##### Table of Contents



UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-QSB
 þ
    
    Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended June 30, 2007
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 Commission file number 000-25555
 Veridien Corporation
  Delaware
    
    59-3020382(State or Other Jurisdiction of
    
    (IRS Employer Identification No.)Incorporation or Organization)
 7600 Bryan Dairy Road, Suite F, Largo, Florida
    
    33777-1433(Address of principal executive offices)
    
    (Zip Code)
  
   þ o
  o þ
   o þ




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##### Table of Contents



TABLE OF CONTENTS
 PagesPART I FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Notes to Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis
    
    
    11Item 3. Controls and Procedures
    
    
    20PART II OTHER INFORMATIONItem 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    21Item 5. Other Information
    
    
    22Item 6. Exhibits and Reports on Form 8-K
    
    
    23EX-3.14 CERTIFICATE OF TERMINATION (OF PREVIOUSLY DESIGNATED PREFERRED STOCK)EX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32.1 SECTION 906 CERTIFICATION OF THE CEOEX-32.2 SECTION 906 CERTIFICATION OF THE CFO
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##### Table of Contents



PART I FINANCIAL INFORMATION
 
 Item 1.
 Financial Statements
Veridien Corporation
and Subsidiaries
 
 June 30, 2007
    
    
    December 31, 2006AssetsCurrent assets:Cash
    
    $
    364,366
    
    
    $
    185,656Marketable Securities
    
    
    26,049
    
    
    
    37,476Accounts receivable, net of allowance
of $35,096 and $86,077
    
    
    230,858
    
    
    
    620,145Inventory
    
    
    526,737
    
    
    
    499,700Prepaid expenses and other current assets
    
    
    31,624
    
    
    
    77,420Total current assets:
    
    
    1,179,634
    
    
    
    1,420,397Property and equipment, net of accumulated
depreciation of $430,161 and $425,286
    
    
    34,646
    
    
    
    35,970Other assets:Patents, net of accumulated amortization of
of $518,853 and $516,298
    
    
    430,329
    
    
    
    410,136Goodwill
    
    
    1,082,399
    
    
    
    905,516Security deposits
    
    
    5,695
    
    
    
    8,283Total Assets:
    
    $
    2,732,703
    
    
    $
    2,780,302
  3




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##### Table of Contents



Veridien Corporation
and Subsidiaries
 June 30, 2007
    
    
    December 31, 2006Liabilities
and Shareholders EquityCurrent liabilities:Note payable
    
    $
    34,102
    
    
    $
    92,325Notes payable  related party
    
    
    -0-
    
    
    
    145,000Current portion of convertible debentures, net of debt discount
of $5,303 and $7,071 at June 30, 2007 and December 31, 2006
    
    
    203,697
    
    
    
    201,929Current portion of convertible debentures  related party
    
    
    275,000
    
    
    
    150,000Accounts payable
    
    
    301,927
    
    
    
    632,161Accounts payable  related party
    
    
    253,338
    
    
    
    93,406Accrued liabilities
    
    
    151,663
    
    
    
    195,975Accrued liabilities  related party
    
    
    119,304
    
    
    
    125,183Total current liabilities
    
    
    1,339,031
    
    
    
    1,635,979Long-term liabilities:Convertible debentures
    
    
    50,000
    
    
    
    50,000Total liabilities:
    
    
    1,389,031
    
    
    
    1,685,979Minority interest
    
    
    91,137
    
    
    
    100,790Shareholders
equity:Series 2006-A preferred stock, $.001 par value, 300,000
authorized, and 200,607 issued and outstanding
at June 30, 2007 and December 31, 2006
    
    
    201
    
    
    
    201Series 2006-B preferred stock , $.001 par value, 1,200,000
authorized, and 993,722 and 943,746 issued
and outstanding at June 30, 2007 and December
31, 2006
    
    
    994
    
    
    
    944Series 2006-C preferred stock, $.001 par value, 0 authorized, and
0 issued and outstanding at June 30 ,2007
and December 31, 2006
    
    
    -0-
    
    
    
    -0-Common Stock  $.001 par value; 800,000,000 shares
authorized, 262,081,764 and 253,840,560
issued and outstanding at June 30, 2007 and
December 31, 2006
    
    
    262,082
    
    
    
    253,841Cumulative foreign exchange adjustment
    
    
    (16,833
    )
    
    
    (25,757
    )Additional paid-in capital
    
    
    42,775,538
    
    
    
    41,335,741Accumulated deficit
    
    
    (40,571,437
    )
    
    
    (37,756,791
    )Current period profit (loss)
    
    
    (1,198,010
    )
    
