##### 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 1934For the quarterly period ended March 31, 2004[  ]
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the transition period from  toCommission file number 000-25555
 Veridien Corporation  Delaware
    
    59-3020382(State or Other Jurisdiction of
Incorporation or Organization)
    
    (IRS Employer Identification No.)2875 MCI Drive, Suite B, Pinellas Park, Florida
    
    33782-6105(Address of principal executive offices)
    
    (Zip Code)
 (727) 576-1600   Indicate by check mark whether the issuer: (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the issuer was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X]  No[  ] State the number of shares outstanding of each of the issuers classes of
common equity, as of the latest practicable date: 209,291,022 shares of common
stock, par value $0.001 were outstanding at May 7, 2004. Transitional Small Business Disclosure Format (check one): Yes [  ] No [X]




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TABLE OF CONTENTS PagesPART I FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Notes to Financial Statements
    
    
    7Item 2.
Managements Discussion and Analysis or Plan of Operations
    
    
    12Item 3. Controls and Procedures
    
    
    17PART II OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    18Item 2.
Changes in Securities and Small Business Issuer Purchases of Equity
Securities
    
    
    18Item 5. Other Information
    
    
    19Item 6. Exhibits and Report on Form 8-K(a) Exhibit 31.1  Rule 13a-14(a)/15d-14(a)
Certification, Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    
    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 to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
    
    
    19EX-31.1 302 Certification of CEOEX-31.2 302 Certification of CFOEX-32.1 906 Certification of CEOEX-32.2 906 Certification of CFO
  2




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##### Table of Contents



PART 1
FINANCIAL INFORMATION 
 Item 1. Financial Statements Veridien Corporation
and Subsidiaries Consolidated Balance Sheets
(Unaudited) March 31, 2004 and December 31, 2003 March 31, 2004
    
    December 31, 2003Current assets:Cash
    
    $
    268,059
    
    
    $
    101,506Accounts receivable  trade
Less allowance for doubtful accounts of
$12,791 and $12,640 respectively
    
    
    72,485
    
    
    
    70,323Inventory
    
    
    111,940
    
    
    
    125,500Due from shareholder
    
    
    69,764
    
    
    
    69,764Marketable securities
    
    
    512,433
    
    
    
    475,416Prepaid expenses and other current assets
    
    
    44,532
    
    
    
    63,637Total current assets
    
    
    1,079,213
    
    
    
    906,146Property and equipment:Furniture and fixtures
    
    
    409,211
    
    
    
    409,211409,211
    
    
    
    409,211Less accumulated depreciation
    
    
    389,215
    
    
    
    385,73119,996
    
    
    
    23,480Other assets:Investments in preferred stock, cost basis
    
    
    125,000
    
    
    
    50,000Investments in securities, restricted basis
    
    
    456,000
    
    
    
    -0-Patents, less accumulated amortization of
$502,182 and 500,967, respectively
    
    
    62,200
    
    
    
    63,415Security deposits and other assets
    
    
    1,625
    
    
    
    1,625644,825
    
    
    
    115,040$
    1,744,034
    
    
    $
    1,044,666
 3




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##### Table of Contents



Veridien Corporation
and Subsidiaries Consolidated Balance Sheets  Continued
(Unaudited)
March 31, 2004 and December 31, 2003 March 31, 2004
    
    December 31, 2003Liabilities and Deficit in Stockholders EquityCurrent liabilities:Current capital lease obligations
    
    $
    4,603
    
    
    $
    6,022Note payable
    
    
    743,912
    
    
    
    878,845Convertible debentures current
    
    
    628,291
    
    
    
    304,291Accounts payable
    
    
    742,638
    
    
    
    890,595Accrued compensation
    
    
    3,918
    
    
    
    2,692Accrued interest
    
    
    1,241,592
    
    
    
    1,156,537Other accrued liabilities
    
    
    23,246
    
    
    
    23,221Customer deposit
    
    
    62,064
    
    
    
