##### Table of Contents



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 1934For the quarterly period ended March 31, 2005o
    
    Transition report pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934For 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)2875 MCI Drive, Suite B, Pinellas Park, Florida
    
    33782-6105(Address of principal executive offices)
    
    (Zip Code)
 (727) 576-1600 
  Indicate by check mark whether the issuer: (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 issuer was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes þ No o State the number of shares outstanding of each of the issuers classes of common equity, as of the
latest practicable date: 227,820,898 shares of common stock, par value $0.001 were outstanding at
May 9, 2005. Transitional Small Business Disclosure Format (check one): Yes o No þ




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TABLE OF CONTENTS PagesPART I
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial Statements
    
    
    3Notes
to Financial Statements
    
    
    7Item 2.
    
        Managements
          Discussion and Analysis
    
    
        9Item 3.
    
    Controls and Procedures
    
    
        17PART II
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
        17Item 2.
    
    Changes in Securities and Small Business Issuer Purchases of Equity Securities
    
    
        17Item 5.
    
    Other Information
    
    
        18Item 6.
    
    Exhibits and Report on Form 8-K(a)
    
    Exhibit 10.37  Investment Agreement  Mineola Holdings Corporation, Veridien Corporation and Mycosol, Inc
    
    
        19(b)
    
    Exhibit 31.1  Rule
13a-14(a)/15d-14(a) Certification, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
    
    
        19(c)
    
    Exhibit 31.2 - Rule
13a-14(a)/15d-14(a) Certification, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
    
    
        19(d)
    
    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
    
    
        19(e)
    
    Exhibit 32.2  Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
    
    
        19EX-10.37: INVESTMENT AGREEMENTEX-31.1: SECTION 302 CERTIFICATION OF CEOEX-31.2: SECTION 302 CERTIFICATION OF CFOEX-32.1: SECTION 906 CERTIFICATION OF CEOEX-32.2: SECTION 906 CERTIFICATION OF CFO
    2




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##### Table of Contents



PART 1
FINANCIAL INFORMATION 
 Item 1. Financial Statements Veridien Corporation
and Subsidiaries Consolidated Balance Sheets March 31, 2005 and December 31, 2004 (Unaudited)March 31, 2005
    
    

(Audited)December 31, 2004Current assets:Cash
    
    $
    546,359
    
    
    $
    126,027Marketable securities
    
    
    136,483
    
    
    
    167,225Accounts receivable, net of allowance
of $21,640 and $12,640
    
    
    102,345
    
    
    
    180,678Inventory
    
    
    358,265
    
    
    
    331,702Prepaid expenses and other current assets
    
    
    44,002
    
    
    
    67,587Total current assets
    
    
    1,187,454
    
    
    
    873,219Property and
equipment, net of accumulated depreciation of $408,908 and
$397,250
    
    
    25,794
    
    
    
    27,648Other assets:Non-current portion of marketable securities
    
    
    110,000
    
    
    
    108,793Patents, net of accumulated amortization of
$507,355 and 506,077, respectively
    
    
    191,105
    
    
    
    176,305Goodwill
    
    
    410,000
    
    
    
    110,000Security deposits
    
    
    8,000
    
    
    
    11,000Total Assets:
    
    $
    1,932,353
    
    
    $
    1,306,965
 3




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##### Table of Contents



Veridien Corporation
and Subsidiaries Consolidated Balance Sheets  Continued March 31, 2005 and December 31, 2004 (Unaudited)March 31, 2005
    
    

(Audited)December 31, 2004Liabilities and Deficit in Shareholders EquityCurrent liabilities:Note payable
    
    
    190,187
    
    
    
    289,347Current portion of convertible debentures
    
    
    628,291
    
    
    
    449,000Accounts payable
    
    
    397,508
    
    
    
    275,504Accrued liabilities
    
    
    859,742
    
    
    
    1,027,641Customer deposit
    
    
    160,855
    
    
    
    160,855Total current liabilities:
    
    
    2,236,583
    
    
    
    2,202,347Long term liabilities:Convertible debentures
    
    
    3,527,682
    
    
    
    3,506,973Total liabilities:
    
    
    5,764,265
    
    
    
    5,709,320Minority interest
    
    
        570,061
    
    
    
    -0-Shareholders deficit:Undesignated preferred stock, $.001 par value,
25,000,000 shares authorizedConvertible redeemable preferred stock,
$10 par value, 100,000 authorized; 6,000 and 6,000
issued and outstanding at March 31, 2005 and
December 31, 2004
    
    
    60,000
    
    
    
    60,000Series B preferred stock,
$.001 par value, 245,344 authorized, 174,219
issued and outstanding at March 31, 2005
and December 31, 2004
    
    
    175
    
    
    
