##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-QSB

|      |  |                                                                                         
|----- |  | ----------------------------------------------------------------------------------------
|[X]   |  | Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 
|      |  |                                                                                         
|      |  | For the quarterly period ended June 30, 2003                                            
|      |  |                                                                                         
|[   ] |  | 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

---

(Name of Small Business Issuer in its charter)


|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|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)

(727) 576-1600

---

(Issuers telephone number, including Area Code)


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 |  | X |  | No
|    |  |   |  |    |  | 

State the number of shares outstanding of each of the issuers classes of
common equity, as of the latest practicable date: 191,147,884 shares of common
stock, par value $0.001 were outstanding at August 8, 2003.

Transitional Small Business Disclosure Format (check one):

|    |  |  |  |    |  |  
|--- |  |  |  | -- |  | -
|Yes |  |  |  | No |  | X
|    |  |  |  |    |  |  





---

TABLE OF CONTENTS



|                                      |                                                                                               |  |  |  |  |  |  | 
|------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|                                      | PART I FINANCIAL INFORMATION                                                                 
|                                      | Item 1. Financial Statements                                                                 
|                                      | Notes to Financial Statements                                                                
|                                      | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                      | Item 3. Controls and Procedures                                                              
|                                      | PART II OTHER INFORMATION                                                                    
|                                      | Item 1. Legal Proceedings                                                                    
|                                      | Item 2. Changes in Securities                                                                
|                                      | Item 3. Default Upon Senior Securities                                                       
|                                      | Item 5. Other Information                                                                    
|                                      | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                           
|Ex-31.1 Section 302 CEO Certification
|Ex-31.2 Section 302 CFO Certification
|Ex-32.1 Section 906 CEO Certification
|Ex-32.2 Section 906 CFO Certification



---



##### Table of Contents



TABLE OF CONTENTS

|        |  |                                                                                      |  |                               |    |                                                                                                                                       |   |  |    |       |  | 
|------- |  | ------------------------------------------------------------------------------------ |  | ----------------------------- | -- | ------------------------------------------------------------------------------------------------------------------------------------- | - |  | -- | ----- |  | 
|        |  |                                                                                      |  |                               |    |                                                                                                                                       |   |  |    | Pages
|        |  |                                                                                      |  |                               |    |                                                                                                                                       |   |  |    |      
|PART I  |  | FINANCIAL INFORMATION                                                                |  |                               |    |                                                                                                                                      
|       
|Item 1. |  | Financial Statements                                                                 |  |                               | 3  |                                                                                                                                      
|        |  |                                                                                      |  | Notes to Financial Statements |    |                                                                                                                                       | 7 | 
|       
|Item 2. |  | Managements Discussion and Analysis of Financial Condition
and Results of Operation |  |                               | 10 |                                                                                                                                      
|       
|Item 3. |  | Controls and Procedures                                                              |  |                               | 17 |                                                                                                                                      
|       
|       
|       
|PART II |  | OTHER INFORMATION                                                                    |  |                               |    |                                                                                                                                      
|       
|Item 1. |  | Legal Proceedings                                                                    |  |                               | 18 |                                                                                                                                      
|       
|Item 2. |  | Changes in Securities                                                                |  |                               | 18 |                                                                                                                                      
|       
|Item 3  |  | Default Upon Senior Securities                                                       |  |                               | 18 |                                                                                                                                      
|       
|Item 5. |  | Other Information                                                                    |  |                               | 19 |                                                                                                                                      
|       
|Item 6  |  | Exhibits and Reports on Form 8-K                                                     |  |                               |    |                                                                                                                                      
|       
|        |  |                                                                                      |  | (a)                           |    | Exhibit 31.1  Rule 13a-14(a)/15d-14(a)
 Certification, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002             |   |  | 19 |      
|       
|        |  |                                                                                      |  | (b)                           |    | Exhibit 31.2  Rule 13a-14(a)/15d-14(a)
Certification, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002              |   |  | 19 |      
|       
|        |  |                                                                                      |  | (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 |   |  | 19 |      
|       
|        |  |                                                                                      |  | (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     |   |  | 19 |      

2



---



##### Table of Contents






PART I    FINANCIAL INFORMATION




Item 1. Financial Statements

Veridien Corporation
and Subsidiaries

Consolidated Balance Sheets
(Unaudited)
June 30, 2003 and December 31, 2002

|                              |                                                                             |               |                      |                   |           |         |         |         |         |         | 
|----------------------------- | --------------------------------------------------------------------------- | ------------- | -------------------- | ----------------- | --------- | ------- | ------- | ------- | ------- | ------- | 
|Assets                        |                                                                             | June 30, 2003 |                      | December 31, 2002
|                              |                                                                             |               |                      |                  
|Current Assets:               |                                                                             |               |                      |                   |           |         |         |        
|                              | Cash                                                                        |               | $                    | 68,332            |           |         | $       | 89,048  |        
|                              | Accounts receivable  trade                                                 |               |                      |                   |           |         |         |         |        
|                              | Less allowance for doubtful account of
$30,265 and $20,584 respectively     |               |                      | 348,074           |           |         |         | 98,205  |        
|                              | Inventory                                                                   |               |                      | 252,967           |           |         |         | 226,688 |        
|                              | Note receivable                                                             |               |                      | 59,718            |           |         |         | -0-     |        
|                              | Due from shareholders                                                       |               |                      | 119,837           |           |         |         | -0-     |        
|                              | Marketable Securities                                                       |               |                      | -0-               |           |         |         | 273,200 |        
|                              | Prepaid expenses and other current assets                                   |               |                      | 35,635            |           |         |         | 62,553  |        
|                              |                                                                             |               |                      |                   |           |         |         |         |        
|                              |                                                                             |               | Total current assets |                   |           | 884,563 |         |         |         | 749,496 | 
|Property and equipment:       |                                                                             |               |                      |                   |           |         |         |        
|                              | Furniture and fixtures                                                      |               |                      | 409,211           |           |         |         | 409,211 |        
|                              | Leasehold improvements                                                      |               |                      | -0-               |           |         |         | -0-     |        
|                              |                                                                             |               |                      |                   |           |         |         |         |        
|                              |                                                                             |               | 409,211              |                   |           |         | 409,211 |        
|Less accumulated depreciation |                                                                             |               | 382,768              |                   |           |         | 377,197 |        
|                              |                                                                             |               |                      |                   |           |         |         |         |        
|                              |                                                                             |               | 26,443               |                   |           |         | 32,014  |        
|Other Assets:                 |                                                                             |               |                      |                   |           |         |         |        
|                              | Patents less accumulated amortization
of $498,615 and $496,811 respectively |               |                      | 15,767            |           |         |         | 17,571  |        
|                              | Security deposits and other assets                                          |               |                      | 74,674            |           |         |         | 1,625   |        
|                              |                                                                             |               |                      |                   |           |         |         |         |        
|                              |                                                                             |               | 90,441               |                   |           |         | 19,196  |        
|                              |                                                                             |               |                      |                   |           |         |         |         |        
|                              |                                                                             | Total assets  |                      | $                 | 1,001,447 |         |         | $       | 800,706 |        
|                              |                                                                             |               |                      |                   |           |         |         |         |        

See accompanying notes to the financial statements.

