--------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                            -------------------------

                                   FORM 10-QSB
                            -------------------------


                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL QUARTER ENDED JUNE 30, 2005

                         COMMISSION FILE NO.: 000-050469



                              VERIDIUM CORPORATION
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


Delaware                                                             59-3764931
--------------------------------------------------------------------------------
(State of other jurisdiction of                                  (IRS Employer
incorporation or organization)                               Identification No.)


1 JASPER STREET, PATERSON, NEW JERSEY                                   07522
--------------------------------------------------------------------------------
(Address of principal executive offices)                              (Zip Code)


                                 (973) 942-7700
--------------------------------------------------------------------------------
               (Registrant's telephone number including area code)



Check mark  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during the past 12
months (or for such shorter  period that the registrant as required to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days. Yes X No __.



The  number  of  outstanding  shares  of  common  stock as of June 30,  2005 was
46,555,083.



Transitional Small Business Disclosure Format:  Yes         No  X


<PAGE>



                              VERIDIUM CORPORATION
                         QUARTERLY REPORT ON FORM 10QSB
                   FOR THE FISCAL QUARTER ENDED JUNE 30, 2005

                                TABLE OF CONTENTS
<TABLE>

<CAPTION>

                                                                                                           Page No
Part I            Financial Information
<S>                                                                                                             <C>
Item 1.           Financial Statements (unaudited for June 30, 2005 and 2004)....................................3
                  Consolidated Balance Sheets - June 30, 2005 (unaudited) and December 31, 2004..................3
                  Consolidated Statements of Operations - for the Six Months
                    Ended June 30, 2005 (unaudited) 2004 (unaudited).............................................4
                  Consolidated Statements of Cash Flows - for the Six Months
                    Ended June 30, 2005 (unaudited) and 2004 (unaudited).........................................5
                  Notes to Consolidated Financial Statements.....................................................6
Item 2.           Management's Discussion and Analysis or Plan of Operation.....................................14
Item 3.           Controls and Procedures.......................................................................20

Part II           Other Information
Item 1.           Legal Proceedings.............................................................................21
Item 2.           Changes in Securities.........................................................................21
Item 3.           Defaults Upon Senior Securities...............................................................21
Item 4.           Submission of Matters to a Vote of Security Holders...........................................21
Item 5.           Other Information ............................................................................21
Item 6.           Exhibits and Reports on Form 8K...............................................................21

Signatures                                                                                                      22
</TABLE>



<PAGE>

                     PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED FOR JUNE 30, 2005 AND 2004)
<TABLE>

                      VERIDIUM CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                 JUNE 30, 2005 (UNAUDITED) AND DECEMBER 31, 2004
<CAPTION>
                                                                        6/30/05         12/31/04
                                                                     ----------------------------
ASSETS:
Current assets:
<S>                                                                  <C>             <C>
   Cash ..........................................................   $     62,857    $  1,096,327
   Accounts receivable, net ......................................      2,829,304       2,433,744
   Inventories ...................................................          3,579           3,627
  Prepaid expenses
   and other current assets ......................................        151,597         143,089
                                                                     ------------    ------------
       Total current assets ......................................      3,047,337       3,676,787

Property and equipment, net ......................................      2,505,386       2,352,519

Other Assets:
   Deposits ......................................................        115,051          26,252
   Patents and technologies, net .................................      1,704,724       1,750,019
   Permits, net ..................................................        298,003         278,164
   Customer List, net.............................................         49,166            --
   WorkForce, net.................................................        196,666            --
   Goodwill ......................................................      4,292,391       4,020,762
                                                                     ------------    ------------
       Total other assets ........................................      6,656,001       6,075,197
                                                                     ------------    ------------

TOTAL ASSETS .....................................................   $ 12,208,724    $ 12,104,503
                                                                     ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
   Short term borrowings .........................................   $     75,131    $    316,320
   Accounts payable ..............................................      2,489,093       2,311,702
   Accrued expenses ..............................................      1,263,706       1,114,185
   Current maturities of long-term debt ..........................        439,890         287,281
   Current portion of convertible debentures .....................      1,799,805       1,736,036
   Current portion of obligations under capital lease ............         58,007         124,686
                                                                     ------------    ------------
       Total current liabilities .................................      6,125,632       5,890,210

Long-term debt, net of current maturities ........................        344,447         474,349
Convertible debentures, net of current portion ...................      3,790,767       3,731,565
Obligations under capital lease, net of current maturities .......          4,901          30,177
Other liabilities ................................................         18,485          18,485
                                                                     ------------    ------------
       Total long term liabilities: ..............................      4,158,600       4,254,576
                                                                     ------------    ------------

       Total liabilities: ........................................     10,284,232      10,144,786

Minority interest in consolidated subsidiary .....................        825,000         825,000

Stockholders' equity:
   Preferred stock, $0.001 par value:
     Series A: 1,881,366 shares authorized issued and outstanding           1,881           1,881
     Series B: authorized 1,801,218 shares; and 1,761,218
      issued and outstanding in 2005 and 2004 ....................          1,761           1,761

     Series C: authorized 750,000 shares; 750,000 shares
      issued and outstanding .....................................            750             750

   Common stock, $0.001 par value, 50,000,000 authorized;
   46,716,349 and 33,849,132 shares issued for
     2005 and 2004, respectively .................................         46,716          33,849

   Additional paid-in capital ....................................     35,392,268      35,278,025
   Accumulated deficit ...........................................    (34,280,130)    (33,942,795)
   Treasury stock at cost, 161,266 shares of
     common stock, for 2005 and 2004 .............................        (63,754)        (63,754)
    Common Stock Subscription Receivable, 2,078,533 shares in 2004           --          (175,000)
                                                                     ------------    ------------
       Total stockholders' equity ................................      1,099,492       1,134,717
                                                                     ------------    ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .......................   $ 12,208,724    $ 12,104,503
                                                                     ============    ============
</TABLE>
            The notes to the Consolidated Financial Statements are an
                       integral part of these statements.


<PAGE>
<TABLE>
                      VERIDIUM CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               FOR THE SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
                              AND 2004 (UNAUDITED)
<CAPTION>
                                                For the three months ending          For the six months ending
                                              ----------------------------------------------------------------
                                                   6/30/05         6/30/04          6/30/05          6/30/04
                                              ----------------------------------------------------------------
<S>                                             <C>             <C>             <C>             <C>
Revenues: ...................................   $  3,572,144    $  3,693,933    $  7,545,564    $  6,795,124
   Cost of Revenues .........................      2,517,454       2,647,035       5,728,744       4,943,119
                                                ------------    ------------    ------------    ------------
Gross profit ................................      1,054,690       1,046,898       1,816,820       1,852,005

Operating expenses:
  Selling expenses ..........................        274,244         278,400         548,119         525,443
  General and Administrative ................        696,583         581,725       1,319,521       1,051,701
  Severance .................................           --           382,480            --           382,480
                                                ------------    ------------    ------------    ------------
Total operating expenses ....................        970,827       1,242,605       1,867,640       1,959,624
                                                ------------    ------------    ------------    ------------

Operating (loss) income .....................         83,863        (195,707)        (50,820)       (107,619)

Other income (expense):
  Forgiveness of interest and finance charges           --            73,950          67,197         413,230
  Amortization of Deferred Financing Costs ..           --           (70,968)           --           (70,968)
  Interest expense ..........................       (174,431)       (112,115)       (339,916)       (338,314)
                                                ------------    ------------    ------------    ------------
    Total other income (expense), net .......        174,431       (109,133)       (272,719)          3,948
                                                ------------    ------------    ------------    ------------

Loss before provision for income taxes ......        (90,568)       (304,840)       (323,539)       (103,671)

Provision for income tax, net ...............        (13,534)         (7,999)        (13,847)         (9,161)
                                                ------------    ------------    ------------    ------------

Net loss ....................................   $   (104,102)   $   (312,839)   $   (337,386)   $   (112,832)
                                                ------------    ------------    ------------    ------------

Basic loss attributable to common ...........   $      (0.00)   $      (0.01)   $      (0.00)   $      (0.00)
shareholders

Diluted loss attributable to common .........   $      (0.00)   $      (0.01)   $      (0.00)   $      (0.00)
shareholders

Weighted average shares of common stock .....     43,984,559      23,364,535      41,833,624      25,187,839
outstanding basic and Dilutive
</TABLE>
            The notes to the Consolidated Financial Statements are an
                       integral part of these statements.