    
    (2,814,646
    )Total shareholders equity:
    
    
    1,252,535
    
    
    
    993,533Total Liabilities and ShareholdersEquity:
    
    $
    2,732,703
    
    
    $
    2,780,302
  4




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Veridien Corporation
and Subsidiaries
  Three Months Ended June 30
    
    
    Six Months Ended June 302007
    
    
    2006
    
    
    2007
    
    
    2006Revenue
    
    $
    680,120
    
    
    $
    265,054
    
    
    $
    1,267,631
    
    
    $
    420,177Operating costs and expenses:Cost of revenue
    
    
    449,945
    
    
    
    155,618
    
    
    
    869,727
    
    
    
    243,604General, selling, and
administrative
    
    
    1,006,841
    
    
    
    249,364
    
    
    
    1,312,973
    
    
    
    453,149Research and development
    
    
    193,247
    
    
    
    131,558
    
    
    
    344,415
    
    
    
    249,8011,650,033
    
    
    
    536,540
    
    
    
    2,527,115
    
    
    
    946,554Other income (expense):Interest expense
    
    
    (23,035
    )
    
    
    (167,252
    )
    
    
    (44,431
    )
    
    
    (323,227
    )Unrealized gain (loss)
on investments
    
    
    (11,996
    )
    
    
    (42,045
    )
    
    
    (11,427
    )
    
    
    (158,279
    )Interest income
    
    
    2,449
    
    
    
    1,435
    
    
    
    5,797
    
    
    
    2,561Dividend income
    
    
    -0-
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    125,914(32,582
    )
    
    
    (207,862
    )
    
    
    (50,061
    )
    
    
    (353,031
    )Net income (loss) before minority
interest
    
    
    (1,002,495
    )
    
    
    (479,348
    )
    
    
    (1,309,545
    )
    
    
    (879,408
    )Minority interest in Mycosol loss
    
    
    54,654
    
    
    
    56,520
    
    
    
    111,535
    
    
    
    109,308Net income (loss)
    
    $
    (947,841
    )
    
    $
    (422,828
    )
    
    $
    (1,198,010
    )
    
    $
    (770,100
    )Deemed dividend on Preferred Stock
    
    
    (57,875
    )
    
    
    -0-
    
    
    
    (96,625
    )
    
    
    -0-Net (Loss) Attributable to Common Shareholders
    
    $
    (1,005,716
    )
    
    $
    (422,828
    )
    
    $
    (1,294,635
    )
    
    $
    (770,100
    )Weighted average Common shares
outstanding  basic and diluted
    
    
    261,955,513
    
    
    
    229,484,344
    
    
    
    259,200,902
    
    
    
    228,905,267Net loss
attributable to Common shareholders per share  basic and diluted
    
    $
    (0.00
    )
    
    $
    (0.00
    )
    
    $
    (0.01
    )
    
    $
    (0.00
    )
  5




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Veridien Corporation
and Subsidiaries
 2007
    
    
    2006Cash flows from operating activities:Net income (loss)
    
    $
    (1,198,010
    )
    
    $
    (770,100
    )Adjustments to reconcile net income (loss) to net cash
(used) by operating activities:Depreciation and amortization
    
    
    6,919
    
    
    
    7,104Non cash Expense of Fair Market Value of Warrants Issued
    
    
    606,490
    
    
    
    0Amortization of debt discount associated with BCF
    
    
    1,768
    
    
    
    2,601Non cash dividends
    
    
    6,883
    
    
    
    (125,914
    )Unrealized (gain) loss on marketable securities
    
    
    11,427
    
    
    
    158,279Stock issuances for services
    
    
    14,715
    
    
    
    32,850Minority interest
    
    
    (111,535
    )
    
    
    (109,308
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    389,287
    
    
    
    133,295Inventory
    
    
    (27,037
    )
    
    
    (10,520
    )Prepaid expenses and other current assets
    
    
    55,229
    
    
    
    34,467Customer deposits
    
    
    -0-
    
    
    
    (15,966
    )Accounts payable  third party
    
    
    (330,234
    )
    
    
    7,814Accounts payable  related party
    
    
    159,932
    
    
    
    -0-Accrued expenses  third party
    
    
    (44,312
    )
    
    
    83,669Accrued expenses  related party
    
    
    (5,879
    )
    
    
    188,190Net cash provided (used) by operating activities:
    
    
    (464,357
    )
    
    
    (383,539
    )Cash flow from investing activities:Purchase of property and equipment
    
    
    (3,550
    )
    
    
    (318
    )Purchase of
additional interest in Mycosol
    
    
    (25,000
    )
    
    
    -0-Increase in patents
    
    
    (22,748
    )
    
