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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 March 31, 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)
 (Issuers telephone number, including Area Code)
  þ o
  o þ
   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
    
    
    12Item 3.
    
    Controls and Procedures
    
    
    18PART II
    
    OTHER INFORMATIONItem 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    19Item 5.
    
    Other Information
    
    
    20Item 6.
    
    Exhibits and Report on Form 8-K
    
    
    20EX-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
  (a)
    
    Exhibit 31.1  Rule 13a-14(a)/15d-14(a) Certification, Adopted
Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
    
    
    22(b)
    
    Exhibit 31.2  Rule 13a-14(a)/15d-14(a) Certification, Adopted
Pursuant to Section 302 of the Sarbanes-OxleyAct of 2002
    
    
    24(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
    
    
    26(d)
    
    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
    
    
    27
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##### Table of Contents



PART 1
FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 Veridien Corporation
and Subsidiaries
 
 March 31, 2007
    
    
    December 31, 2006AssetsCurrent assets:Cash
    
    $
    152,753
    
    
    $
    185,656Marketable securities
    
    
    38,045
    
    
    
    37,476Accounts receivable, net of allowance
of $44,548 and $86,077
    
    
    536,340
    
    
    
    620,145Inventory
    
    
    496,163
    
    
    
    499,700Prepaid expenses and other current assets
    
    
    52,982
    
    
    
    77,420Total current assets
    
    
    1,276,283
    
    
    
    1,420,397Property and equipment, net of accumulated
depreciation of $426,523 and $425,286
    
    
    36,309
    
    
    
    35,970Other assets:Patents, net of accumulated amortization of
$517,575 and $516,298, respectively
    
    
    417,185
    
    
    
    410,136Goodwill
    
    
    907,451
    
    
    
    905,516Security deposits
    
    
    8,283
    
    
    
    8,283Total Assets:
    
    $
    2,645,511
    
    
    
    $2,780,302
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Veridien Corporation
and Subsidiaries
 
 March 31, 2007
    
    
    December 31, 2006Liabilities and Shareholders
EquityCurrent liabilities:Note payable
    
    $
    66,956
    
    
    $
    92,325Notes payable  related party
    
    
    -0-
    
    
    
    145,000Current portion of convertible debentures, net of debt
Discount of $6,187 and $7,071 at March 31, 2007, and
December 31, 2006
    
    
    202,813
    
    
    
    201,929Current portion of convertible debentures  related party
    
    
    275,000
    
    
    
    150,000Accounts payable
    
    
    556,545
    
    
    
    632,161Accounts payable  related party
    
    
    145,554
    
    
    
    93,406Accrued liabilities
    
    
    146,451
    
    
    
    195,975Accrued liabilities  related party
    
    
    118,406
    
    
    
    125,183Total current liabilities:
    
    
    1,511,725
    
    
    
    1,635,979Long term liabilities:Convertible debentures
    
    
    50,000
    
    
    
    50,000Total liabilities:
    
    
    1,561,725
    
    
    
    1,685,979Minority interest
    
    
    45,843
    
    
    
    100,790Shareholders
equity:Series 2006-A preferred stock, $.001 par value, 300,000
authorized, and 200,607 issued and outstanding at March
31, 2007 and December 31, 2006
    
    
    201
    
    
    
    201Series 2006-B preferred stock, $.001 par value, 1,200,000
authorized, and 955,801 and 943,746 issued and
outstanding at March 31, 2007 and December 31, 2006
respectively
    
    
    956
    
    
    
    944Series 2006-C preferred stock, $.001 par value, 0
authorized, and 0 issued and outstanding at March
31, 2007 and December 31, 2006
    
    
    -0-
    
    
    
    -0-Common stock  $.001 par value; 800,000,000 shares
authorized, and 257,848,066 and 253,840,560 issued
and outstanding at March 31, 2007 and December 31, 2006
    
    
    257,848
    
    
    
    253,841Cumulative foreign exchange adjustment
    
    
    (26,443
    )
    
    
    (25,757
    )Additional paid-in capital
    
    
    41,620,752
    
    
    
    41,335,741Accumulated deficit
    
    
    (40,571,437
    )
    
    
    (37,756,791
    )Current period profit (loss)
    
    
    (243,934
    )
    
    
    (2,814,646
    )Total
shareholders equity:
    
    
    1,037,943
    
    
    
    993,533Total
Liabilities and Shareholders Equity:
    