<PAGE>
<TABLE>
                      VERIDIUM CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
                          AND JUNE 30, 2004 (UNAUDITED)
<CAPTION>
                                                                                6/30/05         6/30/04
                                                                             ---------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                          <C>            <C>
Net loss .................................................................   $  (337,386)   $  (112,832)
Adjustments to reconcile net loss to net cash
 provided by (used in) operating activities:
   Depreciation and amortization .........................................       217,957        324,998
   Equity issued in exchange for services rendered .......................       143,160           --
   Provision for doubtful accounts .......................................        (1,752)       (26,378)
   Interest paid directly from lender ....................................        59,202         37,917
   Gain on Sale of Fixed Assets ..........................................        (3,042)          --
   Gain on forgiveness of debt ...........................................       (67,197)          --
   Changes in assets and liabilities,
     Accounts receivable .................................................      (196,753)       (95,028)
     Inventories .........................................................            48            112
     Prepaid expenses and other current assets ...........................        (8,508)       (64,940)
     Severance payable ...................................................       (67,916)       382,480
     Accounts payable ....................................................       157,047        (91,246)
     Accrued expenses ....................................................       101,609       (222,612)
                                                                             -----------    -----------
       Net cash (used in) provided by operating activities ...............        (3,531)       132,471
                                                                             -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES
     Change in deposits ..................................................       (88,799)        (4,900)
     Additional Permit ...................................................       (30,480)          --
     Proceeds from Sale of Fixed Assets ..................................         3,042           --
     Additions to and acquisition of property, plant and equipment .......      (135,440)          --
                                                                             -----------    -----------
       Net cash used in investing activities .............................      (251,677)        (4,900)
                                                                             -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES
     Repayment to factor, Net ............................................          --          (11,772)
     Repayment of short-term borrowings ..................................      (173,992)      (214,722)
     Repayment of current maturities of long-term debt, net ..............       (13,510)       (37,311)
     Repayment of Term Financing .........................................      (100,000)          --
     Proceeds from long-term convertible debentures ......................          --          492,000
     Proceeds from collection of stock subscription receivable ...........       175,000           --
     Proceeds from sale of common stock ..................................        75,000          5,000
     Purchase of treasury stock ..........................................      (340,624)       (50,526)
     Repayment of obligations under capital leases .......................       (91,955)       (85,203)
     Repayment of Laurus Financing .......................................      (308,181)          --
     Repayment of Subordinate Loan .......................................          --          (45,829)
     Repayment of Convertible Debenture ..................................          --          (15,000)
     Deferred Financing Cost Incurred ....................................          --          (20,000)
                                                                             -----------    -----------
       Net cash (used in) provided by financing activities ...............      (778,262)        16,637
                                                                             -----------    -----------
(Decrease) Increase in cash ..............................................    (1,033,470)       144,208

Cash at beginning of period ..............................................     1,096,327         89,392
                                                                             -----------    -----------
Cash at end of period ....................................................   $    62,857    $   233,600
                                                                             ===========    ===========
Supplemental Disclosure of cash flow information
Cash paid during the period for Interest .................................   $    55,770    $   338,314
Supplemental disclosure of non-cash investing and financing activities:
     Equity issued for deferred financing costs ............................          --         82,500
     Equity issued to settle accounts payable ..............................       174,639         --
     Payment of Subordinate Loan with common stock .........................          --        454,171
     Payment of Subordinate Loan with proceeds of Laurus Financing .........          --        500,000
     Payment of CCS Debenture with proceeds of Laurus Financing ............          --        250,000
     Payment of Term Financing with proceeds of Laurus Financing ...........          --        100,000
     Payment of Accounts-Receivable Factor with proceeds of Laurus Financing          --        470,762
     Prepaid expenses paid with proceeds of Laurus Financing ...............          --         16,945
     Interest expense paid with proceeds of Laurus Financing ..............           --         12,917
     Deferred financing costs paid with proceeds of Laurus Financing .......          --        179,876
     Deferred financing costs associated with Stock Issuances ..............          --         50,000
     Issuance of warrants for deferred financing costs .....................          --        489,229
     Deferred financing costs issued in connection with subordinate loan ..           --         30,500
     Acquisition of equipment with long term debt .........................           --        120,998
     Settlement of accounts payable with short term notes .................           --        603,914
Acquisition of business through the following:
     Issuance of Common Stock .............................................         75,000         --
     Incurrence of Term financing .........................................        128,000         --
     Incurrence of convertible debentures (Laurus Master Fund) .............       408,750         --
</TABLE>

           The notes to the Consolidated Financial Statements are an
                       integral part of these statements.
<PAGE>
                      VERIDIUM CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1        BASIS OF PRESENTATION

The consolidated interim financial statements included herein have been prepared
by  Veridium  Corp.  ("Veridium"  or "the  Company"),  pursuant to the rules and
regulations of the Securities and Exchange  Commission with regard to Regulation
S-B and, in the opinion of management,  include all adjustments which, except as
described  elsewhere herein,  are of a normal recurring nature,  necessary for a
fair  presentation of the financial  position,  results of operations,  and cash
flows for the  periods  presented.  The  results  for  interim  periods  are not
necessarily  indicative of results for the entire year. The financial statements
presented  herein  should be read in connection  with the  financial  statements
included  in the  Company's  Annual  Report on Form  10-KSB  for the year  ended
December 31, 2004.

The preparation of financial statements in conformity with accounting principles
generally  accepted  in the United  States of  America  requires  the  Company's
management  to make certain  estimates  and  assumptions.  These  estimates  and
assumptions affect the reported amounts of assets and liabilities and disclosure
of  the  contingent  assets  and  liabilities  at  the  date  of  the  financial
statements.  These  estimates  and  assumptions  will also  affect the  reported
amounts of certain  revenues and expenses  during the reporting  period.  Actual
results  could  differ  materially  based on any  changes in the  estimates  and
assumptions   that  the  Company  uses  in  the  preparation  of  its  financial
statements.  Actual  results could differ  materially  from these  estimates and
assumptions  due to  changes  in  environmental-related  regulations  or  future
operational plans, and the inherent imprecision  associated with estimating such
future matters. Results of interim periods are not necessarily indicative of the
results that may be expected for the entire year. See  "Management's  Discussion
and Analysis of Financial Condition and Results of Operations" in this report.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern.  The Company  incurred a loss
of  $337,386  for the six months  ended June 30,  2005.  As of June 30, 2005 the
Company had $62,857 in cash, and current liabilities  exceeded current assets by
$3,078,281  including  $1,799,805 in  liabilities  that maybe  convertible  into
equity.  These matters raise  substantial  doubt about the Company's  ability to
continue as a going concern.

Management  believes  that it will begin to operate  profitably  due to improved
operational  results  and  cost  cutting  practices.   The  Company  is  working
diligently to eliminate its working capital deficits and net losses. However, at
this time,  it can not be  determined  if the company will be successful in this
regard.  The  accompanying  financial  statements do not contain any adjustments
which may be required as a result of this uncertainty.

2        CERTAIN ACCOUNTING POLICIES

References  to the  "FASB",  "SFAS"  and "SAB"  herein  refer to the  "Financial
Accounting Standards Board," "Statements of Financial Accounting Standards," and
the "SEC Staff Accounting Bulletin," respectively.

NEW ACCOUNTING PRONOUNCEMENTS

In November 2004, the FASB issued SFAS No. 151,  "Inventory Costs - an amendment
of ARB No. 43, Chapter 4," which  clarifies the accounting for abnormal  amounts
of  idle  facility  expense,   freight,  handling  costs,  and  wasted  material
(spoilage) and also requires that the allocation of fixed production overhead be
based on the  normal  capacity  of the  production  facilities.  SFAS No. 151 is
effective for inventory  costs incurred during fiscal years beginning after June
15, 2005.  The adoption of this standard is not  anticipated  to have a material
impact on the Company's results of operations or financial position.