    
    (53,147
    )Decrease in security deposits
    
    
    2,588
    
    
    
    (3,789
    )Net cash used by investing activities:
    
    
    (48,710
    )
    
    
    (57,254
    )Cash flow from financing activities:Proceeds from convertible debentures
    
    
    -0-
    
    
    
    270,000Proceeds from preferred stock issuances
    
    
    750,000
    
    
    
    -0-Proceeds from notes payable  related party
    
    
    100,000
    
    
    
    271,000Payments on notes payable  third party
    
    
    (58,223
    )
    
    
    (42,224
    )Payments on notes payable  related party
    
    
    (100,000
    )
    
    
    (30,000
    )Net cash provided by financing activities:
    
    
    691,777
    
    
    
    468,776Net increase/(decrease) in cash
    
    
    178,710
    
    
    
    27,983Cash at beginning of year
    
    
    185,656
    
    
    
    115,493Cash at end of quarter
    
    $
    364,366
    
    
    $
    143,476Non-cash investing and financing activities:Conversion of debt to convertible debentures
    
    $
    125,000
    
    
    
    -0-Conversion of convertible debentures to common stock
    
    
    -0-
    
    
    $
    50,000Conversion of debt to convertible debentures
    
    
    -0-
    
    
    $
    1,127,032Conversion of preferred stock to common stock
    
    $
    277,123
    
    
    
    -0-Conversion of debt to preferred stock
    
    $
    20,000
    
    
    
    -0-Issuance of
common shares for additional Mycosol interest
    
    $
    50,000
    
    
    
    -0-
  6




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Veridien Corporation
and
Subsidiaries
 Notes to the Unaudited Interim Consolidated Financial Statements at June 30, 2007
  Note A  Stock-Based Compensation
   each
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Note B  Consolidation of Variable Interest Entities
 Mycosol, Inc.
     Santius Lifesciences, Inc.
   8




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(a)
    
    an initial purchase price of 25 million common share warrants. These warrants vest
immediately and have a term of 5 years. The exercise price for 14.2 million of the
warrants is $0.06 per share and the exercise price for 10.8 million of the warrants is
$0.10 per share;(b)
    
    additional purchase price of $ 1.071 million, which Lexxec shall use towards the
exercise price of its Veridien warrants and which purchase price shall only be payable at
the time when Santius has entered into initial product transaction(s) with a NPV of not
less than U.S. $6 million (as determined by an independent appraiser); and(c)
    
    additional purchase price of $ 1.214 million, which Lexxec shall use towards the
exercise price of its Veridien warrants and which purchase price shall only be payable at
the time when Santius has entered into additional product transaction(s) with a NPV of not
less than U.S.$13 million (as determined by an independent appraiser).
    o
    
    If the Veridien stock price has met or exceeded $0.50 per share for a period of 30
consecutive days, the consideration shall be 40 million Veridien common shares; otherwiseo
    
    the consideration will be $20 million; to be satisfied at Lexxecs unilateral option by
the payment of (i) $20 million cash, or (ii) Veridien common shares with a then current
market value of $20 million
 th
  Note C  Marketable Securities
  9




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Note D  Convertible Debentures
    Note E  Preferred Stock
   
 Note F  Deemed Dividend
  10




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Item 2. Managements Discussion and Analysis
 First Quarter  June 30, 2007 Compared with June 30, 2006
  Overview
   Ò ® ® ® ®
 Ò Ò ® ®
 ® ®
 ®
   11




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12




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Results of Operations
 Second Quarter ended June 30, 2007 vs. Second Quarter ended June 30, 2006
 Second Quarter
    
    
    Percentage ofJune 30,
    
    
    Net Revenue2007
    
    
    2006
    
    
    2007
    
    
    2006Revenue
    
    $
    680,120
    
    
    $
    265,054
    
    
    
    100
    %
    
    
    100
    %Cost of Revenue
    
    
    449,945
    
    
    
    155,618
    
    
    
    66
    %
    
    
    59
    %Gross Profit
    
    
    230,175
    
    
    
    109,436
    
    
    
    34
    %
    
    
    41
    %Operating Expenses:General, Selling & Administrative
    
    
    1,006,841
    
    
    
    249,364
    
    
    
    148
    %
    
    
    94
    %Research & Development
    
    
    193,247
    
    
    
    131,558
    
    
    
    28
    %
    
    
    50
    %Loss from Operations
    
    
    (969,913
    )
    
    
    (271,486
    )
    
    
    (143
    )%
    
    
    (102
    )%Other Expense Net
    
    
    (32,582
    )
    
    
    (207,862
    )
    
