UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549  FORM
10-Q  þ
QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2009  oTRANSITION REPORT UNDER SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  Commission file number 000-29587  VALLEY FORGE COMPOSITE TECHNOLOGIES, INC. (Exact name of registrant as specified in
its charter)  Florida

20-3061892(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer Identification
No.)  50 East River Center Blvd., Suite
820 Covington, KY 41011 (Address of principal executive offices)
(Zip Code)  859.581.5111 (Registrant's telephone number, including
area code)  Indicate by check mark whether the Registrant (1) has
filed all reports required to be filed by Section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes þ
  No o  Indicate by check mark whether the registrant has
submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or
for such shorter period that the registrant was required to submit and post such
files).  Yes   £
   No   £  Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check one):  Large accelerated filer o

Accelerated filer o

Non-accelerated filer o

Smaller reporting company þ(Do not check if a smaller reporting
company)  Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act). Yes oNo
þ  Indicate the number of shares outstanding of each of the
issuers classes of common stock, as of the latest practicable date. Class

Outstanding at May 13, 2009Common Stock, $.001 par value per
share

51,415,349   1     VALLEY FORGE COMPOSITE TECHNOLOGIES,
INC. FORM 10-Q FOR THE PERIOD ENDED MARCH 31,
2009  INDEX  PageSPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS
3PART I. FINANCIAL INFORMATION
4Item 1.
Financial Statements
4Consolidated Balance Sheets as of March 31, 2009
(Unaudited) and December 31, 2008
4Consolidated Statements of Operations (Unaudited)
for three months ended March 31, 2009
5Consolidated Statements of Cash Flows (Unaudited)
for the three months ended March 31, 2009
6Notes to the Consolidated Financial
Statements
7Item 2.
Managements Discussion and Analysis of Financial
Condition and Results of Operations
21Item 3.
Qualitative and Quantitative Disclosures About
Market Risk
24Item 4.
Controls and Procedures
25PART II. OTHER INFORMATION
26Item 1.
Legal Proceedings
26Item 2.
Unregistered Sales of Equity Securities and Use of
Proceeds
26Item 3.
Defaults Upon Senior Securities
26Item 4.
Submission of Matters to a Vote of Security
Holders
26Item 5.
Other information
26Item 6.
Exhibits
27SIGNATURES
28    2       Special Note Regarding Forward-Looking Statements  Information included in this Form 10-Q
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.  In this report references to Valley
Forge, the Company, we, us, and our refer to Valley Forge Composite
Technologies, Inc. and its subsidiaries.   3      PART I: FINANCIAL INFORMATION  ITEM 1. FINANCIAL STATEMENTS  VALLEY FORGE COMPOSITE
TECHNOLOGIES, INCCONSOLIDATED BALANCE
SHEETSMarch 31,

December 31,2009

2008ASSETS

(unaudited)

(1)Current assetsCash
$
157,522
$
305,179Accounts receivable

-

9,492Inventory

225,000

225,000Prepaid expenses

130,012

203,002Deposits with
vendors

21,000

21,000Total
current assets

533,534

763,673Property and equipment, net

48,212

51,623Other assets:Security deposit

5,535

5,535Capitalized R&D costs,
net of amortization of $36,104and
$24,409 at March 31, 2009 and December 31, 2008

197,792

219,681Loan fees, net of
amortization of $46,171 and $26,614 atMarch
31, 2009 and December 31, 2008

188,514

208,071Total
other assets

391,841

433,287Total Assets
$
973,587
$
1,248,583LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities:Accounts payable and
accrued expenses
$
232,146
$
246,857Customer deposit

103,950

-Convertible
debenture

42,000

42,000Due to
shareholder

326,558

326,558Total
current liabilities

704,654

615,415Long-term debt, net of debt discount of
 $917,032 and $1,011,553at March 31, 2009 and
December 31, 2008

232,968

138,447Shareholders' Equity:Common stock, $.001
par value, 100,000,000 shares authorized52,882,016 issued
but 51,415,349 outstanding atMarch
31, 2009 and December 31, 2008

51,415

51,415Additional paid-in
capital

6,710,904

6,710,904Accumulated
deficit

(6,726,354)

(6,267,598)Total
shareholders' equity

35,965

494,721Total Liabilities and Shareholders' Equity
$
973,587
$
1,248,583(1) Derived from Audited Financial
StatementsSee the accompanying notes to the
unaudited consolidated financial statements   4     VALLEY FORGE COMPOSITE
TECHNOLOGIES, INCCONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)For the three months
endedMarch 31,2009

