##### 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, 2005
 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
Incorporation or Organization)
    
    (IRS Employer Identification No.)2875 MCI Drive, Suite B, Pinellas Park, Florida
    
    33782-6105(Address of principal executive offices)
    
    (Zip Code)
 
  þ o
   o 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 of Financial Condition
and Results of Operation
    
    
    8Item 3. Controls and Procedures
    
    
    17PART II            OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    18Item 2. Changes in Securities and Small Business Issuer Purchases
of Equity Securities
    
    
    18Item 5. Other Information
    
    
    18Item 6. Exhibits and Reports on Form 8-K
    
    
    19(a) Exhibit 31.1  Rule 13a-14(a)/15d-14(a) Certification,
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
    
    
    21(b) Exhibit 31.2  Rule 13a-14(a)/15d-14(a) Certification, Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
    
    
    22(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
    
    
    23(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
    
    
    24Ex-31.1 Section 302 CEO CertificationEx-31.2 Section 302 CFO CertificationEx-32.1 Section 906 CEO CertificationEx-32.2 Section 906 CFO Certification
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##### Table of Contents



PART I FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 Veridien Corporation
and Subsidiaries
 
 (Unaudited)June 30, 2005
    
    December 31, 2004AssetsCurrent assets:Cash
    
    $
    180,002
    
    
    $
    126,027Marketable Securities
    
    
    230,577
    
    
    
    167,225Accounts receivable, net of allowance
of $20,885 and $12,640
    
    
    121,925
    
    
    
    180,678Inventory
    
    
    366,658
    
    
    
    331,702Prepaid expenses and other current assets
    
    
    26,142
    
    
    
    67,587Total current assets:
    
    
    925,304
    
    
    
    873,219Property and equipment, net of accumulated
depreciation of $411,265 and $397,250
    
    
    26,279
    
    
    
    27,648Other assets:Non-current portion of marketable securities
    
    
    -0-
    
    
    
    108,793Patents, net of accumulated amortization of
of $508,633 and $506,077
    
    
    204,846
    
    
    
    176,305Goodwill
    
    
    410,000
    
    
    
    110,000Security deposits
    
    
    8,000
    
    
    
    11,000Total Assets:
    
    $
    1,574,429
    
    
    $
    1,306,965
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Veridien Corporation
And Subsidiaries
 
 (Unaudited)June 30, 2005
    
    December 31, 2004Liabilities and Deficit in Stockholders EquityCurrent liabilities:Note payable
    
    $
    220,281
    
    
    $
    289,347Current portion of convertible debentures
    
    
    628,291
    
    
    
    449,000Accounts payable
    
    
    441,331
    
    
    
    275,504Accrued liabilities
    
    
    984,807
    
    
    
    1,027,641Customer deposit
    
    
    160,855
    
    
    
    160,855Total current liabilities
    
    
    2,435,565
    
    
    
    2,202,347Long-term liabilities:Convertible debentures
    
    
    3,527,682
    
    
    
    3,506,973Total liabilities:
    
    
    5,963,247
    
    
    
    5,709,320Minority interest
    
    
    425,256
    
    
    
    -0-Shareholders deficit:Undesignated preferred stock, $.001 par
value, 25,000,000 shares authorized
Convertible redeemable preferred stock,
$10 par value, 100,000 authorized; 6,000
issued and outstanding at June 30, 2005
and December 31, 2004
    
    
    60,000
    
    
    
    60,000Series B Preferred Stock, $.001 par value, 245,344
authorized, and 174,219 issued and
outstanding at June 30, 2005 and December 31, 2004
    
    
    175
    
    
    
    175Common Stock  $.001 par value; 300,000,000 shares
authorized, 228,008,110 and 214,369,622 shares
issued and outstanding at June 30, 2005 and
December 31, 2004
    
    
    228,008
    
    
    
    214,370Additional paid-in capital
    
    
    31,640,213
    
    
    
    31,225,088Accumulated deficit
    
    
    (35,901,988
    )
    