    
    (5
    )%
    
    
    (78
    )%Net Loss Before
Minority Interest
    
    
    (1,002,495
    )
    
    
    (479,348
    )
    
    
    (147
    )%
    
    
    (181
    )%Minority Interest
    
    
    54,654
    
    
    
    56,520
    
    
    
    8
    %
    
    
    21
    %Net Loss
    
    
    (947,841
    )
    
    
    (422,828
    )
    
    
    (139
    )%
    
    
    (160
    )%Deemed
Dividend on Preferred Stock
    
    $
    (57,875
    )
    
    
    -0-
    
    
    
    (9
    )%
    
    
    0
    %Net Loss
Attributable to Common Shareholders
    
    $
    (1,005,716
    )
    
    $
    (422,828
    )
    
    
    (148
    )%
    
    
    (160
    )%
 Second Quarter  June 30, 2007 Compared with June 30, 2006
  
    
    Gross revenue from product sales increased for second quarter 2007 by $415,066, or 157%,
to $680,120 compared with $265,054 in second quarter 2006. We continue active promotion of
our product line through trade-show presentations and direct calls on both existing and
potential customers. Our goal is to continue to expand our product lines and we anticipate
new products, which are scheduled with various releases this year, will generate new
revenue in this and future years. In addition, we continue to pursue strategic alliances
with other corporations that have existing distribution networks. Our goal for these
alliances is to create immediate distribution and fulfillment avenues for our products,
while focusing on our capital resources.
    
    Interest income for second quarter 2007 increased by $1,014 or 71% to $2,449 compared
with $1,435 in second quarter 2006.
  
    
    The cost of goods sold from product sales for second quarter 2007 increased by $294,327
or 189% to $449,945 compared with $155,618 in second quarter 2006. The cost of goods ratio
as a percentage of product sales was 66% in second quarter 2007 compared to 59% in second
quarter 2006. The increase in the ratio of the cost of goods sold from product sales as a
percentage of sales revenue resulted primarily from a product mix
during second quarter 2007 with lowered margins.
Profit margins for product sales were at 34% and 41%, respectively for second quarter 2007
and second quarter 2006.
 13




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
    
    General, selling, and administrative expenses for second quarter 2007 increased by
$757,477 or 304% to $1,006.841 compared with $249,364 during the same period of 2006.
Increases that
affected general and administrative costs were associated with selling expenses which
increased for second quarter 2007 by 22% to $91,797 compared with $75,191 in second quarter
2006. This increase is attributable to an increase in sales consulting personnel.
Additional increases in general and administrative costs were associated with public company
expenses for second quarter 2007 the increase in this category increased by 51% to $10,223
compared with $6,753 in second quarter 2006. This increase is attributable to the increased
costs associated with public reporting. Additional increases that affected general and
administrative costs were associated with professional management compensation expenses
which increased for second quarter 2007 by 100% to $87,500 compared with $-0- in second
quarter 2006. Decreases that affected general and administrative expenses were associated
with professional legal, consulting and accounting fees for second quarter 2007 that
decreased by 10% to $57,215 compared with $63,456 in second quarter
2006. Equity based compensation expenses increased for second quarter 2007 by 100% to $598,362 compared with
$-0- in second quarter 2006. These expenses are non-cash and are the fair market value of
the warrants issued as calculated using the Black-Scholes model. They are attributable
(i) $21,025 for options issued to third party consultants;
(ii) $116,290 for options issued under the new
compensation packages for Sheldon Fenton and Kenneth Cancellara; and
(iii) $461,047 for the issuance of
warrants for the purchase of 49.9% of Santius Lifesciences, Inc.(see Note A & B).
    
    Research and development expenses for second quarter 2007 increased by $61,689, or 47%
to $193,247 compared with $131,558 in second quarter 2006. This represents $35,361 for the
Company, $4,408 for Santius Lifesciences Inc. and $153,478 from the consolidation of
expenses for Mycosol, Inc. for the second quarter 2007 compared to $32,085 for the Company
and $99,473 from the consolidation of expenses for the VIE  Mycosol, Inc. for the second
quarter of 2006. The Company continues to research and focus on broadening the range of
claims they can assert on existing products and on testing new products for
commercialization.
    
    Interest expense for second quarter 2007 decreased by $144,217, or 86% to $23,035
compared with $167,252 in second quarter 2006. The decrease in interest expense was due
primarily to a decrease in debt from the capital reorganization in fourth quarter 2006.
Also the Company expensed $884 in convertible debenture discount per Black Scholes
calculations in second quarter 2007 compared to $1,717 in second quarter 2006. .
    