    62,064Due to stockholders
    
    
    34,555
    
    
    
    34,039Total current liabilities
    
    
    3,484,819
    
    
    
    3,358,306Long term liabilities:Convertible debentures
    
    
    1,668,086
    
    
    
    1,687,086Total liabilities
    
    
    5,152,905
    
    
    
    5,045,392Deficit in stockholders equity:Undesignated preferred stock, $.001 par value,
25,000,000 shares authorizedConvertible redeemable preferred stock,
$10 par value, 100,000 authorized; 6,000 and 6,000
issued and outstanding at March 31, 2004 and
December 31, 2003
    
    
    60,000
    
    
    
    60,000Series B preferred stock,
$.001 par value, 245,344 authorized, 174,219 and
174,219 issued and outstanding at March 31, 2004
and December 31, 2003
    
    
    175
    
    
    
    175Common stock - $.001 par value; 300,000,000 shares
authorized, 209,291,022 and 205,745,290 issued
and outstanding at March 31, 2004 and December 31, 2003
    
    
    209,291
    
    
    
    205,745Additional paid-in capital
    
    
    30,876,862
    
    
    
    30,678,313Common stock warrants
    
    
    26,399
    
    
    
    26,399Accumulated deficit
    
    
    (34,966,358
    )
    
    
    (34,229,321
    )Current period profit/(loss)
    
    
    389,760
    
    
    
    (737,037
    )(3,403,871
    )
    
    
    (3,995,726
    )Stock subscriptions receivable
    
    
    (5,000
    )
    
    
    (5,000
    )Total stockholders deficit
    
    
    (3,408,871
    )
    
    
    (4,000,726
    )$
    1,744,034
    
    
    $
    1,044,666
 4




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Veridien Corporation
and Subsidiaries Consolidated Statements of Operations
(Unaudited) For the three months ended
March 31, 2004 and March 31, 2003 March 31, 2004
    
    March 31, 2003Revenue
    
    $
    577,069
    
    
    $
    344,521Operating costs and expenses:Cost of revenue
    
    
    84,465
    
    
    
    133,114General, selling, and administrative
    
    
    249,365
    
    
    
    250,335Research and development
    
    
    41,881
    
    
    
    17,986375,711
    
    
    
    401,435Income (loss) from operations
    
    
    201,358
    
    
    
    (56,914
    )Other income (expense):Interest expense
    
    
    (98,824
    )
    
    
    (97,221
    )Realized gain (loss) on marketable
securities
    
    
    (8,445
    )
    
    
    (64,845
    )Unrealized gain (loss) on marketable
securities
    
    
    295,402
    
    
    
    (14,802
    )Interest income
    
    
    269
    
    
    
    82188,402
    
    
    
    (176,786
    )Net income (loss) before taxes
    
    
    389,760
    
    
    
    (233,700
    )Income taxes
    
    
    -0-
    
    
    
    -0-Net income (loss)
    
    $
    389,760
    
    
    $
    (233,700
    )Net income (loss) per common share
    
    $
    0.0019
    
    
    $
    (0.0013
    )Weighted average share outstanding
    
    
    207,275,534
    
    
    
    185,023,220
 5




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Veridien Corporation
and Subsidiaries Consolidated Statements of Cash Flows
(Unaudited) For the three months ended
March 31, 2004 and March 31, 2003 March 31, 2004
    
    March 31, 2003Cash flows from operating activities:Net income (loss)
    
    $
    389,760
    
    
    $
    (233,700
    )Adjustments to reconcile net income (loss) to net cash
(used) by operating activities:Depreciation and amortization
    
    
    4,699
    
    
    
    3,859Stock issuances for services
    
    
    99,481
    
    
    
    6,100Other, not affecting cash
    
    
    (270,046
    )
    
    
    (94,386
    )Realized (gains) losses on marketable securities
    
    
    8,445
    
    
    
    64,845Unrealized (gains) losses on marketable securities
    
    
    (295,402
    )
    
