New Directors: “We are excited to be on the board. Now about those D&O policies . . .”
Valley Forge Composite Technologies, Inc. (VLYF), a bulletin board company, is in the business of selling mechanical devices (momentum wheels) and recently began to engage in the counter-terrorism equipment business with products related to detection of narcotics, explosives and bio-chemical weapons.
On February 4, Valley Forge announced that it expanded its board and added a couple of new directors with some distinguished-sounding titles that are relevant-sounding to the company’s business.
On February 6, Valley Forge announced that the U.S. Attorney:
- alleged that it exported over $37 million worth of military semiconductors to Hong Kong since about 2009 in violation of the International Traffic in Arms Regulations (“ITAR”); and
- seized the bank accounts of the Company, which held approximately $1.5 million.
Valley Forge stated that its internal investigation is in its early stages, and it has reason to believe that the vast majority of these exports involved commercial semiconductors that were clearly not subject to control under the ITAR, and were not controlled for export to Hong Kong under the Export Administration Regulations. [Ed.: “vast majority” is not the equivalent of “all”]
The bad news:
The government takes ITAR seriously.
The good news:
At least the company has sales and managed to amass about $1.5 million.
The other bad news:
Valley Forge’s CEO, CFO and Chairman roles are all played by the same guy. As of September 2012, the company had eight employees, which consisted of two executive managers, four administrative and two engineers. We wonder how that investigation is going and how much manpower is dedicated to getting to the bottom of it. Expect additional expenses of outside advisors on this one.