##### Table of Contents



UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
 þ
    
    Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended June 30, 2008
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 Commission file number 000-25555
 Veridien Corporation
  Delaware
    
    59-3020382(State or Other Jurisdiction of Incorporation or Organization)
    
    (IRS Employer Identification No.)
 7600 Bryan Dairy Road, Suite F, Largo, Florida
    
    33777-1433(Address of principal executive offices)
    
    (Zip Code)
 
   þ o
  Large accelerated filer o
    
    Accelerated filer oNon-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
  o þ




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##### 



TABLE OF CONTENTS
 PagesPART I FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (Unaudited)
    
    
    3Notes to Financial Statements (Unaudited)
    
    
    7Item 2.
    
    Managements Discussion and Analysis
    
    
    11Item 3.
    
    Controls and Procedures
    
    
    19PART II OTHER INFORMATIONItem 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    20Item 5.
    
    Other Information
    
    
    20Item 6.
    
    Exhibits and Reports on Form 8-K
    
    
    21EX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32.1 SECTION 906 CERTIFICATION OF THE CEOEX-32.2 SECTION 906 CERTIFICATION OF THE CFO
  2




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##### Table of Contents



PART I FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 Veridien Corporation
and Subsidiaries
 
 June 30, 2008
    
    
    December 31, 2007AssetsCurrent assets:Cash
    
    $
    36,838
    
    
    $
    75,389Marketable Securities
    
    
    20,488
    
    
    
    20,591Accounts receivable, net of allowance
of $22,136 and $53,893
    
    
    125,437
    
    
    
    607,449Inventory
    
    
    717,536
    
    
    
    572,689Prepaid expenses and other current assets
    
    
    32,432
    
    
    
    66,456Total current assets:
    
    
    932,731
    
    
    
    1,342,574Property and equipment, net of accumulated
depreciation of $438,749 and $434,999
    
    
    28,812
    
    
    
    32,432Other assets:Patents, net of accumulated amortization of
of $523,963 and $521,408
    
    
    673,112
    
    
    
    614,604Goodwill
    
    
    1,151,751
    
    
    
    1,151,751Security deposits
    
    
    5,695
    
    
    
    5,695Total Assets:
    
    $
    2,792,101
    
    
    $
    3,147,056
  3




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##### Table of Contents



Veridien Corporation
and Subsidiaries
 June 30, 2008
    
    
    December 31, 2007Liabilities and Shareholders Equity (Deficit)Current liabilities:Note payable
    
    $
    13,224
    
    
    $
    46,286Notes payable  related party
    
    
    249,102
    
    
    
    234,102Current portion of convertible debentures, net of debt discount
    
    
    457,233
    
    
    
    205,465of $1,767 and $3,535 at June 30, 2008 and December 31, 2007
    
    
    275,000
    
    
    
    275,000Current portion of convertible debentures  related partyAccounts payable
    
    
    740,455
    
    
    
    739,129Accounts payable  related party
    
    
    712,931
    
    
    
    638,526Accrued liabilities
    
    
    161,883
    
    
    
    191,759Accrued liabilities  related party
    
    
    202,678
    
    
    
    166,528Total current liabilities
    
    
    2,812,506
    
    
    
    2,496,795Long-term liabilities:Convertible debentures
    
    
    -0-
    
    
    
    50,000Total liabilities:
    
    
    2,812,506
    
    
    
    2,546,795Minority interest
    
    
    25,683
    
    
    
    90,049Shareholders equity (deficit):Preferred stock  23,200,000 undesignated, $.001 par value
at June 30, 2008 and December 31, 2007Series 2006-A Preferred stock, $.001 par value, 300,000
authorized, and 200,607 issued and outstanding at June 30,
2008 and December 31, 2007
    
    
    201
    
    
    
    201Series 2006-B Preferred stock, $.001 par value, 1,200,000
authorized, and 999,141 and 1,008,955 issued
and outstanding at June 30, 2008 and December 31, 2007
    
    
    999
    
    
    
    1,009Series 2006-C Preferred stock, $.001 par value, 300,000
authorized, and 0 issued and outstanding
at June 30, 2008 and December 31, 2007
    
    
    -0-
    
    
    
    -0-Common Stock  $.001 par value; 800,000,000 shares
authorized, 266,193,028 and 262,549,196
issued and outstanding at June 30, 2008
and December 31, 2007
    
    
    266,193
    
    
    
    262,549Cumulative foreign exchange adjustment
    
    
    (73
    )
    