    175Common stock  $.001 par value; 300,000,000 shares
authorized, 227,820,898 and 214,369,622 issued
and outstanding at March 31, 2005 and December 31, 2004
    
    
    227,821
    
    
    
    214,370Additional paid-in capital
    
    
    31,631,626
    
    
    
    31,225,088Accumulated deficit
    
    
    (35,901,988
    )
    
    
    (35,144,195
    )Current period profit/(loss)
    
    
        (419,607
    )
    
    
    (757,793
    )Total shareholders deficit:
    
    
        (4,401,973
    )
    
    
    (4,402,355
    )Total Liabilities and Shareholders Deficit:
    
    $
    1,932,353
    
    
    $
    1,306,965
 4




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##### Table of Contents



Veridien Corporation
and Subsidiaries Consolidated Statements of Operations
(Unaudited) For the three months ended
March 31, 2005 and March 31, 2004 March 31, 2005
    
    
    March 31, 2004Revenue
    
    $
    317,378
    
    
    $
    577,069Operating costs and expenses:Cost of revenue
    
    
    226,104
    
    
    
    84,465General, selling, and administrative
    
    
    261,962
    
    
    
    249,365Research and development
    
    
    249,587
    
    
    
    41,881737,653
    
    
    
    375,711Other income (expense):Interest expense
    
    
    (121,334
    )
    
    
    (98,824
    )Realized gain (loss) on investments
    
    
    -0-
    
    
    
    (8,445
    )Unrealized gain (loss) on investments
    
    
    (30,741
    )
    
    
    295,402Interest income
    
    
    444
    
    
    
    269(151,631
    )
    
    
    188,402Net income (loss) before minority interest
    
    
    (571,906
    )
    
    
    389,760Minority interest in Mycosol loss
    
    
        152,299
    
    
    
    -0-Net income (loss)
    
    $
        (419,607
    )
    
    $
    389,760Net income (loss) per common share
    (
    $
        0.002
    )
    
    $
        0.002Weighted average share outstanding
    
    
    225,734,619
    
    
    
    207,275,534
 5




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Veridien Corporation
and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
For the three months ended March 31, 2005 and 2004 2005
    
    
    2004Cash flows from operating activities:Net income (loss)
    
    $
        (419,607
    )
    
    $
    389,760Adjustments to reconcile net income (loss) to net cash
(used) by operating activities:Depreciation and amortization
    
    
    11,658
    
    
    
    4,699Stock issuances for services
    
    
    6,600
    
    
    
    99,481Revenue -
non-cash (stock)
    
    
    
    
    
    
    (456,000
    )Realized (gains) losses on marketable securities
    
    
    
    
    
    
    8,445Unrealized (gains) losses on marketable securities
    
    
    30,741
    
    
    
    (295,402
    )Proceeds from sale of marketable securities
    
    
    
    
    
    
    244,214Minority interest
    
    
        (152,299
    )
    
    
    Changes inMarketable securities
    
    
    (1,206
    )
    
    
    Accounts receivable
    
    
    78,333
    
    
    
    (2,162
    )Inventory
    
    
    (26,563
    )
    
    
    13,560Other current assets
    
    
    23,585
    
    
    
    19,105Accounts payable
    
    
    122,005
    
    
    
    (134,933
    )Accrued expenses
    
    
    88,361
    
    
    
    86,306Due to stockholders
    
    
    
    
    
    
    516Net cash (used) by operating activities:
    
    
    (238,392
    )
    
    
    (22,411
    )Cash flow from investing activities:Purchase of property and equipment
    
    
    (9,805
    )
    
    
    Increase in patents
    
    
    (14,800
    )
    
    
    Decrease in deposits
    
    
    3,000
    
    
    
    Investment in unconsolidated subsidiary (Mycosol)
    
    
    
    
    
    
    (75,000
    )Net cash (used) by investing activities:
    
    
    (21,605
    )
    
    
    (75,000
    )Cash flow from financing activities:Proceeds from Mineola advance
    
    
    500,000
    
    
    
    Proceeds from convertible debentures
    
    
    200,000
    
    
    
    330,000Payments on notes payable
    
    
    (19,671
    )
    
    
    (66,036
    )Net cash provided by financing activities:
    
    
    680,329
    
    
    
    263,964Net increase/(decrease) in cash
    
    
    420,332
    
    
    
    166,553Cash at beginning of quarter
    
    
    126,027
    
    
    
    101,506Cash at end of quarter
    
    $
    546,359
    
    
    $
    268,059Non-cash investing and financing activities:Conversion of convertible debentures to common stock
    
    $
    113,489
    
    
    $
    25,000Payment of accrued interest with Mycosol warrants
    
    
    222,360Purchase of Mycosol interest with 6,000,000 shares
of Veridien common stock
    