In December 2004, the FASB issued FASB statement No. 153 ("SFAS 153").  SFAS 153
addresses  accounting  for  non-monetary  transactions.  The  adoption  of  this
standard is not anticipated to have a material  impact on the Company's  results
of operations or financial position.

In December 2004,  FASB issued revised SFAS No. 123R "Share Based Payment." This
statement is a revision to SFAS 123 and supersedes  Accounting  Principles Board
(APB) Opinion No. 25,  "Accounting  for Stock Issued to  Employees,"  and amends
FASB  Statement No. 95,  "Statement of Cash Flows".  This  statement  requires a
public entity to expense the cost of employee  services received in exchange for
an award of equity instruments. This statement also provides guidance on valuing
and expensing these awards,  as well as disclosure  requirements of these equity
arrangements.  This  statement  is  effective  as of the  beginning of the first
interim or annual  reporting  period that begins after  December  15, 2005.  The
revised  SFAS No. 123 may have a  material  effect on the  Company's  results of
operations but not on the Company's financial position.


<PAGE>

                      VERIDIUM CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

3        CERTAIN ACCOUNTING POLICIES (CONTINUED)

STOCK BASED COMPENSATION

The Company  accounts for employee  stock-based  compensation in accordance with
Accounting  Principles Board (APB) Opinion No. 25,  "Accounting for Stock Issued
to  Employees",  using an  intrinsic  value  approach  to  measure  compensation
expense,  if any.  Under this  method,  compensation  expense is recorded on the
grant date only if the current market price of the underlying  stock exceeds its
exercise price.  Options and warrants issued to non-employees  are accounted for
in  accordance  with SFAS 123 and EITF Issue No. 96-18,  "Accounting  for Equity
Instruments  That Are  Issued  to Other  Than  Employees  for  Acquiring,  or in
Conjunction with Selling, Goods and Services" using a fair value approach.

SFAS No. 123  established  accounting and disclosure  requirements  using a fair
value-based method of accounting for stock-based employee compensation plans. As
allowed by SFAS No. 123, Veridium has elected to continue to apply the intrinsic
value-based  method of  accounting  described  above,  and has adopted  only the
disclosure  requirement of SFAS No. 123 for employee  issued  options.  No stock
option based employee  compensation  costs are reflected in Veridium's net loss,
as all options granted had an exercise price equal to or greater than the market
value of Veridium's  underlying  common stock at the date of grant. Had Veridium
elected  to  recognize  compensation  cost  based on fair value of the stock and
stock  options at the date of grant  under SFAS 123,  such costs would have been
recognized  ratably over the service  period of the  underlying  instrument  and
Veridium's  net loss and net loss per common  share would have  decreased to the
amounts indicated in the table below (which are not intended to be indicative of
or a projection of future results):
<TABLE>
<CAPTION>
                                                  For the Three Months Ending      For the Six Months Ending
                                                   6/30/05          6/30/04          6/30/05         6/30/04
                                                   -------          -------          -------         -------
<S>                                               <C>            <C>            <C>            <C>
Net loss ......................................   $  (104,102)   $  (312,839)   $  (337,386)   $  (112,832)
Less: stock based employee compensation expense
determined under the fair value method for all
awards ........................................          --             --             --             --
Pro forma net loss ............................      (104,102)      (312,839)      (337,386)      (112,832)
Basic and diluted net loss per common share, as         (0.00)         (0.01)         (0.00)         (0.00)
reported
Pro forma basic and diluted net loss per common         (0.00)         (0.01)         (0.00)         (0.00)
share
</TABLE>

SEGMENT INFORMATION

The  Company  operates  in a  single  segment  as a  full  service  provider  of
environmental services within the United States of America.

GOODWILL AND INTANGIBLE ASSETS

The Company accounts for its goodwill and intangible assets pursuant to SFAS No.
142,  Goodwill and Other  Intangible  Assets.  Under SFAS 142,  intangibles with
definite lives continue to be amortized on a straight-line basis over the lesser
of their estimated useful lives or contractual  terms.  Goodwill and intangibles
with  indefinite  lives  are  evaluated  at least  annually  for  impairment  by
comparing the asset's  estimated  fair value with its carrying  value,  based on
cash flow methodology.

Intangibles  with  definitive  lives  consist  primarily of patents,  which have
useful  lives and are  subject  to  impairment  testing  in the event or certain
indicators.  An  impairment  in the  carrying  value of an  asset is  recognized
whenever  anticipated  future  cash  flows  (undiscounted)  from  an  asset  are
estimated  to be less than its  carrying  value.  The  amount of the  impairment
recognized  is the  difference  between the carrying  value of the asset and its
fair value.

4        RELATED PARTY TRANSACTIONS

The  Company  has  utilized  the  services  of  Candent  Corporation   (formerly
Cyngularity   Corporation),   for  development  and  administration  of  various
management  information  systems.  Candent is  majority-owned  by the  Company's
Chairman's  spouse.  Such  services  approximated  $44,100  and  $22,900 for the
six-month  period ended June 30, 2005 and 2004.  The Company also issued 816,578
shares in the second quarter to Candent in full settlement of invoices  relating
to the development and operations of the Company's computer systems,  as well as
1,200,000 shares in the first quarter under a price protection agreement.

<PAGE>
                      VERIDIUM CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

4        RELATED PARTY TRANSACTIONS (CONTINUED)

The  Company  issued  1,000,000  shares of common  stock to James  Green  (chief
executive  officer)  during the first  quarter of 2005 under a price  protection
agreement relating to prior acquisition (see note 6).

The Company  issued  718,702  shares of common stock to  Greenshift  Corporation
(related party controlled by Kevin Kreisler the Company's  Chairman) for $25,000
in cash and the assumption of certain  accounts payable in the amount of $46,806
in the first quarter and issued 1,352,402 shares of common stock for $50,000 and
the  assumption of certain  accounts  payable of $36,831 in the second  quarter.
(see note 6).

The Company issued  1,979,849 shares of common stock to Viridis Capital (related
party  controlled by Kevin  Kreisler the Company's  Chairman)  during the second
quarter of 2005 pursuant to the completion of an  anti-dilution  agreement which
was cancelled in August 2004.

The Company issued 1,139,248 shares of common stock to Serenity Capital (related
party controlled by Lawrence  Kreisler the Company's former Chairman) during the
second quarter of 2005 under a anti-dilution agreement. These shares should have
been issued before the anti-dilution agreement was cancelled in August of 2004.

5        FINANCING ARRANGEMENTS

The following is a summary of the Company's  financing  arrangements  as of June
30, 2005 and December 31, 2004:
<TABLE>
<CAPTION>
                                                                       6/30/05      12/31/04
                                                                    ------------------------

<S>                                                                 <C>          <C>
Short-term borrowings ...........................................   $   75,131   $  316,320

Current maturities of long-term debt:
   Term financing ...............................................      228,000      100,000
    Severance ...................................................      103,329      108,746
   Vehicle loans and other current obligations ..................      108,561       78,535
                                                                    ----------   ----------
     Total current maturities of long-term debt .................   $  439,890   $  287,281

Current portion of convertible debentures:
   Laurus Master Fund, 9% convertible debentures, currently due .    1,799,805    1,736,036
                                                                    ----------   ----------
Long-term debt:

   Term financing ...............................................         --        100,000
    Severance - related party ...................................      109,030      171,530
   Vehicle loans and other current obligations ..................      235,417      202,819
                                                                    ----------   ----------
     Total long-term debt, net of current maturities ............   $  344,447   $  474,349

Convertible debt, net of current portion:
   Senior loan, 10% rate convertible debenture, due March 2007 ..    1,000,000    1,000,000
   GCS debenture, 10% convertible debenture, due December 2008 ..    1,243,267    1,184,065
   Subordinate loan, 12% convertible debenture, due December 2008    1,547,500    1,547,500
                                                                    ----------   ----------
     Total Convertible debt, net of current portion .............   $3,790,767   $3,731,565
</TABLE>

The following chart is presented to assist the reader in analyzing the Company's
ability to fulfill its fixed debt service  requirements  as of June 30, 2005 and
the Company's ability to meet such obligations:

Year                                                                 Amount

2005                                                            $   2,314,826
2006                                                                1,150,926
2007                                                                   80,899
2008                                                                2,838,301
2009                                                                   65,088
                                                                -------------
Total minimum payments due under
 current and long-term obligations                              $   6,450,040
                                                                =============
<PAGE>
                      VERIDIUM CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

5        FINANCING ARRANGEMENTS

SHORT TERM BORROWINGS

During the first  quarter 2004,  the Company  entered into a number of unsecured
term  facilities  with trade  vendors for  outstanding  accounts  payable with a
maturity  date  of  December  31,  2004,   Outstanding   balances   amounted  to
approximately  $75,000 and $316,000 at June 30, 2005 and December 31, 2004.  The
unpaid balances at June 30, 2005 are in default.