    
    (35,144,195
    )Current period profit (loss)
    
    
    (840,482
    )
    
    
    (757,793
    )Total shareholders deficit:
    
    
    (4,814,074
    )
    
    
    (4,402,355
    )Total Liabilities and Shareholders Deficit:
    
    $
    1,574,429
    
    
    $
    1,306,965
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Veridien Corporation
and Subsidiaries
 
 Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Revenue
    
    $
    153,339
    
    
    $
    225,348
    
    
    $
    470,717
    
    
    $
    802,417Operating costs and expenses:Cost of revenue
    
    
    97,361
    
    
    
    48,625
    
    
    
    323,465
    
    
    
    133,090General, selling, and
administrative
    
    
    229,186
    
    
    
    238,125
    
    
    
    491,148
    
    
    
    487,490Research and development
    
    
    250,914
    
    
    
    39,287
    
    
    
    500,501
    
    
    
    81,168577,461
    
    
    
    326,037
    
    
    
    1,315,114
    
    
    
    701,748Income (loss) from operations
    
    
    (424,122
    )
    
    
    (100,689
    )
    
    
    (844,397
    )
    
    
    100,669Other income (expense):Interest expense
    
    
    (125,981
    )
    
    
    (114,037
    )
    
    
    (247,315
    )
    
    
    (212,861
    )Realized gain (loss)
on marketable investments
    
    
    -0-
    
    
    
    519,524
    
    
    
    -0-
    
    
    
    511,079Unrealized gain (loss)
on investments
    
    
    (32,454
    )
    
    
    (214,317
    )
    
    
    (63,195
    )
    
    
    81,085Interest income
    
    
    330
    
    
    
    550
    
    
    
    774
    
    
    
    819Dividend income
    
    
    16,547
    
    
    
    -0-
    
    
    
    16,547
    
    
    
    -0-(141,558
    )
    
    
    191,720
    
    
    
    (293,189
    )
    
    
    380,122Net income (loss) before minority
interest
    
    
    (565,680
    )
    
    
    91,031
    
    
    
    (1,137,586
    )
    
    
    480,791Minority interest in Mycosol loss
    
    
    144,805
    
    
    
    -0-
    
    
    
    297,104
    
    
    
    -0-Net income (loss)
    
    $
    (420,875
    )
    
    $
    91,031
    
    
    $
    (840,482
    )
    
    $
    480,791Net income (loss) per
common share
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-Weight average share outstanding
    
    
    227,921,635
    
    
    
    209,413,926
    
    
    
    225,828,127
    
    
    
    208,344,730
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Veridien Corporation
and Subsidiaries
 
 2005
    
    2004Cash flows from operating activities:Net income (loss)
    
    $
    (840,482
    )
    
    $
    480,791Adjustments to reconcile net income (loss) to net cash
(used) by operating activities:Depreciation and amortization
    
    
    16,571
    
    
    
    9,480Stock issuances for services
    
    
    15,373
    
    
    
    122,223Revenue  non-cash (stock)
    
    
    -0-
    
    
    
    (556,000
    )Realized (gains) losses on marketable securities
    
    
    -0-
    
    
    
    (511,079
    )Unrealized (gains) losses on marketable securities
    
    
    63,195
    
    
    
    (81,085
    )Proceeds from sale of marketable securities
    
    
    -0-
    
    
    
    998,528Minority interest
    
    
    (297,104
    )
    
    
    -0-Changes inMarketable securities
    
    
    (17,753
    )
    
    
    -0-Accounts receivable
    
    
    58,753
    
    
    
    6,958Inventory
    
    
    (34,956
    )
    
    
    (65,438
    )Other current assets
    
    
    41,445
    
    
    
    37,771Accounts payable
    
    
    165,827
    
    
    
    (139,761
    )Accrued expenses
    
    
    179,426
    
    
    
    172,612Due to stockholders
    
    
    -0-
    
    
    
    1,031Net cash
provided (used) by operating activities:
    
    
    (649,705
    )
    