    
    (17,421
    )Additional paid-in capital
    
    
    43,014,590
    
    
    
    43,005,938Accumulated deficit
    
    
    (42,742,064
    )
    
    
    (40,571,437
    )Current period loss
    
    
    (585,934
    )
    
    
    (2,170,627
    )Total shareholders equity (deficit):
    
    
    (46,088
    )
    
    
    510,212Total liabilities and shareholders equity (deficit):
    
    $
    2,792,101
    
    
    $
    3,147,056
  4




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##### Table of Contents



Veridien Corporation
and Subsidiaries
 Three Months Ended June 30
    
    
    Six Months Ended June 302008
    
    
    2007
    
    
    2008
    
    
    2007Revenue
    
    $
    193,341
    
    
    $
    680,120
    
    
    $
    816,747
    
    
    $
    1,267,631Operating costs and expenses:Cost of revenue
    
    
    120,536
    
    
    
    449,945
    
    
    
    596,513
    
    
    
    869,727General, selling, and
administrative
    
    
    237,212
    
    
    
    1,006,841
    
    
    
    634,962
    
    
    
    1,312,973Research and development
    
    
    71,656
    
    
    
    193,247
    
    
    
    203,393
    
    
    
    344,415429,404
    
    
    
    1,650,033
    
    
    
    1,434,868
    
    
    
    2,527,115Other income (expense):Interest and dividend expense
    
    
    (31,413
    )
    
    
    (23,035
    )
    
    
    (57,721
    )
    
    
    (44,431
    )Realized gain on sale of
Mycosol warrants
    
    
    -0-
    
    
    
    -0-
    
    
    
    25,000
    
    
    
    -0-Unrealized gain (loss) on
marketable securities
    
    
    (15,877
    )
    
    
    (11,996
    )
    
    
    (103
    )
    
    
    (11,427
    )Interest income
    
    
    80
    
    
    
    2,449
    
    
    
    645
    
    
    
    5,797(47,210
    )
    
    
    (32,582
    )
    
    
    (32,179
    )
    
    
    (50,061
    )Net income (loss) before minority interest
    
    
    (283,273
    )
    
    
    (1,002,495
    )
    
    
    (650,300
    )
    
    
    (1,309,545
    )Minority interest in Mycosol loss
    
    
    13,705
    
    
    
    54,654
    
    
    
    64,366
    
    
    
    111,535Net income (loss)
    
    $
    (269,568
    )
    
    $
    (947,841
    )
    
    $
    (585,934
    )
    
    $
    (1,198,010
    )Deemed dividend on Preferred Stock
    
    
    -0-
    
    
    
    (57,875
    )
    
    
    -0-
    
    
    
    (96,625
    )Net (Loss) Attributable to Common
Shareholders
    
    $
    (269,568
    )
    
    $
    (1,005,716
    )
    
    $
    (585,934
    )
    
    $
    (1,294,635
    )Weighted average Common shares
outstanding  basic and diluted
    
    
    265,026,924
    
    
    
    261,955,513
    
    
    
    263,940,596
    
    
    
    259,200,902Net loss attributable to Common
shareholders per share  basic
and diluted
    
    $
    (0.00
    )
    
    $
    (0.00
    )
    
    $
    (0.00
    )
    
    $
    (0.01
    )
  5




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##### Table of Contents



Veridien Corporation
and Subsidiaries
 2008
    
    
    2007Cash flows from operating activities:Net loss
    
    $
    (585,934
    )
    
    $
    (1,198,010
    )Adjustments to reconcile net loss to net cash
(used) by operating activities:Depreciation and amortization
    
    
    6,305
    
    
    
    7,428Non-cash expense of fair market value of warrants
    
    
    (10,580
    )
    
    
    606,490Amortization of debt discount associated with BCF
    
    
    1,768
    
    
    
    1,768Realized gain on sale of Mycosol warrants
    
    
    (25,000
    )
    
    
    -0-Non cash dividends
    
    
    4,217
    
    
    
    6,883Unrealized loss on marketable securities
    
    
    103
    
    
    
    11,427Stock issuances for services
    
    
    18,650
    
    
    
    14,715Minority interest
    
    
    (64,366
    )
    
    
    (111,535
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    482,012
    
    
    
    389,287Inventory
    
    
    (144,847
    )
    
    
    (27,037
    )Prepaid expenses and other current assets
    
    
    34,024
    
    
    
    45,796Accounts payable  third party
    
    
    1,325
    
    
    
    (330,234
    )Accounts payable  related party
    
    
    74,405
    
    
    