TERM FINANCING

The Company has certain term financing  totaling $100,000 and $200,000,  at June
30, 2005 and December 31, 2004. The balance at June 30, 2005 is payable in March
2006. This  obligation is secured by a first mortgage  interest in the Company's
Massachusetts property.

The Company has certain  financing  arrangement  totaling $128,000 in connection
with the North Country  Acquisition.  This entire  $128,000  balance at June 30,
2005 is payable in November 2005.

SENIOR LOAN

On December 19, 2003, the Company closed on the first  installment of the Senior
Loan with GCS Investments,  LLC ("GCS"). The Senior Loan is structured as a term
loan with a principal  of $1.5 million  that  matures and renews  annually,  and
bears  interest at 10% per year.  Payments are of interest  only and are payable
monthly.  The Senior Loan is secured by a priority position on substantially all
of the Company's  assets.  Conditions  precedent of this financing  included the
conversion  of the majority of the  Company's  pre-consolidation  debt and other
liabilities  into various forms of equity,  including all obligations due to the
Company's  officers and its related  parties for loans  extended to the Company,
deferred salaries, price-protection agreements in relation to previous loans and
deferred  salaries  and any  other  and  all  liabilities  due to the  Company's
officers and related parties. Additionally required were a cash-based management
contribution, the unconditional personal guarantee of the Company's Chairman and
the conversion by GCS affiliate of $1.184 million in debt into the GCS Debenture
(see below).  The Senior Loan is convertible into common stock of the Company at
100% of market at the time of any such  conversion.  GCS  additionally  received
detachable  warrants  to  purchase  500,000  shares  of  common  stock  that are
exercisable  at $0.40 per share and expire on  December  19,  2008.  The Company
received $1.2 million of the funds under the Senior Loan in 2003 and the balance
of $0.3 million in January 2004. GCS additionally  received  detachable warrants
to purchase  500,000  shares of common stock that are  exercisable  at $0.40 per
share and expire on  December  19,  2008.  The Senior  Loan was  decreased  to a
principal  balance of $1.0 million in March 2004 in  connection  with the Laurus
Financing  (see below).  GCS entered  into a  subordination  agreement  with the
Laurus Funds in connection with the completion of the Laurus Financing.

GCS DEBENTURE

In December 2003, and in connection  with the  requirements  of the Senior Loan,
GCS'  affiliates  converted  $1.184 million in debt into  convertible  preferred
securities of the Company (the "GCS  Debenture").  This instrument is to be paid
at a rate equal to 2% of the  Company's  gross  annual  revenue  on a  quarterly
basis, provided that such payments,  together with the interest payments paid to
GCS on the Senior Loan, do not exceed 30% of the Company's EBITDA for such year.
These  payments  shall continue to be made until the sum of all such payments is
equal to $1.184  million,  at which  time  this  instrument  will  automatically
convert into 30,000 shares of Subsidiary Preferred. Any unpaid principal balance
and accrued interest will be due December 19, 2008.

SUBORDINATE LOAN

The Company  entered into an agreement to purchase their  obligations  due under
the notes issued in connection with the purchase of the  Environmental  Services
Division of R.M. Jones & Co., Inc.  ("Jones") with a principal balance of $2.017
million in exchange  for 1.25 million  shares of common stock and $0.5  million.
The Company's  rights under the agreement  were assigned to GCS in March 2004 in
connection  with the Company's  completion of the Laurus  financing (see below).
GCS received $0.5 million from the Laurus funding as a repayment of their Senior
Loan and acquired about $1.5 million of this loan under the above agreement.

<PAGE>
                      VERIDIUM CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

5        FINANCING ARRANGEMENTS (CONTINUED)

LAURUS FINANCING

On March 31,  2004,  Veridium  closed on a  revolving  fixed  price  convertible
facility in the amount of $1.75 million with the Laurus Master Fund (the "Laurus
Financing").  Structured like a standard  receivables based line of credit, this
facility carries interest at prime plus 5%, subject to a floor of 9%, and a term
of three  years.  This debt can be converted  into equity at a fixed  conversion
price equal to $0.43 per share.  The proceeds of the Laurus  Financing were used
to complete Veridium's  recapitalization process and to stimulate increased cash
flows from operations.  Specifically, these proceeds were used to (a) repurchase
receivables sold under a factoring agreement ($0.5 million),  (b) payment on the
Subordinate  Loan for $0.5 million,  and (c) pay down the CCS Debenture by $0.25
million.   Simultaneously   with  the  closing  of  this   financing,   Veridium
additionally  paid $0.5 million of the  Subordinate  Loan in the form restricted
common  stock  (1.25  million  shares)  and  assigned  GCS  the  balance  of the
Subordinate Loan,  $1.517 million,  in return for a reduction of the Senior Loan
of $0.5 million.  Veridium is currently in default of this  agreement due to its
failure to register certain stock and debentures.

6        CHANGES IN STOCKHOLDERS' EQUITY

During  the first  six  months  of 2005,  various  common  stock  issuances  for
services, price protection and debt repayments were as follows: 2,666,949 shares
issued to settle accounts payable amounting to $201,095; 9,631,368 shares issued
under various price  protection  and  anti-dilute  agreements  (the par value of
these  issuances  were recorded as a reduction to  additional  paid in capital);
258,900 shares were issued to directors for  participation in board meetings for
$50,000;  60,000 shares were issued for services of $6,000;  250,000 shares were
issued for cash proceeds of $25,000; The company also purchased 3,832,166 shares
of common  stock for a cash  payment of  $340,611  and the  Company  immediately
retired the shares.

In September  2003,  Veridium's  shareholders  authorized  the issuance of up to
50,000,000 shares of common stock and 5,000,000 shares of preferred stock. As of
June 30,  2005,  the  Company  did not have  sufficient  shares of common  stock
authorized  to  accommodate  conversion of all  outstanding  shares of preferred
stock

At June 30, 2005,  the Company has certain  price  protection  and  antidilution
agreements in effect with certain stockholders  including certain members of the
board of directors.

7        COMMITMENTS AND CONTINGENCIES

EMPLOYMENT AGREEMENTS

Veridium is party to certain  employment  agreements  with its  Chairman,  Chief
Executive  Officer and Chief  Compliance  Officer.  The  agreements  call for an
annual  base  salary  of  $145,000,  $165,000  and  $145,000  respectively,  and
reimbursement  of  business  expenses,  use of a  Company  automobile,  periodic
bonuses, four weeks vacation and participation in any employee benefits provided
to all employees of Veridium.

The  employment  agreements  also  include  non-solicitation,  covenants  not to
compete,   confidentiality  requirements,   ethics  standards,  and  termination
provisions,  including  severance  of one  year's  salary  upon  termination  by
Veridium for any reason other than fraud or willful misconduct.