2008Sales
$
-
$
-Cost of sales

-

-Gross Profit

-

-Costs and expensesSelling and
administrative expenses

334,103

277,328Stock based
consulting

-

71,225334,103

348,553Loss from operations

(334,103)

(348,553)Other incomeInterest
expense

(124,710)

(8,920)Investment
income

57

150Net loss
$
(458,756)
$
(357,323)Loss per common shareBasic and
Diluted
$
(0.01)
$
(0.01)Weighted Average Common Shares
OutstandingBasic and
Diluted

51,415,349

47,093,807See the accompanying notes to the
unaudited consolidated financial statements   5     VALLEY FORGE COMPOSITE
TECHNOLOGIES, INCCONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)For the three months
endedMarch 31,2009


2008CASH FLOWS FROM OPERATING ACTIVITIESNet loss
$
(458,756)

$
(357,323)Adjustments to reconcile net loss
to net cash used in operating activities:Depreciation  and
amortization expense

34,663


3,420Amortization
of debt discount

94,521


-Common
stock issued for services

-


31,269Fair
value of warrants issued for consulting services

-


71,225Change in operating assets and
liabilities(Increase)
decrease in:Accounts
receivable

9,492


-Inventory

-


(14,741)Prepaid
expenses

72,990


7,311Vendor
deposits

-


(43,445)Increase (decrease)
in:Accounts
payable and accrued expenses

(4,517)


53,609Customer
deposits

103,950


-NET CASH USED IN OPERATING
ACTIVITIES

(147,657)


(248,675)CASH FLOWS FROM INVESTING ACTIVITIESPurchases of
equipment

-


(2,472)NET CASH USED IN INVESTING
ACTIVITIES

-


(2,472)CASH FLOWS FROM FINANCING ACTIVITIESGross proceeds from
exercise of warrants

-


200,000Proceeds from issuance of
common stock per standby equity agreement

-


93,000Repayment of note
payable

-


(25)NET CASH PROVIDED FROM
FINANCING ACTIVITIES

-


292,975NET INCREASE (DECREASE) IN CASH

(147,657)


41,828CASH AT BEGINNING OF PERIOD

305,179


88,656CASH AT END OF PERIOD
$
157,522

$
130,484SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATIONCash paid during the period for:Income taxes
$
-

$
-Interest
$
42,259

$
5,271 See the accompanying notes to the
unaudited consolidated financial statements  6    VALLEY FORGE
COMPOSITE TECHNOLOGIES, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2009  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.   7     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
principals 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.    8    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 March
31, 2009, the Companys cash deposits did not exceed the FDIC insured
limits.  Cash Equivalents  The Company considers all short-term
securities purchased with a maturity of three months or less to be cash
equivalents. At March 31, 2009, 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:  March 31,


December 31,2009


2008Raw
materials

$
-0-


$
-0-Work
in process


-0-



-0-Finished
goods


225,000



225,000$
225,000


$
225,000  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 yearsFurniture 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 of 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.  9     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.  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.  Advertising  Advertising costs are expensed as incurred.
As of March 31, 2009 and 2008, advertising was $85,331 and $47,399,
respectively.  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 EndedMarch 31,2009


2008Net loss

$
(458,756
)

$
(357,323
)Weighted average shares outstanding


51,415,349



47,093,807Loss per share - basic and
diluted

$
(.01
)

$
(.01
)    10    NOTE 1  NATURE OF
BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNFICANT ACCOUNTING
POLICIES  The Companys common stock equivalents include the
following: March 31,


December 31,2009


2008Class A Warrants


2,800,000



2,800,000Class B Warrants


958,500



958,500Class C Warrants


1,000,000



1,000,000Class D Warrants


1,857,146



1,857,146Total common stock equivalents


6,615,646



6,615,646  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%.  A
reconciliation of these related warrants issued and outstanding at March 31,
2009 is as follows:  Class A warrants outstanding at December 31,
2008


