1,230,244, respectively, while our stock based consulting expenses were
$142,450 and $284,900, respectively.  The
Company only recognizes revenue when persuasive evidence of a customer or
distributor arrangement exists, receipt of goods by the customer occurs, the
price is fixed or determinable, collection is reasonably assured and upon the
customer acceptance of the goods.   24    Persuasive evidence of a customer or distributor arrangement
exists upon the Companys receipt of a signed purchase order from the customer,
the Companys shipment of the goods as specified in the purchase order and the
customers receipt of the goods ordered.  A
sales agreement is initiated when the customer submits a signed purchase order
which states the product(s) ordered, price, quantity and the terms and
conditions of sale. Acceptance occurs upon the earlier of: (1) the Companys
receipt of a written acceptance of the goods from the customer; or (2)
expiration of the time period stated in each purchase order for final payment
which may vary with each order. The customer has a right of return from the date
that the shipment occurs until the final payment date stated in the purchase
order. Revenue is only recognized upon completion of product testing by the
customer, but not later than 180 days after product shipment occurs.  The
following chart provides a breakdown of our sales in 2008 and 2007.  December 31,


December 31,2008


2007Valley Forge
Detection Systems, Inc.


-



-Valley Forge
Aerospace, Inc.


132,000



-Valley Forge
Imaging, Inc.


-



-Valley Forge
Imaging Technologies, inc.


-



-Totals per
financial statements:


132,000



-  Our
total operating expense was $1,703,434 and $1,998,412 for the years ended
December 31, 2008 and December 31, 2007, respectively.  Our
average monthly cost of operations from January 2008 through December 2008 was
$154,063. Excluding, non-cash charges of $142,450 for stock based consulting,
$415,269 for issuances of common stock for services, and $26,250 in stock based
compensation, the monthly cost of operations from January 2008 through December
2008 was $105,399.  As of
December 31, 2008, we have approximately $305,179 in cash remaining. Of this
amount, $305,179 is available for use as payroll expense pursuant to the terms
of the investment agreements entered into with purchasers of units in the Unit
Offering.  At this
rate, and barring any material changes to our capital requirements, we
anticipate being able to sustain our operations for seven months, at which
time we will have to obtain additional capital funding. Thus, our ability to
sustain ourselves on our current cash position depends almost entirely on: (1)
how long the government approval process may take and how high the initial
market demand is for the THOR system, and (2) how long it takes to realize
revenue from sales of the ODIN ULDRIS unit; and (3) whether additional cash
infusions are obtained via the exercise of outstanding warrants or from other
sources. While the receipt of purchase orders for the THOR will dictate our
initial production needs, the timing of the government approval process is
largely out of our control. Likewise, we have just begun to market the ODIN
ULDRIS system and do not have a forecast of how long it may take to realize
revenues from any sales of such units.  25     Other
than for general operational and payroll expenses, which may also include the
payment of additional research and development and marketing expenses, the
Companys day-to-day operations are not expected to change materially until such
time as we obtain the necessary government approvals to commence production and
then the delivery of the first commercial THOR devices. We do not anticipate
having significant additional research and development expenses during the next
twelve months, but such expenses may be necessary to facilitate the obtaining of
U.S. Government approvals before we can commence production of the THOR system
or may be necessary to facilitate the execution of our recent contract with
NASA.  In the
coming months, the Company will sharpen its estimates of its capital
requirements based on the quantities of THOR and ODIN ULDRIS units ordered and
based on reliable information enabling us to better predict when government
approvals might be obtained for the THOR system.  Description of Critical Accounting Policies and Estimates,
Going Concern, and Fair Value of Financial Instruments  This section of our Form 10-K contains a description of our
critical accounting policies as they pertain to: the Companys business as a
going concern, our use of estimates, our fair valuation of financial
instruments, our revenue recognition policy, and to the effect on our financial
statements of recent accounting pronouncements.  A more comprehensive
discussion of our critical accounting policies, and certain additional
accounting policies, can be found in Note 1 to the financial statements.  Critical Accounting Policies and Estimates  The accompanying consolidated financial statements have been
prepared by the Company.  The Companys financial statements are
consolidated with the results of its subsidiaries.  All material
inter-company balances and transactions have been eliminated.  Our financial statements have been prepared according to
accounting principles generally accepted in the
United States of America.  In preparing these financial statements, we are
required to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses and related disclosures of contingent
assets and liabilities.  We evaluate these estimates on an on-going basis.
 We base these estimates on historical experiences and on various other
assumptions that we believe are reasonable under the circumstances, the results
of which form the basis for making judgments about the carrying values of assets
and liabilities.  Actual results may differ from these estimates under
different assumptions or conditions.  At this point in our operations,
subjective judgments do not have a material impact on our financial statements
except as discussed in the next paragraph.  Going
Concern  The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern.  The attainment of
sustainable profitability and positive cash flow from operations is dependent on
certain future events.  These conditions raise substantial doubt about the
Companys ability to continue as a going concern.  The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.  26     Use of
Estimates  In preparing financial statements in conformity with generally
accepted accounting principles, Management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the reported period.  Actual
results could differ from those estimates.  Fair Value of
Financial Instruments  The Companys financial instruments consist of cash, security
deposits, due to shareholders, accounts payables, accrued expenses and a
convertible debenture.  The carrying values of these financial instruments
approximate the fair value due to their short term maturities.  Revenue
Recognition  The Company only recognizes revenue when persuasive evidence of a
customer or distributor arrangement exists, receipt of goods by the customer
occurs, the price is fixed or determinable, collection is reasonably assured and
upon the customer acceptance of the goods.  Persuasive evidence of a customer or distributor arrangement
exists upon the Companys receipt of a signed purchase order from the customer,
the Companys shipment of the goods as specified in the purchase order and the
customers receipt of the goods ordered.  A sales agreement is initiated when the customer submits a signed
purchase order which states the product(s) ordered, price, quantity and the
terms and conditions of sale.  Acceptance occurs upon the earlier of; (1)
the Companys receipt of a written acceptance of the goods from the customer; or
(2) expiration of the time period stated in each purchase order for final
payment which may vary with each order.  The customer has a right of return
from the date that the shipment occurs until the final payment date stated in
the purchase order.  Revenue is only recognized upon completion of product
testing by the customer, but not later than 180 days after product shipment
occurs.  Recent Accounting
Pronouncements  The Company does not believe that recent accounting
pronouncementswill have a material affect on the
content or presentation of its financial statements.  The Company does not believe that any other recently issued, but
not yet effective accounting standards will have a material effect on the
Companys consolidated financial position, results of operations or cash
flows.  Off-Balance Sheet
Arrangements  The Company does not have any off-balance sheet arrangements that
have or are reasonably likely to have a current or future effect on the
Companys financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or capital
resources that is material to investors.  27     Contractual
Obligations  As
a smaller reporting company as defined by Item 10 of Regulation S-K, the
Company is not required to provide this information.  ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.  Not
Applicable.  ITEM 8.
 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.  INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS  PAGEReport of
Independent Registered Public Accounting Firm,
29Report of
Independent Registered Public Accounting Firm
30Consolidated
Balance Sheet as of December 31, 2008
31Consolidated
Statements of Operations for the years ended December 31, 2008 and
2007
32Consolidated
Statements of Changes in Stockholders' Equity (Deficit) for the years
ended December 31, 2008 and 2007
33Consolidated
Statements of Cash Flows for the years ended December 31, 2008 and
2007
34Notes to
Consolidated Financial Statements
35   28       [valleyforge10kfinal001.jpg]        To the
Board of Directors and Shareholders Valley
Forge Composite Technologies, Inc Covington, Kentucky  Report of Independent Registered Public Accounting Firm  We have
audited the balance sheet of, Valley Forge Composite Technologies, Inc. as of
December 31, 2008 and the related statements of operations, stockholders equity
and cash flows for the year ending December 31, 2008.  These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audit.  We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  We believe that
our audit provides reasonable basis for my opinion.  In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of, Valley Forge Composite
Technologies Inc as of December 31, 2008, the results of operations and its cash
flows for the years ended December 31, 2008 in conformity with generally
accepted accounting principles in the United States of America.  The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern.  As discussed in Note 2 to the financial
statements, the Company has incurred net losses since inception, which raise
substantial doubt about its ability to continue as a going concern.  The
financial statements do not include any adjustment that might result from the
outcome of this uncertainty.  /s/
Hawkins Accounting April
14, 2009 Los
Angeles, CA  29    REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM    To the Board of
Directors Valley Forge
Composite Technologies, Inc.  We have audited the accompanying consolidated balance sheet of
Valley Forge Composite Technologies, Inc. as of December 31, 2007 and the
related consolidated statements of operations, changes in shareholders equity
(deficit) and cash flows for the year then ended. These consolidated financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.  We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control
over financial reporting.  Accordingly, we express no such opinion. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.  In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of Valley
Forge Composite Technologies, Inc. as of December 31, 2007 and the results
of their operations and their cash flows for the year then ended in conformity
with accounting principles generally accepted in the United States of
America.  The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going concern. As
discussed in Note 2 to the financial statements, the Company has suffered
recurring losses from operations that raises substantial doubt about its ability
to continue as a going concern. Managements plan in regard to these matters is
also described in Note 2. The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.   March 27,
2008
By:
/s/ SHERB
& CO., LLPBoca Raton,
Florida

Certified
Public Accountants     30     VALLEY FORGE
COMPOSITE TECHNOLOGIES, INC.CONSOLIDATED
BALANCE SHEETDecember
31,ASSETS






2008

2007Current assets:Cash





$
305,179
$
88,656Accounts receivable






9,492

-Inventory






225,000

460,114Prepaid expenses






203,002

42,659Deposits with vendors






21,000

222,735Total current assets






763,673

814,164Property and equipment,
net





51,623

59,747Other assets:Security deposit






5,535

5,535Capitalized R&D costs, net
of amortization of $24,409 and $0December 31, 2008 and
2007





219,681

-Loan fees, net of amortization
of $26,614 and $0December 31,
2008 and 2007





208,071

-Total other assets






433,287

5,535Total Assets





$
1,248,583
$
879,446LIABILITIES AND SHAREHOLDERS'
EQUITYCurrent liabilities:Accounts payable and accrued
expenses


$
246,857
$
128,381Note payable






-

160,000Deferred revenue






-

66,000Convertible debenture






42,000

42,000Due to shareholder






326,558

216,558Total current
liabilities






615,415

612,939Long-term debt, net of debt
discount of $1,011,553 and $0at December 31, 2008 and
2007





138,447

-Shareholders' Equity:Common stock, $.001 par value,
100,000,000 sharesauthorized; 52,882,016 issued
but 51,415,349outstanding at December 31,
2008, and 46,955,833shares issued and outstanding
at December 31, 2007



51,415

46,956Additional paid-in
capital





6,710,904

4,638,394Accumulated deficit






(6,267,598)