    
    300,000
 6




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Veridien Corporation
and
Subsidiaries 
 Notes to the Unaudited Interim Consolidated Financial Statements at March 31, 2005 The accompanying consolidated
financial statements of Veridien Corporation at March 31, 2005 have been prepared
without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial statements prepared in
conformity with generally accepted accounting principles have been omitted or condensed pursuant to
such rules and regulations. These statements should be read in conjunction with Veridiens audited
financial statements and notes thereto included in Veridiens Form 10-KSB for the year ended
December 31, 2004. In managements opinion, these interim consolidated financial statements
reflect all adjustments (consisting of normal and recurring adjustments) necessary for a fair
presentation of the consolidated financial position and results of operations for each of the
periods presented. The accompanying unaudited interim financial statements for the three months
ended March 31, 2005 are not necessarily indicative of the results which can be expected for the
entire year. 7




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Note A  Consolidation of Variable Interest Entity  Mycosol Investment In March 2005, the Company sold 458,333 shares of Mycosol common stock to Mineola Holding
Corporation for $500,000. Simultaneously, the Company purchased 687,500 shares of Mycosol common
stock from Mycosol founding Shareholders for $110,000 and 6,000,000 shares of Veridien common stock. The Veridien stock is valued at
its fair market value of $300,000 and because Mycosol is consolidated as a variable interest
entity, the $410,000 investment is shown as goodwill. The $500,000 amount is shown as an increase
in minority interest. Veridien is committed to transferring the entire $500,000 to Mycosol for
payment of Mycosol expenses. As of March 31, 2005, $250,000 had been transferred. As of March 31,
2005 Veridien owned 31.31% of Mycosol, but Mycosol is consolidated since Veridien has control
through its majority funding of Mycosol operations. Also, during the first
quarter of 2005, the Company sold 204,000 Mycosol warrants for
accrued interest owed to debt holder(s) valued at $222,360. This amount increased the minority
interest ownership of Veridiens consolidated subsidiary, Mycosol. Note B  Convertible Debentures In first quarter 2005 and 2004, the Company received $200,000 and $330,000, respectively of
proceeds from the sale of convertible debentures. Interest is accrued at a rate of 8-10% per
annum, compounded in full, with various maturities from January 2005 to March 2008. Prior to
retirement of the debentures, the debenture holders may convert any or all amounts owed into common
stock. The conversion price for each debenture ranges from $.02 to
$.10 per share. 8




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Item 2. Managements Discussion and Analysis First Quarter  March 31, 2005 Compared with March 31, 2004 The following discussion and analysis provide information that we believe is relevant to an
assessment and understanding of the results of operations and financial condition for the first
quarter ending March 31, 2005 compared to the same period of the prior year. This discussion
should be read in conjunction with the Consolidated Financial Statements and the Notes thereto
included elsewhere in this Report. This Report also contains certain forward-looking statements
and information. This cautionary statement should be read as being applicable to all related
forward-looking statements wherever they may appear. Our actual future results could differ
materially from those discussed herein. Overview We are a Life Sciences
Company, incorporated in Delaware, focused on infection control, healthy
lifestyle products and diagnostic products [staining reagent]. Over the Companys history it has invented, developed and patented its own
unique products, sourced and marketed inventive products developed by others and in more recent
times partnered with innovative pioneers to pursue development of proprietary technology. The Company has developed PATENTED and UNIQUE PRODUCTS including SURFACE DISINFECTANTS, ANTISEPTIC
HAND CLEANSERS, INSTRUMENT PRESOAK, and SUN PROTECTION PRODUCTS. The flagship product, VIRAGUARDÒ Hospital Disinfectant/Cleaner & Instrument Presoak, is a
skin friendly, patented, U.S.  EPA and Health Canada registered, surface disinfectant (spray).
Additional product delivery systems include: Viraguard® Hospital Surface Disinfectant Towelettes,
Viraguard® Heavy Duty Textured Hospital Surface Disinfectant Towelettes, Viraguard® Extra Large
Heavy Duty Textured Hospital Surface Disinfectant Towelettes and Viraguard® Toilet Seat Wipes. ViraguardÒ Antiseptic Hand Gel, ViraguardÒ Antiseptic Hand Spray and Viraguard®
Antiseptic Hand Wipes are U.S.  FDA and Health Canada drug listed products utilizing Veridiens
patented Virahol® formulation. Other product offerings include: Water Cooler Cleaning Kits, SunSwipe Sunscreen Towelettes (SPF
15, SPF 30, SPF 45, SPF 45 Baby, and Sunburn Relief) and BugSwipe® Bug Repellent Towelettes. We have recently begun expanding our revenue base to include not only sale of our proprietary
products but also the sale of licensing rights relating to our existing and/or new technology, as
well as service fees. We intend to continue to broaden this initiative. 9