    159,932Accrued expenses  third party
    
    
    (29,876
    )
    
    
    (44,312
    )Accrued expenses  related party
    
    
    36,150
    
    
    
    (5,879
    )Net cash used by operating activities:
    
    
    (201,644
    )
    
    
    (473,281
    )Cash flow from investing activities:Purchase of property and equipment
    
    
    (130
    )
    
    
    (3,550
    )Purchase of additional interest in Mycosol
    
    
    -0-
    
    
    
    (25,000
    )Proceeds from sale of Mycosol warrants
    
    
    25,000
    
    
    
    -0-Increase in patents
    
    
    (61,063
    )
    
    
    (22,748
    )Change in security deposits
    
    
    -0-
    
    
    
    2,588Net cash used by investing activities:
    
    
    (36,193
    )
    
    
    (48,710
    )Cash flow from financing activities:Proceeds from convertible debentures
    
    
    200,000
    
    
    
    -0-Proceeds from preferred stock issuances
    
    
    -0-
    
    
    
    750,000Proceeds from notes payable  related party
    
    
    15,000
    
    
    
    100,000Payments on notes payable  third party
    
    
    (33,062
    )
    
    
    (58,223
    )Payments on notes payable  related party
    
    
    -0-
    
    
    
    (100,000
    )Net cash provided by financing activities:
    
    
    181,938
    
    
    
    691,777Net effect of exchange rates on cash
    
    
    17,348
    
    
    
    8,924Net increase/(decrease) in cash
    
    
    (38,551
    )
    
    
    178,710Cash at beginning of year
    
    
    75,389
    
    
    
    185,656Cash at end of quarter
    
    $
    36,838
    
    
    $
    364,366Non-cash investing and financing activities:Conversion of debt to convertible debentures
    
    
    -0-
    
    
    $
    125,000Conversion of convertible debentures to common stock
    
    
    -0-
    
    
    
    -0-Conversion of preferred stock to common stock
    
    $
    102,357
    
    
    $
    277,123Conversion of debt to preferred stock
    
    
    -0-
    
    
    $
    20,000Issuance of common shares for additional
Mycosol interest
    
    
    -0-
    
    
    $
    50,000
  6




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##### Table of Contents



Veridien Corporation
and
Subsidiaries
 
 Notes to the Unaudited Interim Consolidated Financial Statements at June 30, 2008
  Note A  Going Concern
     Note B  Stock-Based Compensation
  (i)
    
    656,609 shares of common stock valued at the market price at the date of grant [$12,000], to
a consultant for services rendered. Pursuant to our agreement with the consultant, they will
continue to receive $1,000 of Veridien stock every month during 2008.
 (ii)
    
    428,305 shares of common stock valued at the market price at the date of grant [$6,650], to
two employees and a consultant for services rendered.
 7




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##### Table of Contents



Note B  Stock-Based Compensation  Continued
  a.
    
    300,000 to a consultant (exercise price $0.06 / expiry December 31, 2011 / vesting
immediately), the fair value of which was $1,503, $683 of which was expensed during the first
six months;
 b.
    
    1,000,000 to a consultant (exercise price $0.05 / expiry December 31, 2010 / vesting at
12/31/08), the fair value of which was $5,317, $2,658 of which was expensed during the first
six months;
 c.
    
    1,000,000 to a consultant (exercise price $0.08 / expiry December 31, 2011 / vesting at
12/31/09), the fair value of which was $4,784, $1,196 of which was expensed during the first
six months.
  (a)
    
    To the consultant in (a) above, 350,000 if sales procured by them during 2008 exceed
$500,000, 350,000 if sales procured by them during 2008 exceed $1 million;
 (b)
    
    To the consultant in (b) above, 400,000 if 2008 Revenue exceeds $4.6 million;
 (c)
    
    To the consultant in (c) above, 200,000 if 2009 Revenue exceeds $6 million;
 (d)
    
    To another consultant, maximum 1,000,000 per year for 3 years
 
    
    Year 1  175,000 warrants for every $1 million in 2008 sales over 2007 sales level
(exercise price $0.08 / vest February 15, 2009 / expiry February 15, 2011);
 
    
    Year 2  175,000 warrants for every $1 million in 2009 sales over 2008 sales
level (exercise price $0.10 / vest February 15, 2010 / expiry February 15, 2012);
 
    
    Year 3  175,000 warrants for every $1 million in 2010 sales over 2009 sales
level (exercise price $0.10 / vest February 15, 2011 / expiry February 15, 2013).
   Note C  Consolidation of Mycosol
  Consolidation of Variable Interest Entities,
  8