    
    14,802Proceeds from sale of marketable securities
    
    
    244,214
    
    
    
    69,155(Increase) decrease in:Accounts receivable
    
    
    (2,162
    )
    
    
    (97,712
    )Prepaid and other current assets
    
    
    19,105
    
    
    
    17,077Inventory
    
    
    13,560
    
    
    
    (139,996
    )Other assets
    
    
    -0-
    
    
    
    (32,999
    )Increase (decrease) in:Accounts payable and accrued expenses
    
    
    (196,584
    )
    
    
    421,961Due to stockholders
    
    
    516
    
    
    
    516Customer deposits
    
    
    -0-
    
    
    
    (16,800
    )Net cash (used) by operating activities:
    
    
    15,586
    
    
    
    (17,728
    )Cash flow from investing activities:Purchase of investment  preferred stock
    
    
    (75,000
    )
    
    
    -0-Net cash (used) by investing activities:
    
    
    (75,000
    )
    
    
    -0-Cash flow from financing activities:Proceeds from convertible debentures
    
    
    330,000
    
    
    
    -0-Net payment on capital leases
    
    
    (1,419
    )
    
    
    (1,201
    )Net proceeds from borrowings
    
    
    (102,614
    )
    
    
    (23,871
    )Net cash provided by financing activities:
    
    
    225,967
    
    
    
    (25,072
    )Net increase/(decrease) in cash
    
    
    166,553
    
    
    
    (42,800
    )Cash at beginning of quarter
    
    
    101,506
    
    
    
    89,048Cash at end of quarter
    
    $
    268,059
    
    
    $
    46,248
 With regard to commitments and contingencies at March 31, 2004, there are no material changes
from the financial statement footnotes as presented December 31, 2003. 6




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Veridien Corporation
and
Subsidiaries 
 Notes to the Unaudited Interim Consolidated Financial Statements at March 31, 2004 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 2004. 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 March 31, 2004, raw materials and finished goods amounted
to approximately $111,940. 5. Marketable Equity  Securities, Trading Marketable Equity  Securities, Trading are comprised of common stock and are
carried at estimated fair value. The associated unrealized gains and losses,
net of income tax are included in the statement of operations. 7




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Note A  Summary of Significant Accounting Policies  - Continued 6. Property and Equipment Property and equipment are stated at cost. Depreciation on property and
equipment is calculated on the straight-line method over their estimated useful
lives ranging from three to seven years. Leasehold improvements are amortized
on the straight-line method over the shorter of the lease term or estimated
useful life. Major renewals, betterments and replacements are capitalized.
Maintenance and repairs are charged to expense as incurred. 7. Patents The Company capitalizes certain costs, primarily legal and other fees, related
to patents. Accumulated costs are amortized over the estimated lives of the
patents using the straight-line method, commencing at the time the patents are
issued. 8. Loan Costs Loan coast are amortized by the straight-line method over the term of the
respective loans. 9. Investment in Preferred Stock  Cost Basis During the fourth quarter of 2003 the Company invested $50,000 in preferred
stock of an unrelated entity. During the first quarter of 2004 the Company
invested an additional $75,000 in preferred stock in the same entity. The
investee company is an early stage development company. 10. Investment in Securities  Restricted Basis During first quarter 2004 the Company signed an agreement with H-Quotient, Inc.
(HQNT) which involves the sale of product, licensing and service fees. The
initial amount earned in first quarter 2004 reflects 400,000 HQNT restricted
common shares which are listed at two-thirds fair market value at March 31,
2004. 11. Income Taxes Deferred taxes are provided on a liability method whereby deferred tax assets
are recognized for deductible temporary differences and operating loss and tax
credit carryforwards and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely that not that some portion or all of the deferred tax assets
will not be realized. Deferred tax assets and liabilities are adjusted for the
effects of changes in tax laws and rates on the date of enactment. 8