2,800,000Granted


-Exercised/forfeited

-Class A warrants outstanding at March 31,
2009


2,800,000  11      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 March 31, 2009, 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.  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.  12     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 of 2008, FASB issued FASB No. 163,
Accounting for Financial Guarantee Insurance Contracts-an interpretation of
FASB Statement No. 60.  The scope of the statement is limited to financial
guarantee insurance (and reinsurance) contracts.  The pronouncement is
effective for fiscal years beginning after December 31, 2008.  The Company
does not believe this pronouncement will impact its financial statements.  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.  NOTE 2 - GOING CONCERN  As reflected in the accompanying
consolidated financial statements, the Company has an accumulated deficit of
$6,726,354 at March 31, 2009, net losses in the period ended March 31, 2009 of
$458,756 and cash used in operations during the period ended March 31, 2009 of
$147,657. 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.  13     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.  NOTE 3  INCOME TAXES  There was no income tax expense for the
periods ended March 31, 2009 and 2008 due to the Companys net losses.  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 March 31, 2009.  NOTE 4 - RELATED PARTY
TRANSACTIONS  At March 31, 2009 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 March 31, 2009 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.  14     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 March
31, 2009 and 2008 was $30,032 and $22,941, respectively.  The following is a schedule of future
minimum lease payments required under the lease as of March 31, 2009:  Period Ending March 31

Amount2010

$
70,7592011


67,7642012


22,388$
160,911  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 in detail within the Consulting agreement as Share
Based Payments which is described in Note 1.  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.  15     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.  On September 23,
2008, the Class B warrants contractual expiration date of November 13, 2007 has
been extended to April 2, 2009 by decision of the board of directors.  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 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 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 up to May 14, 2010, by resolution of
the Board on February 8, 2008, which extended the termination date of the
registration rights agreement and other agreements with these shareholders.
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 this 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.  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 $41,096 to interest expense during the three
months ended March 31,2009.  On September 29, 2008, the Company secured
a second financing arrangement with MKM. 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 was 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 $0.75 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 $53,425 to interest expense during the three months
ended March 31, 2009.  16     Stock warrant activity for the period ended
March 31, 2009 is summarized as follows:  Number of


Weighted averageshares


exercise priceOutstanding at December 31,
2008


6,615,646


$
1.32Granted


-



-Exercised


-



-Outstanding at March 31,
2009


6,615,646


$
1.32  The following table summarizes the
Company's Class A, B, C, D and E stock warrants outstanding at March 31,
2009:  Weighted Average


Weighted AverageRange of





Remaining


ExerciseExercise Price


Number


Life


Price$
1.00



800,000



1.15


$
1.00$
1.50



1,000,000



1.15


$
1.50$
2.00



1,000,000



1.15


$
2.00$
1.50



958,500



0.01


$
1.50$
1.61



1,000,000



6.25


$
1.61$
0.75



1,857,146



6.50


$
0.75  NOTE 8- REGISTRATION RIGHTS AGREEMENTS  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. Nevertheless, the registration rights agreement with QCF1 expires on May
14, 2010 after being extended by Board resolution on February 8, 2008.  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 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
Purchasers investments. 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.  17     NOTE 9  PROPERTY AND EQUIPMENT  The major classifications of equipment are summarized
below:  Estimated


March 31,


December 31,Life


2009


2008Office
equipment
5 years


$
52,674


$
52,674Furniture and
fixtures
7 years



49,564



49,564102,238



102,238Less accumulated
depreciation




(54,026
)


(50,615
)$
48,212


$
51,623Depreciation expense for the
three months ended March 31, 2009 and  2008 was $3,411 and $3,420,
respectively.  NOTE 10  CAPITALIZED R&D COSTS  March 31,


December 31,2009


2008Capitalized R&D
costs

$
233,896


$
244,090Less accumulated
amortization


(36,104
)


(24,409
)$
197,792


$
219,681Amortization for the three
months ending March 31, 2009 and 2008 was $11,695 and $-0-,
respectively.  Capitalized R&D costs are being
amortized over 5 years.   NOTE 11  LOAN FEES  March 31,


December 31,2009


2008Loan
fees

$
234,685


$
234,685Less accumulated
amortization


(46,171
)


(26,614
)$
188,514


$
208,071Amortization for the three
months ending March 31, 2009 and 2008 was $19,557 and $-0-,
respectively.  Loan fees are being amortized over the
terms of the loans which are 36 months.  18     NOTE 12  ACCOUNTS PAYABLE  The Companys current accounts payable and
accrued expenses include $74,371 borrowed on revolving credit lines utilizing
corporate credit cards which bear interest at an average rate of 12.42% per
annum and call for total minimum monthly installment payments of $1,853 as of
March 31, 2009. However, since amounts may be due on demand and it is the
Companys intent to pay such balances in their entirety during 2009, 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 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 $41,096 to interest expense
during the three months ended March 31, 2009.  On September 29, 2008, the Company secured
a second financing arrangement with MKM, and other unrelated individuals. 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 $0.75 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 $53,425 to interest expense during the three months
ended March 31, 2009.  The promissory notes are as follows:  March 31,