(4,418,843)Total shareholders'
equity






494,721

266,507Total Liabilities and
Shareholders' Equity


$
1,248,583
$
879,446The accompanying notes should
be read in conjunction with the audited consolidated financial
statements.   31      VALLEY FORGE
COMPOSITE TECHNOLOGIES, INCCONSOLIDATED
STATEMENTS OF OPERATIONSFor the years
endedDecember
31,2008

2007Sales



$
132,000
$
-Cost of sales



72,068

-Gross Profit



59,932

-Costs and expensesLoss on shipped inventory

-

483,268Selling and
administrative expenses
1,560,984

1,230,244Stock based consulting


142,450

284,9001,703,434

1,998,412Loss from operations


(1,643,502)

(1,998,412)Other incomeInterest expense



(208,567)

(23,894)Investment income


3,314

11,186Net loss



$
(1,848,755)
$
(2,011,120)Loss per common shareBasic and Diluted

$
(0.04)
$
(0.04)Weighted Average Common
Shares OutstandingBasic and Diluted


49,362,903

46,482,853  The accompanying notes should be read
in conjunction with the audited consolidated financial statements  32     VALLEY FORGE
COMPOSITE TECHNOLOGIES, INC.CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITYYEARS ENDED
DECEMBER 31, 2008 AND 2007Common
Stock

Number of
Shares

Additional
Paid-in
Capital

Accumulated
Deficit

TotalBALANCE AT JANUARY 1,
2007
$
46,296

46,296,500
$
3,197,654
$
(2,407,723)
$
836,227Stock based consulting -
warrants

-

-

284,900

-

284,900Proceeds from exercise of
warrants

338

338,000

506,662

-

507,000Stock based compensation

50

50,000

242,450

-

242,500Proceeds from standby equity
agreement

272

271,333

406,728

-

407,000Net loss for the year ended
December 31, 2007

-

-

-

(2,011,120)

(2,011,120)BALANCE AT DECEMBER 31,
2007

46,956

46,955,833

4,638,394

(4,418,843)

266,507Stock based consulting -
warrants

-

-

142,450

-

142,450Proceeds from exercise of
warrants

200

200,000

199,800

-

200,000Stock issued for
services

412

412,516

414,857

-

415,269Stock based compensation

25

25,000

26,225

-

26,250Stock issued for money
raisers

2,200

2,200,000

(2,200)

-

-Proceeds from sale of common
stock

1,560

1,560,000

48,440

-

50,000Debt discount

-

-

1,150,000

-

1,150,000Proceeds from standby equity
agreement

62

62,000

92,938

-

93,000Net loss for the year ended
December 31, 2008

-

-

-

(1,848,755)

(1,848,755)BALANCE AT DECEMBER 31,
2008
$
51,415

51,415,349
$
6,710,904
$
(6,267,598)
$
494,721The accompanying
notes should be read in conjunction with the audited consolidated
financial statements.   33     VALLEY FORGE
COMPOSITE TECHNOLOGIES, INC.CONSOLIDATED
STATEMENTS OF CASH FLOWSFor the year
ending December 31,2008

2007CASH FLOWS FROM OPERATING
ACTIVITIESNet loss


$
(1,848,755)
$
(2,011,120)Adjustments to reconcile net
lossto net cash used in operating
activities:Depreciation  and
amortization expense
64,948

13,574Amortization of debt
discount
138,447Loss on shipped
inventory

-

483,268Common stock issued for
services
415,269

-Fair value of warrants issued
for consulting services
142,450

284,900Stock based compensation
26,250

242,500Change in operating assets and
liabilities(Increase) decrease in:Accounts receivable

(9,492)

-Inventory


235,114

(475,644)Prepaid expenses

(160,343)

86,132Vendor deposits

201,735

(222,735)Increase (decrease) in:Accounts payable and accrued
expenses
118,476

(126,299)Deferred revenue

(66,000)

66,000NET
CASH USED IN OPERATING ACTIVITIES
(741,901)

(1,659,424)CASH FLOWS FROM INVESTING
ACTIVITIESCapitalized R&D
Costs

(244,090)

-Loan fees



(234,685)

-Purchases of equipment

(5,801)

(9,917)NET
CASH USED IN INVESTING ACTIVITIES
(484,576)

(9,917)CASH FLOWS FROM FINANCING
ACTIVITIESGross proceeds from exercise of
warrants
200,000

507,000Proceeds from issuance of
common stock per standby equity agreement
93,000

407,000Proceeds from issuance of
common stock
50,000

-Proceeds from long-term
debt

1,150,000

160,000Repayments of notes
payable

(160,000)

-Repayments to
shareholder

-

-Proceeds from shareholder
loans

110,000

-NET
CASH PROVIDED FROM FINANCING ACTIVITIES
1,443,000

1,074,000NET INCREASE (DECREASE) IN
CASH
216,523

(595,341)CASH AT BEGINNING OF
PERIOD

88,656

683,997CASH AT END OF PERIOD
$
305,179

88,656SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION
$
-
$
-Cash paid during the period
for:Income taxes

$
-
$
-Interest


$
28,992
$
9,192The accompanying
notes should be read in conjunction with the audited consolidated
financial statements.  34    VALLEY FORGE COMPOSITE TECHNOLOGIES, INC.  NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS DECEMBER
31, 2008  NOTE 1
 NATURE OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNFICANT
ACCOUNTING POLICIES  Nature of the Business  The
Companys primary operating subsidiary has been Valley Forge Composite
Technologies, Inc., a Pennsylvania corporation, which was incorporated in
Pennsylvania on November 21, 1996. On August 7, 2007, Valley Forge Composite
Technologies, Inc., a Pennsylvania corporation, was re-domiciled as a Florida
corporation and changed its name to Valley Forge Detection Systems, Inc.
(VFDS).  Simultaneously, the business segments of the former Pennsylvania
company were split into new Florida corporations, with VFDS aerospace segment
assigned to Valley Forge Aerospace, Inc. (VFA); VFDS personnel screening
technologies assigned to Valley Forge Imaging, Inc. (VFI), and VFDS
development and commercialization of potential new product lines assigned to
Valley Forge Emerging Technologies, Inc. (VFET).  The Company is the 100%
shareholder of its four subsidiaries.  The
primary activity of VFI is to market and sell a personnel screening device known
as ODIN-ULDRIS (Ultra Low Dose Radiographic Imaging System).  On April 30,
2007, the Company signed an agreement to become a re-seller of the
ODIN-ULDRIS.  VFA is
actively engaged in the design and manufacture of attitude control instruments
for small satellites, in particular, mini momentum reaction wheels based on
VFAs propriety composite and bearing technology.  VFET
evaluates miscellaneous scientific technologies not matching the Companys
aerospace and anti-terrorism business segments for potential commercialization.  Between
1996 and 2003, through VFDS, the Company won numerous contracts to produce
various mechanical devices for special projects. Since September 11, 2001 the
Company has focused much of its energy on the development and commercialization
of its counter-terrorism products.  Such products include an advanced
detection capability for illicit narcotics, explosives, and bio-chemical weapons
using photo-nuclear reactions to initiate secondary gamma quanta the result of
which is a unique and distinguishable signal identifying each component of a
substance.  This product is known as the THOR LVX photonuclear detection
system (THOR).  The development and commercialization of THOR is the
present focus of VFDS.  On July
6, 2006, Quetzal Capital 1, Inc., a Florida corporation (QC1) entered into a
share exchange agreement with VFDS predecessor Pennsylvania corporation. Under
the share exchange agreement, QC1 issued 40,000,000 shares of its common stock
to VFDS shareholders for the acquisition of all of the outstanding capital stock
of VFDS.  For financial accounting purposes, the exchange of stock was
treated as a recapitalization of VFDS with the former shareholders of QC1
retaining 5,000,000 shares (or approximately 11%) of the public
company.  Prior to the merger, QC1 was a reporting shell corporation
with no operations. The share exchange was approved by QC1 and its sole
shareholder, Quetzal Capital Funding I, Inc. (QCF1), and by VFDS board of
directors and a majority of its shareholders.   QC1 changed its
name to Valley Forge Composite Technologies, Inc., a Florida corporation, and is
referred to throughout this report as the Company.  35     NOTE 1
 NATURE OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNFICANT
ACCOUNTING POLICIES  Several
related agreements were also made with parties associated or affiliated with QC1
in connection with the approval of the share exchange. These agreements involved
the approval of a consulting agreement and a warrant agreement with Coast To
Coast Equity Group, Inc. (CTCEG), a company owned by the same shareholders who
owned QC1s sole corporate shareholder, QCF1, and a registration rights
agreement for QCF1, CTCEG and private placement unit holders. On March 14, 2007,
QCF1 was dissolved by unanimous decision of its three shareholders, Charles J.
Scimeca, George Frudakis, and Tony N. Frudakis. This resulted in the Company
gaining two additional shareholders due to the splitting of QCF1's share of the
Companys common stock between the three individual shareholders of QCF1.  Basis of Presentation  The
accompanying consolidated financial statements have been prepared by Valley
Forge Composite Technologies, Inc., a Florida corporation (the Company). The
Companys consolidated financial statements are prepared in accordance with
generally accepted accounting principles in the United States of America (US
GAAP). The consolidated financial statements of the Company include the Company
and its subsidiaries. All material inter-company balances and transactions have
been eliminated.  Going Concern  The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. The attainment of sustainable profitability
and positive cash flow from operations is dependent on certain future events.
These conditions raise substantial doubt about the Companys ability to continue
as a going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty (See Note 2).  Use
of Estimates  In
preparing financial statements in conformity with generally accepted accounting
principles, management is required to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and revenues and
expenses during the reported period. Actual results could differ from those
estimates.  Comprehensive Income  The
Company follows the Statement of Financial Accounting Standards (SFAS) No.
130, Reporting Comprehensive Income. Comprehensive income is a more inclusive
financial reporting methodology that includes disclosure of certain financial
information that historically has not been recognized in the calculation of net
income. Since the Company has no items of other comprehensive income,
comprehensive income (loss) is equal to net income (loss).  Fair
Value of Financial Instruments  The
Companys financial instruments consist of cash, security deposits, due to
shareholders, accounts payables, accrued expenses and a convertible debenture.
The carrying values of these financial instruments approximate the fair value
due to their short term maturities.   36     NOTE 1  NATURE OF
BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNFICANT ACCOUNTING
POLICIES  Concentration of Credit Risk  Certain
financial instruments potentially subject the Company to concentrations of
credit risk. These financial instruments consist primarily of cash. The Company
maintains its cash investments in high credit quality financial institutions. At
various times, the Company has deposits in excess of the Federal Deposit
Insurance Corporation limit. The Company has not experienced any losses on these
accounts. At December 31, 2008, the Companys cash deposits exceeded the FDIC
insured limits by $76,473.  Cash
Equivalents  The
Company considers all short-term securities purchased with a maturity of three
months or less to be cash equivalents. At December 31, 2008, the Company held no
cash equivalent securities.  Inventories  The Companys
accounts for finished goods inventory by applying the lower of cost or market
method, on a first-in, first-out (FIFO) basis. Inventories consist of the
following:  December 31