3



---



##### Table of Contents



Veridien Corporation
And Subsidiaries

Consolidated Balance Sheets  Continued
(Unaudited)
June 30, 2003 and December 31, 2002

|                                                |                                                                                                                                                                                                                            |                             |            |                   |            |   |            |             |            |  
|----------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------- | ---------- | ----------------- | ---------- | - | ---------- | ----------- | ---------- | -
|Liabilities
and Deficit in Stockholders Equity |                                                                                                                                                                                                                            | June 30, 2003               |            | December 31, 2002
|                                                |                                                                                                                                                                                                                            |                             |            |                  
|Current liabilities:                            |                                                                                                                                                                                                                            |                             |            |                   |            |   |            |            
|                                                | Current capital lease obligations                                                                                                                                                                                          |                             | $          | 5,150             |            |   | $          | 5,150       |           
|                                                | Note payable                                                                                                                                                                                                               |                             |            | 248,977           |            |   |            | 293,323     |           
|                                                | Convertible debentures due                                                                                                                                                                                                 |                             |            | 1,706,311         |            |   |            | 1,981,311   |           
|                                                | Accounts payable                                                                                                                                                                                                           |                             |            | 1,407,682         |            |   |            | 1,113,791   |           
|                                                | Accrued compensation                                                                                                                                                                                                       |                             |            | 5,642             |            |   |            | 7,412       |           
|                                                | Accrued interest                                                                                                                                                                                                           |                             |            | 1,241,406         |            |   |            | 1,053,227   |           
|                                                | Other accrued liabilities                                                                                                                                                                                                  |                             |            | 20,527            |            |   |            | 40,229      |           
|                                                | Customer deposits                                                                                                                                                                                                          |                             |            | 24,606            |            |   |            | 41,406      |           
|                                                | Due to stockholders                                                                                                                                                                                                        |                             |            | 33,008            |            |   |            | 31,976      |           
|                                                |                                                                                                                                                                                                                            |                             |            |                   |            |   |            |             |           
|                                                |                                                                                                                                                                                                                            | Total current liabilities   |            |                   | 4,693,309  |   |            |             | 4,567,825  |  
|Long-term liabilities:                          |                                                                                                                                                                                                                            |                             |            |                   |            |   |            |            
|                                                | Capital lease obligations less current                                                                                                                                                                                     |                             |            | 3,282             |            |   |            | 6,022       |           
|                                                | Convertible debentures                                                                                                                                                                                                     |                             |            | 727,200           |            |   |            | 349,000     |           
|                                                |                                                                                                                                                                                                                            |                             |            |                   |            |   |            |             |           
|                                                |                                                                                                                                                                                                                            | Total long-term liabilities |            |                   | 730,482    |   |            |             | 355,022    |  
|                                                |                                                                                                                                                                                                                            |                             |            |                   |            |   |            |             |           
|                                                |                                                                                                                                                                                                                            | Total liabilities:          |            |                   | 5,423,791  |   |            |             | 4,922,847  |  
|Deficit in Stockholders Equity:                |                                                                                                                                                                                                                            |                             |            |                   |            |   |            |            
|                                                | 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, 2003
and December 31, 2002 |                             |            | 60,000            |            |   |            | 60,000      |           
|                                                | Series B Preferred Stock, $.001 par value, 245,344
authorized, and 174,219 issued and
outstanding at June 30, 2003 and December 31, 2002                                                                                   |                             |            | 175               |            |   |            | 175         |           
|                                                | Common Stock  $.001 par value; 300,000,000 shares
authorized, 190,947,884 and 183,274,887 shares
issued and outstanding at June 30, 2003 and
December 31, 2002                                                            |                             |            | 190,948           |            |   |            | 183,275     |           
|                                                | Additional paid-in capital                                                                                                                                                                                                 |                             |            | 30,007,372        |            |   |            | 29,842,331  |           
|                                                | Common stock warrants                                                                                                                                                                                                      |                             |            | 26,399            |            |   |            | 26,399      |           
|                                                | Accumulated deficit                                                                                                                                                                                                        |                             |            | (34,229,321       | )          |   |            | (33,416,017 | )         
|                                                | Current period profit/(loss)                                                                                                                                                                                               |                             |            | (472,917          | )          |   |            | (813,304    | )         
|                                                |                                                                                                                                                                                                                            |                             |            |                   |            |   |            |             |           
|                                                |                                                                                                                                                                                                                            |                             | (4,417,344 | )                 |            |   | (4,117,141 | )          
|                                                | Stock subscriptions receivable                                                                                                                                                                                             |                             |            | (5,000            | )          |   |            | (5,000      | )         
|                                                |                                                                                                                                                                                                                            |                             |            |                   |            |   |            |             |           
|                                                |                                                                                                                                                                                                                            | Total stockholders deficit |            |                   | (4,422,344 | ) |            |             | (4,122,141 | )
|                                                |                                                                                                                                                                                                                            |                             |            |                   |            |   |            |             |           
|                                                |                                                                                                                                                                                                                            | $                           | 1,001,447  |                   |            | $ | 800,706    |            
|                                                |                                                                                                                                                                                                                            |                             |            |                   |            |   |            |             |           

See accompanying notes to financial statements.