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Note A  Summary of Significant Accounting Policies  - Continued 12. Reclassification Certain reclassifications have been made to the December 31, 2003 audited
consolidated financial statements to be in conformity with the March 31, 2004
unaudited interim financial statements. 13. Net Income (Loss) per Share Net income (loss) per common share is calculated by dividing the net income
(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 207,275,534 and
185,023,220 for the quarter ending March 31, 2004 and 2003, respectively.
Common stock equivalents (stock options, warrants, 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 March 31, 2004 and for the three months ended March 31, 2003 and
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 March 31, 2004 and the results of its operations
and its cash flows for the three months ended March 31, 2004 and March 31,
2003, respectively. The results for the three months ended March 31, 2004 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. Prior to this quarter, the Company had incurred losses since its incorporation.
At March 31, 2004, the Company had an accumulated deficit of $34,576,598,
resulting primarily from research and development, sales and marketing, and
administrative expenses being substantially in excess of sales revenue. 9




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Note B  Realization of Assets  Continued The Company has a deficit in stockholders equity of $3.4 million, a deficit in
working capital of $2.4 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. Note C  Marketable Securities and Investments During first quarter 2004, the Company sold 358,869 HQNT shares and realized a
loss at time of sale of $8,445 due to the decline in the FMV of the stock the
from December 31, 2003 closing price of $.72. 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. During the first quarter 2004 the Company recorded an unrealized gain in the
amount of $295,402 which reflects the increase in the FMV of 301,431 HQNT
shares from $.72 to $1.70 at March 31, 2004. 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. 10




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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). The Company at March 31, 2004 has
received $25,072 in product purchases as an offset to the credit note. 11




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Item 2. Managements Discussion and Analysis or Plan of Operations First Quarter - March 31, 2004 Compared with March 31, 2003 The following discussion and analysis provide information that we believe is
relevant to an assessment and understanding of the results of operations and
financial condition for the first quarter ending March 31, 2004 compared to the
same period of the prior year. This discussion should be read in conjunction
with the Consolidated Financial Statements and the Notes thereto included
elsewhere in this Report. This Report also contains certain forward-looking
statements and information. This cautionary statement should be read as being
applicable to all related forward-looking statements wherever they may appear.
Our actual future results could differ materially from those discussed herein. Overview We are a Health Care and Anti-Infectives 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 a skin friendly, patented, U.S.  EPA and Health Canada registered,
surface disinfectant. Viraguard® Antiseptic Hand Gel, Viraguard® Antiseptic
Hand Wipes are U.S.  FDA and Health Canada drug listed products utilizing
Veridiens patented Virahol® formulation. Recent product line extensions have included sales of sunscreen impregnated
towelettes being marketed under the SunSwipe label. We have recently begun expanding our revenue base to include not only sale of
our proprietary products but also the sale of licensing rights relating to our
existing and/or new technology, as well as service fees. We intend to continue
to broaden this initiative. During 2003 and early 2004, we continued to focus our sales efforts on our
Infection Control 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. Since 2002, we have contracted the services of Dunnigan Developments Ltd. to
coordinate sales and marketing activities with our large multi-national and
other major corporate customers. Paul Dunnigan, the principal of Dunnigan
Developments Ltd., has 22 years experience in marketing and merchandising
consumer products, as well as in supply-chain management for large retailing
operations, including many years with a multi-national corporation. 12