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##### Table of Contents



Note C  Consolidation of Mycosol  Continued
  Note D  Marketable Securities
  Note E  Inventory
  Note F  Convertible Debentures
     Note G  Preferred Stock
   9




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##### Table of Contents



Note H  Santius LifeSciences, Inc.
  Consolidation of Variable Interest Entities
   10




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##### Table of Contents



Item 2. Managements Discussion and Analysis
 First Quarter  June 30, 2008 Compared with June 30, 2007
 Overview
   ® ® ® ® ®
 ® ® ®
 ® ®
 ®
   11




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##### Table of Contents



Results of Operations
 Second Quarter ended June 30, 2008 vs. Second Quarter ended June 30, 2007
 Second Quarter
    
    
    Percentage ofJune 30,
    
    
    Net Revenue2008
    
    
    2007
    
    
    2008
    
    
    2007Revenue
    
    $
    193,341
    
    
    $
    680,120
    
    
    
    100
    %
    
    
    100
    %Cost of Revenue
    
    
    120,536
    
    
    
    449,945
    
    
    
    62
    %
    
    
    66
    %Gross Profit
    
    
    72,805
    
    
    
    230,175
    
    
    
    38
    %
    
    
    34
    %Operating Expenses:General, Selling & Administrative
    
    
    237,212
    
    
    
    1,006,841
    
    
    
    123
    %
    
    
    148
    %Research & Development
    
    
    71,656
    
    
    
    193,247
    
    
    
    37
    %
    
    
    28
    %Loss from Operations
    
    
    (236,063
    )
    
    
    (969,913
    )
    
    
    (122
    )%
    
    
    (143
    )%Other Expense Net
    
    
    (47,210
    )
    
    
    (32,582
    )
    
    
    (24
    )%
    
    
    (5
    )%Net Loss Before Minority Interest
    
    
    (283,273
    )
    
    
    (1,002,495
    )
    
    
    (147
    )%
    
    
    (147
    )%Minority Interest
    
    
    13,705
    
    
    
    54,654
    
    
    
    7
    %
    
    
    8
    %Net Loss
    
    
    (269,568
    )
    
    
    (947,841
    )
    
    
    (139
    )%
    
    
    (139
    )%Deemed Dividend on Preferred Stock
    
    
    -0-
    
    
    
    (57,875
    )
    
    
    (0
    )%
    
    
    (9
    )%Net Loss Attributable to Common
Shareholders
    
    $
    (269,568
    )
    
    $
    (1,005,716
    )
    
    
    (139
    )%
    
    
    (148
    )%
  
    
    Gross revenue from product sales decreased in second quarter 2008 by $486,779, or 72%,
to $193,341 compared with $680,120 in second quarter 2007. 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. This should generate
new revenue in 2008 and in futures years. In addition, we launched in March 2008 a
national sales drive for medical markets across the United States, encompassing 26 new
sales representatives. As a result of their efforts several clinical trials are underway
and we expect orders to begin from the results in the third quarter.
 
    
    Interest income for second quarter 2008 decreased by $2,369 or 97% to $80 compared with
$2,449 in second quarter 2007. The decrease in interest income is attributed to a lower
cash balance earning interest at lower interest rates at the bank over the same period in
the prior year.
  
    
    The cost of goods sold from product sales for second quarter 2008 decreased by $329,409
or 73% to $120,536 compared with $449,945 in second quarter 2007. The cost of goods ratio
as a percentage of product sales was 62% in second quarter 2008 compared to 66% in second
quarter 2007. The decrease in the ratio of the cost of goods sold from product sales as a
percentage of sales revenue resulted primarily from a product mix during the second quarter
2008 with increased margins. Profit margins for product sales were at 38% and 34%,
respectively for second quarter 2008 and second quarter 2007.
 12