    $
    2,645,511
    
    
    $
    2,780,302
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Veridien Corporation
and Subsidiaries
 
 For the three months ended,March 31, 2007
    
    
    March 31, 2006Revenue
    
    $
    587,468
    
    
    $
    155,123Operating costs and expenses:Cost of revenue
    
    
    418,264
    
    
    
    87,986General, selling, and administrative
    
    
    301,341
    
    
    
    203,785Research and development
    
    
    151,199
    
    
    
    118,243870,804
    
    
    
    410,014Other income (expense):Interest expense
    
    
    (21,396
    )
    
    
    (155,975
    )Unrealized
gain (loss) on marketable securities
    
    
    568
    
    
    
    (116,234
    )Interest income
    
    
    3,348
    
    
    
    1,126Dividend income
    
    
    -0-
    
    
    
    125,914(17,480
    )
    
    
    (145,169
    )Net loss before minority interest
    
    
    (300,816
    )
    
    
    (400,060
    )Minority interest in Mycosol loss
    
    
    56,882
    
    
    
    52,788Net loss
    
    $
    (243,934
    )
    
    $
    (347,272
    )Deemed dividend on preferred stock
    
    $
    (38,750
    )
    
    
    -0-Net loss attributable to common
shareholders
    
    $
    (282,684
    )
    
    $
    (347,272
    )Net loss attributable to common
shareholders per common share  basic
and diluted
    
    $
    (0.00
    )
    
    $
    (0.00
    )Weighted
average shares outstanding
    
    
    256,446,291
    
    
    
    228,326,190
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Veridien Corporation
and Subsidiaries
 2007
    
    
    2006Cash flows from operating activities:Net income (loss)
    
    $
    (243,934
    )
    
    $
    (347,272
    )Adjustments to reconcile net income (loss) to net cash
(used) by operating activities:Depreciation and amortization
    
    
    3,606
    
    
    
    3,550Amortization of debt discount associated with BCF
    
    
    884
    
    
    
    884Non cash dividends
    
    
    -0-
    
    
    
    (125,914
    )Unrealized (gains) loss on marketable securities
    
    
    (568
    )
    
    
    116,234Stock issuances for services
    
    
    7,965
    
    
    
    6,500Minority interest
    
    
    (56,882
    )
    
    
    (52,788
    )Changes inAccounts receivable
    
    
    83,805
    
    
    
    185,651Inventory
    
    
    3,537
    
    
    
    (33,512
    )Prepaid expenses and other current assets
    
    
    (24,438
    )
    
    
    12,956Accounts payable  third party
    
    
    (75,616
    )
    
    
    (72,037
    )Accounts payable  related party
    
    
    52,148
    
    
    
    33,982Accrued expenses  third party
    
    
    (25,231
    )
    
    
    28,810Accrued expenses  related party
    
    
    28,186
    
    
    
    100,391Net cash (used) by operating activities:
    
    
    (246,538
    )
    
    
    (142,565
    )Cash flow from investing activities:Purchase of property and equipment
    
    
    (2,668
    )
    
    
    Increase in patents
    
    
    (8,326
    )
    
    
    (22,161
    )Increase in security deposits
    
    
    -0-
    
    
    
    (389
    )Net cash (used) by investing activities:
    
    
    (10,994
    )
    
    
    (22,550
    )Cash flow from financing activities:Proceeds from convertible debentures
    
    
    -0-
    
    
    
    50,000Proceeds
from preferred stock issuances
    
    
    250,000
    
    
    
    -0-Proceeds from notes payable  related party
    
    
    -0-
    
    
    
    141,000Payments on notes payable  third party
    
    
    (25,371
    )
    
    
    (20,386
    )Net cash provided by financing activities:
    
    
    224,629
    
    
    
    170,614Net increase/(decrease) in cash
    
    
    (32,903
    )
    
    
    5,499Cash at beginning of quarter
    
    
    185,656
    
    
    
    115,493Cash at end of quarter
    
    $
    152,753
    
    
    $
    120,992Non-cash investing and financing activities:Conversion of debt to convertible debenture
    
    $
    125,000
    
    
    
    -0-Conversion of convertible debentures to common stock
    
    
    -0-
    
    
    $
    113,489Conversion of preferred stock to common stock
    
    $
    152,388
    
    
    
    -0-Conversion of debt to preferred stock
    
    $
    20,000
    
    
    