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During 2002, we entered into a global distribution agreement with E.I. DuPont de Nemours and
Company to market Veridiens line of sunscreen towelettes. DuPont has commenced marketing
Veridiens towelettes and sales of these products in the Emergency Services and Industrial markets
began in the second quarter of 2003. In addition, we entered into a five (5) year Distribution Agreement with DuPont for all Viraguard®
products in the United States of America for specific market segments. The Agreement includes
certain exclusivity rights for the Emergency Services and Industrial markets. The products
concerned are Viraguard® Hard Surface Disinfectant Towelettes, Viraguard® Antiseptic Hand Wipes,
Viraguard® Disinfectant solution in one gallon, 16 ounce and 2 ounce formats all of which are being
produced for DuPont under their brand label. Deliveries commenced in February 2003 and continue
through the first quarter results contained in the financials presented here. In 2003, DuPont and Veridien agreed to test the Virahol® formulation for efficacy on Hepatitis A, B
and C in order to create superior kill claims for the Viraguard® product line. Hepatitis outbreaks
across North America in 2002 and 2003 have increased demand for products with Hepatitis kill
claims, particularly in the Healthcare and First Responder markets. As of December 2003, Veridien
has received label claim approval representing effectiveness against Hepatitis A, B and C on
Viraguard® Disinfectant liquids for Hard Surfaces. Veridien has also drug listed all the
Viraguard® Hand Antiseptic products with the FDA, which products reflect effectiveness against
Hepatitis A, B and C based on in vitro testing. These new Hepatitis kill claims should provide
Veridien and its subregistrants (ie. Dupont) with a strong competitive advantage in 2005 and
forward. We are aggressively continuing to pursue possible strategic alliances with a number of major
corporations to further strengthen our Company. During 2004 the Company
decided to make a strategic extension of its current focus by partnering
with innovative pioneers to pursue development of proprietary technology. To this end, the Company
entered into an Agreement with Mycosol, Inc., a development-stage chemical and pharmaceutical
company, located in the Research Triangle Park area of North Carolina. While Veridiens focus is on
anti-infectives killing bacteria, mold, mildew, and viruses  through our ViraguardÒ product
line of proprietary, alcohol-based liquid and towelette antiseptics and disinfectants, Mycosol is
developing complementary, non-alcohol-based technologies of safe, potent, long lasting products
that it believes will not only kill, but retard the regrowth of infective microbials  particularly
mold. We believe the integration of the two companies will provide benefits to both in the areas
of product development & commercialization, sales and management. Under the Agreement, we have an
option to acquire the majority ownership of Mycosol. Veridien also has two seats on Mycosols
four-Director Board. Mycosol will continue to focus its technology on the further development of
unique anti-microbials (bacteria, mold, yeast) to feed the Veridien product pipeline and
distribution channels. Mycosol was founded in late 2002. The Company has a unique, proprietary, low-cost platform
technology that it believes can safely and effectively prevent or treat microbial-induced and
microbial-exacerbated problems. Mycosols primary technology is based on M301  an analog
derivative of a drug compound originally developed by the pharmaceutical company, Burroughs
Wellcome (BW), [part of Glaxo-SmithKline], to orally treat diseases of the digestive system. Although found to be safe and
efficacious in Phase III clinical studies, due to changes in corporate market strategies, the drug 10