LEGAL PROCEEDINGS

Veridium  is party to the  matter  entitled  Kerns  Manufacturing  Corp.  v. KBF
Pollution Management Inc. The action was filed in the Supreme Court of the State
of New York,  August 14,  2003.  The verified  complaint  seeks  performance  of
certain agreements between the plaintiffs and KPMI and VEC, plus attorney's fees
and costs. The matter is ongoing and counsel is therefore unable to evaluate the
probability of an  unfavorable  outcome or range of potential loss at this time.
This matter relates to recent  acquisition  of Vulcan Waste  Systems,  Inc. from
Kerns Manufacturing Corp. and the breach by Kerns of the terms and conditions of
the relevant  acquisition  agreement.  Veridium  incurred a loss in December 31,
2003  on its  write-off  of  $1,890,000  of  idle  equipment  connected  to this
transaction.  1,350,000 shares of restricted  common stock related to the Vulcan
acquisition  remain  outstanding  which  shares  Veridium  is  seeking  to  have
cancelled.  Veridium is currently  pursuing the reversal of this acquisition and
seeking the return of the common stock issued.

<PAGE>
                      VERIDIUM CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

7        COMMITMENTS AND CONTINGENCIES (CONTINUED)

Veridium is party to a matter entitled Stern & Co. v. Veridium Corporation.  The
action was filed in the United State District Court for the Southern District of
New York on  February  2, 2005.  The  Complaint  seeks  compensatory  damages of
approximately  $150,000,  interest,  attorney's  fees and  costs  for  breach of
contract. The matter is in settlement negotiations. See Note 9.

Veridium is party to a matter entitled Daley v. Veridium  Corporation  which has
been filled  against the Company by a  contractor's  employee who was injured at
the Paterson Facility while working on an emissions test in 2002. The case is in
the discovery  phase.  The Company is represented  and defended by its insurance
carrier.  There is a risk that a judgment  may exceed the  insurance  limit,  in
which  case the  Company  would not be able to pay and be forced to  curtail  or
cease operations.

The Company has received a federal grand jury subpoena from the Middle  District
of  Pennsylvania  requiring the production of original  records in regards to an
incident  that  occurred  in February  of 2004,  where a tanker  truck of liquid
wastes,  shipped from the Company's New Jersey  recycling  facility by a private
carrier to a destination in Pennsylvania,  overheated on the highway, causing no
injuries,  but requiring  emergency  response  services,  including  redirecting
traffic. The Company is cooperating fully in the investigation.

The Company is subject to a number of complaints from the New Jersey  Department
of  Environmental  Protection  ("NJDEP")  related to past operations at Paterson
from 1999 to 2004.  The Company  has  reserved  $350,000  to cover the  assessed
penalties.  The NJDEP has indicated a strong desire to settle these actions in a
global  settlement.  The Company may not have the funds  available to settle the
case,  which  could  jeopardize  the  continuing  operations  of its New  Jersey
recycling facility.


Veridium is also  involved in various  collection  matters for which vendors are
seeking  payment for services  rendered  and goods  provided.  These  collection
matters total $150,000.

OTHER CONTINGENCIES

Veridium  is  subject  to  various   regulatory   requirements,   including  the
procurement of requisite licenses and permits at its facilities.  These licenses
and permits without which Veridium's  operations would be adversely affected are
subject to periodic renewal. Veridium anticipates that, once a license or permit
is issued with  respect to a facility,  the license or permit will be renewed at
the end of its term if the  facility's  operations  are in  compliance  with the
applicable regulatory requirements.

Per FASB 143, Veridium has established a remediation accrual for potential costs
to be incurred upon the future closure of its leased  hazardous  waste recycling
and storage facility  located at One Jasper Street in Paterson,  NJ. The amounts
associated  with these  estimates are based on and represent costs that would be
incurred by a third party being retained to conduct the closure. This amount was
determined to be approximately $113,000 as of June 30, 2005.

Under  Veridium's  insurance  programs,  coverage is obtained  for  catastrophic
exposures, as well as those risks required to be insured by law or contract. The
deductible   per   occurrence   for   environmental   impairments   is  $25,000.
Environmental  liability  insurance is carried with policy  limits of $3,000,000
per occurrence and $6,000,000 aggregate.

Viridis  Capital,  LLC, an affiliate of Kevin  Kreisler,  assumed a $75,000 debt
payable to Lakeland Bank and assigned this debt to GreenShift, another affiliate
of  Kevin  Kreisler.  Lakeland  Bank  has not  released  Veridium  of this  debt
obligation.

The Company  has failed to comply with  certain  registration  requirements  for
stock issued to certain debt holders.

<PAGE>
                      VERIDIUM CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

8 ACQUISITIONS  Veridium follows SFAS No. 141,  "Business  Combinations."  Under
this standard, business acquisitions are accounted for under the purchase method
and  goodwill  represents  the  excess  of  the  purchase  price  of a  business
acquisition over the fair market value of the net assets acquired at the date of
acquisition.  The statement also requires the recognition of acquired intangible
assets apart from goodwill if it arises from contractual and other legal rights.
If an intangible does not arise from contractual or other legal rights, it shall
be  recognized  as an asset apart from  goodwill  only if it is capable of being
separated or divided from the acquired  entity an sold,  transferred,  licensed,
rented, or exchanged.

In  connection   with  the  completion  of  the  acquisition  of  North  Country
Environmental in May 2005, Veridium recorded approximately $272,000 in goodwill,
$200,000  in  amortizable  workforce  related  intangibles  and  $50,000  for an
amortizable  customer list relating to the engineering  and training  portion of
the business. Such amortizable intangible assets have an expected useful life of
ten years. This acquisition  provided Veridium with the additional volume in the
Field Service area to maximize  potential of existing  structure,  as well as to
add  Engineering  and  Training to the  service  offerings.  Operations  of this
acquisition  from the  date of  acquisition  through  June 30,  2005  have  been
included in the Company's  consolidated  statement of operations.  The following
table  summarizes the fair value of assets acquired and liabilities  assumed for
the acquisition detailed above.
<TABLE>
<CAPTION>
Purchase Price:

Cash paid to sellers from Convertible Debenture Proceeds:
<S>                                                                      <C>
              Cash paid directly to lending facility on Line of Credit   $358,750
              Cash paid directly to seller ...........................   $ 50,000
----------------------------------------------------------------------   --------
                       Total Cash payments to seller .................   $408,750

Fair value of debt issued to sellers, per agreement ..................   $128,000
Fair value of equity issued on date of acquisition ...................   $ 75,000

Total Purchase Price .................................................   $611,750

Fair value of net assets acquired
              Current Assets .........................................   $233,853
              Property and Equipment .................................   $175,280
              Goodwill ...............................................   $271,629
              Workforce ..............................................   $200,000
              Customer List ..........................................   $ 50,000
----------------------------------------------------------------------   --------
                       Total assets acquired .........................   $930,762

Liabilities Assumed:
              Current Liabilities ....................................   $242,880
              Long Term Debt .........................................   $ 76,132
----------------------------------------------------------------------   --------
                       Total liabilities assumed .....................   $319,012
</TABLE>

The following  (unaudited) proforma consolidated results of operations have been
prepared as if the acquisition of North Country  Environmental,  had occurred at
January 1, 2005:

                                 June 30, 2005        June 30, 2004
                                 -------------        -------------
Sales ........................   $   8,330,564        $   6,795,124
Net income ...................   $    (302,386)       $    (112,832)
Net income per share - basic .   ($       0.00)       ($       0.00)
Net income per share - diluted   ($       0.00)       ($       0.00)

9             SUBSEQUENT EVENT

On June 30,  2005,  Veridium  entered into an agreement to acquire the assets of
Marshall  Environmental,  Inc. ("Marshall").  Under the terms of the acquisition
agreement,  Veridium  will acquire  substantially  all of  Marshall's  assets in
return for the  assumption  by Veridium of  liabilities  totaling  $150,000  and
$200,000 in cash. This  acquisition is expected to close on or before August 31,
2005 and is  expected  to add about $1.5  million in gross  annualized  sales to
Veridium.