    During second quarter 2007 the Company recorded an unrealized loss in the amount of
$11,996 which reflects a decline in the FMV of 370,495 Healthnostics, Inc. (HNSO) shares
(note the symbol was changed from HNST to HNSO on March 15, 2007) from March 31, 2007 at
$.027 to $.015 at June 30, 2007; and a decline in the FMV of 431,404 Standard Global
Holding Group (SNDH) shares of $.065 at March 31, 2007 to $.048 at June 30, 2007. During
second quarter 2006 the Company recorded an unrealized loss in the amount of $42,045 which
reflects the decline in the FMV of 719,507 HQNT shares from March 31, 2006 at $.09 to $.05
at June 30, 2006; a decline in the FMV of 10,741 Healthnostics, Inc. (HNST) shares from
March 31, 2006 at $.07 to $.04 at June 30, 2006; and a decrease in the FMV of 431,404
Standard Global Holding Group (SNDH) shares of $.19 at March 31, 2006 to $.16 at June 30,
2006.
    
    Net (loss) increased to a net loss before Minority interest in Mycosol to ($1,002,495)
for second quarter 2007 from a net loss of ($479,348) in second quarter 2006. Net (loss)
increased to a net loss after Minority interest in Mycosol to ($947,841) for second quarter
2007 from a net loss of ($422,828) in second quarter 2006. Net (loss)
attributable to common shareholders as of second quarter 2007 was
($1,005,716) due to a deemed dividend of $57,875 on preferred shares
issued and preferred shares converted during 2007. There were no
deemed dividend in 2006 during this same period.
 14




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Six Months ended June 30, 2007 vs. Six Months ended June 30, 2006
 Six Months ended
    
    
    Percentage ofJune 30,
    
    
    Net Revenue2007
    
    
    2006
    
    
    2007
    
    
    2006Revenue
    
    $
    1,267,631
    
    
    $
    420,177
    
    
    
    100
    %
    
    
    100
    %Cost of Goods Sold
    
    
    869,727
    
    
    
    243,604
    
    
    
    69
    %
    
    
    58
    %Gross Profit
    
    
    397,904
    
    
    
    176,573
    
    
    
    31
    %
    
    
    42
    %Operating Expenses:General, Selling & Administrative
    
    
    1,312,973
    
    
    
    453,149
    
    
    
    104
    %
    
    
    108
    %Research & Development
    
    
    344,415
    
    
    
    249,801
    
    
    
    27
    %
    
    
    59
    %Loss from Operations
    
    
    (1,259,484
    )
    
    
    (526,377
    )
    
    
    (99
    )%
    
    
    (125
    )%Other Expense Net
    
    
    (50,061
    )
    
    
    (353,031
    )
    
    
    (4
    )%
    
    
    (84
    )%Net Loss Before
Minority Interest
    
    
    (1,309,545
    )
    
    
    (879,408
    )
    
    
    (103
    )%
    
    
    (209
    )%Minority Interest
    
    
    111,535
    
    
    
    109,308
    
    
    
    9
    %
    
    
    26
    %Net Loss
    
    
    (1,198,010
    )
    
    
    (770,100
    )
    
    
    (95
    )%
    
    
    (183
    )%Deemed
Dividend on Preferred Stock
    
    $
    (96,625
    )
    
    
    -0-
    
    
    
    (8
    )%
    
    
    0
    %Net Loss
Attributable to Common Shareholders
    
    $
    (1,294,635
    )
    
    $
    (770,100
    )
    
    
    (102
    )%
    
    
    (183
    )%
 Six-months
ended June 30, 2007 Compared with Six Months Prior Year ended June 30, 2006
  
    
    Gross revenue from product sales increased for the first six months of 2007 by $847,454,
or 202%, to $1,267,631 compared with $420,177 in 2006. We continue active promotion of our
product line through trade-show presentations and direct calls on both existing and
potential customers. Our goal is to continue to expand our product lines and we anticipate
new products, which are scheduled with various releases this year, will generate new
revenue in this and future years. In addition, we continue to pursue strategic alliances
with other corporations that have existing distribution networks. Our goal for these
alliances is to create immediate distribution and fulfillment avenues for our products,
while focusing on our capital resources.
    
    During the first six months of 2007 the Company recorded an unrealized loss in the
amount of $11,427 which reflects an increase in the FMV of 370,495 HNS0 shares (note the
symbol was changed from HNST to HNSO on March 15, 2007) from December 31, 2006 at $.008 to
$.015 at June 30, 2007 and a decline in the FMV of 431,404 SNDH shares from December 31,
2006 at $.08 to $.0475 at June 30, 2007. During the first six months of 2006 the Company
recorded an unrealized loss in the amount of $158,279 which reflects the decline in the FMV
of 719,507 HQNT shares from December 31, 2005 at $.17 to $.05 at June 30, 2006; and a
decline in the FMV of 10,741 HNST shares from December 31, 2005 at $.125 to $.04 at June
30, 2006 and a decline in the FMV of 431,404 SNDH shares from December 31, 2005 at $.24 to
$.16 at June 30, 2006.
    