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was never commercialized. More than a decade later, an internal research development project found
M301 to also be a unique, safe, multi-active compound exhibiting potent, topical, anti-inflammatory
(rivaling steroids), anti-fungal, anti-allergic, and anti-bacterial properties. But, as before,
corporate re-prioritization of drug development projects again sidelined the technology. Years later, Jeffrey Selph, the Project Manager for M301 at BW, opted for early retirement and
subsequently formed Mycosol with medical industry executive and Co-Founder, Richard Klein, and VP
of Business Development, Jim Hriso. These senior executives, with nearly 100 years of combined
health sciences technology and market development experience, sought to create and develop an M301
technology platform and products targeted to a myriad of new, multi-billion dollar market
applications. The Company is supported by a cadre of outside consultant experts and strategic
alliance partners in the areas of biochemistry, chemical development, safety and efficacy testing,
regulatory, marketing, and administrative services. Mycosol acquired access to the original technical and preclinical database through a license with
BWs successor, GlaxoSmithKline, to use as a reference and for guidance in developing new,
anti-inflammatory and anti-microbial applications for M301. Mycosol has since developed a broad
technology platform, a large library of related compounds, expanded the safety and efficacy
database, and filed for five U.S. patents and a world patent covering commercial applications in
medical, veterinary, diagnostics, industrial, and agriculture. For example: further and recent
testing of the lead compound, M301, and several analogs have shown them to be potent fungicidal
(kills fungus) and fungistatic (prevents the growth of fungi) agents against a broad spectrum of
yeast and mold. Some forms of yeast and mold are known to cause human infection and inherently
produce a significant inflammatory response in the tissue or organ involved. Mycosol has
identified several medical indications in dermatology, otolaryngology (ENT), and inflammatory bowel
disease that are caused by fungi and/or allergic reactions to biomaterials and in which
steroid-type drugs are currently the gold standard of treatment. These targets were selected
because they represent very large market potential and because Mycosol believes that the M301
technologys multi-activity can dramatically improve the level of care: palliative (faster
reduction of itching and inflammation) and curative (kill fungi, allergens, and other
infectives) and with fewer side effects (because they are not absorbed by the body).
Mycosol can also leverage M301s unique anti-fungal properties and the publics concern over
mold-infiltrated buildings (a.k.a. sick building syndrome) to focus on industrial market
opportunities such as pre-treated construction materials, e.g., sheetrock, structural lumber, air
filters, HVAC systems, etc. to help underwrite much of those anticipated development expenses and
to provide for a future license revenue stream, Mycosol intends to form collaborative partnerships
with companies, where applicable. The medical and agricultural opportunities are examples
where the high cost of development and long and rigorous regulatory paths (FDA and EPA,
respectively) would strongly suggest strategic alliances with companies specialized in those
fields. To help facilitate this overall collaborative strategy, Mycosol entered into a comprehensive
strategic alliance with us (in June 2004) to jointly focus on both the burgeoning
anti-microbial/anti-infectives market in which we currently participate, and other life science
opportunities being developed around the M301 technology. More recently, Mycosols core technology efforts developed and validated the use of an M301
formulation as a unique staining reagent. Staining reagents are used extensively to study
cell-based assays in laboratory research and development, an unregulated market. The proprietary
M301 reagent formulation has demonstrated significant competitive advantages, which include: 11




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user safety, reagent stability, non-toxicity to cells, very quick absorption by cells, real-time
and selective staining of the cell nucleus, and the ability to repeatedly stain living cells.
Mycosol intends to commercialize its first new staining reagent products in 2005, and to explore
licensing opportunities for the research laboratory market. In the not-too-distant future, Mycosol
sees further development of a pipeline of staining reagent products based on the M301 library of
analogs, as well as expansion into the similarly-sized, but FDA-regulated clinical diagnostics
market. We believe our strategic investment in Mycosol will result in a foundation for Veridiens evolving
broad-based life sciences strategy. For accounting purposes, our
Consolidated financial statements
as presented herein are reflective of our interest in Mycosol in that our Consolidated statements
also include the accounts of Mycosol, Inc. (see Note 1  Principles of Consolidation where there is
a complete description of the Variable Interest Entity (VIE), namely Mycosol, Inc.) As of March
31, 2005 our investment in Mycosol includes $780,000 in cash and $300,000 in equivalent value of
Veridien stock, for a total 31.31% interest in Mycosol. The Company has incurred losses since its incorporation. At March 31, 2005, the Company had an
accumulated deficit of $36,321,595. The Company has financed its ongoing business activities
through a combination of sales, equity financing, sale of marketable securities and debt. 12




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Result of Operations First Quarter ended March 31, 2005 vs. First Quarter ended March 31, 2004 First Quarter
    
    
    
    Percentage ofMarch 31
    
    
    

Gross Revenue2005
    
    
    2004
    
    
    
    2004
    
    
    2003Revenue
    
    $
    317,378
    
    
    $
    577,069
    
    
    
    100
    %
    
    
    100
    %Cost of Revenue
    
    
    226,104
    
    
    
    84,465
    
    
    
    71
    %
    
    
    15
    %Gross Profit
    
    
    91,274
    
    
    
    492,604
    
    
    
    29
    %
    
    
    85
    %Operating Expenses:General, Selling &
Administrative
    
    
    261,962
    
    
    
    249,365
    
    
    
    83
    %
    
    
    43
    %Research & Development
    
    
    249,587
    
    
    
    41,881
    
    
    
    79
    %
    
    
    7
    %Other Income (Expense) Net
    
    
    (151,631
    )
    
    
    188,402
    
    
    
    48
    %
    
    
    33
    %Net Income
(Loss) Before Minority Interest
    
    
    (571,906
    )
    
    
    389,760
    
    
    
    180
    %
    
    
    68
    %Minority Interest
    
    
        152,299
    
    
    
    -0-
    
    
    
        48
    %
    
    
    0
    %Net Income (Loss) Before Taxes
    
    $
        (419,607
    )
    
    $
    389,760
    
    
    