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##### Table of Contents




    
    General, selling, and administrative expenses for second quarter 2008 decreased by
$769,629 or 76% to $237,212 compared with $1,006,841 during the same period of 2007
  (1)
    
    professional management compensation expenses for the second quarter 2008 that
decreased by 50% to $43,750 compared with $87,500 in second quarter 2007. This decrease
is attributable to a compensation package for Sheldon Fenton and Kenneth Cancellara
which was implemented in second quarter 2007; however, was eliminated for Cancellara in
2008; and
 (2)
    
    equity based compensation expenses for the second quarter 2008 that decreased
by 103% to ($20,934) compared with $598,362 in second quarter 2007. These expenses are
non-cash and are the fair market value of the warrants issued as calculated using the
Black-Scholes model. These expenses are attributable to the summation of (i) $4,688
for the second quarter 2008 and $21,025 in second quarter 2007 for options issued to
third party consultants; (ii) $9,384 for the second quarter 2008 and $116,290 in second
quarter 2007 for options issued under compensation packages for management; (iii)
$(34,408) for the second quarter 2008 and $-0- in second quarter 2007 for the
forfeiture of non-vested warrants from a management compensation package; and (iv) $-0-
for the second quarter 2008 and $461,047 in second quarter 2007 for the issuance of
warrants for the purchase of 49.9% of Santius Lifesciences, Inc..
  (1)
    
    insurance fees for second quarter 2008 that increased by 3% to $26,917 compared
with $27,625 in second quarter 2007;
 (2)
    
    sales and marketing expenses for second quarter 2008 that increased by 28% to
$83,965 compared with $65,535 in second quarter 2007; and
 (3)
    
    rent expense for second quarter 2008 that increased by 2% to $27,882 compared
with $27,240 in second quarter 2007.
 
    
    Research and development expenses for second quarter 2008 decreased by $121,591, or 63%
to $71,656 compared with $193,247 in second quarter 2007. Veridien Corporation had a
decrease of $3,672 or 10% to $31,689 for the second quarter 2008 compared with $35,361 in
second quarter 2007. Also, as of March 31, 2008 Santius LifeSciences is no longer
classified as a variable interest entity (VIE) of Veridien Corporation and is not
consolidated in Veridiens statements. Mycosol, Inc research and development expenses
decreased by $113,511 or 74% to $39,967 for the second quarter 2008 compared with $153,478
in second quarter 2007. The Company continues to research and focus on broadening the
range of claims they can assert on existing products and on testing new products for
commercialization.
 
    
    Interest and dividend expense for second quarter 2008 increased by $8,378 or 36% to
$31,413 compared with $23,035 in second quarter 2007. The increase in interest expense was
due primarily to an increase in debt for funding. Also the Company expensed $884 in
convertible debenture discount per Black Scholes calculations in second quarter 2008 and
2007.
 
    
    During second quarter 2008 the Company recorded an unrealized loss in the amount of
$15,877 which reflected a net decline in the FMV of 370,495
Healthnostics, Inc. (HNSO) shares and 431,404 Standard Global Holding Group (SNDH) shares. During second quarter 2007
the Company recorded an unrealized loss in the amount of $11,996 which reflected a net
decline in the FMV of 370,495 Healthnostics, Inc. (HNSO) shares and a decline in the FMV of
431,404
 13




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##### Table of Contents



Standard Global Holding Group (SNDH) shares. The current fair market value of all
marketable securities is $20,488 at June 30, 2008 and $20,591 at December 31, 2007.
 
    
    Net loss decreased to a net loss before Minority interest in Mycosol to $283,273 for
second quarter 2008 from a net loss of $1,002,495 in second quarter 2007. Net loss
decreased to a net loss after Minority interest in Mycosol to $269,568 for second quarter
2008 from a net loss of $947,841 in second quarter 2007. Net loss attributable to common
shareholders as of second quarter 2007 was $1,005,716 due to a deemed dividend of $57,875 on preferred shares issued
and preferred shares converted during 2007. There were no deemed dividends in 2008 during
this same period.
 14




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##### Table of Contents



Six Months ended June 30, 2008 vs. Six Months ended June 30, 2007
 Six Months ended
    
    
    Percentage ofJune 30,
    
    
    Net Revenue2008
    
    
    2007
    
    
    2008
    
    
    2007Revenue
    
    $
    816,747
    
    
    $
    1,267,631
    
    
    
    100
    %
    
    
    100
    %Cost of Goods Sold
    
    
    596,513
    
    
    
    869,727
    
    
    
    73
    %
    
    
    69
    %Gross Profit
    
    
    220,234
    
    
    
    397,904
    
    
    
    27
    %
    
    
    31
    %Operating Expenses:General, Selling & Administrative
    
    
    634,962
    
    
    
    1,312,973
    
    
    
    78
    %
    
    
    104
    %Research & Development
    
    
    203,393
    
    
    
    344,415
    
    
    
    25
    %
    
    
    27
    %Loss from Operations
    
    
    (618,121
    )
    
    
    (1,259,484
    )
    