    
    476,031Cash flow from investing activities:Purchase of property and equipment
    
    
    (12,646
    )
    
    
    (1,687
    )Increase in patents
    
    
    (31,097
    )
    
    
    -0-Decrease in deposits
    
    
    3,000
    
    
    
    -0-Investment in unconsolidated subsidiary (Mycosol)
    
    
    -0-
    
    
    
    (310,000
    )Net cash used by investing activities:
    
    
    (40,743
    )
    
    
    (311,687
    )Cash flow from financing activities:Proceeds from Mineola advance
    
    
    500,000
    
    
    
    -0-Proceeds from convertible debentures
    
    
    200,000
    
    
    
    330,000Proceeds on notes payable
    
    
    44,423
    
    
    
    (43,365
    )Net cash provided by financing activities:
    
    
    744,423
    
    
    
    286,635Net increase/(decrease) in cash
    
    
    53,975
    
    
    
    450,979Cash at beginning of year
    
    
    126,027
    
    
    
    101,506Cash at end of quarter
    
    $
    180,002
    
    
    $
    552,485Non-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
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Veridien Corporation
and
Subsidiaries
 
 Notes to the Unaudited Interim Consolidated Financial Statements at June 30, 2005
  Note A  Consolidation of Variable Interest Entity  Mycosol Investment
   Note B  Convertible Debentures
  7




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Item 2. Managements Discussion and Analysis
 First Quarter  June 30, 2005 Compared with June 30, 2004
  Overview
   Ò
 Ò Ò
    8




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and and
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Results of Operations
 Second Quarter ended June 30, 2005 vs. Second Quarter ended June 30, 2004
 Second Quarter
    
    Percentage ofJune 30,
    
    Net Revenue2005
    
    2004
    
    2005
    
    2004Revenue
    
    $
    153,339
    
    
    $
    225,348
    
    
    
    100
    %
    
    
    100
    %Cost of Revenue
    
    
    97,361
    
    
    
    48,625
    
    
    
    63
    %
    
    
    22
    %Gross Profit
    
    
    55,978
    
    
    
    176,723
    
    
    
    37
    %
    
    
    78
    %Operating Expenses:General, Selling & Administrative
    
    
    229,186
    
    
    
    238,125
    
    
    
    149
    %
    
    
    106
    %Research & Development
    
    
    250,914
    
    
    
    39,287
    
    
    
    164
    %
    
    
    17
    %Income (Loss) from Operations
    
    
    (424,122
    )
    
    
    (100,689
    )
    
    
    (277
    )%
    
    
    (45
    )%Other Income (Expense) Net
    
    
    (141,558
    )
    
    
    191,720
    
    
    
    (92
    )%
    
    
    85
    %Net Income (Loss) Before
Minority Interest
    
    
    (565,680
    )
    
    
    91,031
    
    
    
    (369
    )%
    
    
    40
    %Minority Interest
    
    
    144,805
    
    
    
    -0-
    
    
    
    94
    %
    
    
    0
    %Net Income (Loss) Before Taxes
    
    
    (420,875
    )
    
    
    91,031
    
    
    
    (274
    )%
    
    
    40
    %Income Taxes
    
    
    -0-
    
    
    
    -0-
    
    
    
    0
    %
    
    
    0
    %Net Income (Loss)
    
    $
    (420,875
    )
    

    $
    91,031
    
    
    
    (274
    )%
    
    
    40
    %
 Second Quarter  June 30, 2005 Compared with June 30, 2004
  
    
    Gross revenue from product sales increased for second quarter 2005
by $27,991, or 22%, to $153,339 compared with $125,348 in second
quarter 2004. 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. Gross revenue from licensing and service fees decreased for second
quarter 2005 by $100,000 or 100% to $-0- compared with $100,000 in
second quarter 2004. During the second quarter 2004 the Company
received service fees for services provided for Mycosol, Inc.
 