        132
    %
    
    
    68
    %Income Taxes
    
    
    -0-
    
    
    
    -0-
    
    
    
    0
    %
    
    
    0
    %Net Income (Loss)
    
    $
        (419,607
    )
    
    $
    389,760
    
    
    
        132
    %
    
    
    68
    %
 Consolidated gross revenues for first quarter 2005 decreased by $554,918 or 64% to $317,822
compared with $872,740 in first quarter 2004.  
    Gross revenue from product sales increased for first quarter 2005 by $196,309 or 162% to
$317,378 compared with $121,069 in first quarter 2004. This increase
can be attributed to the fulfillment of an order to Dupont. Gross revenue from licensing and
service fees decreased for first quarter 2005 by $456,000 or 100% to $-0- compared with
$456,000 in first quarter 2004. During first quarter 2004 the Company signed an agreement
with H-Quotient, Inc. (HQNT) which involves the sale of product, licensing and service fees.
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. We have recently begun expanding our revenue
base to include not only sale of our proprietary products but also the sale of licensing rights
relating to our existing and/or new technology, as well as service fees. We intend to continue
to broaden this initiative from new technology created by Mycosol
including their seven patents pending.
    During the first quarter 2004, the Company recorded an unrealized
gain in the amount of $295,402 which reflects the increase in the
FMV of 301,431 HQNT shares from $.72 to $1.70 at March 31, 2004. 13




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
    Interest income for first quarter 2005 increased by $175 or 65% to
$444 compared with $269 in first quarter 2004. Consolidated gross expenses for first quarter 2005 increased by $406,748 or 84% to $889,728
compared with $482,980 in first quarter 2004.  
    The cost of revenue for the first quarter increased as a percentage of total revenue to
71% in 2005 from 15% in 2004. The cost of goods sold from products sales for first
quarter 2005 increased by $152,042 or 205% to $226,104 compared with $74,062 in first
quarter 2004. This can be attributed to an increase in product sales of 162% for the same
period. The cost of goods ratio as a percentage of product sales was 71% in first quarter
2005 compared to 61% in first quarter 2004. 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 due to increases in raw material costs passed on by our suppliers.
The cost of revenue from licensing and service fees for first quarter 2005 decreased by
$10,403 or 100% to $-0- compared with $10,403 in first quarter 2004. The cost of revenue
as a percentage of licensing and revenue fees was 2% for first quarter 2004. The Company
continues to work to improve margins with the introduction of new products, and to provide
licensing and service fees for Veridiens patented and unique products.
    General, selling, and administrative expenses for first quarter 2005 increased by
$12,597 or 5% to $261,962 compared with $249,365 in first quarter 2004.
Increases that affected general and administrative expenses
were associated with professional public company, legal, consulting
and accounting fees for first quarter 2005 that increased by 31% to
$68,194 compared with $52,179 in first quarter 2004. Increases in
general and administrative costs were associated with insurance fees
for first quarter 2005 that increased by 13% to $22,161 compared with
$19,538 in first quarter 2004. Increases that affected general and
administrative costs were associated with rent expense for first
quarter 2005 that increased by 8% to $6,347 compared with $5,864 in
first quarter 2004. Decreases in general and administrative costs
were associated with sales and marketing expenses for first quarter
2005 that decreased by 3% to $100,391 compared with $103,236 in first
quarter 2004.
    Research and development expenses for first quarter 2005 increased by $207,706 or 496%
to $249,587 compared with $41,881 in first quarter 2004. This represents $27,868
for the Company and $221,719 from consolidation of expenses for the
VIE  Mycosol, Inc. with respect to their development of their
seven patents pending. 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.
    During first quarter 2004, the Company sold 358,869 HQNT shares and realized a loss of
$8,445 due to the decline in the FMV of the stock from December 31, 2003 at $.72.
    During first quarter 2005, the Company recorded an unrealized loss in the amount of
$30,741 which reflects the decrease in the fair market value of 301,506 HQNT common shares
from $.55 to $.45 and Healthnostics, Inc. (HNST) common shares from $.13 to $.075 at March
31, 2005. 14