December 31,2009


2008Notes
payable

$
1,150,000


$
1,150,000Less:  principal
payments


-



-Notes payable
outstanding at March 31, 2009 and December 31, 2008


1,150,000



1,150,000Less: unamortized
discount on notes payable


(917,032
)


(1,011,553
)Notes
payable, net


232,968



138,447Less current
portion


-



-Notes
payable, net of discount of $917,032, less current portion

$
232,968


$
138,447   19     NOTE 14  CUSTOMER DEPOSIT  On March 17, 2009, VFA entered into an
agreement to manufacture certain satellite components for
$221,000.  As of March 31, 2009, the Company had received $103,950 in
cash and had not delivered the product to the customer.  NOTE 15  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 March 31, 2009, the Company had sold
333,333 shares for $500,000.  NOTE 16 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.  NOTE 17 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.   20    Item
2.  Managements Discussion and Analysis or Plan of Operation.  The following analysis of our consolidated
financial condition and results of operations for the three months ended March
31, 2009 and 2008 should be read in conjunction with the Consolidated Financial
Statements and other information presented elsewhere in this quarterly report
and in conjunction with our Form 10-K for the fiscal year ended December 31,
2008, which was filed with the SEC on April 15, 2009.  This Management's Discussion and Analysis
of Financial Condition and Results 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.  Liquidity and Capital
Resources  Between December 31, 2008 and March 31,
2009, our capital requirements have largely been met through sales of securities
and debt financing. In March, 2009, we recorded a customer deposit of
$103,950.  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 $458,756 for the three months ended March 31,
2009. 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 three months ended March 31, 2009 we received cash proceeds of $103,950
from customer deposits.  For the year ended December 31, 2008, we
received cash proceeds from sales of our common stock of $343,000.  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 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.  21      Commitments and Contingent Liabilities  The Company leases office and warehouse
spaces in Covington, KY and Erlanger, KY under non-cancelable operating leases,
expiring August 2011(five year lease) and December 2010 (37 month lease),
respectively. Base rent is $5,807 per month with an annual rent escalator of 3%.
At March 31, 2009, future minimum payments for operating leases related to our
office and warehouse facilities were $160,911 through August 2011.  Our total current liabilities increased to
$704,654 at March 31, 2009 compared to $615,415 at December 31, 2008. Our total
current liabilities at March 31, 2009 included accounts payable and accrued
expenses of $232,146, customer deposits of $103,950, 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 three months ended March 31, 2009, and 2008,
and should be read in conjunction with the financial statements, and notes
thereto, included with this report at Part II, Item 7, below.  SUMMARY COMPARISON OF OPERATING
RESULTS  Three months ended
March 31,2009


2008Gross profit

$
-


$
-Total operating expenses


334,103



348,553Loss from operations


(334,103
)


(348,553
)Total other income (expense)


(124,653
)


(8,770
)Net income (loss)


(458,756
)


(357,323
)Net income (loss) per share

$
(0.01
)

$
(0.01
)  Our operating expenses have generally
decreased from the three months ended March 31, 2008 compared with the three
months ended March 31, 2009.  The major components of our operating
expenses consist of selling and administrative expense and stock based
consulting for the comparable reporting periods.  For the three months
ended March 31, 2009 and March 31, 2008, our selling and administrative expenses
were $334,103 and $277,328, respectively, while our stock based consulting
expenses were $0 and $71,225, 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.  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.  22     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 2009 and 2008.  March 31,


March 31,2009


2008Valley Forge Detection Systems, Inc.


-



-Valley Forge Aerospace, Inc.


-



-Valley Forge Imaging, Inc.


-



-Valley Forge Emerging Technologies, Inc.