In connection with the legal matter Stern & Co. v. Veridium, the Company entered
into a settlement for approximately $30,000.

<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION

FORWARD LOOKING STATEMENTS

In  addition  to   historical   information,   this   Annual   Report   contains
forward-looking statements, which are generally identifiable by use of the words
"believes,"  "expects,"  "intends,"   "anticipates,"  "plans  to,"  "estimates,"
"projects," or similar expressions. These forward-looking statements are subject
to certain  risks and  uncertainties  that could cause actual  results to differ
materially from those  reflected in these  forward-looking  statements.  Factors
that might  cause such a  difference  include,  but are not  limited  to,  those
discussed  in the section  entitled  "Management's  Discussion  and  Analysis of
Financial  Condition and Results of  Operations--Factors  That May Affect Future
Results."   Readers  are  cautioned  not  to  place  undue   reliance  on  these
forward-looking  statements,  which reflect management's opinions only as of the
date  hereof.  We  undertake  no  obligation  to revise or publicly  release the
results of any  revision to these  forward-looking  statements.  Readers  should
carefully review the risk factors described in other documents the Company files
from time to time with the  Securities  and  Exchange  Commission  (the  "SEC"),
including  the  Quarterly  Reports on Form 10QSB to be filed by us in the fiscal
year 2004.

OVERVIEW

Veridium  Corporation  is a Delaware  Corporation  and through its  subsidiaries
("we",  "our",  "us",  "Veridium"  or  the  "Company"),   are  an  environmental
management  company  providing a variety of  services to a broad  client base in
both the private and public sectors with a  specialization  in the recycling and
reuse of metal and chemical hazardous wastes. We conduct business throughout the
northeastern region of the United States and our services include:

o    Environmental Services - we provide transportation, distribution, recycling
     and  disposal  services  specific to the  materials  and  processes  of our
     clients, for a wide range of industrial wastes.

o    Recycling Services - we provide the service of recycling  metal-bearing and
     chemical  hazardous  wastes,  transported  in bulk and in containers of all
     sizes, from which we extract metals that we then market for recovery.

o    Field Services - we provide remedial, industrial cleaning and other related
     services for our clients at their sites and facilities.

Our  business  for the first six  months of 2005 is broken  down into 70 percent
distribution,  15 percent  recycling and 15 percent field services.  By offering
both  distribution and recycling,  we enable our customers to engage Veridium to
manage  their wastes in the most cost  effective  and  environmentally  friendly
manner possible.  Our  environmentally  friendly recycling  processes produce no
waste.

The Company was formed in 1984 as KBF Pollution  Management,  Inc.  ("KPMI") and
was merged with its wholly owned subsidiary,  Veridium Corporation in 2003 after
completing the acquisition of the former Environmental Services Division of R.M.
Jones & Co.,  Inc.  ("ESD"),  Enviro-Safe,  Corp.  ("ESC"),  and Metal  Recovery
Transportation,  Corp.,  ("MRTC").  These  acquisitions were completed to form a
full  service  environmental  company,  operating  throughout  the New  England,
Northeast and Mid-Atlantic States.

We presently operate five service centers:  our recycling facility and corporate
headquarters  in  Paterson,  New Jersey;  our Part B  permitted  TSDF in Lowell,
Massachusetts,  our  field  service  operation  and  administrative  offices  in
Sandwich,  Massachusetts and Milford, Massachusetts;  and our technical services
center in Plainville, Connecticut.

Veridium  operates through its subsidiary,  Veridium  Environmental  Corporation
("VEC"). VEC, in turn, is the sole owner of (1) American Metals Recovery,  Corp.
("AMRC"),  our New Jersey recycling  facility,  (2) ESD, the sole owner of Jones
Environmental Services (North East), Inc., our  Massachusetts-based  RCRA Part B
TSD facility,  (3) ESC, our field  services  company,  and (4) MRTC, the holding
company for our transportation  company. All commercial activities are conducted
through these subsidiaries.

<PAGE>

The table  and below  discussions  should  be read in  conjunction  with Item 1,
Financial Statements, of this report.

                     Percentage of Total Revenues For the Period Ended
                     -------------------------------------------------
                                                   6/30/05    6/30/04
                     -------------------------------------------------

Revenue .......................................     100.0%    100.0%
Cost of revenue ...............................      75.9      72.7
                                                    -----     -----
   Gross profit ...............................      24.1      27.3

Selling expenses ..............................       7.3       7.7
General and administrative expenses ...........      16.5      15.5
Severance .....................................       --        5.6
                                                    -----     -----
   Total operating expenses ...................      23.8      28.8
                                                    -----     -----

Income (loss) from operations .................       0.3      (1.5)

Forgiveness of interest and finance charges ...       --        6.0
Gain on Sale of Fixed Assets ..................       --       (1.0)
Interest expense ..............................      (4.5)     (5.0)
                                                    -----     -----
   Total other income (expense) ...............      (4.5)      --
                                                    -----     -----

Income (loss) before provision for income taxes      (4.2)     (1.5)
   Provision for income taxes .................      (0.2)     (0.1)
                                                    -----     -----

Net income (loss) .............................      (4.4)     (1.6)
                                                    =====     =====

BUSINESS RISK FACTORS

There are many  important  factors that have  affected,  and in the future could
affect, Veridium's business,  including but not limited to the factors discussed
below,  which  should be  reviewed  carefully  together  with other  information
contained in this report.  Some of the factors are beyond our control and future
trends are difficult to predict.

Veridium is currently in default on some of its debt.

Veridium is currently in default of its Laurus  Financing  agreement  due to its
failure to register certain  securities.  The entire Laurus financing is now due
upon demand. As of June 30, 2005 this amount totaled $1,799,805 and has not been
demanded.  If this amount is demanded,  Veridium would have to find  alternative
financing or liquidate assets to satisfy the demand.

We currently do not have enough common stock authorized.

In September  2003,  Veridium's  shareholders  authorized  the issuance of up to
50,000,000 shares of common stock and 5,000,000 shares of preferred stock. As of
June 30,  2005,  the  Company  did not have  sufficient  shares of common  stock
authorized  to  accommodate  conversion of all  outstanding  shares of preferred
stock and  convertible  debentures.  We will be  required  to hold a meeting  of
stockholders in order to authorize the issuance of up to 150,000,000  additional
shares of  common  stock.  If the  holders  of  preferred  stock or  convertible
debentures  attempt  to convert  their  securities  prior to the  holding of the
meeting and the approval of an amendment to our Certificate of Incorporation, we
will be unable to provide for the conversion of some or all of such  securities.
As a result,  we could be liable to the holders thereof for any damages relating
to our inability to satisfy our  obligations  to them.  In addition,  this could
represent a default  under our  obligations  to,  among  others,  holders of the
debentures to be registered  herein.  The occurrence of any of these risks could
trigger lawsuits or other proceedings against the company.

The conversion of our  convertible  debentures,  the exercise of our outstanding
warrants   and   options   and   the   Company's   various   anti-dilution   and
price-protection  agreements could cause the market price of our common stock to
fall, and may have dilutive and other effects on our existing stockholders.

The conversion of our outstanding  convertible  debentures,  and the exercise of
our  outstanding  warrants  and options  could  result in the  issuance of up to
7,070,348 shares of common stock,  assuming all outstanding warrants and options
are currently  exercisable,  and taken with the Company's various  anti-dilution
and price-protection  agreements,  are subject to adjustment pursuant to certain
anti-dilution and price-protection  provisions.  Such issuances would reduce the
percentage of ownership of our existing  common  stockholders  and could,  among
other  things,  depress  the  price  of our  common  stock.  This  result  could
detrimentally  affect  our  ability  to  raise  additional  equity  capital.  In
addition,  the sale of these  additional  shares of  common  stock may cause the
market price of our stock to decrease.

Our external auditors have issued a going concern opinion at December 31, 2004.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern.  The Company  incurred a loss
of  $337,386  for the six months  ended June 30,  2005.  As of June 30, 2005 the
Company had $62,857 in cash, and current liabilities  exceeded current assets by
$3,078,281 including $1,799,805 in liabilities that are convertible into equity.
These matters raise substantial doubt about the Company's ability to continue as
a going concern.