December 312008


2007Raw
materials

$
-0-


$
-0-Work in
process


-0-



460,114Finished
goods


225,000



-0-$
225,000


$
460,114
  Property and Equipment  Property and equipment is stated at cost. Depreciation on property
and equipment is calculated using the straight-line method over the estimated
useful lives of the assets.  Computers and Equipment 5
years Furniture and fixtures 7
years  Expenditures for major renewals and betterments that extend the
useful lives of the assets are capitalized.  Expenditures for maintenance
and repairs of the assets are charged to expense as incurred.  Loan
Fees  Loan
fees are stated at cost.  Amortization on loan fees is calculated using the
straight-line method over the term of the loans.  Revenue Recognition  The
Company only recognizes revenue when persuasive evidence of a customer or
distributor arrangement exists, receipt of goods by the customer occurs, the
price is fixed or determinable, collection is reasonably assured and upon the
customer acceptance of the goods.  Persuasive evidence of a customer or distributor arrangement
exists upon the Companys receipt of a signed purchase order from the customer,
the Companys shipment of the goods as specified in the purchase order and the
customers receipt of the goods ordered.   37    A sales agreement is initiated when the customer submits a signed
purchase order which states the product(s) ordered, price, quantity and the
terms and conditions of sale. Acceptance occurs upon the earlier of: (1) the
Companys receipt of a written acceptance of the goods from the customer; or (2)
expiration of the time period stated in each purchase order for final payment
which may vary with each order. The customer has a right of return from the date
that the shipment occurs until the final payment date stated in the purchase
order. Revenue is only recognized upon completionof product testingby the customer, but not later than 180 days after
product shipment occurs.  Income Taxes  Under
the asset and liability method of FASB Statement 109, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities, and their respective tax bases and operating loss and tax
credit carryforwards.  Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled.
Deferred tax assets are reduced by a valuation allowance, when in the Company's
opinion it is likely that some portion or the entire deferred tax asset will not
be realized.  Loss
per common share  In
accordance with SFAS No 128 Earnings Per Share, Basic earnings per share is
computed by dividing net loss by the weighted average number of shares of common
stock outstanding during the period. Diluted earnings per share is computed by
dividing net loss by the weighted average number of shares of common stock,
common stock equivalents and potentially dilutive securities outstanding during
each period. For the periods below the Company excludes potentially dilutive
securities such as convertible warrants and the convertible debenture from the
loss per share calculations as their effect would have been anti-dilutive.  The following sets
forth the computation of earnings per share.  For the Period EndedDecember 31,2008


2007Net
loss

$
(1,848,755)


$
(2,011,120)Weighted
average shares
outstanding


49,362,903



46,482,853Loss per share
- basic and
diluted

$
(  .04)


$
(  .04)
   38      NOTE 1
 NATURE OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNFICANT
ACCOUNTING POLICIES  The Companys
common stock equivalents include the following:  December 31,


December 31,2008


2007Class A
Warrants


2,800,000



3,000,000Class B
Warrants


958,500



958,500Class C
Warrants


1,000,000



-Class D
Warrants


1,857,146



-Total common
stock
equivalents


6,615,646



3,958,500
  Share Based Payments  In
December 2004, the FASB issued SFAS No. 123(R), "Share-Based Payment," which
replaces SFAS No. 123 and supersedes APB Opinion No. 25. Under SFAS No. 123(R),
companies are required to measure the compensation costs of share-based
compensation arrangements based on the grant-date fair value and recognize the
costs in the financial statements over the period during which employees or
independent contractors are required to provide services. Share-based
compensation arrangements include stock options and warrants, restricted share
plans, performance-based awards, share appreciation rights and employee share
purchase plans. In March 2005, the SEC issued Staff Accounting Bulletin No. 107,
or SAB 107. SAB 107 expresses views of the staff regarding the interaction
between SFAS No. 123(R) and certain SEC rules and regulations and provides the
staff's views regarding the valuation of share-based payment arrangements for
public companies. SFAS No. 123(R) permits public companies to adopt its
requirements using one of two methods. On April 14, 2005, the SEC adopted a new
rule amending the compliance dates for SFAS 123(R). Companies may elect to apply
this statement either prospectively, or on a modified version of retrospective
application under which financial statements for prior periods are adjusted on a
basis consistent with the pro forma disclosures required for those periods under
SFAS 123.  Effective January 1, 2006, the Company has fully adopted the
provisions of SFAS No. 123(R) and related interpretations as provided by SAB
107. As such, compensation cost is measured on the date of grant as the fair
value of the share-based payments. Such compensation amounts, if any, are
amortized over the respective vesting periods of the option grant. The Company
applies this statement prospectively. Prior to January 1, 2006, neither VFDS nor
QC1 had any stock-based compensation plans.  On July
6, 2006 the Company granted 3,000,000 Class A warrants in connection with a
two-year consulting agreement beginning July 6, 2006 to CTCEG. These
warrants granted in connection with the consulting agreement include the
following provisions: 1,000,000 warrants to purchase 1,000,000 shares at an
exercise price of $1.00 per share when the per share market value closes at or
above $1.00 for up to two years from the effective date of the registration
statement registering the underlying shares; 1,000,000 warrants to purchase
1,000,000 shares at an exercise price of $1.50 per share when the per share
market value closes at or above $1.50 for up to two years from the effective
date of the registration statement registering the underlying shares; and,
1,000,000 warrants to purchase 1,000,000 shares at an exercise price of $2.00
per share when the per share market value closes at or above $2.00 for up to two
years from the effective date of the registration statement registering the
underlying shares.  On February 8, 2008, the Board of Directors extended
the consulting and warranty agreement until May 13, 2010.  A total of
$569,800 was allocated to these warrants using the Black-Scholes pricing model
with the following assumptions: share price of $1.00; strike prices ranging from
$1.00 to $2.00 per share; time to expiration (days) of 638; expected volatility
of 52.86%; no dividends; and an annual interest rate based on 3-month U.S.
Treasury Bill of 4.81%.  Twelve months consulting expense in the
amount of $142,450 was attributed to the grant of these warrants through the
period ended December 31, 2008. A reconciliation of these related warrants
issued and outstanding at December 31, 2008 is as follows:  39     Class A
warrants outstanding at December 31,
2007