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
    Interest expense for first quarter 2005 increased by $22,510 or 23% to $121,334 compared
with $98,824 in first quarter 2004. The increase in interest expense was due primarily to
the increase in Convertible Debentures and continuing current debt financing arrangements.
    Net income (losses) increased to a net loss before Minority interest in Mycosol to
571,906 for first quarter 2005 from a net income of $389,760 for first quarter 2004 Net
income (losses) increased to a net loss after Minority interest
in Mycosol to $419,607 for
first quarter 2005 from a net income of $389,760 for first quarter 2004 . Liquidity and Working Capital Historically, our principal source of financing for our research and development and business
activities have been through sales, equity offerings, and debt. As of March 31, 2005 and March 31,
2004 we had working capital deficits of approximately $1,049,129 and $2,405,606 respectively.
Our previous independent certified public accountants stated in their report on the 2004
consolidated financial statements that due to losses from operations and a working capital deficit,
there is substantial doubt about the Companys ability to continue as a going concern. We are
addressing the going concern issue in virtually every aspect of our operation. We continue to cut
operating expenses and are successfully changing our product mix such that the company is achieving
improved margins. Because of our significant losses incurred since inception, we have become
substantially dependent on (1) loans from officers, directors, and third parties, (2) private
placements of our securities, (3) revenue from sales, and (4) liquidation of our marketable
securities to fund operations. These results of these items are included in the following
descriptions.  
    During the first quarter of 2005 we issued 2 convertible debentures for cash proceeds of
$200,000. These debentures carry interest rates of 8%, have terms of 3 years and have
conversion rates of $0.051.
    During the three months ended March 31, 2005, 29,419 common shares were issued under the
companys S8 Registration Statement to an employee under the terms of their employment
contract. The average effective price per share was $0.05.
    During the first quarter of 2005 100,000 common shares were issued to the Chairman of
the Board under the terms of his consulting agreement with the company. The effective
price per share was $5,100.
    During the first quarter $110,000 and 6,000,000 shares of common stock were issued to
the three Founding Shareholders of Mycosol in exchange for 687,500 shares of Mycosol Common
Stock.
    During the first quarter 2005 $113,489 of the Loan and Security Agreement principal was
converted by the holders to 0- shares of Series B Preferred Stock and 7,321,857 shares of
Common Stock. 15




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
    During the first quarter 2005 we sold 458,333 common shares of Mycosol, Inc. to an
unrelated third party for cash proceeds of $500,000.
    During the first quarter 2005 we invested $325,000 in preferred A Stock of Mycosol,
Inc..
    During the three months ended March 31, 2005, accounts receivable decreased by $78,333
to $102,345 from $180,678 at December 31, 2004.
    During the three months ended March 31, 2005, inventory increased by $26,563 to $358,265
compared with $331,702 at December 31, 2004. This includes Mycosol inventory at $57,485 in
first quarter 2005.
    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 May 12, 2005, we have cash of approximately $71,973 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.
    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. 16




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Item 3. Controls and Procedures Pursuant to rules adopted by
the SEC as directed by Section 302 of the Sarbanes-Oxley Act of 2002,
the Company has performed an evaluation of its disclosure controls
and procedures (as defined by Exchange Act Rule 13a-15(e)) as of the
end of the period covered by this report. Based on this evaluation,
the Companys Chief Executive Officer and Acting Chief Financial
Officer has concluded that these procedures (i) are effective in
ensuring that information required to be disclosed by the Company in
the reports the Company files or submits under the Exchange Act are
recorded, processed, summarized, and reported within the time periods
specified in the SECs rules and forms; and (ii) ensure that
information required to be disclosed by the Company in the reports it
files or submits under the Exchange Act is accumulated and
communicated to the Companys management, including its
principal executive and principal financial officer, or persons
performing similar functions, as appropriate to allow timely
decisions regarding required disclosure, except that this Form 10-QSB
was filed late and that adjustments were required by our auditors in
their review. We are reviewing our accounting
department procedures to ensure that future adjustments in these
areas are not required. 
 PART II OTHER INFORMATION 
 Item 1. Legal Proceedings There have been no changes in the previously reported litigation. 
 Item 2. Changes in Securities  (a)
    Not applicable.(b)
    Not applicable.(c)
    The following issuances of equity securities (including debt securities immediately
convertible into equity securities) without registration under the Securities Act of 1933
occurred during the quarter ending March 31, 2005:Common StockThe Registrant had issued 6,000,000 shares of its common stock to the three Founding
Shareholders of Mycosol which it exchanged in addition with $110,000 on February 28, 2005
for 687,500 additional shares of Mycosol common stock. This issuance was considered exempt
from registration by reason of Section 4(2) of the Securities Act.At March 31, 2005, 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 first quarter but are still not issued. The issuance is considered
exempt from registration by reason of Section 4(2) of the Securities Act.Convertible SecuritiesOn February 14, 2005 the Registrant issued a convertible debenture for cash proceeds of
$100,000 to a third party, unrelated, accredited investor. This debenture carries an 17