4



---



##### Table of Contents



Veridien Corporation
and Subsidiaries

Consolidated Statements of Operations
(Unaudited)

|                                 |                                                 |   |                    |          |                  |   |             |         |      |   |             |          |   |   |             |          |  
|-------------------------------- | ----------------------------------------------- | - | ------------------ | -------- | ---------------- | - | ----------- | ------- | ---- | - | ----------- | -------- | - | - | ----------- | -------- | -
|                                 |                                                 |   | Three Months Ended |          | Six Months Ended
|                                 |                                                 |   | June 30,           |          | June 30,        
|                                 |                                                 |   |                    |          |                 
|                                 |                                                 |   | 2003               |          | 2002             |   | 2003        |         | 2002
|                                 |                                                 |   |                    |          |                  |   |             |         |     
|Sales                            |                                                 | $ | 549,956            |          |                  | $ | 282,362     |         |      | $ | 894,477     |          |   | $ | 567,155     |         
|Operating costs and expenses:    |                                                 |   |                    |          |                  |   |             |         |      |   |             |          |   |   |             |         
|                                 | Cost
of sales                                   |   |                    | 390,916  |                  |   |             | 183,935 |      |   |             | 524,030  |   |   |             | 317,761  |  
|                                 | General, selling, and administrative            |   |                    | 247,309  |                  |   |             | 329,166 |      |   |             | 497,644  |   |   |             | 699,619  |  
|                                 | Research
and development                        |   |                    | 29,546   |                  |   |             | 53,429  |      |   |             | 47,532   |   |   |             | 79,403   |  
|                                 |                                                 |   |                    |          |                  |   |             |         |      |   |             |          |   |   |             |         
|                                 |                                                 |   | 667,771            |          |                  |   | 566,530     |         |      |   | 1,069,206   |          |   |   | 1,096,783   |         
|                                 |                                                 |   |                    |          |                  |   |             |         |      |   |             |          |   |   |             |         
|Loss from Operations             |                                                 |   | (117,815           | )        |                  |   | (284,168    | )       |      |   | (174,729    | )        |   |   | (529,628    | )       
|Other income (expense):          |                                                 |   |                    |          |                  |   |             |         |      |   |             |          |   |   |             |         
|                                 | Interest expense                                |   |                    | (100,752 | )                |   |             | (80,198 | )    |   |             | (197,973 | ) |   |             | (156,143 | )
|                                 | Change in market value
of marketable securities |   |                    | -0-      |                  |   |             | 13,570  |      |   |             | (14,802  | ) |   |             | 13,570   |  
|                                 | Realized gain (loss)
on marketable securities   |   |                    | (20,733  | )                |   |             | -0-     |      |   |             | (85,578  | ) |   |             | -0-      |  
|                                 | Realized gain on sale of
property and equipment |   |                    | -0-      |                  |   |             | -0-     |      |   |             | -0-      |   |   |             | 35,130   |  
|                                 | Realized gain or loss on sale of
assets         |   |                    | -0-      |                  |   |             | 11,970  |      |   |             | -0-      |   |   |             | 11,970   |  
|                                 | Realized sale of cash credits                   |   |                    | -0-      |                  |   |             | 64,500  |      |   |             | -0-      |   |   |             | 64,500   |  
|                                 | Interest income                                 |   |                    | 83       |                  |   |             | 49      |      |   |             | 165      |   |   |             | 81       |  
|                                 |                                                 |   |                    |          |                  |   |             |         |      |   |             |          |   |   |             |         
|                                 |                                                 |   | (121,402           | )        |                  |   | 9,891       |         |      |   | (298,188    | )        |   |   | (30,892     | )       
|Net loss before taxes            |                                                 |   | (239,217           | )        |                  |   | (274,277    | )       |      |   | (472,917    | )        |   |   | (560,520    | )       
|Income taxes                     |                                                 |   | -0-                |          |                  |   | -0-         |         |      |   | -0-         |          |   |   | -0-         |         
|                                 |                                                 |   |                    |          |                  |   |             |         |      |   |             |          |   |   |             |         
|Net loss                         |                                                 | $ | (239,217           | )        |                  | $ | (274,277    | )       |      | $ | (472,917    | )        |   | $ | (560,520    | )       
|                                 |                                                 |   |                    |          |                  |   |             |         |      |   |             |          |   |   |             |         
|Net loss per common share        |                                                 | $ | (0.001             | )        |                  | $ | (0.002      | )       |      | $ | (0.003      | )        |   | $ | (0.003      | )       
|Weight average share outstanding |                                                 |   | 189,329,219        |          |                  |   | 178,514,576 |         |      |   | 187,176,220 |          |   |   | 176,912,060 |         

See accompanying notes to financial statements.

5



---



##### Table of Contents



Veridien Corporation
and Subsidiaries

Consolidated Statements of Cash Flows
(Unaudited)