3,000,000Granted


-Exercised/forfeited

200,000Class A
warrants outstanding at December 31,
2008

2,800,000
  Warranties  Some of
the Companys product lines will be covered by an annual renewable warranty
effective only with the purchase of the Companys annual maintenance contract
agreement. The Company expects the annual maintenance contract agreement fees
will total 15% to 20% of the original purchase price of the products.  Revenue
from periodic maintenance agreements shall be recognized ratably over the
respective maintenance periods provided no significant obligations remain, and
collectability of the related receivable is probable.  Recent accounting pronouncements  In
September 2006, the Financial Accounting Standards
Board (FASB) issued SFAS No. 157, Fair Value Measurements(SFAS 157). SFAS 157 defines fair value, establishes a
framework for measuring fair value, and requires enhanced disclosures about fair
value measurements.  SFAS 157 requires companies to disclose the fair value
of their financial instruments according to a fair value hierarchy as defined in
the standard.  Additionally, companies are required to provide enhanced
disclosure regarding financial instruments in one of the categories, including a
reconciliation of the beginning and ending balances separately for each major
category of assets and liabilities.  In February 2008, the FASB issued FASB
Staff Position (FSP) No. FAS 157-2, which delays by one year the effective date
of SFAS No. 157 for certain types of non-financial assets and non-financial
liabilities.  As a result, SFAS 157 will be effective for financial
statements issued for fiscal years beginning after November 15, 2007, or the
Companys fiscal year beginning July 1, 2008, for financial assets and
liabilities carried at fair value on a recurring basis, and on July 1, 2009, for
non-recurring non-financial assets and liabilities that are recognized or
disclosed at fair value.  The Company adopted SFAS No. 157 on July 1, 2008
for financial assets and liabilities carried at fair value on a recurring basis,
with no material impact on its financial statements.  The Company is
currently determining what impact the application of SFAS 157 on July 1, 2009
for non-recurring non-financial assets and liabilities that are recognized or
disclosed at fair value will have on its financial statements.  In
October 2008, the FASB issued Staff Position No. FAS 157-3, Determining the
Fair Value of a Financial Asset When the Market for That Asset is Not
Active (FSP 157-3).  FSP 157-3 clarifies the application of
SFAS 157, which the Company adopted as of July 1, 2008, in cases where a market
is not active.  The Company has considered the guidance provided by
FSP 157-3 as of December 31, 2008, and the impact was not material.  In
February 2007, the FASB issued SFAS No. 159 The Fair Value Option for
Financial Assets and Financial Liabilities  including an Amendment of SFAS No.
115, (SFAS 159), which permits an entity to measure many financial assets
and financial liabilities at fair value that are not currently required to be
measured at fair value. Entities that elect the fair value option will report
unrealized gains and losses in earnings at each subsequent reporting date. The
fair value option may be elected on an instrument-by-instrument basis, with few
exceptions. SFAS 159 amends previous guidance to extend the use of the fair
value option to available-for-sale and held-to-maturity securities. The
Statement also establishes presentation and disclosure requirements to help
financial statement users understand the effect of the election. SFAS No. 159 is
effective as of the beginning of the first fiscal year beginning after November
15, 2007. The Company does not believe the acceptance of SFAS 159 has a material
impact on the financial statements.   40    In December 2007, the FASB issued SFAS No. 160, Noncontrolling
Interests in Consolidated Financial Statements, an amendment of Accounting
Research Bulletin No 51 (SFAS 160). SFAS 160 establishes accounting and
reporting standards for ownership interests in subsidiaries held by parties
other than the parent, changes in a parents ownership of a noncontrolling
interest, calculation and disclosure of the consolidated net income attributable
to the parent and the noncontrolling interest, changes in a parents ownership
interest while the parent retains its controlling financial interest and fair
value measurement of any retained noncontrolling equity investment. SFAS 160 is
effective for financial statements issued for fiscal years beginning after
December 15, 2008, and interim periods within those fiscal years. Early adoption
is prohibited. The adoption of SFAS No. 160 is not expected to have a material
effect on its financial position, results of operations or cash flows.  In
March 2008, the Financial Accounting Standards Board issued SFAS No. 161,
Disclosures about Derivative Instruments and Hedging
Activities.  SFAS No. 161 requires additional disclosures related
to the use of derivative instruments, the accounting for derivatives and the
financial statement impact of derivatives.  SFAS No. 161 is effective
for fiscal years beginning after November 15, 2008.  The adoption of
SFAS No. 161 will not impact the Company's financial statements.  In
May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally
Accepted Accounting Principles (SFAS 162). SFAS 162 identifies the
sources of accounting principles and the framework for selecting the principles
used in the preparation of financial statements of nongovernmental entities that
are presented in conformity with generally accepted accounting principles (the
GAAP hierarchy). SFAS 162 will become effective 60 days following the
SECs approval of the Public Company Accounting Oversight Board amendments to
AU Section 411, The Meaning of Present Fairly in Conformity With
Generally Accepted Accounting Principles. We do not currently expect the
adoption of SFAS 162 to have a material effect on our results of operations
and financial condition.  In
May 2008, the FASB issued FSP Accounting Principles Board (APB) 14-1
Accounting for Convertible Debt instruments That May Be Settled in Cash upon
Conversion (Including Partial Cash Settlement) (FSP APB 14-1). FSP
APB 14-1 requires the issuer of certain convertible debt instruments that
may be settled in cash (or other assets) on conversion to separately account for
the liability (debt) and equity (conversion option) components of the
instrument in a manner that reflects the issuers non-convertible debt borrowing
rate. FSP APB 14-1 is effective for fiscal years beginning after
December 15, 2008 on a retroactive basis.  In
June 2008, the FASB issued FASB Staff Position Emerging Issues Task
Force (EITF) No. 03-6-1, Determining Whether Instruments Granted in
Share-Based Payment Transactions Are Participating Securities (FSP EITF No.
03-6-1).  Under FSP EITF No. 03-6-1, unvested share-based payment
awards that contain rights to receive nonforfeitable dividends (paid or unpaid)
are participating securities, and should be included in the two-class method of
computing EPS. FSP EITF No. 03-6-1 is effective for fiscal years beginning after
December 15, 2008, and interim periods within those years, and is not
expected to have a significant impact on the Companys financial statements.  The
Company does not believe that any other recently issued, but not yet effective
accounting standards will have a material effect on the Companys consolidated
financial position, results of operations or cash flows.  Research and Development Costs Research and development costs, which relate primarily to the
development, design and testing of products, are expensed as incurred, until
such time as management determines the research and development will have a
future use and at that time, such expense are capitalized and amortized over
their useful life.  Research and development expense, which are included in
selling, general and administrative expenses, were  $226,769 in 2008 and
$50 for 2007.  Capitalized research and development costs were $244,091 in
2008 and $0 in 2007.  41      NOTE 2 -GOING CONCERN  As
reflected in the accompanying consolidated financial statements, the Company has
an accumulated deficit of $6,267,598 at December 31, 2008, net losses in
the period ended December 31, 2008 of $1,848,755and cash used in operations during the period ended December 31, 2008 of
$741,901. The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern.  The
attainment of sustainable profitability and positive cash flow from operations
is dependent on certain future events. These conditions raise substantial doubt
about the Companys ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty. Management may attempt to raise additional funds by way of a
public or private offering of its securities. While the Company believes in the
viability of its strategy to improve sales volume and its ability to raise
additional funds, there can be no assurances to that effect.  Since
its inception in 1996, the Company was involved in the development and sales of
advanced scientific technologies. Sales through the years were sporadic but had
high margins. The Companys limited financial resources have prevented the
Company from aggressively advertising its products and services to achieve
consumer recognition. The ability of the Company to continue as a going concern
is dependent on the Companys ability to further implement its business plan to
generate increased revenues and to raise additional funds.  In
2003, the Company entered into a Cooperative Research and Development Agreement
for the development and commercialization of the THOR system, which is more
fully described in Note 4.  While
the Company is attempting to increase sales in general, the growth has not been
significant enough to support the Companys daily operations. The consolidated
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.  The
Company also seeks the acquisition, development, and commercialization of other
advanced technologies. The ultimate success of the Company in attaining
sustainable profitability and positive cash flow from operations is dependent
upon the successful development and commercialization of these advanced
technologies including the THOR and Odin systems together with obtaining
sufficient capital or financing to support management plans. Management believes
that the actions presently being taken to further implement its business plan
and generate additional revenues and to raise additional funds provide the
opportunity for the Company to continue as a going concern.  42     NOTE 3 INCOME TAXES  There
was no income tax expense for the periods ended December 31, 2008 and 2007 due
to the Companys net losses.  Deferred income taxes reflect the net income tax effect of
temporary differences between the carrying amounts of the assets and liabilities
for financial reporting purposes and amounts used for income
taxes.  The Companys deferred income tax assets and liabilities
consist of the following at December 31, 2008:  Net operating
loss carryforwards

$
1,457,000Less:  Valuation
allowance


(1,457,000)Net deferred
income tax assets

$
-0-
  The table below
summarizes the differences between the Companys effective tax rate and the
statutory federal rate as follows for fiscal years 2008 and 2007: 2008


2007Computed
expected tax benefit


(33)
%

(35)
%State taxes net
of expected tax benefit


(6)
%

(6)
%Permanent
differences


-
%

9
%Change in
valuation allowance


39
%

32
%Effective tax
rate


0
%

0
%
  Net
operating loss carryforwards totaled approximately $3,746,000 at December 31,
2008.  The net operating loss carryforwards will begin to expire in
the year 2028 if not utilized.  After consideration of all the
evidence, both positive and negative, management has recorded a full valuation
allowance at December 31, 2007 due to the uncertainty of realizing the deferred
tax assets. The valuation allowance increased by approximately $719,000 for
the year ended December 2008. Utilization of the Companys net operating
loss carryforwards are limited based on changes in ownership as defined in
Internal Revenue Code Section 382.  Under
the asset and liability method of FASB Statement 109, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities, and their respective tax bases and operating loss and tax
credit carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. Deferred
tax assets are reduced by a valuation allowance, when in the Company's opinion
it is likely that some portion or the entire deferred tax asset will not be
realized. After consideration of all the evidence, both positive and negative,
management has recorded a full valuation allowance due to the uncertainty of
realizing the deferred tax assets. Utilization of the Company's net operating
loss carryforwards are limited based on changes in ownership as defined in
Internal Revenue Code Section 382. Due to ongoing losses and the establishment
of a valuation allowance to offset deferred tax assets, the Company did not
record a tax provision for the period ended December 31, 2008.  In
July 2006, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an
interpretation of FASB Statement No. 109 (FIN 48), which provides
criteria for the recognition, measurement, presentation and disclosure of
uncertain tax positions. A tax benefit from an uncertain position may be
recognized only if it is more likely than not that the position is
sustainable based on its technical merits. The provisions of FIN 48 are
effective for fiscal years beginning after December 15, 2006. The Company
has evaluated its tax positions taken through December 31, 2007 and determined
that no uncertain tax positions existed as of December 31, 2008 requiring
recognition in accordance with FIN 48.  43     NOTE 4
- RELATED PARTY TRANSACTIONS  At
December 31, 2008 the Company owed Louis J. Brothers, the Companys president
and major shareholder, $326,558 for advances made to the Company. Such amount,
which is included in the due to shareholders balance on the balance sheet at
December 31, 2008 earns 6% annual interest compounded quarterly, and is due on
demand.  On
August 11, 2006, Coast to Coast Equity Group, Inc., a Company warrant holder,
loaned the Company $42,000 as described in Note 6.  NOTE 5
- DESCRIPTION OF LEASING ARRANGEMENTS  On
September 1, 2006, the Company entered into a lease of 2,985 square feet of
office space located at 50 E. River Center Boulevard, Suite 820, Covington,
Kentucky. The term of the lease shall be for five years beginning on the
first day of September, 2006 and ending on the last day of August, 2011.  Under
the terms of the lease, the Company shall pay additional rent to cover operating
expenses of the property at a pro rata share deemed to be 0.928%, which will
total approximately $19,402 for the initial twelve months.  These expenses
are anticipated to increase at a 3% rate annually for the remaining term of the
agreement.  On
December 1, 2007, the Company entered into a lease of 2,700 square feet of
rentable space located at 1895 Airport Exchange Blvd, Building A, Erlanger,
Kentucky. The term of the lease shall be for 37 months beginning on the
first day of December, 2007 and ending on the last day of December, 2010.  Under
the terms of the lease, the Company shall pay additional rent to cover operating
expenses of the property of approximately $349 per month.  Rent expense for
the period ended December 31, 2008 and 2007 was $92,273 and $70,034,
respectively.  The following is a
schedule of future minimum lease payments required under the lease as of
December 31, 2008:  Period EndingDecember 31