    
    During the second quarter 2004 the Company sold 344,500
H-Quotient, Inc. (HQNT) shares and realized a gain at time of sale
of $519,524 due to the increase in the sale price from the cost
basis of $.70 at time of acquisition. During second quarter 2004
the Company received these 344,500 shares of common stock from an
investor in exchange for 486,875 restricted common shares of
H-Quotient, Inc. (HQNT). The 486,875 restricted common shares
represents H-Quotients customer deposit for products to be
delivered in future quarters.
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
    
    Interest income for second quarter 2005 decreased by $220, or 40%
to $330 compared with $550 in second quarter 2004.
 
    
    Dividend income for second quarter 2005 increased by $16,547,
or 100% to $16,547 compared with $ -0- in second quarter 2004.
The Company received 71,951 common shares of Standard Global Holdings
Group (SNDH) as a dividend during second quarter 2005.  The PMV at
June 30, 2005 is $19,427.
  
    
    The cost of revenue for the second quarter increased as a percentage of total revenue to
63% in 2005 from 22% in 2004. The cost of goods sold from product sales for second quarter
2005 increased by $48,736 or 100% to $97,361 compared with $48,625 in second quarter 2004.
The cost of goods ratio as a percentage of product sales was 63% in second quarter 2005
compared to 39% in second 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. Profit margins for product sales were at 37% and 61%, respectively.
    
    General, selling, and administrative expenses for second quarter 2005 decreased by
$8,939 or 4% to $229,186 compared with $238,125 during the same period of 2004. Decreases
that affected general and administrative costs were associated with selling expenses which
decreased for second quarter 2005 by 8% to $80,425 compared with $87,332 in second quarter
2004. This decrease is attributable to a reduction in advertising expenses. Decreases
that affected general and administrative costs were associated with administrative wages
which decreased in second quarter 2005 by 22% to $30,363 compared with $38,812 in second
quarter 2004. This decrease is attributable to the decrease in permanent staff versus
contracting staff from outside agencies. Additional decreases in general and
administrative costs were associated with public company expenses for second quarter 2005
the decrease in this category decreased by less than 1% to $9,909 compared with $9,958 in
second quarter 2004. This decrease is attributable to the reduction of costs in
maintaining the Companys website. Increases that affected general and administrative
expenses were associated with professional legal, consulting and accounting fees for second
quarter 2005 that increased by 28% to $54,272 compared with $42,275 in second quarter 2004.
    
    Research and development expenses for second quarter 2005 increased by $211,627, or 539%
to $250,914 compared with $39,287 in second quarter 2004. This represents $25,748 for the
Company and $225,166 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.
    
    Interest expense for second quarter 2005 increased by $11,944, or 10% to $125,981
compared with $114,037 in second quarter 2004. The increase in interest expense was due
primarily to the increase in Convertible Debentures and continuing current debt financing
arrangements.
    
    During second quarter 2005 the Company recorded an unrealized loss in the amount of
$32,454 which reflects the decline in the FMV of 301,506 HQNT shares from March 31, 2004 at
$.45 to $.30 at June 30, 2005; a decline in the FMV of 10,741 Healthnostics, Inc. (HNST)
 shares from March 31, 2005 at $.075 to $.065 at June 30, 2005; an increase in the FMV of
71,951 Standard Global Holding Group (SNDH) shares of $.23 at June 6, 2005 to $.27 at June
30, 2005 and
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
    
    Net income (losses) increased to a net loss before Minority interest in Mycosol to
$565,680 for second quarter 2005 from a net income of $91,031 in second quarter 2004. Net
income (losses) increased to a net loss after Minority interest in Mycosol to $420,875 for second quarter
2005 from a net income of $91,031 in second quarter 2004.
 Six Months ended June 30, 2005 vs. Six Months ended June 30, 2004
 Six Months ended
    
    Percentage ofJune 30,
    
    Net Revenue2005
    
    2004
    
    2005
    
    2004Revenue
    
    $
    470,717
    
    
    $
    802,417
    
    
    
    100
    %
    
    
    100
    %Cost of Goods Sold
    
    
    323,465
    
    
    
    133,090
    
    
    