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We are aggressively continuing to pursue possible strategic alliances with a
number of major corporations to further strengthen our Company. During 2002, we entered into a global distribution agreement with E.I. DuPont
de Nemours and Company to market Veridiens line of sunscreen towelettes.
DuPont has commenced marketing Veridiens towelettes and sales of these
products in the Emergency Services and Industrial markets began in the second
quarter of 2003. In addition, we entered into a five (5) year Distribution Agreement with DuPont
for all Viraguard® products in the United States of America for specific market
segments. The Agreement includes certain exclusivity rights for the Emergency
Services and Industrial markets. The products concerned are Viraguard® Hard
Surface Disinfectant Towelettes, Viraguard® Antiseptic Hand Wipes, Viraguard®
Disinfectant solution in one gallon, 16 ounce and 2 ounce formats all of which
are being produced for DuPont under their brand label. Deliveries commenced in
February 2003. In 2003, DuPont and Veridien agreed to test the Virahol® formulation for
efficacy on Hepatitis A, B and C in order to create superior kill claims for
the Viraguard® product line. Hepatitis outbreaks across North America in 2002
and 2003 have increased demand for products with Hepatitis kill claims,
particularly in the Healthcare and First Responder markets. As of December
2003, Veridien has received label claim approval representing effectiveness
against Hepatitis A, B and C on Viraguard® Disinfectant liquids for Hard
Surfaces. Veridien has also drug listed all the Viraguard® Hand Antiseptic
products with the FDA, which products reflect effectiveness against Hepatitis
A, B and C based on in vitro testing. These new Hepatitis kill claims should
provide Veridien and its subregistrants (ie. Dupont) with a strong competitive
advantage in 2004. During 2003 we signed a supply contract with the American Red Cross. Our
patented Viraguard® disinfectants and wipes may be used by the Red Cross to
meet regulatory requirements concerning the type of hard surface disinfectants
used in Red Cross Biomedical Services facilities across America. The products
the American Red Cross have contracted for are: Viraguard® Hospital Hard
Surface Disinfectant Cleaner and Instrument Presoak, Viraguard® Antiseptic Hand
Spray, Viraguard® Hospital Surface Disinfectant Towelettes and Viraguard®
Antiseptic Hand Wipes. The Viraguard® products will be used for personal hand
sanitation, disinfection of clinic surfaces and for maintenance of blood
collection equipment. Early in 2004 we signed a multi-year contract with H2O to Go, LLC. Purified
Water to Go operates a fast growing chain of retail franchises marketing
purified water, nutrition and healthy lifestyle products. They will be using
our patented Viraguard® infection control products for cleaning and
disinfecting their stores and operating equipment, as well as providing hand
hygiene for their staff and customers when water refilling in stores. The full
Viraguard® line of infection control products and our unique SunSwipe
Sunscreen Towelettes will be sold to retail customers in H2O to Go stores
across the United States. Prior to this quarter, the Company had incurred losses since its incorporation.
At March 31, 2004, the Company had an accumulated deficit of $34,576,598. The
Company has financed its ongoing business activities through a combination of
sales, equity financing, sale of marketable securities and debt. 13




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Result of Operations First Quarter ended March 31, 2004 vs. First Quarter ended March 31, 2003 First Quarter
    
    Percentage ofMarch 31
    
    Net Revenue2004
    
    2003
    
    2004
    
    2003Revenue
    
    $
    577,069
    
    
    $
    344,521
    
    
    
    100
    %
    
    
    100
    %Cost of Revenue
    
    
    84,465
    
    
    
    133,114
    
    
    
    15
    %
    
    
    39
    %Gross Profit
    
    
    492,604
    
    
    
    211,407
    
    
    
    85
    %
    
    
    61
    %Operating Expenses:General, Selling &
Administrative
    
    
    249,365
    
    
    
    250,335
    
    
    
    43
    %
    
    
    73
    %Research & Development
    
    
    41,881
    
    
    
    17,986
    
    
    
    7
    %
    
    
    5
    %Income (Loss) from Operations
    
    
    201,358
    
    
    
    (56,914
    )
    
    
    35
    %
    
    
    (17
    )%Other Income (Expense) Net
    
    
    188,402
    
    
    
    (176,786
    )
    
    
    33
    %
    
    
    (51
    )%Net Income (Loss) Before Taxes
    
    
    389,760
    
    
    
    (233,700
    )
    
    
    68
    %
    
    
    (68
    )%Income Taxes
    
    
    -0-
    
    
    
    -0-
    
    
    
    0
    %
    
    
    0
    %Net Income (Loss)
    
    $
    389,760
    
    
    $
    (233,700
    )
    
    
    68
    %
    
    
    (68
    )%
 Consolidated gross revenues for first quarter 2004 increased by $528,137 or
153% to $872,740 compared with $344,603 in first quarter 2003.  
    