    Interest income for the first six months of 2007 increased by $3,236, or 126% to $5,797
compared with $2,561 during the same period of 2006.
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
    
    Dividend income for second quarter 2007 decreased by $125,914, or 100% to $-0- compared
with $125,914 in second quarter 2006. The Company received -0- common shares of Standard
Holdings Group (SNDH) as a dividend during the first six months of 2007 and 359,753 common
shares of Standard Global Holdings Group (SNDH) as a dividend during the first six months
of 2006.
  
    
    The cost of goods sold from product sales for the six months ended June 30, 2007
increased by $626,123 or 257% to $869,727 compared with $243,604 during the same period of
2006. The cost of goods ratio as a percentage of product sales was 69% during the six
months ended June 30, 2007 compared to 58% in the same period 2006. The increase in ratio
of the cost of goods from product sales as a percentage of sales resulted primarily from
sale of a product mix with decreased margins. Profit margins for product sales were at 31%
and 42%, respectively for year-to date 2007 and year-to-date 2006.
    
    General, selling, and administrative expenses for six months ended June 30, 2007
increased by $859,824 or 190% to $1,312,913 compared with $453,149 during the same period of
2006. Increases that affected general and administrative costs were associated with
selling expenses which increased for six months ended June 30, 2007 by 96% to $273,776
compared with $139,581 in the same period 2006. This increase is attributable to an
increase in sales consulting personnel. Additional increases in general and administrative
costs were associated with public company expenses for six months ended June 30, 2007 the
increase in this category increased by 48% to $17,628 compared with $11,936 in the same
period 2006. This increase is attributable to the increased costs associated with public
reporting. Additional increases that affected general and administrative costs were
associated with professional management compensation expenses which increased for six
months ended June 30, 2007 by 100% to $87,500 compared with $-0-
in the same period 2006. Equity based compensation expenses increased for six months ended June 30, 2007 by 100% to $606,490
compared with $-0- in the same period 2006. These expenses are non-cash and are the fair
market value of the warrants issued as calculated using the Black-Scholes model. They are
attributable (i) $29,153 for options issued to third party
consultants; (ii) $116,290 options issued under
the new compensation packages for Sheldon Fenton and Kenneth
Cancellara; and (iii) $461,047 the
issuance of warrants for the purchase of 49.9% of Santius Lifesciences, Inc.(see Note A &
B).
    
    Research and development expenses for the first six months of 2007 increased by $94,614,
or 38% to $344,415 compared with $249,801 during the same period of 2006. This represents
$58,963 for the Company, $4,408 for Santius Lifesciences Inc. and $281,044 consolidation
of expenses for Mycosol, Inc. for the first six months of 2007 and $59,314 for the Company
and $190,487 consolidation of expenses for the VIE  Mycosol, Inc for the same period of
2006. The Company continues to research and focus on broadening the range of claims they
can assert on existing products and on testing new products for commercialization.
    
    Interest expense for the first six months of 2007 decreased by $278,796, or 86% to
$44,431 compared with $323,227 during the same period of 2006. The decrease in interest
expense was due primarily to a decrease in debt from the capital reorganization in fourth
quarter 2006. Also the Company expensed $1,768 in convertible debenture discount per
Black Scholes calculations in the first six months of 2007 compared to $2,601 in the same
period 2006.
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Liquidity and Working Capital
  
    
    During the second quarter we issued 50,000 Preferred Shares series
2006-B for cash proceeds of $500,000.
 
    
    During the first quarter we issued 27,000 Preferred Shares series
2006-B for (i) cash proceeds of $250,000; and (ii) extinguishment
of Notes Payable  related Party (cash proceeds already received
by the company) of $20,000.
 
    
    During the second quarter the holders of 12,079 Preferred Shares
of series 2006-B elected to convert their Preferred Shares and
accrued and unpaid dividends thereon of $3,945.81 into 3,118,395
common shares. As per the terms of the Preferred Shares, the
effective price per share was $0.04.
 
    
    During the first quarter the holders of 14,945 Preferred Shares of
series 2006-B elected to convert their Preferred Shares and
accrued and unpaid dividends thereon of $2,937.53, into 3,809,688
common shares. As per the terms of the Preferred Shares, the
effective price per share was $0.04.
 