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interest rate of 8% and has a term of 3 years. This instrument is immediately convertible
into common shares, at the option of the holder, at the conversion rate of $0.051. This
issuance was considered exempt from registration by reason of Section 4(2) of the Securities
Act.On March 7, 2005 the Registrant issued a convertible debenture for cash proceeds of $100,000
to a third party, unrelated, accredited investor. This debenture carries an interest rate
of 8% and has a term of 3 years. This instrument is immediately
convertible into common shares, at the option of the holder, at the conversion rate of $0.051. This issuance was
considered exempt from registration by reason of Section 4(2) of the Securities Act.Loan and Security Agreement ConversionsOn January 11, 2005 $113,489 of principal of the Loan and Security Agreement was converted
to 7,321,857 shares of Common Stock and 0 shares of Series B
Preferred Stock. This issuance was considered exempt from registration by reason of Section 3(a)(9) of the
Securities Act. From September 14, 1998 to January 11, 2005, the lenders have converted
$2,370,147 of this $2,500,000 debt into Common Shares and Series B Preferred Shares at a
combined average cost of the equivalent of $0.031 per Common Share.(d)
    During the quarter ended March 31, 2005 the Company did not repurchase any of its
equity securities.(e)
    Not applicable. 
 Item 5. Other Information As previously reported on Form 8-K filed March 9, 2005:  1.
    Entry into A Material Definitive Agreement -On February 28, 2005 the Registrant amended its previously reported Agreement with Mycosol Inc.
and Mycosols three Founding Shareholders (see Form 10Qsb June 30, 2004) by increasing the
maximum Series A Preferred Stock subscription amount available to Veridien from $1,500,000 to
$1,875,000.The Registrant has exercised its option under the previously reported Agreement with Mycosol
Inc. and their three Founding Shareholders to acquire additional shares of Mycosol. The
Registrant had issued 6,000,000 shares of its common stock to the three founding shareholders of
Mycosol which it exchanged on February 28, 2005 for 687,500 shares of Mycosol common stock.
Under its Agreement with Mycosol and their three founding shareholders, the Registrant is
authorized to have participants in its investment group. On March 7, 2005 an unrelated third
party, participated with the Registrant and acquired 458,333 of such shares.2.
    Completion of Acquisition and Disposition of Assets  18




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On March 7, 2005 an unrelated third party, participating with the Registrant as permitted under
the Registrants Agreement with Mycosol Inc. and their three Founding Shareholders acquired
458,333 shares of the common stock of Mycosol Inc. from the Registrant (see Exhibit 10-37).On March 8, 2005 the Registrant acquired from Mycosol 250,000 shares of its Series A Preferred
Stock for $250,000.3.
    Off Balance Sheet Arrangement On March 7, 2005 the Registrant agreed with the unrelated third party participating in the
Agreement with Mycosol Inc. and their three Founding Shareholders to permit such third person to
(i) exchange until December 31, 2005 their 458,333 common shares of Mycosol Inc. for 9,803,992
common shares of the Registrant; or if not so exchanged (ii) commencing January 1, 2007 for a
period of 3 months after notice by Registrant, to Put to the Registrant 229,167 common shares of
Mycosol Inc. for $250,000, payable in cash or Registrants common stock at Registrants option
(see Exhibit 10-37). As previously reported on Form 8-K April 29, 2005 (as amended May 11, 2005), effective April 27,
2005:  1.
    Veridien Corporation dismissed Carter, Cartier, Melby & Guarino, C.P.A.s, P.A. as
Veridiens independent accountants.2.
    Veridien retained Malone & Bailey, P.C. to act as their independent Certified Public
Accountants. 
 Item 6. Exhibits and Report on Form 8-K  A.
    Exhibits  (a)
    Exhibit 10.37 Investment Agreement  Mineola Holdings
Corporation, Veridien Corporation and Mycosol, Inc.(b)
    Exhibit 31.1  Rule 13a-14(a)/15d-14(a) Certification,
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(c)
    Exhibit 31.2  Rule 13a-14(a)/15d-14(a) Certification,
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(d)
    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(e)
    Exhibit 32.2  Certification Pursuant 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 19




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B.
    Report on Form 8-K There was 1
report on Form 8-K filed in the first quarter of 2005. This report was
filed on March 9, 2005. The report disclosed (i) Entry into a Material Definitive
Agreement; (ii) Completion of Acquisition or Disposition of Assets; (iii) Creation
of a Direct Financial Obligation or an obligation under an Off
Balance Sheet
arrangement; and (iv) Unregistered Sales of Equity Securities. During the second quarter of 2005 to date there has been 1 report on Form 8-K
(amended). This report was filed on April 29, 2005 and amended on May 11, 2005.
This report disclosed a change in the companys auditors. 20




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SIGNATURES Pursuant to the requirements of the Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized. Veridien Corporation(Registrant)Date
May 31, 2005
    
    By
    
    /s/ Sheldon C. FentonSheldon C. FentonChief Executive OfficerDate
May 31, 2005
    
    By
    
    /s/ Rene A. GareauRene A. GareauExecVice President & Secretary
 21