    Gross revenue from licensing and service fees increased for first
quarter 2004 by $456,000 or 100% to $456,000 compared with $-0- in
first quarter 2003. During first quarter 2004 the Company signed an
agreement with H-Quotient, Inc. (HQNT) which involves the sale of
product, licensing and service fees. The initial amount earned there
under in first quarter 2004 reflects 400,000 HQNT restricted common shares
which are reflected at two-thirds fair market value at March
31, 2004. Gross revenue from product sales decreased for first
quarter 2004 by $223,452 or 65% to $121,069 compared with $344,521 in
first quarter 2003. We continue active promotion of our product line
through trade-show presentations and direct calls on both existing and
potential customers. Our goal is to continue to expand our product
lines and we anticipate new products, which are scheduled with various
releases this year, will generate new revenue in this and future
years. In addition, we continue to pursue strategic alliances with
other corporations that have existing distribution networks. Our goal
for these alliances is to create immediate distribution and
fulfillment avenues for our products, while focusing on our capital
resources. We have recently begun expanding our revenue base to
include not only sale of our proprietary products but also the sale of
licensing rights relating to our existing and/or new technology, as
well as service fees. We intend to continue to broaden this
initiative.  
    
    During the first quarter 2004 the Company recorded an unrealized gain
in the amount of $295,402 which reflects the increase in the FMV of
301,431 HQNT shares from $.72 to $1.70 at March 31, 2004. 14




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##### Table of Contents




    
    Interest income for first quarter 2004 increased by $187 or 228% to
$269 compared with $82 in first quarter 2003. Consolidated gross expenses for first quarter 2004 decreased by $95,323 or 16%
to $482,980 compared with $578,303 in first quarter 2003.  
    
    The cost of revenue for the first quarter decreased as a percentage
of total revenue to 15% in 2004 from 39% in 2003. The cost of goods
sold from products sales for first quarter 2004 decreased by $59,052 or
44% to $74,062 compared with $133,114 in first quarter 2003. The cost
of goods ratio as a percentage of product sales was 61% in first
quarter 2004 compared to 39% in first quarter 2003. The increase in
ratio of the cost of goods from product sales as a percentage of sales
resulted primarily from sale of a product mix with decreased margins
due to increases in raw material costs passed on by our suppliers. The
cost of revenue from licensing and service fees for first quarter 2004
increased by $10,403 or 100% to $10,403 compared with $-0- in first
quarter 2003. The cost of revenue as a percentage of licensing and
revenue fees was 2% in first quarter 2004 compared to 0-% in first
quarter 2003. The Company continues to work to improve margins with
the introduction of new products, and to provide licensing and service
fees for Veridiens patented and unique products.
    
    General, selling, and administrative expenses for first quarter
2004 decreased by $970 or less than 1% to $249,365 compared with
$250,335 in first quarter 2003. Decreases in general and
administrative costs were associated with sales and marketing expenses
for first quarter 2004 that decreased by 8% to $103,236 compared with
$112,576 in first quarter 2003. Increases that affected general and
administrative costs were associated with rent expense for first
quarter 2004 that increased by 9% to $5,864 compared with $5,367 in
first quarter 2003. Increases that affected general and administrative
expenses were associated with professional public company, legal,
consulting and accounting fees for first quarter 2004 that increased by
8% to $52,179 compared with $48,456 in first quarter 2003. Increases
in general and administrative costs were associated with insurance fees
for first quarter 2004 that increased by 16% to $19,538 compared with
$16,894 in first quarter 2003.
    
    Research and development expenses for first quarter 2004 increased
by $23,895 or 133% to $41,881 compared with $17,986 in first quarter
2003. The Company continues to research and focus on broadening the
range of claims they can assert on existing products and on testing new
products for commercialization.
    