    -0-Payment of accrued interest with Mycosol warrants
    
    
    -0-
    
    
    $
    222,360Purchase of Mycosol interest with 6,000,000 shares
of Veridien common stock
    
    
    -0-
    
    
    $
    300,000
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Veridien Corporation
and
Subsidiaries
 
 Notes to the Unaudited Interim Consolidated Financial Statements at March 31, 2007
  Note A  Stock-Based Compensation
   Note B  Consolidation of Mycosol
  Consolidation of Variable Interest Entities
  7




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Note B  Consolidation of Mycosol  Continued
   Note C  Marketable Securities
    Note
D  Convertible Debentures
   8




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Note D 
Convertible Debentures  Continued
  Note
E  Preferred Stock
    Note
F  Deemed Dividend
  Note
G  Subsequent Event
    9




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Note
G  Subsequent Event  Continued
     (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).
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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;
  o
    
    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
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Item 2. Managements Discussion and Analysis
 First Quarter  March 31, 2007 Compared with March 31, 2006
  Overview
   Ò
   12




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Result of Operations
 First Quarter ended
March 31, 2007 vs. First Quarter ended March 31, 2006
 First Quarter
    
    
    Percentage ofMarch 31
    
    
    Gross Revenue2007
    
    
    2006
    
    
    2007
    
    
    2006Revenue
    
    $
    587,468
    
    
    $
    155,123
    
    
    
    100
    %
    
    
    100
    %Cost of Revenue
    
    
    418,264
    
    
    
    87,986
    
    
    
    71
    %
    
    
    57
    %Gross Profit
    
    
    169,204
    
    
    
    67,137
    
    
    
    29
    %
    
    
    43
    %Operating Expenses:General, Selling & Administrative
    
    
    301,341
    
    
    
    203,785
    
    
    
    51
    %
    
    
    131
    %Research & Development
    
    
    23,633
    
    
    
    27,229
    
    
    
    4
    %
    
    
    18
    %Research & Development  Mycosol
    
    
    127,566
    
    
    
    91,014
    
    
    
    22
    %
    
    
    59
    %Other Income (Expense) Net
    
    
    (17,480
    )
    
    
    (145,169
    )
    
    
    (3
    )%
    
    
    (94
    )%Net loss before minority interest
    
    
    (300,816
    )
    
    
    (400,060
    )
    
    
    (51
    )%
    
    
    (258
    )%Minority interest in Mycosol loss
    
    
    56,882
    
    
    
    52,788
    
    
    
    10
    %
    
    
    34
    %Net loss
    
    $
    (243,934
    )
    
    $
    (347,272
    )
    
    
    (42
    )%
    
    
    (224
    )%Deemed dividend on preferred stock
    
    $
    (38,750
    )
    
    
    -0-
    )
    
    
    (7
    )%
    
    
    0
    %Net loss attributable to common
shareholders
    
    $
    (282,684
    )
    
    $
    (347,272
    )
    
    
    (48
    )%
    
    
    (224
    )%
  
    
    Gross revenue from product sales increased for first quarter 2007
by $432,345 or 279% to $587,468 compared with $155,123 in first
quarter 2006. The increase in sales can be attributed to growing
sales to a large multinational customer and ongoing efforts in the
medical and dental markets. 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.
    
    Interest income for first quarter 2007 increased by $2,222 or 197%
to $3,348 compared with $1,126 in first quarter 2006. The
increase in interest income is attributed to a higher balance
earning interest at higher interest rates at the bank over the
same period in the prior year.
    
    Dividend income for first quarter 2007 decreased by $125,914 or
100% to $0 compared with $125,914 in first quarter 2006. Dividend
income in first quarter 2006 is attributed to receipt of 359,753
shares of Standard Holdings Group LTD (SNDH) in first quarter
2006. These shares were distributed as a dividend based on
holdings of H-Quotient, Inc. (HQNT) stock as of December 30, 2005.
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
    
    The cost of goods sold from products sales for first quarter 2007 increased by $330,278
or 375% to $418,264 compared with $87,986 in first quarter 2006. This can be attributed
to an increase in product sales of 279% for the same period. The cost of goods ratio as a
percentage of product sales was 71% in first quarter 2007 compared to 57% in first quarter
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. Although the
costs of isopropyl alcohol and freight surcharges being levied due to the increasing costs
of oil has decreased margins, the Company continues to work toward decreasing the cost of
goods ratio as a percentage by improving the product mix with higher margins by sourcing
new manufacturers and adding new higher margin products.
    