    
    During the second quarter 925,926 common shares were issued to two
minority shareholders of Mycosol, Inc. in exchange for their
50,000 Mycosol Preferred A shares and 18,750 Mycosol common share
warrants.
 
    
    During the second quarter, 89,377 common shares were issued to two
employees as part of their compensation package. The average
effective price per share was $0.036.
 
    
    During the six months ended June 30, 2007 200,000 common shares
were earned by the Chairman of the Board under the terms of his
consulting agreement with the company. The effective price per
share was $0.037.
 
    
    During the second quarter the following warrants for the purchase
of Common Stock were issued to a consultant providing management
services to the company, all with an expiry date of December 31,
2011: [a] 1,000,000 warrants with an exercise price of $0.06 and
vesting (i) 333,333 immediate, (ii) 333,333 on December 31, 2007,
and (iii) 333,334 on December 31, 2008; [b] 1,000,000 warrants
with an exercise price of $0.10 and vesting (i) 333,333 on
December 31, 2007, and (ii) 666,667 on December 31, 2008.
 
    
    During the second quarter the following warrants for the purchase
of Common Stock were issued to each of Sheldon Fenton (President &
CEO) and Kenneth Cancellara (Executive Chairman) as part of a
compensation package for providing management services to the
company, all with an expiry date of April 1, 2012: [a] 2,500,000
warrants with an exercise price of $0.06 and immediate vesting;
[b]
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2,500,000 with an exercise price of $0.10, vesting on December 31, 2008; and [c] 2,500,000
warrants with an exercise price of $0.10, vesting on December 31, 2009.
 
    
    During the second quarter the 25,000,000 Common Stock warrants
were issued in exchange for a 49.9% interest in Santius
LifeSciences Inc. The warrants vest immediately and expire on May
12, 2012. The exercise price for 14,200,000 of the warrants is
$0.06 and for 10,800,000 of the warrants is $0.10.
 
    
    During the first quarter, 65,000 common shares were issued under
the companys S8 Registration Statement to two employees in
recognition of past performance. The average effective price per
share was $0.041.
 
    
    During the three months ended March 31, 2007, 32,818 common shares
were issued under the companys S8 Registration Statement an
employee under the terms of their employment contract. The
average effective price per share was $0.046.
 
    
    During the first quarter we issued a convertible debenture for
extinguishment of Notes Payable-related Party (cash proceeds
already received by the company) of $125,000. This debenture
carries an interest rate of 8%, has a 1-year term and has a
conversion rate of $0.04.
 
    
    During the six months ended June 30, 2007, accounts receivable
decreased by $389,287 to $230,858 from $620,145 at December 31,
2006. This decrease can be attributed to to an increase in
collected accounts from December 31, 2006.
 
    
    During the six months ended June 30, 2007, inventory increased by
$27,037 to $526,737 compared with $499,700 at December 31, 2006.
 
    
    We plan to utilize our current debt financing arrangements and
pursue additional equity and debt financing while managing cash
flow in an effort to provide funds to increase revenues to support
operation, research and development activities. We believe that
our long-term success depends on revenues from operations from
product sales and ongoing royalties from technologies. If such
sources of funds are not adequate, we may seek to obtain financing
to meet operating and research expenses from other sources
including, but not limited to, future equity or debt financings.
 
    
    As of August 3, 2007, we have cash of approximately $358,448 and
during May and June, we expect cash flow of $300,000 from
operating activities, private placements and possible sale of
marketable securities. This level of liquidity should be
sufficient to operate the Company for more than 180 days. The
Company anticipates increasing sales, reduced operating expenses,
and additional private placement funding will contribute to
continuous operations of the Company.
 
    
    We anticipate utilizing a portion of our funds to support the
working capital requirements of our anticipated increase in sales
and to cover new product development costs for Veridien. We also
anticipate increasing our investment/ownership in Mycosol, Inc.
 
    
    If disruptions occur in third party vendors that supply raw
materials to our contract fill manufacturers, we may experience
the inability to have product inventory for sale to our customers.
Such events could have material adverse effect on Veridien to
compete effectively in the marketplace. We continue to utilize
the services of a number of contract fill manufacturers. These
contract fill manufacturers have been successful in locating
sources of our commonly available raw materials and converting
these into finished products and we believe that use of these
contract fill manufacturers will assure us of the timely
production of products.
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Critical Accounting Estimates
        
 Item 3. Controls and Procedures
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PART II
 OTHER INFORMATION
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 (a)
    