The  company  received  a Federal  Grand Jury  subpoena  regarding  an  incident
occurring in February of 2004.

The Company has received a federal grand jury subpoena from the Middle  District
of  Pennsylvania  requiring the production of original  records in regards to an
incident  that  occurred  in February  of 2004,  where a tanker  truck of liquid
wastes,  shipped from the Company's New Jersey  recycling  facility by a private
carrier to a destination in Pennsylvania,  overheated on the highway, causing no
injuries,  but requiring  emergency  response  services,  including  redirecting
traffic.  If this  investigation  leads to successful  legal action  against the
company,  substantial  penalties  may be  imposed  and  business  may  be  lost,
jeopardizing continuing operations at the New Jersey Recycling Facility.

The Company's  New Jersey  operation is subject to a number of complaints by the
New Jersey Department of Environmental Protection.

The Company is subject to a number of complaints from the New Jersey  Department
of  Environmental  Protection  ("NJDEP")  related to past operations at Paterson
from 1999 to 2004.  The Company  has  reserved  $350,000  to cover the  assessed
penalties.  The NJDEP has indicated a strong desire to settle these actions in a
global  settlement.  The Company may not have the funds  available to settle the
case,  which  could  jeopardize  the  continuing  operations  of its New  Jersey
recycling facility. The company's New Jersey recycling operation is subject to a
continuous operating losses.

Diligent  and  extensive  measures  continue  to be taken to  reduce  costs  and
increase  revenue at the  Company's  New  Jersey  Recycling  Facility.  If these
efforts do not  result in this  facility  operating  as a  profitable  center in
today's  marketplace,  it may have to be  curtailed or  substantially  modified,
including the possibility of a plant shutdown.

<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern.  While the Company realized a
net loss of  approximately  $0.3 million during the first six months ending June
30, 2005,  current  liabilities  exceeded current assets by  approximately  $3.1
million,  including about $1.8 million in liabilities  that are convertible into
equity. This working capital deficit raises doubt about the Company's ability to
continue as a going concern.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our  consolidated  financial  statements  requires us to make
estimates that affect the reported amounts of assets, liabilities,  revenues and
expenses.  The  following  are the areas that we believe  require  the  greatest
amount of estimates in the preparation of our financial  statements:  allowances
for doubtful  accounts and legal matters.  Prior to the filing of this Quarterly
Report on Form 10QSB,  the Company's  Audit  Committee  reviewed  these critical
accounting policies and estimates and discussed them with our management.

We establish an allowance  for doubtful  accounts to cover  accounts  receivable
that  may  not be  collectible.  In  establishing  the  allowance  for  doubtful
accounts,  we analyze the collectibility of accounts that are large or past due.
In addition,  we consider  historical bad debts and current  economic  trends in
evaluating the allowance for doubtful accounts.  Accounts receivable written off
in  subsequent  periods can differ  materially  from the  allowance for doubtful
accounts provided.

As described more fully in Item 1, Note 7, Commitments and Contingencies, above,
we are subject to legal proceedings,  which we have assumed in our consolidation
process.  Accruals are established for legal matters when, in our opinion, it is
probable  that  a  liabilities  exists  and  the  liability  can  be  reasonably
estimated.  Estimates  of the  costs  associated  with  dispute  settlement  are
adjusted as facts emerge.  Actual expenses incurred in future periods can differ
materially from accruals established.

We attempt to make good faith  realistic  estimates in providing  allowances for
assets and recording liabilities.  Our experience has been that overestimates in
one area can occur but are often offset by underestimates in other areas.  While
it is probable in the future that unexpected  events could materially affect the
results of operations of a future  period,  we believe that our risk  management
protocols  would prevent the  occurrence of such an event from having a material
impact on our financial condition.

SIX MONTHS ENDED JUNE 30, 2005 VERSUS THE SIX MONTHS ENDED JUNE 30, 2004

Revenues

Total  revenues  were $3.6  million for the three  months  ended June 30,  2005,
corresponding to a decrease of $0.1 million,  or 3%, over the three months ended
June 30, 2004 revenues of $3.7 million.  Total revenues for the six months ended
June 30, 2005 were $7.5 million corresponding to an increase of $0.7 million, or
10% over the six months  ended  June 30,  2004  revenues  of $6.8  million.  The
increased  revenues  realized  during the period  were  largely due to one large
budgeted project.

Cost of Revenues

Cost of revenues for the three months ended June 30, 2005 were $2.6 million,  or
72% of  revenue,  as compared  to $2.6  million,  or 72% of revenue for the same
period in 2004.  Cost of  revenues  for the six months  ended June 30, 2005 were
$5.7 million, or 76% of revenue compared to $4.9 million, or 73% of revenue. The
change in cost of revenues  during the first six months of 2005 compared to 2004
was primarily due to one large budgeted lower margin project.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended June 30,
2005 were $0.9 million,  or 25% of revenue,  as compared to $1.2 million, or 34%
of revenue for the same  period in 2004.  Selling,  general  and  administrative
expenses  for the six months  ended June 30, 2005 were $1.8  million,  or 24% of
revenue  compared to $2.0  million,  or 29% of  revenue.  The change in selling,
general  and  administrative  expenses  is due to the  severance  of several key
employees during the second quarter of 2004.

Operating  results for the three  months ended June 30,  2005,  increased  about
$280,000  from an operating  loss of about  $190,000 from the period ending June
30,  2004.  Operating  results  for the six  months  ended  June 30,  2005 is an
operating income of $20,545 as compared to an operating loss of $107,619.
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION

SIX MONTHS ENDED JUNE 30 2005 VERSUS THE SIX MONTHS ENDED JUNE 30, 2004

Depreciation and Amortization

Depreciation and amortization  expenses for the three months ended June 30, 2005
were $0.1 million,  or 2.2% of revenue,  as compared to $0.2 million, or 5.1% of
revenue for the same period in 2004.  Depreciation and amortization  expense for
the six months  ended June 30, 2005 was $0.21  million or 2.8% of  revenues,  as
compared to $0.32 million or 4.7% of revenues.

Interest Expense

Interest  expenses for the three months ended June 30, 2005 were $0.17  million,
or 4.9% of revenue,  as compared  to $0.11  million,  or 3.0% of revenue for the
same period in 2004.  Interest  expense  for the six months  ended June 30, 2005
were $0.34  million or 4.5% of revenue as compared  to $0.34  million or 5.0% of
revenue.

Net Income or Loss

Net loss for the three months ended June 30, 2005, was $0.1 million,  or 2.8% of
revenue,  as compared to a net loss of $0.3 million, or 8.5% of revenue from the
same  period in 2004.  The net loss for the six months  ended June 30,  2005 was
$0.3 million,  or 4.4%, as compared to a net loss of $0.1 for the same period in
2004. On May 10, 2005,  Veridium acquired the assets and certain  liabilities of
North Country Environmental  Services and subsequently,  combined this unit with
EnviroSafe,  our Field Services unit headquartered in Sandwich, MA. We have seen
positive profitability with this acquisition.

LIQUIDITY AND CAPITAL RESOURCES

Cash

Our primary  source of liquidity is cash  provided by  operating,  investing and
financing activities,  and availability under our various credit facilities. For
the six months ended June 30, 2005,  net cash used by our  operating  activities
was $1.03 million as compared to the net cash provided by operations,  investing
and financing activities of about $0.14 million for the same period of 2004.

Liquidity

Our operating  activities during the first six months of 2005 used approximately
$3,000 in cash,  as compared to cash  provided by  operations  of  approximately
$132,000  during the same period in 2004. We used cash  provided from  operating
activities to fund operations and strengthen our balance sheet. We intend to use
cash  provided  from  operating,  investing  and  financing  activities  to fund
operations and continue to reduce debt outstanding.  For the foreseeable future,
we anticipate that cash generated by operating  activities will be sufficient to
fund operations.