For the six months ended
June 30, 2003 and June 30, 2002

|                                          |                                                                                 |                                                |          |               |          |               |        |          |         |  
|----------------------------------------- | ------------------------------------------------------------------------------- | ---------------------------------------------- | -------- | ------------- | -------- | ------------- | ------ | -------- | ------- | -
|                                          |                                                                                 |                                                |          | June 30, 2003 |          | June 30, 2002
|                                          |                                                                                 |                                                |          |               |          |              
|Cash flows from operating activities:     |                                                                                 |                                                |          |               |          |               |        |         
|                                          | Net (loss)                                                                      |                                                | $        | (472,917      | )        |               | $      | (560,520 | )      
|                                          | Adjustments to reconcile net (loss) to net cash
(used) by operating activities: |                                                |          |               |          |               |        |          |        
|                                          |                                                                                 | Depreciation and amortization                  |          |               | 9,157    |               |        |          | 8,195   |  
|                                          |                                                                                 | Change in market value of securities           |          |               |          |               |        |          | (13,570 | )
|                                          |                                                                                 | Stock issuances for services                   |          |               | 29,788   |               |        |          | 61,150  |  
|                                          |                                                                                 | Stock issuances for interest expense, non-cash |          |               | 6,726    |               |        |          |         |  
|                                          |                                                                                 | Realized gain/loss on marketable securities    |          |               | 100,380  |               |        |          | (11,970 | )
|                                          |                                                                                 | Proceeds from sale of marketable securities    |          |               | 272,622  |               |        |          |         |  
|                                          | (Increase) decrease in:                                                         |                                                |          |               |          |               |        |          |        
|                                          |                                                                                 | Accounts receivable                            |          |               | (249,869 | )             |        |          | (31,735 | )
|                                          |                                                                                 | Licensing fees receivable                      |          |               | -0-      |               |        |          | -0-     |  
|                                          |                                                                                 | Notes receivable                               |          |               | (59,718  | )             |        |          | -0-     |  
|                                          |                                                                                 | Prepaid and other current assets               |          |               | 26,918   |               |        |          | 36,060  |  
|                                          |                                                                                 | Inventories                                    |          |               | (26,279) | )             |        |          | 137,821 |  
|                                          |                                                                                 | Other assets                                   |          |               | (73,049  | )             |        |          | 6,756   |  
|                                          | Increase (decrease) in:                                                         |                                                |          |               |          |               |        |          |        
|                                          |                                                                                 | Accounts payable and accrued expenses          |          |               | 458,816  |               |        |          | 370,156 |  
|                                          |                                                                                 | Due to stockholders                            |          |               | (118,805 | )             |        |          | 1,032   |  
|                                          |                                                                                 | Customer deposits                              |          |               | (16,800  | )             |        |          | (10,320 | )
|                                          |                                                                                 |                                                |          |               |          |               |        |          |        
|Net cash (used) by operating activities:  |                                                                                 |                                                | (113,030 | )             |          |               | (6,945 | )       
|                                         
|Cash flow from investing activities:      |                                                                                 |                                                |          |               |          |               |        |         
|                                          | Net purchases and disposal of property and equipment                            |                                                |          | -0-           |          |               |        | -0-      |        
|                                          |                                                                                 |                                                |          |               |          |               |        |          |        
|Net cash (used) by investing activities   |                                                                                 |                                                | -0-      |               |          |               | -0-    |         
|                                         
|Cash flow from financing activities:      |                                                                                 |                                                |          |               |          |               |        |         
|                                          | Proceeds from convertible debentures                                            |                                                |          | 133,200       |          |               |        | 204,000  |        
|                                          | Net payment on capital leases                                                   |                                                |          | (2,740        | )        |               |        | (3,600   | )      
|                                          | Net proceeds from borrowings                                                    |                                                |          | (38,146       | )        |               |        | (130,490 | )      
|                                          |                                                                                 |                                                |          |               |          |               |        |          |        
|Net cash provided by financing activities |                                                                                 |                                                | 92,314   |               |          |               | 69,910 |         
|Net increase/(decrease) in cash           |                                                                                 |                                                | (20,716  | )             |          |               | 62,965 |         
|Cash at beginning of year                 |                                                                                 |                                                | 89,048   |               |          |               | 7,219  |         
|                                          |                                                                                 |                                                |          |               |          |               |        |          |        
|Cash at end of quarter                    |                                                                                 | $                                              | 68,332   |               |          | $             | 70,184 |         
|                                          |                                                                                 |                                                |          |               |          |               |        |          |        

See accompanying notes to financial statements.

6



---



##### Table of Contents



Veridien Corporation
and
Subsidiaries




Notes to the Unaudited Interim Consolidated Financial Statements at June 30, 2003:

These unaudited interim consolidated financial statements and notes to
unaudited interim consolidated financial statements should be read in
conjunction with the financial statements and related footnotes included in the
Companys Form 10Ksb filed with the SEC in March 2003.

Note A  Summary of Significant Accounting Policies

A summary of the Companys significant accounting policies consistently applied
in the preparation of the accompanying unaudited interim consolidated financial
statements follows.

1. Principles of Consolidation

The accompanying financial statements include the accounts of the company and
its subsidiaries, each of which is wholly-owned.

2. Accounting Estimates

The presentation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

3. Accounts Receivable

The Company uses the allowance method of accounting for doubtful accounts. The
balance is based on historical collections and managements review of the
current status of existing receivables and estimate as to their collectibility.

4. Inventories

Inventories, consisting primarily of raw materials and finished goods, are
stated at the lower of cost or market. Cost is determined by the first-in,
first-out method. At June 30, 2003, raw materials and finished goods amounted
to approximately $252,967.

5. Reclassification

Certain reclassifications have been made to the December 31, 2002 audited
consolidated financial statements to be in conformity with the June 30, 2003
unaudited interim financial statements.

6. Net Loss per Share

Net loss per common share is calculated by dividing the net loss by the
weighted average number of common shares outstanding during the period.
Weighted average number of common shares outstanding is calculated as the sum
of the month-end balances of shares outstanding, divided by the number of
months. The weighted average shares outstanding were 189,329,219 and
187,176,220 for the quarter ending June 30, 2003 and 2002, respectively.
Common stock equivalents (stock options, warrants,

7



---



##### Table of Contents



Note A  Summary of Significant Accounting Policies  Continued

convertible debentures and convertible redeemable preferred stock) are not
included in the weighted average number of common shares because the effects
would be anti-dilutive.

Note B  Realization of Assets

The accompanying unaudited interim consolidated financial statements of the
Company as of June 30, 2003 and for the three months and six months ended June
30, 2003 and 2002, included herein have been prepared in accordance with the
instructions for Form 10-Qsb under the Securities Exchange Act of 1934, as
amended, and Article 10 of Regulation S-X under the Securities Act of 1933, as
amended. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations relating to interim financial statements.

In the opinion of management, the accompanying unaudited interim consolidated
financial statements of the Company reflect all adjustments, consisting only of
normal recurring adjustments, necessary to present fairly the financial
position of the Company as of June 30, 2003, and the results of its operations
and its cash flows for the three months and six months ended June 30, 2003 and
June 30, 2002, respectively. The results for the three months and six months
ended June 30, 2003 are not necessarily indicative of the expected results for
the full fiscal year or any future period.

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Since inception, the Company has incurred losses of approximately $34.7
million, resulting primarily from research and development, sales and
marketing, and administrative expenses being substantially in excess of sales
revenue.

The Company has a deficit in stockholders equity of $4.4 million, a deficit in
working capital of $3.8 million and is experiencing a continuing cash flow
deficiency. Those conditions raise substantial doubt about the Companys
ability to continue as a going concern.

The company plans to utilize its 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 operations, research and
development activities.

In view of the matters described in the preceding paragraphs, recoverability of
a major portion of the recorded asset amounts shown in the accompanying
consolidated balance sheet is dependent upon the continued operations of the
Company and that such operations will be profitable and provide adequate cash
flows. Further, the ability of the Company to continue its operations and
successfully defend itself against potential claims or assessments is dependent
on the ability to obtain additional debt and equity financing, employ cash
management techniques and aggressively market its products.

The unaudited interim consolidated financial statements do not contain any
adjustments relating to the recoverability and classification of recorded asset
amounts or amounts and classification of liabilities that might be necessary
should the Company be unable to continue in existence.