    The following issuances of equity securities (including debt securities immediately
convertible into equity) without registration under the Securities Act of 1933 occurred
during the Quarter ended June 30, 2007:Preferred StockDuring the second quarter we issued 50,000 Preferred Shares series 2006-B for cash proceeds
of $500,000. Third party, unrelated, accredited investors purchased these shares. This
issuance was considered exempt from registration by reason of Section 4(2) of the Securities
Act.Common StockDuring the second quarter the holders of 12,079 Preferred Shares of series 2006-B elected to
convert their Preferred Shares and accrued and unpaid dividends thereon of $3,945.81, into
3,118,395 common shares. As per the terms of the Preferred Shares, the effective price per
share was $0.04. This issuance is considered exempt from registration by reason of 3(a)(9)
of the Securities Act.At June 30, 2007, the Chairman of the Board was entitled to the issuance of 100,000 common
            shares under the terms of his consulting agreement with the company. These shares were
accounted for in the second quarter but have not yet been issued. This issuance is
considered exempt from registration by reason of Section 4(2) of the Securities Act.At June 30, 2007, two employees were entitled to the issuance of 89,377 common shares as
part of their respective compensation packages. These shares were accounted for in the
second quarter but have not yet been issued. This issuance is considered exempt from
registration by reason of Section 4(2) of the Securities Act.During the second quarter 925,926 common shares were issued to two minority shareholders of
Mycosol, Inc. in exchange for their 50,000 Mycosol common shares and 18,750 Mycosol common
share warrants. This issuance is considered exempt from registration by reason of Section
4(2) of the Securities Act.Options and WarrantsDuring the second quarter the following warrants for the purchase of Common Stock were
issued to a consultant providing management services to the company, all with an expiry date
of December 31, 2011: [a] 1,000,000 warrants with an exercise price of $0.06 and vesting (i)
333,333 immediate, (ii) 333,333 on December 31, 2007, and (iii) 333,334 on December 31,
2008; [b] 1,000,000 warrants with an exercise price of $0.10 and vesting (i) 333,333 on
December 31, 2007, and (ii) 666,667 on December 31, 2008. This issuance was considered
exempt from registration by reason of Section 4(2) of the Securities Act.During the second quarter the following warrants for the purchase of Common Stock were
issued to each of Sheldon Fenton (President & CEO) and Kenneth Cancellara (Executive
Chairman) as part of a compensation package for providing management services to the
company, all with an
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expiry date of April 1, 2012: [a] 2,500,000 warrants with an exercise price of $0.06 and
immediate vesting; [b] 2,500,000 with an exercise price of $0.10, vesting on December 31,
2008; and [c] 2,500,000 warrants with an exercise price of $0.10, vesting on December 31,
2009. This issuance was considered exempt from registration by reason of Section 4(2) of
the Securities Act.During the second quarter the 25,000,000 Common Stock warrants were issued in exchange for a
49.9% interest in Santius LifeSciences Inc. The warrants vest immediately and expire on May
12, 2012. The exercise price for 14,200,000 of the warrants is $0.06 and for 10,800,000 of
the warrants is $0.10. This issuance was considered exempt from registration by reason of
Section 4(2) of the Securities Act.(b)
    
    Not applicable.(c)
    
    Not applicable.(d)
    
    During the quarter ended June 30, 2007 the Company did not repurchase any of its equity
securities.
 
 Item 5. Other Information
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Item 6. Exhibits and Report on Form 8-K
  (a)
    
    Exhibit 31.1  Rule 13a-14(a)/15d-14(a) Certification,
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(b)
    
    Exhibit 31.2  Rule 13a-14(a)/15d-14(a) Certification,
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(c)
    
    Exhibit 32.1  Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(d)
    
    Exhibit 32.2  Certification Pursuant 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(e)
    
    Exhibit 3.14  Certificate of Termination (of Previously
Designated Preferred Stock)
   i.
    
    May 9, 2007
 a.
    
    Item 1.01 Entry into a Material
Definitive Agreementb.
    
    Item 5.02 Departure of Directors or
Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officersc.
    
    Item 9.01 Financial Statements and
Exhibits
 ii.
    
    May 24, 2007
 a.
    
    Item 1.01 Entry into a Material
Definitive Agreementb.
    
    Item 9.01 Financial Statements and
Exhibits
 iii.
    
    June 18, 2007
 a.
    
    Item 5.03 Amendments to Articles of
Incorporation or Bylawsb.
    
    Item 9.01 Financial Statements and
Exhibits
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SIGNATURES
  Veridien Corporation(Registrant)Date: August 14, 2007
    
    By
    
    /s/ Sheldon C. FentonSheldon C. FentonChief Executive OfficerDate: August 14, 2007
    
    By
    
    /s/ Russell Van ZandtRussell Van ZandtChief Financial Officer & Chairman
 24