Amount2009

$
70,2432010


72,2702011


35,820$
178,333  NOTE 6
- CONVERTIBLE DEBENTURE  On
August 11, 2006, the Company issued a convertible debenture to Coast To Coast
Equity Group, Inc. (CTCEG), in the amount of $42,000 in exchange for cash
received.  This debenture matures upon the earlier of twelve months from
the date of the closing of the merger between VFDS and CTCEG, which occurred on
July 6, 2006, or upon the date of an event of default which would include any
proceedings by VFDS to seek protection due to insolvency. On August 10, 2007,
the Company and CTCEG agreed to extend the agreement for an additional twelve
months ending July 6, 2008.  The stated interest rate is 4% per annum. The
amounts due may be paid in cash or, upon mutual agreement of the parties, cash
equivalents including but not limited to payment in the form of the Companys
common stock valued at $1.00 per share; or upon mutual agreement of the parties,
CTCEG may apply amounts due toward the cash exercise of the 3,000,000 Class A
warrants granted to CTCEG as stated indetail within the Consulting agreement as Share Based Payments which is
described in Note 1.   44    NOTE 7  SHAREHOLDERS EQUITY  On July
6, 2006, the Company issued 3,000,000 Class A warrants in exchange for
consulting services rendered. The Company valued these warrants at the fair
market value on the dates of the grant as referred to in Note 1. The Company
recorded stock based consulting expense of $142,450 for the period ending
December 31, 2008.  During
the period August 2006 through November 2006, the Company sold in private
placement transactions 1,296,500 units at $1.00 per unit which consist of 1
share of common stock and 1 Class B warrant which can be exercised at $1.50 per
share within 6 months from the effective date of a registration statement
registering the units and the underlying shares reserved for the exercise of the
warrants. A registration statement was required to be filed within 30 days from
the date that the Company attains a shareholder base of 35 shareholders. This
filing occurred on November 14, 2006 and was declared effective on May 14, 2007.
 The Class B warrants contractual expiration date of November 13, 2007 has
been extended several times by the board of directors, with the most recent
extension occurring on December 23, 2008. The Class B warrants currently expire
on April 4, 2009.  The
Company established a price protection provision relating to the selling unit
holders of the private placement securities named in the registration statement.
The provision states that parties to the agreement are entitled to receive
additional stock or warrants if the Company sells shares of stock or warrants
for less than $1.00 per share of common stock and $1.50 per warrant prior to the
time limitations specified which are one (1) year from the effective date of the
Registration Statement for common stock issued and six (6) months from the
effective date of the Registration Statement for warrants issued. The Company
did not offer any additional securities that would have caused this provision to
become effective prior to the applicable time limitations of the provisions,
which expired in May 2008. Accordingly, the Company believes that the price
protection provision will have no accounting impact.  Coast
To Coast Equity Group, Inc., and Charles J. Scimeca, George Frudakis, and Tony
N. Frudakis (formerly the shareholders of Quetzal Capital Funding 1, Inc.), are
protected from dilution of their percentage ownership of the Company.
Non-dilution rights, as defined by the registration rights agreement
(incorporated by reference herein), mean that these parties shall continue to
have the same percentage of ownership and the same percentage of voting rights
of the class of the Companys common stock regardless of whether the Company or
its successors or its assigns may thereafter increase or decrease the authorized
number of shares of the Companys common stock or increase or decrease the
number of shares issued and outstanding. The non-dilution rights, by the terms
of the registration rights agreement, will continue in effect for a period of
two years from the effective date of the registration statement and are
assignable in private transactions, provided that the shares are not sold in
market transactions. The Company does not anticipate that it will offer any
additional securities which would cause this provision to become effective prior
to the applicable time limitations of the provisions. Accordingly, the Company
believes that the non-dilution provision will have no accounting impact.
Nevertheless, on February 8, 2008, the board of directors implicitly extended
the termination date of the non-dilution protection to May 14, 2010 by extending
the Consulting Agreement, the Warrant Agreement, and the Registration Rights
Agreement for an additional three years.  Common Stock Warrants  On July
3, 2008, the Company secured a financing arrangement with MKM Opportunity Master
Fund, LLC ("MKM") an unaffiliated accredited institutional investor. The
financing consists of a $500,000 Convertible Note, with a conversion price of
$0.50 per share, bearing interest at the rate of 8% per year, payable on a
quarterly basis and has a term of three years due on July 3, 2011. In connection
with the financing, MKM was also issued Series C Warrants (the "Warrants") to
purchase up to 1,000,000 shares of the Company's common stock. The warrants are
exercisable at an exercise price of 1.61 per share. In connection with this
financing arrangement, the Company recorded an initial debt discount of $500,000
to be amortized over the term of the note and charged $82,648 to interest
expense during the year ended December 31, 2008.   45    On September 29, 2008, the Company secured a financing arrangement
with MKM and several securities purchasers unrelated toMKM. The financing consists of a $650,000
Convertible Note, with a conversion price of $0.35 per share, bearing interest
at the rate of 8% per year, payable on a quarterly basis and has a term of three
years due on September 29, 2011. In connection with the financing, MKM and other
unrelated individuals were also issued Series D Warrants (the "Warrants") to
purchase up to 1,857,146 shares of the Company's common stock. The warrants are
exercisable atan exercise price of .75 per share. In connection with
this financing arrangement, the Company recorded an initial debt discount of
$650,000 to be amortized over the term of the note and charged $55,799 to
interest expense during the year ended December 31, 2008.  Stock
warrant activity for the period ended December 31, 2008 is summarized as
follows:  Number


Weighted averageof
shares


exercise
priceOutstanding
at December 31, 2007


3,958,500


$
1.50Granted


2,857,146



1.05Exercised


200,000



1.00Outstanding
at December 31, 2008


6,615,646


$
1.32
  The following table
summarizes the Company's Class A, B, C, and D stock warrants outstanding at
December 31, 2008:  Weighted Average


Weighted AverageRange of





Remaining


ExerciseExcercise Price


Number


Life


Price$
1.00



800,000



1.40


$
1.00$
1.50



1,000,000



1.40


$
1.50$
2.00



1,000,000



1.40


$
2.00$
1.50



958,500



0.25


$
1.50$
1.61



1,000,000



6.50


$
1.61$
0.75



1,857,146



6.75


$
0.75
  NOTE 8
- REGISTRATION RIGHTS AGREEMENT  Pursuant to the terms of a registration rights agreement entered
into on July 6, 2006, the Company agreed to file a registration statement
covering the shares of common stock underlying the securities issued to CTCEG
and to private securities purchasers (the unit purchasers), and to register for
resale the 5,000,000 shares owned by Charles J. Scimeca, George Frudakis, and
Tony N. Frudakis (formerly QCF1), no later than 30 days after the Company
obtains a shareholder base of 35 shareholders, and to use its best efforts to
have the registration statement declared effective with the SEC within 180 days
of the filing date. If the Company did not meet the scheduled filing date, it
had agreed to pay liquidated damages as required in the registration rights
agreement. Similar registration rights applied to the Companys sales of
securities in a private placement transaction occurring between August 2006 and
November 2006. Management timely filed the Form SB-2 registration agreement with
the Securities and Exchange Commission (SEC) on November 14, 2006, and the
SEC declared the registration effective on May 14, 2007, which was the first
business day after the 180-day period expired. Accordingly, liquidated damages
have not been accrued as of the balance sheet date.  Subsequently, on
February 8, 2008, the expiration date of the Registration Rights Agreement was
extended to May 14, 2010 by the board of directors.  Pursuant to the terms of the August-November 2006 private
placement agreement, the Company agreed to obtain a trading symbol from the NASD
within three (3) months after the effective date of the  46    Companys registration statement registering
the private placement securities, and, if it failed to do so, the
Company agreed that it would undertake to locate and merge with a company having
a public quote for its common stock within the seven (7) month period following
the effective date of the Companys Registration Statement, and, failing the
ability to merge timely with a trading company, the Company had agreed
to rescind the Purchasers investment. The Company obtained a trading
symbol for its common stock on July 9, 2007.  Accordingly, damages
have not been accrued as of the balance sheet date.  NOTE 9
 PROPERTY AND EQUIPMENT  The major
classifications of equipment are summarized below:  December 31,


December 31,Estimated
Life

2008


2007Office
equipment     
                                          5
years

$
52,675


$
50,551Furniture
and
fixtures           
                             7
years


49,564



45,887102,238



96,438Less
accumulated depreciation


(50,616)



(36,691)$
51,623


$
59,747
  Depreciation expense for the years ending December 31, 2008 and
2007 was $13,925 and $13,574, respectively.  NOTE 10
 CAPITALIZED R&D COSTS  The major
classifications of equipment are summarized below:  December 31,


December 31,2008


2007Capitalized
R&D costs

$
244,090


$
-Less
accumulated amortization


(24,409)



-$
219,681


$
-
  Amortization expense for the years ending December 31, 2008 and
2007 was $24,409 and $-0-, respectively.  Capitalized R&D
costs are being amortized over 5 years.  NOTE 11
 LOAN FEES  The major
classifications of equipment are summarized below:  December 31,


December 31,2008


2007Loan
fees

$
234,685


$
-Less
accumulated amortization


(26,614)



-$
208,071


$
-
  Amortization
expense for the years ending December 31, 2008 and 2007 was $ $26,614 and $-0-,
respectively. Loan fees are being
amortized over the terms of the loans which are 36 months.  47     NOTE 12
 ACCOUNTS PAYABLE  The
Companys current accounts payable and accrued expenses include $77,979 borrowed
on revolving credit lines utilizing corporate credit cards which bear interest
at an average rate of 12.49% per annum and call for total minimum monthly
installment payments of $1,932 as of December 31, 2008. However, since amounts
may be due on demand and it is the Companys intent to pay such balances in
their entirety during 2008, such amounts have been classified as current.  The
remaining accounts payable and accrued liabilities consist of ordinary
administrative expenses which were incurred in the operations of the
Company.  NOTE 13
 NOTES PAYABLE  On
December 19, 2007, the Company borrowed $160,000 from a financial institution at
a rate of 5.00% with a maturity date of June 15, 2008.  The note was
secured by a personal guarantee of an officer and employee of the Company.
 As of December 31, 2008 the balance outstanding was $0.  On July
3, 2008, we received gross proceeds of $500,000 ($415,202 net proceeds) in
connection with a financing provided by MKM, an unaffiliated accredited
institutional investor.  The note matures on July 7, 2011 and bears an
interest rate at 8% per year, with interest payable on a quarterly basis.
 Pursuant to the terms of a Securities Purchase Agreement that we entered
into with MKM in connection with the financing, we issued a secured convertible
promissory note to MKM with an initial conversion price of $0.50 per share.  In
connection with the promissory note, seven-year Series C Warrants to purchase
1,000,000 shares of common stock at a price of $1.61 per share were issued.
 These warrants are treated as a discount on the promissory note and were
valued at $500,000 and will be amortized over a 36-month period.  The fair
value of each stock warrant was estimated on the date of the grant using the
Black-Scholes option-pricing model in accordance with SFAS No. 157using the following weighted average
assumptions:  expected divided yield 0%; risk free interest rate of 2.82%;
volatility of 106% and an expected term of 3 years.  On
September 29, 2008, we received gross proceeds of $650,000 ($509,822 net
proceeds) in connection with a financing provided by MKM, an unaffiliated
accredited institutional investor and other unrelated individuals. The note
matures on September 29, 2011 and bears an interest rate at 8% per year, with
interest payable on a quarterly basis.  Pursuant to the terms of a
Securities Purchase Agreement that we entered into with MKM in connection with
the financing, we issued a secured convertible promissory note to MKM with an
initial conversion price of $0.35 per share.  In
connection with the promissory note, seven-year Series D Warrants to purchase
1,857,146 shares of common stock at a price of $0.75 per share.  These
warrants were treated as a discount on the promissory note and were valued at
$650,000 and will be amortized over a 36-month period.  The fair value of
each stock warrant was estimated on the date of the grant using the
Black-Scholes option-pricing model in accordance with SFAS No. 157using the following weighted average
assumptions:  expected divided yield 0%; risk free interest rate of 2.82%;
volatility of 125% and an expected term of 3 years.  48     The
promissory notes are as follows:  December 31,


December 31,2008


2007Notes
payable

$
1,150,000


$
160,000Less:
 principal payments


-



-Notes payable
outstanding at December 31, 2008
and
December 31, 2007


1,150,000



160,000Less:
unamortized discount on notes payable


(1,011,553)