    
    (76
    )%
    
    
    (99
    )%Other Expense Net
    
    
    (32,179
    )
    
    
    (50,061
    )
    
    
    (4
    )%
    
    
    (4
    )%Net Loss Before Minority Interest
    
    
    (650,300
    )
    
    
    (1,309,545
    )
    
    
    (80
    )%
    
    
    (103
    )%Minority Interest
    
    
    64,366
    
    
    
    111,535
    
    
    
    8
    %
    
    
    9
    %Net Loss
    
    
    (585,934
    )
    
    
    (1,198,010
    )
    
    
    (72
    )%
    
    
    (95
    )%Deemed Dividend on Preferred Stock
    
    
    -0-
    
    
    
    (96,625
    )
    
    
    0
    %
    
    
    (8
    )%Net Loss Attributable to Common
Shareholders
    
    $
    (585,934
    )
    
    $
    (1,294,635
    )
    
    
    (72
    )%
    
    
    (102
    )%
  
    
    Gross revenue from product sales decreased for the first six months of 2008 by $450,884,
or 36%, to $816,747 compared with $1,267,631 in 2007. 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. This should generate
new revenue in 2008 and in futures years. In addition, we launched in March 2008 a
national sales drive for medical markets across the United States, encompassing 26 new
sales representatives. As a result of their efforts several clinical trials are underway
and we expect orders to begin from the results in the third quarter.
 
    
    During the first six months of 2008 the Company sold 12,500 Mycosol common share
purchase warrants that it held to a third-party investor for $25,000 cash and recognized a
realized gain from the sale. Veridien had obtained these warrants as part of its
subscription under the Mycosol Series A Preferred Share Offering. For each dollar
invested, Mycosol issued Veridien one Mycosol Series A Preferred Share (value $1) and 0.375
Warrants to purchase Mycosol common stock at $0.001. Veridien continues to hold ownership
of the Series A Preferred Shares, but sold 12,500 of their un-exercised Mycosol warrants to
a third-party for $25,000 cash. The sale of the warrants was treated as a sale of less
than a controlling interest in a subsidiary with no basis and the entire $25,000 was
recorded as other income [SAB.T.5H].
 
    
    Interest income for the first six months of 2008 decreased by $5,152 or 89% to $645
compared with $5,797 during the same period of 2007. The decrease in interest income is
attributed to a lower cash balance earning interest at lower interest rates at the bank
over the same period in the prior year.
 15




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##### Table of Contents




    
    The cost of goods sold from product sales for the six months ended June 30, 2008
decreased by $273,214 or 31% to $596,513 compared with $869,727 during the same period of
2007. The cost of goods ratio as a percentage of product sales was 73% during the six
months ended June 30, 2008 compared to 69% in the same period 2007. The increase in ratio of the cost of goods
from product sales as a percentage of sales resulted primarily from sales of a product mix
with decreased margins and the increase in sampling with the new sales force to potential
customers in the medical markets. Profit margins for product sales were at 27% and 31%,
respectively for the first six months of 2008 and 2007.
 
    
    General, selling, and administrative expenses for six months ended June 30, 2008
decreased by $678,011 or 52% to $634,962 compared with $1,312,973 during the same period of
2007.
  (1)
    
    equity based compensation expenses for the first six months ended June 2008
that decreased by 102% to ($10,580) compared with $606,490 in the same period of 2007.
These expenses are non-cash and are the fair market value of the warrants issued as
calculated using the Black-Scholes model. These expenses are attributable to the
summation of (i) $9,239 for the six months ended June 2008 and $29,153 for the same
period of 2007 for options issued to third party consultants; (ii) $28,152 for the
first six months ended June 2008 and $116,290 for the same period of 2007 for options
issued under compensation packages for management; (iii) $(46,775) in the first six
months ended June 2008 and $-0- for the same period of 2007 for the cancellation of
non-vested warrants from a management compensation package and a third party consultant
package; and (iv) $-0- for the first six months ended June 2008 and $461,047 for the
same period of 2007 for the issuance of warrants for the purchase of 49.9% of Santius
Lifesciences, Inc..
  (1)
    
    sales and marketing expenses for the six months ended June 2008 that increased
by 54% to $200,853 compared with $130,710 in the same period 2007. The increase is
attributable to the launch of a national sales drive for medical markets across the
United States which encompasses 26 new sales representatives;
 (2)
    
    professional public company, legal, consulting and accounting fees for six
months ended June 30, 2008 that increased by 7% to $122,128 compared with $113,849 in
the same period 2007; and
 (3)
    
    rent expense for the six months ended June 2008 that increased by 2% to $55,764
compared with $54,480 in the same period 2007;
 