    During first quarter 2004, the Company sold 358,869 HQNT shares and
realized a loss of $8,445 due to the decline in the FMV of the stock
from December 31, 2003 at $.72.
    
    During first quarter 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.
    
    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. 15




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##### Table of Contents




    
    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.
    
    Interest expense for first quarter 2004 increased by $1,603 or 2%
to $98,824 compared with $97,221 in first quarter 2003. The increase
in interest expense was due primarily to the increase in Convertible
Debentures and continuing current debt financing arrangements.
    
    Net income (losses) increased to a net income of $389,760 for first
quarter 2004 from a net loss of ($233,700) in first quarter 2003. This
represented a 167% increase in net income (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 March 31, 2004 and March 31, 2003 we had working capital
deficits of approximately $2,405,606 and $3,976,270 respectively. Our
independent certified public accountants stated in their report on the 2003
consolidated financial statements that due to losses from operations and a
working capital deficit, there is substantial doubt about the Companys ability
to continue as a going concern. We are addressing the going concern issue in
virtually every aspect of our operation. We continue to cut operating expenses
and are successfully changing our product mix such that the company is
achieving improved margins. Because of our significant losses incurred since
inception, we have become substantially dependent on (1) loans from officers,
directors, and third parties, (2) private placements of our securities, (3)
revenue from sales, and (4) liquidation of our marketable securities to fund
operations. These results of these items are included in the following
descriptions.  
    
    During the first quarter of 2004 the company liquidated a portion
of its marketable securities for a net cashflow of $244,214.
    
    During the first quarter of 2004 we issued 2 convertible debentures
for cash proceeds of $330,000. These debentures carry interest rates
of 10%, have terms of 3 years and have conversion rates of $0.06.
    
    During the first quarter of 2004 a Convertible Debentures with a
principal balance of $25,000 (accrued interest waived) was converted
into 500,000 shares of common stock.
    
    During the three months ended March 31, 2004, 19,889 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 $0.075.
    
    During the first quarter of 2004 1,373,571 common shares were
issued under the companys S8 Registration Statement for legal and
consulting services totaling $92,681. The average price per share was
$0.067. 16




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##### Table of Contents




    
    During the first quarter of 2004 100,000 common shares were issued
to the Chairman of the Board under the terms of his consulting
agreement with the company. The effective price per share was $0.053.
    
    During the first quarter of 2004, as allowed under their agreement,
the company repaid their accounts receivable factoring debt of $77,614
with the issuance of 1,552,272 common shares.
    
    During the three months ended March 31, 2004, accounts receivable
increased by $2,162 to $72,485 from $70,323 at December 31, 2003.
    
    During the three months ended March 31, 2004, inventory decreased
by $13,560 to $111,940 compared with $125,500 at December 31, 2003.
    
    We believe that our long-term success depends on revenues from
operations from product sales and ongoing royalties from technologies
and service fees. If such sources of funds are not adequate, we may
seek to obtain financing to meet operating and research expenses from
other sources including, but not limited to, future equity or debt
financings.
    
    As of May 11, 2004, we have cash of approximately $800,827 and
during May and June, we expect cash flow of $300,000 from operating
activities, private placements and possible sale of marketable
securities. This level of liquidity should be sufficient to operate
the Company for more than 180 days. The Company anticipates increasing
sales, reduced operating expenses, and additional private placement
funding will contribute to continuous operations of the Company.
    
    We anticipate utilizing a portion of our funds to support the
working capital requirements of our anticipated increase in sales.
    