-Notes
payable, net


138,447



160,000Less
current portion


-



-Notes
payable, net of discount of $1,108,174,
less current
portion

$
138,447


$
160,000
  NOTE 14
 DEFERRED REVENUE  On
April 20, 2007, VFA entered into an agreement with NASA to manufacture certain
satellite components for $132,000.  As of December 31, 2008, the Company
had received $123,400 in cash and recorded accounts receivable of $8,600 for
revenue of $132,000 and in accordance with the Companys revenue recognition
policy (see note 1), the revenue has been recognized because goods have been
received by the customer.  NOTE 15  ADVERTISING  Advertising costs are expensed as incurred. As of December 31,
2008 and 2007 advertising expense was $124,256 and $126,618, respectively.  NOTE 16
 STANDBY EQUITY AGREEMENT  On
August 22, 2007, the Company entered into an agreement with CTCEG to sell
333,333 shares of common stock at $1.50 per share on demand of the Company.  The
Company established a price protection provision relating to the selling price
of common stock per the agreement. The provision states that parties to the
agreement are entitled to receive additional stock if the Company sells shares
of stock for less than $1.50 per share of common stock to an investor prior to
the time limitations specified which is one (1) year from the effective date of
the agreement.  As of
December 31, 2008, the Company had sold 333,333 shares for $500,000.  NOTE 17
 STOCK COMPENSATION  On
August 15, 2007, the Board of Directors of the Company issued 50,000 shares of
restricted common stock to an employee of the Company.  The Company
incurred a $242,500 expense based on the closing price of the stock on August
15, 2007.  On
August 1, 2008, the Board of Directors of the Company issued 25,000 shares of
restricted common stock to an employee of the Company.  The Company
incurred a $26,250 expense based on the closing price of the stock on August 1,
2008.  The
employee will also receive an additional 25,000 restricted shares on August 1,
2009, provided that the employee is performing services for the Company on the
given date.  49     NOTE 18
 COMMON STOCK RESCISSION  On
November 12, 2008, the Company's Board of Directors authorized the rescission of
transactions involving 866,667 shares of common stock issued to Coast to Coast
Equity Group, Inc. Coast to Coast Equity Group, Inc. approved the rescission
following subsequent review of the price protection mechanism that
triggered the issuances in July 2008. This rescission has no impact on the
Statement of Operations or Shareholders Equity.  NOTE 19
 SUBSEQUENT EVENTS  The
Companys Board of Directors on April 8, 2009 was made aware that certain
shareholders, particularly certain shareholders who purchased our units in the
fall of 2006 and Charles Scimeca who is the president of Coast To Coast Equity
Group, Inc. and a direct shareholder and Class A warrant holder, may wish to sue
the Company and/or its board of directors for the Companys failure to complete
the development of THOR and its failure to sell an ODIN unit and may allege that
Mr. Brothers promised certain individual shareholders that the products would be
finished and sales made by dates certain. However, no specific allegations have
been made, nor have any legal theories of liability been presented to the
Company, except that Coast To Coast Equity Group, Inc. has indicated that it may
also seek approximately $50,000 in claimed unreimbursed expenses for consulting
services in addition to claims it may seek as a shareholder. The Company is
evaluating the merits and materiality of these unasserted claims and its
options.  No amounts have been reserved for these unasserted claims.  50     ITEM
9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES.  During 2005 and up to July 6, 2006, Morison Cogen, LLP was the
independent auditing firm of Valley Forge Composite Technologies, Inc., a
Pennsylvania corporation.  On July 6, 2006, following the Share Exchange
transaction, the company elected to continue to use Sherb & Co., LLP as its
independent auditing firm.  (During 2005 and 2006, Sherb & Co., LLP was
the independent auditing firm of the shell company that acquired the
Pennsylvania corporation.) There were no disagreements with Morison Cogen,
LLP.  Change of
Independent Auditors:  On March 2, 2009, Sherb & Co., LLP. was dismissed as the
certifying accountant for the Company.  On March 5, 2009, the Company
engaged Hawkins Accounting as its principal independent
accountant.  This decision to engage Hawkins Accounting was ratified
by the full Board of Directors of the Company.  Pertaining to Sherb & Co., LLPs accountants report on the
financial statements for the past two years, management of the Company has not
had any disagreements with Sherb & Co., LLP related to any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure, which disagreement, if not resolved to the satisfaction of
Sherb & Co., LLP, would have caused it to make a reference to the subject
matter of the disagreement in connection with its reports.  Because the Company has no standing audit committee, the Companys
full Board of Directors participated in and approved the decision to change
independent accountants.  In connection with its review of financial statements through
September 30, 2008, there have been no disagreements with Sherb & Co., LLP
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements if not resolved
to the satisfaction of Sherb & Co., LLP would have caused them to make
reference thereto in their report on the financial statements.  During the two most recent audit periods and the interim period up
to September 30, 2008, there have been no reportable events with the Company as
set forth in Item 304(a)(i)(v) of Regulation S-K.  The Company requested that Sherb & Co., LLP furnish it with a
letter addressed to the SEC stating whether or not it agrees with the above
statements.  A copy of such letter is filed as Exhibit 16.1 to our
Form 8-K filed on March 6, 2009.  New Independent
Auditors:  The Company engaged Hawkins Accounting as its new certifying
accountant as of March 5, 2009.  Prior to such date, the Company did
not consult with Hawkins Accounting regarding (i) the application of accounting
principles to a specified transaction, (ii) the type of audit opinion that might
be rendered, or (iii) any other matter that was the subject of a disagreement or
a reportable event between the Company and its former auditor as described in
Item 304(a)(1)(iv) or Item 304(a)(1)(v) of Regulation S-K.  51     ITEM 9A.
 CONTROLS AND PROCEDURES. ****  Evaluation of Disclosure Controls and Procedures **** We have carried out an evaluation, under the supervision and with
the participation of our management, including our Chief Executive Officer and
Principal Financial Officer, of the effectiveness of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the Exchange Act)) as of December 31, 2008.
Based on such evaluation, we have concluded that, as of such date, our
disclosure controls and procedures were effective to ensure that information
required to be disclosed by us in our Exchange Act reports is recorded,
processed, summarized and reported within the time periods specified in
applicable SEC rules and forms, and that such information is accumulated and
communicated to our management, including our Chief Executive Officer and
Principal Financial Officer, as appropriate, to allow timely discussions
regarding required disclosure.  Managements Report on Internal Control over Financial
Reporting  Valley Forge Composite Technologies, Inc.s management is
responsible for establishing and maintaining internal control over financial
reporting for the Company. Valley Forge Composite Technologies, Inc.s internal
control system was designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles. Internal control over financial reporting of the Company includes
those policies and procedures that: (1) pertain to the maintenance of records that in reasonable
detail accurately and fairy reflect the transactions of the company. (2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorization of management
and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the Companys
assets that could have a material effect on the Companys financial
statements.  All internal control systems, no matter how well designed, have
inherent limitations, including the possibility of human error or circumvention
through collusion of improper overriding of controls. Therefore, even those
internal control systems determined to be effective can provide only reasonable
assurance with respect to financial statement preparation. Further, because of
changes in conditions, the effectiveness of internal control may vary over
time.  The management of Valley Forge Composite Technologies, Inc.
assessed the effectiveness of the Companys internal control over financial
reporting as of December 31, 2008. In making its assessment of internal control
over financial reporting, management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSD) in
Internal-Control-Integrated Frameworkand implemented a process to
monitor and assess both the design and operating effectiveness of the Companys
internal controls. Based on this assessment, management believes that as of
December 31, 2008, the Companys internal control over financial reporting was
effective.  This annual report does not include an attestation report of the
Companys registered public accounting firm regarding internal control over
financial reporting. Managements report was not subject to attestation by the
Companys registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company to provide only
Managements report in this annual report.  52    Changes in Internal Control Over Financial Reporting  Management of the Company has evaluated, with the participation of
the Companys Chief Executive Officer and Chief Financial Officer, changes in
the Companys internal controls over financial reporting (as defined in Rule
13a-15(f) of the Exchange Act) during the fourth quarter of 2008. In connection
with such evaluation, there have been no changes to the Companys internal
control over financial reporting that occurred since the beginning of the
Companys fourth quarter of 2008 that have materially affected, or are
reasonably likely to materially affect the Companys internal control over
financial reporting.  ITEM 9A(T).
 CONTROLS AND PROCEDURES.  Not
Applicable.  ITEM 9B.
 OTHER INFORMATION.  Not
Applicable.  PART
III  ITEM
10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.  Directors and
Executive Officers  Prior to March 2008, the Company had a board of directors composed
of two individuals, Louis J. Brothers and Larry Wilhide.  These board
members, who are also the majority shareholders of the Company and are the
Companys only officers, will hold office indefinitely.  During March 2008 and April 2008, the Company appointed five
additional board members: Andrew T. Gilinsky, Eugene Breyer, Dr. Victor E.
Alessi, Raul A. Fernandez, and Richard S. Relac.  The
following table sets forth the name and, age, and position of each officer and
director of the Company.  Name

Age

PositionLouis J.
Brothers

57

Chairman of the
Board of Directors,Chief Executive
Officer, and PresidentLarry K.
Wilhide