8



---



##### Table of Contents



Note C  Marketable Securities and Investments

During the second quarter 2003 the Company sold 380,000 HQNT shares and
realized a loss in the amount of $20,733 due to the decline in the FMV of the
stock from March 31, 2003.

During the first quarter 2003 5,000,000 restricted common shares with deemed
Stockholder Equity of $100,000 were issued in exchange for 276,267 free trading
common shares of H. Quotient, Inc. (HQNT) (a publicly traded company). The
Company recorded an unrealized gain of $62,998 which reflects the increase in
the FMV of 276,267 HQNT shares from $.362 to $.59 at March 31, 2003.

During the first quarter 2003 the Company recorded an unrealized loss in the
amount of $77,800 which reflects the decline in the FMV of 103,733 HQNT shares
from December 31, 2002 at $1.34 to $.59 at March 31, 2003.

During first quarter 2003, the Company sold 100,000 HQNT shares and realized a
loss of $64,845 due to the decline in the FMV of the stock from December 31,
2002 at $1.34.

In February 2002, the Company realized a gain on the sale of obsolete inventory
by receipt of 18,000 common shares of Nutraceutical Clinical Laboratories
International, Inc. (NCCL). The investment in common shares was recorded at
$31,500 which represents fair market value of the security.

In February 2002, the Company realized a gain on marketable securities. The
Company received 6,000 common shares of Nutraceutical Clinical Laboratories
International, Inc. (NCCL) for payment on an aged accounts receivable. A net
gain of $3,630 was realized for the difference of the debt paid and the fair
market value of the common shares.

Note D  Related Party Transactions

In February 2003, the Company sold raw materials and finished goods in the
amount of $94,836 to a manufacturing company owned by a director of Veridien
Corporation. The Company received a credit note with the manufacturing company
in the amount of $47,418 to be applied against product purchases. Also, a
promissory note for $47,418 was received with an interest rate of 10% per annum
which shall accrue from May 1, 2003 until paid. This note may be settled by
delivery of 79,030 free trading common shares of Nutraceutical Clinical
Laboratories International, Inc. (NCCL).

These unaudited interim consolidated financial statements and notes to
unaudited interim consolidated financial statements should be read in
conjunction with the financial statements and related footnotes included in the
Companys Form 10Ksb filed with the SEC in March 2003.

9



---



##### Table of Contents






Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

Second Quarter  June 30, 2003 Compared with June 30, 2002, and Six-Months Ended June 30, 2003 Compared with June 30, 2002

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 as of June 30, 2003 for the three months and six months
ended June 30, 2003 and June 30, 2002, respectively. 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 Health Care company incorporated in Delaware focusing on infection
control and other Healthy Lifestyle products. The Company has developed
patented and unique products including Surface Disinfectants, Antiseptic Hand
Cleansers, Instrument Presoak and SUN PROTECTION PRODUCTS.

The flagship product, VIRAHOL® Hospital Disinfectant/Cleaner & Instrument
Presoak, is now being marketed as VIRAGUARD® Hospital Disinfectant/Cleaner &
Instrument Presoak. VIRAGUARD® Hospital Disinfectant/Cleaner & Instrument
Presoak and VIRAGUARD® Hospital Surface Disinfectant Towelette are EPA
registered disinfectants designed for effective disinfecting, cleaning and
deodorizing of hard, inanimate nonporous surfaces. VIRAGUARD® Antiseptic Hand
Gel and VIRAGUARD® Antimicrobial Hand Wipes, which are regulated by the FDA and
utilize Veridiens patented formulation, are effective against germs when soap
and water hand washing is not possible.

Recent product line extensions have included (1) the SunSwipe product line
(sunscreen impregnated towelettes in SPF 15, SPF 30, SPF 45, Baby 45 and
after-tanning: all in a towelettes product delivery configuration); and (2)
BugSwipe (an insect repellant in the towelettes product delivery
configuration).

During 2002 and early 2003, we have continued to focus our sales efforts on our
Disinfectant products. We have expanded our product line to include Viraguard®
Toilet Seat Wipes, which are available for use in restrooms in hotels,
restaurants, airports and other public places as well as in hospitals and
physicians offices, and other places where disinfection is critical to
controlling the spread of disease carrying organisms.

To spearhead expansion of our Dental Markets, beginning December 1, 2002,
Veridien launched a national sales force of specialized dental representatives
to target dental supply and distribution companies.

We are aggressively continuing to pursue possible strategic alliances with a
number of major corporations to further strengthen our Company. We entered
into a five (5) year Distribution Agreement with E.I. DuPont de Nemours and
Company 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.

10



---



##### Table of Contents



We have adopted a new approach to marketing SunSwipe and BugSwipe products
for 2003 and onward. We are developing Master Distributor Agreements with
companies who have strong market penetration in specific areas. These include
Emergency Services, Healthcare, Retail Mass Merchandise, Sporting Goods,
Supermarkets, Convenience Stores, Industrial and Institutional sales channels.
Master Distribution agreements allow us to take advantage of the Distributors
extensive abilities to place products in these markets.

During 2002, we entered into a global distribution agreement with DuPont 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. Deliveries commenced in April 2003.

The Company has incurred losses since its incorporation. At June 30, 2003, the
Company had an accumulated deficit of $34,702,238. The Company has financed
its ongoing business activities through a combination of sales, equity
financing, and debt.