    
    During the first six months of 2008 the Company recorded an unrealized loss in the
amount of $103 which reflected a net decline in the FMV of 370,495 Healthnostics, Inc.
(HNSO) shares and 431,404 Standard Global Holding Group (SNDH) shares. During the first
six months of 2007 the Company recorded an unrealized loss in the amount of $11,427 which
reflected a net decline in the FMV of 370,495 Healthnostics, Inc. (HNSO) shares and a
decline in the FMV of 431,404 Standard Global Holding Group (SNDH) shares. The current
fair market value of all marketable securities is $20,488 at June 30, 2008 and $20,591 at
December 31, 2007.
 
    
    Research and development expenses for the first six months of 2008 decreased by
$141,022, or 41% to $203,393 compared with $344,415 in the same period 2007. Veridien
Corporation had a decrease of $6,508 or 11% to $52,455 during the first six months of 2008
compared with $58,963 in the same period 2007. Also, as of March 31, 2008 Santius
LifeSciences is no longer classified as a variable interest entity (VIE) of Veridien
Corporation and is not consolidated in Veridiens
 16




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##### Table of Contents



statements. Mycosol, Inc research and
development expenses decreased by $93,335 or 33% to $187,709 during the first six months of
2008 compared with $281,044 in the same period of 2007. The Company continues to research
and focus on broadening the range of claims they can assert on existing products and on
testing new products for commercialization.
 
    
    Interest and dividend expense for the first six months of 2008 increased by $13,290, or
30% to $57,721 compared with $44,431 during the same period of 2007. The increase in
interest expense was due primarily to an increase in debt for funding. The Company
expensed $1,768 in convertible debenture discount per Black Scholes calculations in the
first six months of 2008 and in the same period 2007.
  Liquidity and Working Capital
  
    
    During the second quarter 2008 the holder of 9,814 Preferred Shares of series 2006-B
elected to convert their Preferred Shares and accrued and unpaid dividends thereon of $4,217
into 2,558,918 common shares. As per the terms of the Preferred Shares, the effective price
per share was $0.04.
 
    
    During the six months ended June 30, 2008 50,000 common shares were issued to an employee
under the terms of their employment contract. The average effective price per share was
$0.011.
 
    
    During the six months ended June 30, 2008 178,305 common shares were issued to an employee
under the terms of their employment contract. The average effective price per share was
$0.017.
 
    
    During the six months ended June 30, 2008 200,000 common shares were earned by the Chairman
of the Board under the terms of his consulting agreement with the company. The effective
price per share was $0.0155.
 
    
    During the six months ended June 30, 2008 656,609 common shares were issued to a consultant
under the terms of their consulting agreement. The average effective price per share was
$0.018.
 
    
    During the first quarter 2008 we issued a convertible debenture for cash proceeds of
200,000. This debenture carries an interest rate of 8%, has a 1-year term and has a conversion
rate of $0.0215.
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##### Table of Contents




    
    During the first six months of 2008 we issued the following warrants to purchase common
stock:
 (i)
    
    300,000 to a consultant (exercise price $0.06 / expiry December 31,
2011 / vesting immediately),; the fair value of which was $1,503, $683 of which
was expensed during the first six months of 2008;
 (ii)
    
    1,000,000 to a consultant (exercise price $0.05 / expiry December 31,
2010 / vesting at 12/31/08), the fair value of which was $5,317, $2,658 of which
was expensed during the first six months of 2008;
 (iii)
    
    1,000,000 to a consultant (exercise price $0.08 / expiry December
31, 2011 / vesting at 12/31/09), the fair value of which was $4,784, $1,196 of
which was expensed during the first six months of 2008;
  (a)
    
    To the consultant in (i) above, 350,000 if sales procured by them
during 2008 exceed $500,000, 350,000 if sales procured by them during 2008 exceed
$1 million;
 (b)
    
    To the consultant in (ii) above, 400,000 if 2008 Revenue exceeds $4.6
million;
 (c)
    
    To the consultant in (iii) above, 200,000 if 2009 Revenue exceeds $6
million;
 (d)
    
    To another consultant, maximum 1,000,000 per year to a consultant for 3
years
 
    
    Year 1  175,000 warrants for every $1 million in 2008 sales over 2007 sales
level (exercise price $0.08 / vest February 15, 2009 / expiry February 15, 2011);
 
    
    Year 2  175,000 warrants for every $1 million in 2009 sales over 2008 sales
level (exercise price $0.10 / vest February 15, 2010 / expiry February 15, 2012);
 
    
    Year 3  175,000 warrants for every $1 million in 2010 sales over 2009 sales
level (exercise price $0.10 / vest February 15, 2011 / expiry February 15, 2013)
 
    
    During the three months ended June 30, 2008, accounts receivable decreased by $482,012 to
$125,437 from $607,449 at December 31, 2007.
 