    69
    %
    
    
    17
    %Gross Profit
    
    
    147,252
    
    
    
    669,327
    
    
    
    31
    %
    
    
    83
    %Operating Expenses:General, Selling & Administrative
    
    
    491,148
    
    
    
    487,490
    
    
    
    104
    %
    
    
    61
    %Research & Development
    
    
    500,501
    
    
    
    81,168
    
    
    
    106
    %
    
    
    10
    %Income (Loss) from Operations
    
    
    (844,397
    )
    
    
    100,669
    
    
    
    (179
    )%
    
    
    13
    %Other Income (Expense) Net
    
    
    (293,189
    )
    
    
    380,122
    
    
    
    (62
    )%
    
    
    47
    %Net Income (Loss) Before
Minority Interest
    
    
    (1,137,586
    )
    
    
    480,791
    
    
    
    (242
    )%
    
    
    60
    %Minority Interest
    
    
    297,104
    
    
    
    -0-
    
    
    
    63
    %
    
    
    -0-Net Income (Loss) Before Taxes
    
    
    (840,482
    )
    
    
    480,791
    
    
    
    (179
    )%
    
    
    60
    %Income Taxes
    
    
    -0-
    
    
    
    -0-
    
    
    
    0
    %
    
    
    0
    %Net Income (Loss)
    
    $
    (840,482
    )
    
    $
    480,791
    
    
    
    (179
    )%
    
    
    60
    %
 Six-months ended June 30, 2005 Compared with Six Months Prior Year ended June 30, 2004
  
    
    Gross revenue from product sales increased for the first six
months of 2005 by $224,300, or 91%, to $470,717 compared with
$246,417 in 2004. 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
 13




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
    
    During the first quarter 2004 the Company sold 344,500 HQNT shares
and realized a gain at time of sale of $519,524 due to the
increase in the sale price from the cost basis of $.70 at time of
acquisition. During second quarter 2004 the Company received
these 344,500 shares of common stock from an
investor in exchange for 486,875 restricted common shares of H-Quotient, Inc. (HQNT). The
486,875 restricted common shares represents H-Quotients customer deposit for products to be
delivered in future quarters. During the second quarter 2004 the Company sold 358,869 HQNT
 shares and realized a loss at time of sale of $8,445 due to the decline in the FMV of the stock
the from December 31, 2003 closing price of $.72. This represents a net realized gain of
$511,079 for the first six months of 2004.
 
    
    During second quarter 2005 the Company recorded an unrealized loss
in the amount of $32,454 which reflects the decline in the FMV of
301,506 HQNT shares from March 31, 2004 at $.45 to $.30 at June
30, 2005; a decline in the FMV of 10,741 HNSTshares from March 31,
2005 at $.075 to $.065 at June 30, 2005; an increase in the FMV of
71,951 SNDH shares of $.23 at June 6, 2005 to $.27 at June 30,
2005; and 400,000 HQNT shares from March 31, 2005 at $.275 to $.30
at June 30, 2005. During the first quarter 2005 the Company
recorded an unrealized loss in the amount of $30,741 which
reflects the decline in the FMV of 301,506 HQNT shares from
December 31, 2004 at $.55 to $.45 at March 31, 2005; and a decline
in the FMV of 10,741 HNST shares from December 31, 2004 at $.13 to
$.075 at March 31, 2005. During the second quarter 2004 the
Company recorded an unrealized loss in the amount of $214,317
which reflects the decline in the FMV of 301,431 HQNT shares from
March 31, 2004 at $1.70 to $.989 at June 30, 2004. 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. This
represents a net unrealized gain of $81,085 for the first six
months of 2004.
 
    
    Interest income for the first six months of 2005 decreased by $45,
or 5% to $774 compared with $819 during the same period of 2004.
 
    
    Dividend income for the first six months of 2005 increased by $16,547,
or 100% to $16,547 compared with $ -0- during the same period of 2004.
The Company received 71,951 common shares of Standard Global Holdings
Group (SNDH) as a dividend during second quarter 2005.  The PMV at
June 30, 2005 is $19,427.
  