11



---



##### Table of Contents



Results of Operations

Second Quarter ended June 30, 2003 vs. Second Quarter ended June 30, 2002

|                                  |  |                |          |               |  |      |          |      |  |  |     |    |  |  |      |   
|--------------------------------- |  | -------------- | -------- | ------------- |  | ---- | -------- | ---- |  |  | --- | -- |  |  | ---- | --
|                                  |  | Second Quarter |          | Percentage of
|                                  |  | June 30,       |          | Net Revenue  
|                                  |  |                |          |              
|                                  |  | 2003           |          | 2002          |  | 2003 |          | 2002
|                                  |  |                |          |               |  |      |          |     
|Net Sales                         |  | $              | 549,956  |               |  | $    | 282,362  |      |  |  | 100 | %  |  |  | 100  | % 
|Cost of Goods Sold                |  |                | 390,916  |               |  |      | 183,935  |      |  |  | 71  | %  |  |  | 65   | % 
|Gross Profit                      |  |                | 159,040  |               |  |      | 98,427   |      |  |  | 29  | %  |  |  | 35   | % 
|                                  |  |                |          |               |  |      |          |      |  |  |     |    |  |  |      |   
|Operating Expenses:               |  |                |          |               |  |      |          |      |  |  |     |    |  |  |      |   
|General, Selling & Administrative |  |                | 247,309  |               |  |      | 329,166  |      |  |  | 45  | %  |  |  | 117  | % 
|Research & Development            |  |                | 29,546   |               |  |      | 53,429   |      |  |  | 5   | %  |  |  | 19   | % 
|                                  |  |                |          |               |  |      |          |      |  |  |     |    |  |  |      |   
|(Loss) from Operations            |  |                | (117,815 | )             |  |      | (284,168 | )    |  |  | (21 | )% |  |  | (101 | )%
|                                  |  |                |          |               |  |      |          |      |  |  |     |    |  |  |      |   
|Other Income (Expense) Net        |  |                | (121,402 | )             |  |      | 9,891    |      |  |  | (22 | )% |  |  | 4    | % 
|                                  |  |                |          |               |  |      |          |      |  |  |     |    |  |  |      |   
|Net (Loss) Before Taxes           |  |                | (239,217 | )             |  |      | (274,277 | )    |  |  | (43 | )% |  |  | (97  | )%
|Income Taxes                      |  |                | -0-      |               |  |      | -0-      |      |  |  | 0   | %  |  |  | 0    | % 
|Net (Loss)                        |  | $              | (239,217 | )             |  | $    | (274,277 | )    |  |  | (43 | )% |  |  | (97  | )%

Second Quarter  June 30, 2003 Compared with June 30, 2002

Consolidated gross revenues for second quarter 2003 increased by $177,588 or
48%, to $550,039 compared with $372,451 in second quarter 2002.



| |  | Gross revenue from product sales increased for second quarter 2003 by
$267,594, or 95%, to $549,956 compared with $282,362 in second quarter
2002. We continue active promotion of our product line through
trade-show presentations and direct calls on both existing and
potential customers. Our goal is to continue to expand our product
lines and we anticipate new products, which are scheduled with various
releases this year, will generate new revenue in this and future
years. In addition, we continue to pursue strategic alliances with
other corporations that have existing distribution networks. Our goal
for these alliances is to create immediate distribution and
fulfillment avenues for our products, while focusing on our capital
resources.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Interest income for second quarter 2003 increased by $34, or 69% to
$83 compared with $49 in second quarter 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| 
| |  | Change in market value of securities for second quarter 2002
recognizes an increase of $13,570 in the value of the marketable
securities held by the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| 
| |  | Realized gain or loss on sale of assets for second quarter 2002
recognized a net gain of $11,970 on the sale of marketable securities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| 
| |  | Realized sale of cash credits for second quarter 2002 recognized a net
gain on the sale of cash credits in the amount of $64,500. This
investment was reclassified as a marketable security at the fair
market value at June 30, 2002. These credits were originally recorded
in June 2001 in the amount of $129,000 with a stated value of
$150,500. At December 31, 2001 the $129,000 was written down to                                                                                                                                                                                                                                                                                                                                                              

12



---



##### Table of Contents





| |  | $64,500 due to their restrictions. These credits were exchanged for
430,000 shares of restricted common shares of H-Quotient, Incorporated
(HQNT). The cash credits were originally received when the Company
sold inventory in May 2001 to SGD International Corporation.
Currently, a remainder of $23,000 cash credits still remains with SGD
International.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Consolidated gross expenses for second quarter 2003 increased by $142,528, or
22%, to $789,256 compared with $646,728 in second quarter 2002.



| |  | The cost of goods sold for second quarter 2003 increased by $206,981,
or 113% to $390,916 compared with $183,935 in second quarter 2002.
The increase in the cost of sales resulted primarily from increased
sales of 95% over the same period of 2002. Profit margins were at 29%
and 35%, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | General, selling, and administrative expenses for second quarter 2003
decreased by $81,857 or 25% to $247,309 compared with $329,166 during
the same period of 2002. Decreases that affected general and
administrative costs were associated with administrative wages which
decreased in second quarter 2003 by 51% to $14,951 compared with
$30,807 in second quarter 2002. This decrease is attributable to the
reduction in staff. Decreases that affected general and
administrative expenses were associated with professional legal,
consulting and accounting fees for second quarter 2003 that decreased
by 87% to $13,925 compared with $104,358 in second quarter 2002.
Additional decreases in general and administrative costs were
associated with public company expenses for second quarter 2003 the
decrease in this category decreased by 77% to $6,212 compared with
$26,471 in second quarter 2002. The higher expenses in 2002 were the
result of the annual shareholder meeting which was held on March 6,
2002. Additionally, selling expenses increased for second quarter
2003 by 26% to $132,839 compared with $105,185 in second quarter 2002.
| 
| |  | Research and development expenses for second quarter 2003 decreased by
$23,883, or 45% to $29,546 compared with $53,429 in second quarter
2002. The decrease was due primarily to the use of outside services
for registrations instead of internal staffing. The Company continues
to do additional research on the focus of broadening the range of
claims we can assert on our existing products and on testing new
products for commercialization.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| 
| |  | Interest expense for second quarter 2003 increased by $20,554, or 26%
to $100,752 compared with $80,198 in second quarter 2002. The
increase in interest expense was due primarily to the increase in
Convertible Debentures and continuing current debt financing
arrangements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| 
| |  | During the second quarter 2003 the Company sold 380,000 HQNT shares
and realized a loss in the amount of $20,733 due to the decline in the
FMV of the stock from March 31, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| 
| |  | Net losses decreased to $239,217 second quarter 2003 from $274,277 in
second quarter 2002. This represented a 13% decrease in net losses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