    General, selling, and administrative expenses for first quarter 2007 increased by
$97,556 or 48% to $301,341 compared with $203,785 in first quarter 2006. Increases that
affected general and administrative expenses were associated with (1) professional public
company, legal, consulting and accounting fees for first quarter 2007 that increased by 19%
to $54,190 compared with $45,401 in first quarter 2006; (2) insurance fees for first
quarter 2007 that increased by 6% to $23,298 compared with $21,927 in first quarter 2006;
(3) rent expense for first quarter 2007 that increased by 385% to $27,240 compared with
$5,619 in first quarter 2006; and (4) sales and marketing expenses for first quarter 2007
that increased by 151% to $173,459 compared with $69,062 in first quarter 2006.
    
    Research and development expenses for first quarter 2007 increased by $32,956 or 28% to
$151,199 compared with $118,243 in first quarter 2006. This represents $23,633 for the
Company and $127,566 from consolidation of expenses for Mycosol, Inc. with respect to their
development of their nine 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 2007, the Company recorded an unrealized gain in the amount of $568
which reflects an increase in the fair market value of 370,495 Healthnostics, Inc. (HNSO)
common shares from $.008 to $.027, net of decline in the fair market value of 431,404
Standard Holdings Group LTD (SNDH) common shares from $.08 to $.065 at March 31, 2007. At
March 31, 2007 Veridien held 719,507 shares HQNT, 370,495 shares of HNSO (note the symbol
was changed from HNST to HNSO on March 15, 2007) and 431,404 shares of SNDH at their net
fair market value of $38,045. During first quarter 2006, the Company recorded an
unrealized loss in the amount of $116,234 which reflects the decline in the fair market
value of 719,507 HQNT common shares from $.17 to $.09, a decline in the fair market value
of 10,741 Healthnostics, Inc. (HNST) common shares from $.125 to $.07, and a decline in the
fair market value of 431,404 Standard Holdings Group LTD (SNDH) common shares from $.24 to
$.19 at March 31, 2006. At March 31, 2006 Veridien held 719,507 shares HQNT, 10,741 shares
of HNST and 431,404 shares of SNDH at their net fair market value of $147,474.
    
    Interest expense for first quarter 2007 decreased by $134,579 or 86% to $21,396 compared
with $155,975 in first quarter 2006. The decrease in interest expense was due primarily to
a decrease in debt from the capital reorganization in fourth quarter 2006.
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
    
    Net income (losses) decreased to a net (loss) before Minority interest in Mycosol to
($300,816) for first quarter 2007 from a net (loss) of ($400,060) for first quarter 2006.
Net income (losses) decreased to a net (loss) after Minority interest in Mycosol to
($243,934) for first quarter 2007 from a net (loss) of ($347,272) for first quarter
2006. Net Income (loss) attributable to common shareholders as March 31, 2007
was ($282,684) due to a deemed dividend of $38,750 on preferred shares issued and preferred
shares converted during 2007.
   
    
    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 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 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 to an
employee under the terms of their employment contract. The
average effective price per share was $0.046.
    
    During the three months ended March 31, 2007, 100,000 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 $0.038.
    
    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 per share.
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
    
    During the three months ended March 31, 2007, accounts receivable
decreased by $83,805 to $536,340 from $620,145 at December 31,
2006. This decrease can be attributed to collected receivables
that were due in early January 2007.
    
    During the three months ended March 31, 2007, inventory decreased
by $3,537 to $496,163 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 May 8, 2007, we have cash of approximately $275,415 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 360 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.
 Critical Accounting Estimates
    17




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Item 3. Controls and Procedures
   18




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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 March 31, 2007:
 Preferred Stock
  Common Stock
   Convertible Securities
  (b)
    
    Not applicable.(c)
    
    Not applicable.
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(d)
    
    During the quarter ended March 31, 2007 the Company did not repurchase any of its
equity securities.
 
 Item 5. Other Information
  
 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
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##### Table of Contents



SIGNATURES
  Veridien Corporation(Registrant)Date:
May 15, 2007
    
    By
    
    /s/ Sheldon C. FentonSheldon C. FentonChief Executive OfficerDate:
May 15, 2007
    
    By
    
    /s/ Russell Van ZandtRussell Van ZandtChief Financial Officer& Chairman
 21