61

Director,
Vice-President (Engineering)Andrew T.
Gilinsky

48

DirectorRichard S.
Relac

68

DirectorEugene
Breyer

61

DirectorRaul A.
Fernandez

59

DirectorDr. Victor A.
Alessi

69

Director  Background of Executive Officers, Directors and Significant
Employees  Louis J. Brothers  A
founding shareholder of VLYF, since 1997 Louis J. Brothers has been the
president and chairman of the board of directors of VLYF, and he became Chairman
of the Board of Directors upon execution of the July 6, 2006 Share Exchange
Agreement. Mr. Brothers has more than 20 years of experience in marketing,
marketing support, product management and logistics in industrial products. Mr.
Brothers has extensive international business experience having worked in
Europe, Russia, China and Japan. In China, he was part of the management team
that supervised the construction of three large industrial plants. Mr. Brothers
was responsible for increasing his products market share in the bearing
industry from 2% to 95%, in the process making valuable contacts, building
business relationships with private manufacturers  53    and the research communities and gaining important knowledge in
the manufacturing and technology market segments.  From
1995 to 1999, Mr. Brothers was in charge of mid-Atlantic sales for Novamax. From
1994 to 1995, Mr. Brothers was the national sales manager of Process Research,
located in Ewing, New Jersey. From 1978 to 1994 Mr. Brothers was an assistant
product manager and then the product manager of two to four product lines at
Quaker Chemical, located in Conshohosken, Pennsylvania. Mr. Brothers holds a
Bachelor of Science Degree in Interdisciplinary Sciences from the University of
Cincinnati.  Larry K. Wilhide  Larry
K. Wilhide is a founder of VLYF, and since its inception in 1997 has been a
director and the vice-president of engineering. On July 6, 2006, Mr. Wilhide
became a director of the Company upon the execution of the Share Exchange
Agreement. Mr. Wilhide is a part-time employee of VLYF and since 2000 continues
to work for SKF Bearing, Inc. in Hanover, Pennsylvania as a sub-contractor where
he performs general engineering and design services.  Mr.
Wilhide has worked as a design engineer on projects for aerospace bearings for
over 25 years including cage, retainer design and spherical bearing
refurbishing. He has supported general machining and grinding operations. He was
team leader for computer aided design and computer numerical control
programming. Additionally, Mr. Wilhide served in the U.S. Army in Korea where he
held primary responsibility for arming nuclear warheads. Mr. Wilhide holds a
Bachelors Degree in Mechanical Engineering.  Andrew T. Gilinsky  Andrew
T. Gilinsky has consented to becoming a director of the Company. Mr. Gilinsky is
a certified public accountant and has been employed since 1987 by Clairmont
Paciello & Co., P.C., located in King of Prussia,
Pennsylvania.  Clairmont Paciello & Co., P.C. serves as the
Companys outsourced accounting staff.  Eugene Breyer  Eugene
Breyer has consented to becoming a director of the Company.  Mr.
Breyers spouse is the sister of Mr. Brothers spouse. From December 1999
through the present, Mr. Breyer has been employed as the director of human
resources for Cincinnati State Technical and Community College.  Dr. Victor E. Alessi  Dr.
Victor E. Alessi has consented to becoming a director of the Company. From 1999
until September 2007, Dr. Alessi was the Chief Executive Officer of the United
States Industry Coalition, an Arlington, Virginia based non-profit organization
comprised of American businesses, organizations, and research institutions
dedicated to non-proliferation through the commercialization of technology
emanating from the New Independent States of the former Soviet Union. Since
September 2007, Dr. Alessi has been retired.  Raul A. Fernandez  Raul A.
Fernandez has consented to becoming a director of the Company.  Mr.
Fernandez is an information technology consultant. He has been employed by
KForce Technology Staffing in Tampa, Florida since March 2007. Previously,
between January 2000 and November 2006, he was the director of information
technology services at Iron Mountain Information Management in Collegeville,
Pennsylvania.  54     Richard S. Relac  Richard
S. Relac has consented to becoming a director of the Company. Mr. Relac is a
professional linguist and since January 2006 has been self-employed in this
capacity.  From 1983 to January 2002, Mr. Relac served the National
Security Agency as an intelligence analyst and reporter, customer relations
officer, and senior editor. In January 2002 he retired from federal
service.  Mr. Relac remained in retired status until January 2006 when
he was elected as a council member to Bonneauville Borough,
Pennsylvania. He ceased being a council member in March 2009.  Also in
January 2006, Mr. Relac commenced his free-lance translating service with Valley
Forge Composite Technologies, Inc. as his primary customer. Mr. Relac
currently operates his translating service.  Corporate
Governance  The Board of Directors held formal meetings in August, September,
October, November, and December 2008. Meetings of the board have been conducted
by telephone.  We have never held an annual meeting of shareholders
because all actions requiring shareholder approval have been conducted by the
written consent of our majority shareholders, Messrs. Brothers and
Wilhide.  We anticipate that we will begin to hold annual shareholder
meetings when we enter into the operational phase of our core business
plan.  Audit Committee
and Audit Committee Financial Expert  We do not have an audit committee or an audit committee financial
expert sitting on the board.  Due to our stagnant growth during 2008,
we did not expand our board of directors as expected to include an audit
committee or an audit committee financial expert.  It is not likely that we
will expand the board in 2009 to include an audit committee or an audit
committee financial expert unless and until we enter into the operational phase
of our core business plan.  Board of Directors
Nominating Committee  We do not have a standing board of directors nominating committee
or a committee performing similar functions.  Messrs. Brothers and Wilhide
at all times from the inception of VLYF to March 2008 have been the only
directors of the Company.  In March and April 2008, Messrs. Brothers and
Wilhide appointed five directors to serve indefinitely. We do not anticipate
needing a nominating committee at least until we choose to add additional
directors or to fill a vacant position.  Compliance with
Section 16(a) of the Exchange Act  Section 16(a) of the Exchange Act requires that the Companys
directors and executive officers and persons who beneficially own more than ten
percent (10%) of a registered class of its equity securities file with the SEC
reports of ownership and changes in ownership of its common stock and other
equity securities.  Executive officers, directors, and greater than ten
percent (10%) beneficial owners are required by SEC regulation to furnish the
Company with copies of all Section 16(a) reports that they file.  Based
solely upon a review of the copies of such reports furnished to us, the Company
believes that during 2008 the filing requirements applicable to its newly
appointed directors were delinquent.  The Company believes that the filing
requirements for its existing executive officers, directors, and greater than
ten percent (10%) beneficial owners were met.  The following reports were filed late for newly appointed
directors Section 16(a) disclosures:  Forms 3 for Andrew T. Gilinsky, Eugene Breyer, Dr. Victor E.
Alessi, Raul A. Fernandez, and Richard S. Relac.  55     Code of
Ethics  In August 2006, the Company adopted a Code of Ethics.  The
Code of Ethics applies to the Companys officers, director level employees and
certain other designated employees and independent contractors.  A copy of
the Code of Ethics, our Code of Conduct, and our Insider Trading Policy are
available on our website at www.VLYF.com under the Investor Relations tab.  ITEM 11. 
EXECUTIVE COMPENSATION.  The Company paid compensation to each of the directors and
executive officers in the following amounts during fiscal year 2008:  Name

Salary

PositionLouis J.
Brothers

$
0

As Chairman of
the Board, Director$
115,818

As Principal
Executive Officer,
Principal
Financial OfficerLarry K.
Wilhide

$
0

As
Director$
88,068

As
Vice-President   Messrs. Brothers and Wilhide each have the use of a Company car
and each are protected by the Companys indemnification policy for directors and
officers (set forth below).  No other fringe benefits for either of them
have been awarded in fiscal year 2008 or are contemplated at this time.  No
other form of compensation or incentive compensation was paid or awarded to
either of them in fiscal year 2008. S   SUMMARY COMPENSATION TABLE  Annual Compensation

Long-Term
CompensationName and
Principal
Posistion
Fiscal
Year
Salary
($)
Bonus
($)
Stock
Awards
($)
Option
Awards ($)
All
Other ($)
Total
($)
Awards
($)
Payouts
($)Louis J. Brothers(Chief Executive Officer
2008
$115,818




$115,818President and Director)
2007
$128,400




$128,400Larry K. Wilhide
2008
$ 88,068




$  88,068(Vice-President and Director)
2007
$ 98,400




$  98,400   Payments to
Management  In the future, Mr. Brothers and all other employees will receive
commissions from their individual efforts resulting in customer purchase orders
for THOR and ODIN units.  Compensation Committee Interlocks and Insider
Participation  We do not have a Compensation Committee.  All
compensation-of-officer discussions occurred between Messrs. Brothers and
Wilhide in their capacities as officers and directors.  Discussion of
officer compensation matters did not occur between Messrs. Brothers and Wilhide
the newly appointed directors during 2008.  56     Compensation Committee Report  Our board of directors has not reviewed or discussed with
Management the Compensation Discussion and Analysis required by Item 402(b) of
Regulation S-K.  The members of our board of directors, as of December 31, 2008,
were Louis J. Brothers, Larry K. Wilhide, Andrew T. Gilinsky, Eugene Breyer, Dr.
Victor E. Alessi, Raul A. Fernandez, and Richard S. Relac.  Indemnification of Directors and Officers  Our bylaws contain the broadest form of indemnification for our
officers and directors permitted under Florida law.  Our bylaws generally
provide as follows:  The Company shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by, or in the right of the Company) by reason of the fact
that he or she is or was a director, officer, employee or agent of the Company,
or is or was serving at the request of the Company as a director, officer,
employee or agent of any other corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorney's fees), judgments, fines,
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding, including any appeal thereof, if he or she
acted in good faith in a manner he reasonably believed to be in, or not opposed
to the best interests of the Company, and with respect to any criminal action or
proceeding, had no reasonable cause to believe that his or her conduct was
unlawful.  The termination of any action, suit or proceeding by judgment,
order, settlement, conviction or upon a plea of no contenders or its equivalent
shall not create, of itself, a presumption that the person did not act in good
faith or in a manner which he or she reasonably believed to be in, or not
opposed to, the best interests of the Company or, with respect to any criminal
action or proceeding, had reasonable cause to believe that his or her conduct
was unlawful.  To the extent that a director, officer, employee or agent of the
Company has been successful on the merits or otherwise in defense of any action,
suit or proceeding referred to above, or in any defense of any claim, issue or
matter therein, he or she shall be indemnified against expenses, including
attorneys fees, actually and reasonably incurred by him in connection
therewith.  Any indemnification shall be made only if a determination is made
that indemnification of the director, officer, employee or agent is proper in
the circumstances because such person has met the applicable standard of conduct
set forth above. Such determination shall be made either (1) by the Board of
Directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (2) by the shareholders who were
not parties to such action, suit or proceeding.  If neither of the above
determinations can occur because the Board of Directors consists of a sole
director or the Company is owned by a sole shareholder, which is controlled by
the sole officer and director, then the sole officer and director or sole
shareholder shall be allowed to make such determination.  Expenses incurred in defending any action, suit or proceeding may
be paid in advance of the final disposition of such action, suit or proceeding
as authorized in the manner provided above upon receipt of any undertaking by or
on behalf of the director, officer, employee or agent to repay such amount,
unless it shall ultimately be determined that she is entitled to be indemnified
by the Company.  The indemnification provided shall be in addition to the
indemnification rights provided pursuant to Chapter 607 of the Florida Statutes,
and shall not be deemed exclusive of any other rights to which any person
seeking indemnification may be entitled under any bylaw, agreement, vote of
shareholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent of the Company and shall inure to the benefit of the
heirs, executors and administrators of such a person.  57     Director
Compensation  The following table
summarizes all compensation paid to our directors during 2008. As the table
reflects, all of our directors served without compensation.  After the
close of 2008, the board of directors voted to compensate themselves in the form
of restricted stock. Compensation commences in January 2009 and none is
retroactive to 2008.  DIRECTOR COMPENSATIONName
Fees
Earned or Paid in Cash
Stock
Awards
Option
Awards
Non-Equity
Incentive Plan Compensation
Nonqualified
Deferred Compensation Earnings
All
Other Compensation
TotalLouis
J. Brothers





_
_Larry
K. Wilhide





_
_Andrew
T. Gilinsky





_
_Eugene
Breyer





_
_Dr.
Victor E. Alessi





_
_Raul
A. Fernandez





_
_Richard
S. Relac





_
_
    ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.  The Company has 52,882,016 shares of common stock issued and
51,415,349 outstanding.  The table below assumes and projects the exercise
of all Class A, B, C, and D warrants, which raises the issued and outstanding
shares to 59,497,662 issued and 58,030,995 outstanding. There are no
arrangements or agreements providing for the right to acquire additional
beneficial ownership by the Companys management.  There are no
preconceived arrangements providing for a specific change of control of
management of the Company upon the happening of certain future events.
Beneficial owners and management will have the following holdings of the Company
following the exercise of the warrants:  58     Common


CommonShares


Shares IssuableBeneficially


Upon ExerciseName

Owned


of Warrants


Total



%
Directors and Executive
OfficersLouis J. Brothers & Roe Brothers, Ten
Ent


18,880,000



-



18,880,000



32.5Larry K. Wilhide & Pat Wilhide, Ten Ent


18,880,000



-



18,880,000



32.5Dr. Victor E. Alessi


-



-



-



-Raul A. Fernandez


-



-



-



-Richard S. Relac


5,000



5,000



10,000



*Andrew T. Gilinsky


20,000



-



20,000



*Eugene Breyer


-



-



-



-OthersDaniel S. Katz (1)