13



---



##### Table of Contents



Six Months ended June 30, 2003 vs. Six Months ended June 30, 2002

|                                  |  |                  |          |               |  |      |          |      |  |  |     |    |  |  |     |   
|--------------------------------- |  | ---------------- | -------- | ------------- |  | ---- | -------- | ---- |  |  | --- | -- |  |  | --- | --
|                                  |  | Six Months ended |          | Percentage of
|                                  |  | June 30,         |          | Net Revenue  
|                                  |  |                  |          |              
|                                  |  | 2003             |          | 2002          |  | 2003 |          | 2002
|                                  |  |                  |          |               |  |      |          |     
|Net Sales                         |  | $                | 894,477  |               |  | $    | 567,155  |      |  |  | 100 | %  |  |  | 100 | % 
|Cost of Goods Sold                |  |                  | 524,030  |               |  |      | 317,761  |      |  |  | 59  | %  |  |  | 56  | % 
|Gross Profit                      |  |                  | 370,447  |               |  |      | 249,394  |      |  |  | 41  | %  |  |  | 44  | % 
|Operating Expenses:               |  |                  |          |               |  |      |          |      |  |  |     |    |  |  |     |   
|General, Selling & Administrative |  |                  | 497,644  |               |  |      | 699,619  |      |  |  | 56  | %  |  |  | 123 | % 
|Research & Development            |  |                  | 47,532   |               |  |      | 79,403   |      |  |  | 5   | %  |  |  | 14  | % 
|(Loss) from Operations            |  |                  | (174,729 | )             |  |      | (529,628 | )    |  |  | (20 | )% |  |  | (93 | )%
|Other Income (Expense) Net        |  |                  | (298,188 | )             |  |      | (30,892  | )    |  |  | (33 | )% |  |  | (5  | )%
|Net (Loss) Before Taxes           |  |                  | (472,917 | )             |  |      | (560,520 | )    |  |  | (53 | )% |  |  | (99 | )%
|Income Taxes                      |  |                  | -0-      |               |  |      | -0-      |      |  |  | 0   | %  |  |  | 0   | % 
|Net (Loss)                        |  | $                | (472,917 | )             |  | $    | (560,520 | )    |  |  | (53 | )% |  |  | (99 | )%

Six-months ended June 30, 2003 Compared with Six Months Prior Year ended June 30, 2002

Consolidated gross revenues for the six months ended June 30, 2003 increased by
$202,236, or 29% to $894,642 compared with $692,406 during the same period of
2002.



| |  | Gross revenue from product sales increased for the first six months of
2003 by $327,322, or 58%, to $894,477 compared with $567,155 in 2002.
We continue active promotion of our product line through trade-show
presentations and direct calls on both existing and potential
customers. Our goal is to continue to expand our product lines and we
anticipate new products, which are scheduled with various releases
this year, will generate new revenue in this and future years. In
addition, we continue to pursue strategic alliances with other
corporations that have existing distribution networks. Our goal for
these alliances is to create immediate distribution and fulfillment
avenues for our products, while focusing on our capital resources.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Interest income for the first six months of 2003 increased by $84, or
104% to $165 compared with $81 during the same period of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| 
| |  | Change in market value of securities for the six months ended June 30,
2002 recognizes an increase of $13,570 in the value of the marketable
securities held by the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| 
| |  | Realized gain or loss for the six months ended June 30, 2002 realized
a gain on the receipt of 6,000 common shares of Nutraceutical Clinical
Laboratories International, Inc. (NCCL) for payment on an aged
accounts receivable. A net gain of $3,630 was realized for the
difference of the debt paid and the fair market value of the common
shares. Also during the six months ended June 30, 2002 the Company
realized a gain on the sale of obsolete inventory by receipt of 18,000
common shares of Nutraceutical Clinical Laboratories International,
Inc. (NCCL). The investment in common shares was recorded at $31,500
which represents fair market value of the security.                                                                              

14



---



##### Table of Contents





| |  | Realized gain or loss on sale of assets for the six months ended June
30, 2002 recognized a net gain of $11,970 on the sale of marketable
securities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Realized sale of cash credits for the six months ended June 30, 2002
recognized a net gain on the sale of cash credits in the amount of
$64,500. This investment has now been reclassified as a marketable
security at the fair market value as of June 30, 2002. These credits
were originally recorded in June 2001 in the amount of $129,000 with a
stated value of $150,500. At December 31, 2001 the $129,000 was
written down to $64,500 due to their restrictions. These credits were
exchanged for
430,000 shares of restricted common shares of H-Quotient, Incorporated
(HQNT). The cash credits were originally received when the Company sold
inventory in May 2001 to SGD International Corporation. Currently, a
remainder of $23,000 cash credits still remain with SGD International.

Consolidated gross expenses for the first six months of 2003 increased by
$114,633, or 9%, to $1,367,559 compared with $1,252,926 during the same period
of 2002.



| |  | The cost of goods sold for the six months ended June 30, 2003
increased by $206,269, or 65% to $524,030 compared with $317,761
during the same period of 2002. The increase in the cost of sales
resulted primarily from increased sales at 58% over the same period of
2002. There was an increase in the cost of goods ratio as a
percentage of sales to 59% during the current year 2003 compared to
56% in the same period of 2002. The Company is working towards
decreasing the cost of goods ratio as a percentage by improving the
product mix with higher margins.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | General, selling, and administrative expenses for six months ended
June 30, 2003 decreased by $201,975, or 29% to $497,644 compared with
$699,619 during the same period of 2002. Decreases that affected
general and administrative costs were associated with administrative
wages which decreased for six months ended June 30, 2003 by 30% to
$44,235 compared with $63,156 in the same period 2002. This decrease
is attributable to the reduction of staff. Decreases that affected
general and administrative expenses were associated with professional
legal, consulting and accounting fees for six months ended June 30,
2003 that decreased by 70% to $60,638 compared with $205,058 in the
same period 2002. Additional decreases in general and administrative
costs were associated with public company expenses for six months
ended June 30, 2003 the decrease in this category decreased by 88% to
$8,665 compared with $70,399 in the same period 2002. The higher
expenses in 2002 were the result of the annual shareholder meeting
which was held on March 6, 2002. Additionally, selling expenses
increased for six months ended June 30, 2003 by 14% to $245,415
compared with $215,825 in the same period 2002.
| 
| |  | Research and development expenses for the first six months of 2003
decreased by $31,871, or 40% to $47,532 compared with $79,403 during
the same period of 2002. The decrease was due primarily to the use of
outside services for registrations instead of internal staffing. The
Company continues to do additional research on the focus of broadening
the range of claims we can assert on our existing products and on
testing new products for commercialization.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| 
| |  | During the first quarter 2003 5,000,000 restricted common shares with
deemed Stockholder Equity of $100,000 were issued in exchange for
276,267 free trading common shares of H. Quotient, Inc. (HQNT) (a
publicly traded company). The Company recorded an unrealized gain of
$62,998 which reflects the increase in the FMV of 276,267 HQNT shares
from $.362 to $.59 at March 31, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| 
| |  | During the first quarter 2003 the Company recorded an unrealized loss
in the amount of $77,800 which reflects the decline in the FMV of
103,733 HQNT shares from $1.34 to $.59 at March 31, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

15



---



##### Table of Contents





| |  | During second quarter 2003, the Company sold 380,000 HQNT shares and
realized a loss of $20,733 due to the decline in the FMV of the stock
from March 31, 2003 at $.59. During first quarter 2003, the Company
sold 100,000 HQNT shares and realized a loss of $64,845 due to the
decline in the FMV of the stock from December 31, 2002 at $1.34.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Interest expense for the first six months of 2003 increased by
$41,830, or 27% to $197,973 compared with $156,143 during the same
period of 2002. The increase in interest expense was due primarily to
the increase in Convertible Debentures and continuing current debt
financing arrangements.                                                

Net losses decreased to $472,917 during the first six months of 2003 from
$560,520 during the same period of 2002. This represented a 16% decrease in
net losses.