    If disruptions occur in third party vendors that supply raw
materials to our contract fill manufacturers, we may experience the
inability to have product inventory for sale to our customers. Such
events could have material adverse effect on Veridien to compete
effectively in the marketplace. We continue to utilize the services of
a number of contract fill manufacturers. These contract fill
manufacturers have been successful in locating sources of our commonly
available raw materials and converting these into finished products and
we believe that use of these contract fill manufacturers will assure us
of the timely production of products. 
 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 17




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##### Table of Contents



changes in internal controls or other factors that could significantly affect
internal controls subsequent to the date of the companys most recent
evaluation. 
 PART II OTHER INFORMATION 
 Item 1. Legal Proceedings There have been no changes in the previously reported litigation. 
 Item 2. Changes in
Securities and Small Business Issuer Purchases of Equity Securities  (a)
    
    Not applicable.(b)
    
    Not applicable.(c)
    
    The following issuances of equity securities (including debt
securities immediately convertible into equity securities) without
registration under the Securities Act of 1933 occurred during the
quarter ending March 31, 2004:Common StockOn February 4, 2004, $25,000 of the principal of an outstanding
Convertible Debenture was converted into 500,000 common shares. Accrued
interest on this debenture had been waived by the holder. The issuance
was considered exempt from registration by reason of Section 3(a)(9) of
the Securities Act.At March 31, 2004, the Chairman of the Board was entitled to the issuance
of 100,000 common shares under the terms of his consulting agreement with
the company. These shares were accounted for in the first quarter but
not issued until May 3, 2004. The issuance was considered exempt from
registration by reason of Section 4(2) of the Securities Act.During the first quarter of 2004 we exercised our option to retire our
accounts receivable factoring debt of $77,614 with the issuance of
1,552,272 common shares. The issuance was considered exempt from
registration by reason of Section 4(2) of the Securities Act.Convertible SecuritiesDuring the first quarter of 2004 we issued a total of 2 convertible
debentures for cash proceeds of $330,000. 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 of $ 0.06. These issuances were considered exempt
from registration by reason of Section 4(2) of the Securities Act.(d)
    
    Not applicable. 18




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##### Table of Contents



(e)
    
    During the Quarter ended March 31, 2004 the Company did not
repurchase any of its equity securities. 
 Item 5. Other Information During the first quarter of 2004 the Company entered into a three year contract
with Purified Water to Go, a North American retail chain. Our Viraguard®
product line of patented infection control products, along with our unique
SunSwipe Sunscreen Towelettes will be sold to retail customers in Purified
Water to Go stores across America. Purfied Water to Go has also agreed to use
Verdiens Viraguard® products as part of a state of the art Infection Control
Protocol for cleaning and disinfection in their stores. The Veridien products
were introduced at Purified Water to Gos convention in early April by
Veridiens sales team. Product shipments began in the second quarter. During the first quarter of 2004 the Company made additional strategic and
equity investments in a private Anti-Infectives/Drug Development Company
(ADDC). We expect to increase our array of proprietary products and expand our
research and development capabilities through our ownership interest in this
company. The ADDC is creating and developing unique, safe, potent, long
lasting anti-microbials (bacteria, mold, yeast) and anti-infectives that are
expected to not only kill but retard the re-growth of infective microbials.
These new products are complementary to Veridiens existing product line. The
ADDC management team has begun working with Veridien on its development
projects and marketing opportunities. 
 Item 6. Exhibits and Report on Form 8-K  A.
    
    Exhibits 
  (a)     Exhibit 31.1  Rule 13a-14(a)/15d-14(a)
Certification, Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. 
  (b)     Exhibit 31.2  Rule 13a-14(a)/15d-14(a)
Certification, Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. 
  (c)     Exhibit 32.1 - Certification Pursuant to 18
U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 
  (d)     Exhibit 32.2  Certification Pursuant 18 U.S.C.
Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  B.
    
    Report on Form 8-KNo reports on Form 8-K were filed during the quarter for which this
report is filed. 19




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SIGNATURES Pursuant to the requirements of the Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized. Veridien Corporation
(Registrant)Date May 14, 2004
    By
    /s/ Sheldon C. FentonSheldon C. FentonChief Executive Officer Date May 14, 2004
    By:
    /s/ Rene A. GareauRene A. GareauExec Vice President & Secretary 20