500,000







500,000



0.9Tony Frudakis (2)


1,950,830



933,334



2,891,164



5.0George Frudakis (3)


1,957,828



933,334



2,891,162



5.0Charles J. Scimeca (4)


1,957,829



933,332



2,891,161



5.0MKM Opportunity Master Fund, Ltd. (5)


-



2,428,572



2,428,572
(6)


4.2
(6)All Directors and Executive Officersas a Group (7 persons)


37,785,000



5,000



37,790,000



65.0  
Percentage ownership is calculated assuming the exercise of all warrants held by
Beneficial Owners. *
Denotes beneficial ownership less than 1%. (1) Mr.
Katzs address is 4911 NE 27th Street, Lighthouse Point, FL 33064. (2) Dr.
Tony Frudakis address is 900 Cocoanut Avenue, Sarasota, FL 34236. (3) Mr.
George Frudakis address is 7935 213th Street East, Bradenton, FL 34202. (4) Mr.
Scimecas address is 9040 Town Center Parkway, Bradenton, FL 34202. (5) MKM
Opportunity Master Fund, Ltd.s address is c/o MKM Capital Advisors, LLC, 644
Broadway, 4th Floor, New York, NY 10012. (6)
Does not include 2,857,144 shares of Common Stock, which may be issuable
upon conversion of two Senior Secured Convertible Notes, which
along with 3,575,239 Warrants, are convertible into a maximum of 9.9% or 5,869,252 shares of
issued and outstanding Common Stock.   ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.  Director
Independence  Our independent directors are Messrs. Fernandez and Relac and Dr.
Alessi.  Our definition of independent is that of NASDAQ Marketplace Rule
4200(a)(15). However, the Companys securities are not listed on any platform in
the NASDAQ Stock Market.  Review, Approval
or Ratification of Transactions with Related Persons  As
a smaller reporting company, we are not required to report this information.  59     Transactions with
Related Persons  At December 31, 2008 the Company owed Louis J. Brothers, the
Companys president and major shareholder, $326,558 for advances made to the
Company. Such amount, which is included in the due to shareholders balance on
the balance sheet at December 31, 2008 earns 6% annual interest compounded
quarterly, and is due on demand.  The Company paid Rosemary A. Brothers, the wife of director Louis
J. Brothers, $26,667 for administrative services.  Rosemary A. Brothers is,
as of the filing date of this report, the Companys only administrative
employee.  Transactions with
Promoters  On July 6, 2006, Quetzal Capital 1, Inc., a Florida corporation
(QC1) entered into a share exchange agreement with VFDS predecessor
Pennsylvania corporation. Under the share exchange agreement, QC1 issued
40,000,000 shares of its common stock to VFDS shareholders for the acquisition
of all of the outstanding capital stock of VFDS.  For financial
accounting purposes, the exchange of stock was treated as a recapitalization of
VFDS with the former shareholders of QC1 retaining 5,000,000 shares (or
approximately 11%) of the public company.  Prior to the merger, QC1
was a reporting shell corporation with no operations. The share exchange was
approved by QC1 and its sole shareholder, Quetzal Capital Funding I, Inc.
(QCF1), and by VFDS board of directors and a majority of its
shareholders.   QC1 changed its name to Valley Forge Composite
Technologies, Inc., a Florida corporation, and is referred to throughout this
report as the Company.  The three shareholders of QC1 were the same
shareholders of Coast To Coast Equity Group, Inc., which entered into a
consulting agreement with the newly merged Company.  The Company has a consulting contract with Coast To Coast Equity
Group, Inc.  The contract is for a two-year period.  The full text of
the contract is attached to the Companys Form 8-K filed on July 11, 2006 and is
incorporated herein by reference.  The terms of the contract generally
provide that Coast To Coast Equity Group, Inc. will not be paid cash but will be
paid three million warrants to purchase up to three million shares of Company
common stock.  The warrant agreement also is attached to the Companys Form
8-K filed on July 11, 2006 and is incorporated herein by reference.  Coast To Coast Equity Group, Inc., Charles, J. Scimeca, Tony N.
Frudakis, and George Frudakis are protected from dilution of their percentage
ownership of the Company.  Non-dilution rights, as defined by the
registration rights agreement (the full text of the agreement is attached to the
Companys Form 8-K filed on July 11, 2006 and is incorporated herein by
reference), mean that these parties shall continue to have the same percentage
of ownership and the same percentage of voting rights of the class of the
Companys common stock regardless whether the Company or its successors or its
assigns may thereafter increase or decrease the authorized number of shares of
the Companys common stock or increase or decrease the number of shares issued
and outstanding.  The non-dilution rights, by the terms of the registration
rights agreement, will continue in effect for a period two years from May 14,
2007, the effective date of the Form SB-2 registration statement which registers
their Company securities for re-sale.  On August 11, 2006, the Company issued a convertible debenture to
CTCEG in the amount of $42,000 in exchange for cash received.  The interest
rate is 4% per annum and runs from August 11, 2006.  The amounts due may be
paid in cash or cash equivalents, including but not limited to payment in the
form of the Companys common stock valued at $1.00 per share, or CTCEG may apply
amounts due toward the cash exercise of its Class A Warrants.  The sale was
conducted in a private transaction exempt from registration pursuant to pursuant
to Sections 4(2) or 4(6) of the Securities Act.  On August 22, 2007, the Company entered into an agreement with
CTCEG to sell 333,333 shares of common stock at $1.50 per share on demand of the
Company.  The Company established a price protection provision
relating to the selling price of common stock per the agreement.  The
provision states that parties to the agreement are entitled to receive
additional stock if the Company sells shares of stock  60    for less than $1.50 per share of common stock to an investor prior
to the time limitations specified which is one (1) year from the effective date
of the agreement.  As of December 31, 2007, the Company had sold 271,333
shares for $407,000.  The Company has the right to sell an additional
62,000 shares with a value of $93,000 to CTCEG by August 21, 2008.  For a transaction on February 15, 2008, the Company on August 8,
2008 issued CTCEG 200,000 shares of restricted common stock to reimburse it for
its assignment of 200,000 registered Class A warrants to Debra Elenson without
compensation from Ms. Elenson. On or about February 15, 2008, Ms. Elenson
exercised the warrants. The issue was conducted in a private transaction exempt
from registration pursuant to pursuant to Sections 4(2) or 4(6) of the
Securities Act.  For a May 8, 2008 transaction, the Company on August 8, 2008
issued 1,200,000 shares of restricted common stock to reimburse CTCEGs
principals Charles Scimeca and Tony Frudakis for their sale of 1,200,000 shares
of registered Company stock to Daniel Katz at a discount to market to induce Mr.
Katz to enter an investment banking agreement. The Company issued an additional
360,000 shares to CTCEG to compensate it for its federal tax liability. The
issue was conducted in a private transaction exempt from registration pursuant
to pursuant to Sections 4(2) or 4(6) of the Securities Act.  ITEM 14.
 PRINCIPAL ACCOUNTANT FEES AND SERVICES.  Audit Fees  We have paid Sherb & Co., LLP $25,000 for auditing our
financial statements for the years ended December 31, 2007 and 2006.  We
are paying Hawkins Accounting $25,000 for auditing our financial statements for
the years ended December 31, 2008.  Audit Related Fees  We have paid Sherb & Co., LLP $15,000 for the review of our
quarterly financial statements, review of our Forms 10-QSB, 10-Q, and 8-K, and
services that are normally provided by the accountant in connection with
non-year-end statutory and regulatory filings on engagements.  Tax Fees  None.  All Other Fees  None.  PART
IV  ITEM 15.
 EXHIBITS, FINANCIAL STATEMENT SCHEDULES.  Exhibits
are listed in the Index of Exhibits on page 63.  61     SIGNATURES  Pursuant to the requirements of Section 13 or 15(d) of the
Exchange Act, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.  Valley Forge
Composite Technologies, Inc.Date: April
15, 2009
By:
/s/ Louis
J. BrothersLouis J.
BrothersPresident,
Chief Executive Officer,
Chief
Financial
Officer, and
Chairman of the Board
(Principal
Executive Officer,
Principal
Financial and
Accounting
Officer)  In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.  Date: April
15, 2009
By:
/s/ Louis
J. BrothersLouis J.
BrothersPresident,
Chief Executive Officer,
Chief
Financial
Officer, and
Chairman of the BoardDate: April
15, 2009
By:
/s/ Larry
K. WilhideLarry K.
WilhideDirectorDate: April
15, 2009
By:
/s/ Andrew
T. GilinskyAndrew T.
GilinskyDirectorDate: April
15, 2009
By:
/s/ Richard
N. RelacRichard N.
RelacDirectorDate: April
15, 2009
By:
/s/ Dr.
Victor E. AlessiDr. Victor E.
AlessiDirectorDate: April
15, 2009
By:
/s/ Raul
A. FernandezRaul A.
FernandezDirectorDate: April
15, 2009
By:
/s/ Eugene
BreyerEugene
BreyerDirector   62       INDEX OF EXHIBITSExhibit
No.
Description2.1 *
Share Exchange
Agreement Between Quetzal Capital 1, Inc. and the Shareholders of Valley
Forge Composite Technologies, Inc., dated July 6, 20063(i)(1)*
Articles of
Amendment by Quetzal Capital 1, Inc.4.3 *
Valley Forge
Composite Technologies, Inc.s Notice of Shareholder Action and
Information Statement4.4 *
Articles and
Plan of Share Exchange Between Quetzal Capital 1, Inc., a Florida
corporation, and Valley Forge Composite Technologies, Inc., a Pennsylvania
corporation, filed with the Florida Department of State, Division of
Corporations, effective July 6, 20064.5 *
Articles and
Plan of Share Exchange Between Quetzal Capital 1, Inc., a Florida
corporation, and Valley Forge Composite Technologies, Inc., a Pennsylvania
corporation, filed with the Pennsylvania Department of State, Corporation
Bureau, effective July 6, 200610.1 *
Registration
Rights Agreement, dated July 6, 200610.2 *
Consulting
Agreement between Coast To Coast Equity Group, Inc. and Quetzal Capital 1,
Inc., dated July 6, 200610.3 *
Warrant
Agreement between Coast To Coast Equity Group, Inc. and Quetzal Capital 1,
Inc., dated July 6, 200621.1
List of
Subsidiaries31.1
13a-14(a)-15d-14(a)
Certification - Louis J Brothers31.2
13a-14(a)-15d-14(a)
Certification - Louis J Brothers32.1
18 U.S.C. §
1350 Certification - Louis J Brothers32.2
18 U.S.C. §
1350 Certification - Louis J Brothers  * Incorporated
by reference from Form 8-K filed July 11,
2006.  63