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 June 30, 2003 and June 30, 2002 we had working capital
deficits of approximately $3,808,746 and $1,913,369 respectively. Our
independent certified public accountants stated in their report on the 2002
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 second quarter of 2003 we issued a total of 5 convertible
debentures for cash proceeds of $120,000 and accounts payable
retirement of $13,200. These debentures carry interest rates of 10%,
have terms of 3 years and have conversion rates between $0.04 and
$0.05.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | During the second quarter of 2003 the company liquidated a portion of
its marketable securities for a net cashflow of $198,265.                                                                                                                                                 
| 
| |  | During the second quarter of 2003 2 Convertible Debentures with
principal balances of $30,000 and accrued interest of $6,726 were
converted into 1,224,221 shares of common stock.                                                                                              
| 
| |  | During the second quarter of 2003 $6,200 of the Loan and Security
Agreement principal was converted by the holders to -0- shares of
Series B Preferred Stock and 400,000 shares of Common Stock.                                                                                
| 
| |  | During the six months ended June 20, 2003, 71,893 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 $0.042.                                        
| 
| |  | During the six months ended June 20, 2003, 71,893 common shares were
issued under the companys S8 Registration Statement to a consultant
under the terms of their contract. The average effective price per
share was $0.042.                                                  
| 
| |  | During the second quarter of 2003 660,000 common shares were issued to
a former officer of the Company in fulfillment of all obligations to
him under his employment contract with the Company.                                                                                 

16



---



##### Table of Contents





| |  | During the three months ended March 31, 2003, 245,000 common shares
were issued under the companys S8 Registration Statement to our legal
counsel for legal services provided to the company. The effective
price per share was $0.025.                                                                                                                                                                                                                                                                                                                                                                                                                             
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | During the first quarter of 2003 the company liquidated a portion of
its marketable securities for a net cashflow of $67,147.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| 
| |  | During the six months ended June 30, 2003, accounts receivable
increased by $249,869 to $348,074 from $98,205 at December 31, 2002.
This increase is attributable to our increased sales level.                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| 
| |  | During the six months ended June 30, 2003, inventory increased by 12%
to $252,967 compared with $226,688 at December 31, 2002. The increase
is necessary to meet increased sales level demands.                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| 
| |  | 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 July 28, 2003, we have cash of approximately $64,982 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 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.




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-14) 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 are effective in ensuring that information
required to be disclosed by the company is recorded, processed, summarized, and
reported within the time periods specified in the SECs rules and forms. In
addition, there have not been any significant changes in internal controls or
other factors that could significantly affect internal controls subsequent to
the date of the companys most recent evaluation.

17



---



##### Table of Contents






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 June 30, 2003:                                                                               
|
| |     |  | Common Stock                                                                                                                                                                                                                                                                                                  
|
| |     |  | On June 23, 2003 $6,200 of the principal of the Loan and Security
Agreement was converted into 400,000 share of common stock. This
issuance was considered exempt from registration by reason of Section
3(a)(9) of the Securities Act.                                                                       
|
| |     |  | On June 23, 2003 $30,000 of principal and $6,726 of accrued interest of
outstanding Convertible Debentures were converted into 1,224,211 common
shares. This issuance was considered exempt from registration by reason
of Section 3(a)(9) of the Securities Act.                                             
|
| |     |  | On June 30, 2003 we issued 660,000 shares of Common Stock valued at $17,688 to a former officer of the Company in fulfillment of all
obligations to him under his employment contract with the Company. This
issuance was considered exempt from registration by reason of Section
4(2) of the Securities Act.

Convertible Debentures



| |     |  | During the second quarter of 2003 we issued a total of 5 convertible
debentures for cash proceeds of $120,000 and accounts payable retirement
of $13,200. These debentures carry interest rates of 10% and have terms
of 3 years. These instruments are immediately convertible into common
shares, at the option of the holder, at conversion rates between $0.04
and $0.05. These issuances were considered exempt from registration by
reason of Section 4(2) of the Securities Act.
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (d) |  | Not applicable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        




Item 3. Default Upon Senior Securities

During the first quarter of 2003 our 3-year convertible debentures issued in
February and March of 2000, with total principal amounts of $820,000, came due
with accrued interest. By the end of the second quarter the company had
successfully negotiated the renewal/extension of $275,000 (principal plus
accrued interest thereon) of this amount and the company is in the process of
negotiating extension/renewal terms with the remainder of the holders.

18



---



##### Table of Contents






Item 5. Other Information

During 2002, we entered into a five (5) year Distribution Agreement with E.I.
DuPont de Nemours and Company 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 to Dupont commenced in February 2003.

In addition, we entered into a global distribution agreement with DuPont to
market Veridiens line of sunscreen towelettes. DuPont has commenced marketing
Veridiens towelettes in the Emergency Services and Industrial markets.
Deliveries to Dupont commenced in April 2003.




Item 6. Exhibits and Report on Form 8-K



| | (e) |  | Exhibit 31.1  Rule 13a-14(a)/15d-14(a)
Certification, Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.            
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------
|
| | (f) |  | Exhibit 31.2  Rule 13a-14(a)/15d-14(a)
Certification, Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.            
|
| | (g) |  | 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
|
| | (h) |  | 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



---



##### Table of Contents






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                                   August 14, 2003 |  | By /s/ Sheldon C. Fenton

       Sheldon C. Fenton
       Chief Executive Officer  
|                                                       |  |                                                                                    
|                                                       |  |                                                                                    
|Date                                   August 14, 2003 |  | By /s/ Rene A. Gareau

       Rene A. Gareau
       Exec.Vice President & Secretary

20