    
    During the three months ended June 30, 2008, inventory increased by $144,847 to $717,536
compared with $572,689 at December 31, 2007.
 
    
    We plan to utilize our current debt financing arrangements and pursue additional equity and
debt financing while managing cash flow in an effort to provide funds to increase revenues to
support operation, research and development activities. We believe that our long-term success
depends on revenues from operations from product sales and ongoing royalties from
technologies. If such sources of funds are not adequate, we may seek to obtain financing to
meet operating and research expenses from other sources including, but not limited to, future
equity or debt financings.
 
    
    As of August 5, 2008, we have cash of approximately $44,889 and during August and
September, we expect cash flow of $300,000 from operating activities, private placements and
possible sale of marketable securities. This level of liquidity should be sufficient to
operate the Company for more than 180 days. The Company anticipates increasing sales, reduced
operating expenses, and additional private placement funding will contribute to continuous
operations of the Company.
 
    
    We anticipate utilizing a portion of our funds to support the working capital requirements
of our anticipated increase in sales and to cover new product development costs for Veridien.
We also anticipate increasing our investment/ownership in Mycosol, Inc.
 
    
    If disruptions occur in third party vendors that supply raw materials to our contract fill
manufacturers, we may experience the inability to have product inventory for sale to our
customers. Such events could have material adverse effect on Veridiens ability to compete
effectively in the marketplace.
 18




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##### Table of Contents



We continue to utilize the services of a number of contract
fill manufacturers. These contract fill manufacturers have been successful in locating
sources of our commonly available raw materials and converting these into finished products
and we believe that use of these contract fill manufacturers will assure us of the timely
production of products.
 Critical Accounting Estimates
        
 Item 3.
    
    Controls and Procedures
  19




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##### Table of Contents



PART II
 OTHER INFORMATION
 
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
 (b)
    
    The following issuances of equity securities (including debt securities immediately
convertible into equity) without registration under the Securities Act of 1933 occurred
during the Quarter ended June 30, 2008:
 Common Stock
 During the second quarter the holder of 9,814 Preferred Shares of series 2006-B elected to
convert their Preferred Shares and accrued and unpaid dividends thereon of $4,216.71 into
2,558,918 common shares. As per the terms of the Preferred Shares, the effective price per
share was $0.04. This issuance is considered exempt from registration by reason of 3(a)(9)
of the Securities Act.
 At June 30, 2008, 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 have not yet been issued. This issuance is considered
exempt from registration by reason of Section 4(2) of the Securities Act.
 At June 30, 2008 two employees and one consultant were entitled to the issuance of 369,697
common shares as part of their compensation packages for services provided during the second
quarter. These shares were accounted for in the second quarter but were not issued by the
end of the quarter. This issuance is considered exempt from registration by reason of
Section 4(2) of the Securities Act.
 (c)
    
    Not applicable.
 (d)
    
    Not applicable.
 (e)
    
    During the quarter ended June 30, 2008 the Company did not repurchase any of its equity
securities.
 
 Item 5.
    
    Other Information
 Not applicable.
 20




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##### Table of Contents



Item 6.
    
    Exhibits and Report on Form 8-K
 A.
    
    Exhibits
 (a)
    
    Exhibit 31.1  Rule 13a-14(a)/15d-14(a) Certification,
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 (b)
    
    Exhibit 31.2  Rule 13a-14(a)/15d-14(a) Certification,
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 (c)
    
    Exhibit 32.1  Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 (d)
    
    Exhibit 32.2  Certification Pursuant 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 B.
    
    Report on Form 8-K
  i.
    
    April 2, 2008
 Item 5.02 (b) Departure of Directors or Certain Officers;
Election of Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers
 21




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##### Table of Contents



SIGNATURES
  Veridien Corporation(Registrant)Date:   August 14, 2008
    By /s/ Sheldon C. FentonSheldon C. FentonChief Executive Officer Date:   August 14, 2008
    By /s/ Russell Van ZandtRussell Van ZandtChief Financial Officer & Chairman 22