    
    The cost of revenue for the first six months of 2005 increased as a percentage of total
revenue to 69% in 2004 from 17% during the same period of 2004. The cost of goods sold
from product sales for the six months ended June 30, 2005 increased by $200,778 or 164% to
$323,465 compared with $122,687 during the same period of 2004. The cost of goods ratio as
a percentage of product sales was 69% during the six months ended June 30, 2005 compared to
50% in the same period 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. Profit margins for product sales were at 31% and 50%, respectively.
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
    
    General, selling, and administrative expenses for six months ended June 30, 2005
increased by $3,658 or 1% to $491,148 compared with $487,490 during the same period of
2004. Increases that affected general and administrative expenses were associated with
professional legal, consulting and accounting fees for six months ended June 30, 2005 that
increased by 30% to $122,541 compared with $94,455 in the same period 2004. Decreases that
affected general and administrative costs were associated with selling expenses which
decreased for six months ended June 30, 2005 by 5% to $180,673 compared with $190,696 in
the same period 2004. This decrease is attributable to a reduction in advertising
expenses. Decreases that affected general and administrative costs were associated with
administrative wages which decreased for six
months ended June 30, 2005 by 13% to $63,417 compared with $73,242 in the same period 2004.
This decrease is attributable to the decrease in permanent staff versus contracting staff
from outside agencies. Additional decreases in general and administrative costs were
associated with public company expenses for six months ended June 30, 2005 the decrease in
this category decreased by 10% to $12,631 compared with $13,959 in the same period 2004.
This decrease is attributable to the reduction of costs in maintaining the Companys
website.
    
    Research and development expenses for the first six months of 2005 increased by
$419,333, or 517% to $500,501 compared with $81,168 during the same period of 2004. This
represents $53,616 for the Company and $446,885 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.
    
    Interest expense for the first six months of 2005 increased by $34,454, or 16% to
$247,315 compared with $212,861 during the same period of 2004. The increase in interest
expense was due primarily to an increase in Convertible Debentures and continuing current
debt financing arrangements.
  Liquidity and Working Capital
  
    
    During the six months ended June 30, 2005, 59,131 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.
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
    
    During the first six months of 2005 200,000 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 $0.05.
 
    
    During the second quarter of 2005 57,500 common shares were
issued, under the Companys S8 Registration Statement, to staff as
employment bonuses. The value of the shares issued was $2,473.
 
    
    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 first quarter of 2005 $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 of 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.
 
    
    During the six ended June 30, 2005, accounts receivable decreased
by $58,753 to $121,955 from $180,678 at December 31, 2004.
 
    
    During the six months ended June 30, 2005, inventory increased by
$34,956 to $366,658 compared with $331,702 at December 31, 2004.
This includes Mycosol inventory at $70,282 in second 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 August 8, 2005, we have cash of approximately $89,316 and
during August and September, 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 and our
VIE, Mycosol.
 
    
    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 1. Legal Proceedings
  
 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 June 30, 2005:
 Common Stock
  (d)
    
    During the quarter ended June 30, 2005 the Company did not repurchase any of its equity
securities.(e)
    
    Not applicable.
 
 Item 5. Other Information
   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.
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Item 6. Exhibits and Report on Form 8-K
 A.
    
    Exhibits
 (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
 B.
    
    Report on Form 8-K
  a.
    
    A report was filed on April 29, 2005 and amended on May 11,
2005. This report disclosed a change in the companys auditors.
 b.
    
    A report was filed on June 27, 2005 announcing the appointment
of Russell Van Zandt as the companys Chief Financial Officer.
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SIGNATURES
  Veridien Corporation(Registrant)Date August 15, 2005
    
    By
    
    /s/ Sheldon C. FentonSheldon C. FentonChief Executive OfficerDate August 15, 2005
    
    By
    
    /s/ Russell Van ZandtRussell Van ZandtChief Financial Officer & Chairman
 20