-



-Totals per financial statements:


-



-  Our total operating expense was $334,103
for the three months ended March 31, 2009 and $348,553 for the three months
ended March 31, 2008.  Our average monthly cost of operations from
January 2009 through March 2009 was $111,368.  As of March 31, 2009, we have approximately
$157,522 in cash remaining. Of this amount, $157,522 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 one month, 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 are
continuing to market and to obtain internationally accepted radiation testing of
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.  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.  23     Description of Critical Accounting
Policies and Estimates, Going Concern, and Fair Value of Financial
Instruments  This section of our Form 10-Q 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.  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.  ITEM 3. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK  As a smaller reporting company as defined
by Item 10 of Regulation S-K, the Company is not required to provide information
required by this Item.  24     ITEM 4T. CONTROLS AND PROCEDURES  Disclosure Controls and
Procedures  Under the supervision and with the
participation of our principal executive officer and principal financial
officer, we conducted an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures, as defined in Rule
13a-15(e) promulgated under the Exchange Act, as of March 31, 2009 (the
"Evaluation Date"). Based on this evaluation, our principal executive officer
and principal financial officer concluded as of the Evaluation Date that our
disclosure controls and procedures were effective such that the information
relating to the Company, including our consolidated subsidiaries, required to be
disclosed in our SEC reports (i) is recorded, processed, summarized and reported
within the time periods specified in SEC rules and forms and (ii) is accumulated
and communicated to management, including our principal executive
officer/principal financial officer, as appropriate, to allow timely decisions
regarding required disclosure.  Our management, including our chief
executive officer and chief financial officer, does not expect that our
disclosure controls and procedures or our internal controls will prevent all
error and all fraud. A control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints and the
benefits of controls must be considered relative to their costs. Due to the
inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within the Company have been detected.  Management's Report on Internal Control
over Financial Reporting  Our management is responsible for
establishing and maintaining adequate control over financial reporting (as
defined in Rule 13a-15(f) promulgated under the Exchange Act. Our management
assessed the effectiveness of our internal control over financial reporting as
of March 31, 2009. In making this assessment, our management used the criteria
set forth by the Committee of Sponsoring Organizations of the Treadway
Commission ("COSO") in Internal Control-Integrated Framework. Our
management has concluded that, as of March 31, 2009, our internal control over
financial reporting is effective based on these criteria.  Changes in Internal Control over
Financial Reporting  Our management has also evaluated our
internal control over financial reporting, and there have been no significant
changes in our internal controls or in other factors that could significantly
affect those controls subsequent to the date of our last evaluation.  The Company is not required by current SEC
rules to include, and does not include, an auditor's attestation report. The
Company's registered public accounting firm has not attested to Management's
reports on the Company's internal control over financial reporting.   25    PART II 
OTHER INFORMATION  ITEM 1. LEGAL PROCEEDINGS  Valley Forge Composite Technologies,
Inc. v. Randall Broadright and Mary Katherine Broadright, Civil Action No.
2:08-cv-00187-WOB(E.D. KY)  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 in March 2009 with all claims being
dismissed by both parties and with the Company agreeing to release restrictive
legends on 300,000 shares of Company stock owned by the defendants.  We reported the settled status of this
litigation in our Form 8-K filed on May 6, 2009.   Valley Forge Composite Technologies,
Inc. v. National Concept Licensing, Inc., Marvin Moore, Cindy L. Seide and
Richard S. Gold, Civil Action No. 2:08-cv-00046-WOB (E.D. KY)  On April 30, 2009, the Company and the
defendants named in the above civil suit agreed to the terms of a settlement.
 The settlement, which provides for no admissions of liability by any
party, provides that the defendants shall pay a total of $55,000 with the first
payment being in the amount of $1,750 and followed by three quarterly
installments each in the amount of $13,750.  The payments are personally
guaranteed by defendant Richard S. Gold. Upon execution of settlement documents,
all individual defendants will be dismissed with prejudice and defendant
National Concept Licensing, Inc. will be dismissed without prejudice.  The civil suit was filed on March 18, 2008
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, and sought 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 had sought, 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 deemed just and proper.  We reported the settled status of this
litigation in our Form 10-K for the year ending December 31, 2008.  ITEM 2. UNREGISTERED SALES OF EQUITY
SECURITIES AND USE OF PROCEEDS  None.  ITEM 3. DEFAULTS UPON SENIOR SECURITIES  None.  ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS  None  ITEM 5. OTHER INFORMATION  None  26     ITEM 6. EXHIBITS  The following exhibits are filed herewith:  (a)
Exhibits  Exhibit 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, 200610.4**
Form of Investment Letter31.1
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 on July 11, 2006. ** Incorporated by reference from Form SB-2/A filed on
May 3, 2007.  27    SIGNATURES  Pursuant to the requirements of the Securities Exchange
Act of 1934, 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: May 13, 2009
By:
/s/ Louis J. BrothersLouis J. BrothersPresident, Secretary and Treasurer
(Principal Accounting Officer and Authorized
Officer)     28