The Company's  capital  requirements  consist of general  working capital needs,
scheduled  principal  and  interest  payments on debt,  obligations  and capital
leases and planned capital expenditures. The Company's capital resources consist
primarily of cash generated  from  operations and proceeds from issuance of debt
and common  stock.  The Company's  capital  resources are impacted by changes in
accounts  receivable as a result of revenue  fluctuations,  economic trends, and
collection  activities.  At June 30, 2005 the Company had cash of  approximately
$63,000.  This cash  represents  a decrease  of  $1,033,000  from the year ended
December 31, 2004.

Cash Flows for the Six Months Ended June 30, 2005

Our operating  activities during the first six months of 2005 used approximately
$3,000 in cash.  Accounts  receivable  at June 30, 2005,  net of  allowance  for
doubtful  accounts,  totaled  $2.8 million as compared to the December 31, 2004,
balance of $2.4 million.  Accounts payable at June 30, 2005 totaled $2.5 million
as compared to the December 31, 2004, balance of $2.3 million.  Accrued expenses
at June 30, 2005  totaled  $1.3  million as compared  to the  December  31, 2004
balance of $1.1  million.  These  increases and decreases are a result of normal
operational activity.

For the six months  ended  June 30,  2005,  Veridium  used  $0.25  million  from
investing  activities,  and we used net cash from financing of $0.78 million. We
used  these  funds to  further  provide  working  capital  for  operations.  Our
financing arrangements are discussed in more detail in Item 1, Note 5, Financing
Arrangements, above.

The Company had a negative working capital position of $3.1 million at June 30,
2005, of which convertible debentures accounted for approximately $1.8 million.

<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION

LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

STOCKHOLDER MATTERS

Stockholders'  equity  was $1.1  million  at June 30,  2005,  or $0.03 per share
outstanding,  as compared to $1.1  million at December  31,  2004,  or $0.03 per
share outstanding. Stockholders' remained unchanged during the period.

In September  2003,  Veridium's  shareholders  authorized  the issuance of up to
50,000,000 shares of common stock and 5,000,000 shares of preferred stock. As of
June 30,  2005,  the  Company  did not have  sufficient  shares of common  stock
authorized  to  accommodate  conversion of all  outstanding  shares of preferred
stock

GreenShift  Corporation  ("GreenShift"),  an  affiliate of Kevin  Kreisler,  the
Company  Chairman,  has an  anti-dilution  agreement  in place to  maintain  its
ownership  percentage  (relative to the  acquisition  by  GreenShift  of 750,000
shares of the  Company's  Series C Preferred  Stock for $1.5 million in December
2004) at about 25% of the outstanding capital stock of the Company; the terms of
the December 2004 GreenShift investment also provide for price protection in the
amount of $1.5 million.  Mr. Kreisler  additionally has price protection  rights
relative to his purchase  and  conversion  into  restricted  preferred  stock of
approximately  $1.0 million of the Company's  debt in December  2004. As of June
30, 2005, no additional shares were due under these agreements.

ANTI-DILUTION AND PRICE PROTECTION AGREEMENTS

James Green has an  anti-dilution  agreement in place to maintain his  ownership
percentage at 10% of the outstanding capital stock of the Company until December
31, 2005. Mr. Green  additionally  has price  protection  rights relative to the
Company's  May 2003  acquisition  from Mr.  Green of  EnviroSafe  Corp.,  in the
approximate amount of $283,000. During 2004 and 2003, Mr. Green received 180,000
shares of the Company's  Series B Preferred  Stock and 3.6 million shares of the
Company's common stock,  respectively,  pursuant to these agreements. As of June
30, 2005, no additional  shares were due under these  agreements.  In connection
with the  issuance of these  shares,  the Company has adjusted the par value and
paid in capital.

Richard  Krablin  has an  anti-dilution  agreement  in  place  to  maintain  his
ownership  percentage  at 3% of the  outstanding  capital  stock of the Company.
During 2004 and 2003, Mr. Krablin received 47,383 shares of the Company's Series
B  Preferred  Stock and 245,000 of the  Company's  common  stock,  respectively,
pursuant to this agreement.  As of June 30, 2005, no additional  shares were due
under this  agreement.  In  connection  with the issuance of these  shares,  the
Company has adjusted the par value and paid in capital.

In  addition to the  agreements  detailed  above,  four  shareholders  had price
protection agreements totaling about $150,000 as of June 30, 2005, corresponding
to an expected additional  1,650,000 shares of common stock. This amount depends
on a variety of factors  including  market price for the Company's  common stock
and whether any cash payments are made.

NEW ACCOUNTING PRONOUNCEMENTS

In November 2004, the FASB issued SFAS No. 151,  "Inventory Costs - an amendment
of ARB No. 43, Chapter 4," which  clarifies the accounting for abnormal  amounts
of  idle  facility  expense,   freight,  handling  costs,  and  wasted  material
(spoilage) and also requires that the allocation of fixed production overhead be
based on the  normal  capacity  of the  production  facilities.  SFAS No. 151 is
effective for inventory  costs incurred during fiscal years beginning after June
15, 2005.  The adoption of this standard is not  anticipated  to have a material
impact on the Company's results of operations or financial position

In December 2004, the FASB issued FASB statement No. 153 ("SFAS 153").  SFAS 153
addresses  accounting  for  non-monetary  transactions.  This  statement  is not
anticipated to have a material effect on the Company's results of operations.

<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION

In December 2004, the Financial  Accounting Standards Board ("FASB") issued SFAS
No. 123R "Share  Based  Payment."  This  statement is a revision to SFAS 123 and
supersedes  Accounting  Principles  Board (APB) Opinion No. 25,  "Accounting for
Stock Issued to Employees," and amends FASB Statement No. 95, "Statement of Cash
Flows".  This statement requires a public entity to expense the cost of employee
services received in exchange for an award of equity instruments. This statement
also  provides  guidance  on valuing  and  expensing  these  awards,  as well as
disclosure  requirements  of  these  equity  arrangements.   This  statement  is
effective as of the  beginning of the first interim or annual  reporting  period
that  begins  after  December  15,  2005.  The  revised  SFAS No. 123 may have a
material effect on the Company's  results of operations but not on the Company's
financial position.

OFF BALANCES SHEET ARRANGEMENTS

Viridis  Capital,  LLC, an affiliate of Kevin  Kreisler,  assumed a $75,000 debt
payable to Lakeland Bank and assigned this debt to GreenShift, another affiliate
of  Kevin  Kreisler.  Lakeland  Bank  has not  released  Veridium  of this  debt
obligation.

ITEM 3.  CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our principal  executive officer and principal  financial and accounting officer
have  participated  in and supervised the evaluation of our disclosure  controls
and  procedures  (as  defined in Rules  13(a)-15(e)  and  15(d)-15(e)  under the
Securities  Exchange  Act of 1934,  as amended  (the  "Exchange  Act")) that are
designed  to ensure  that  information  required  to be  disclosed  by us in the
reports that we file is recorded, processed,  summarized and reported within the
time periods  specified in the  Securities and Exchange  Commission's  rules and
forms. Disclosure controls and procedures include, without limitation,  controls
and procedures designed to ensure that the information  required to be disclosed
by us in the reports  that we file or submit  under the Act is  accumulated  and
communicated to our  management,  including our principal  executive  officer or
officers and principal  financial officer,  to allow timely decisions  regarding
required  disclosure.  The Company's chief executive officer and chief financial
officer  determined  that,  as of the end of the period  covered by this report,
these  controls and  procedures are adequate and effective in alerting them in a
timely  manner to material  information  relating to the Company  required to be
included in the Company's periodic SEC filings.

<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

Note 7 to the financial statements contained in this Form 10QSB is incorporated
herein by reference.

ITEM 2.    CHANGES IN SECURITIES

None.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5.    OTHER INFORMATION

None.

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

The following are exhibits filed as part of the Company's Form 10-QSB for the
period ended March 31, 2005:

Exhibit Number                       Description

     31.1 Certification  of Chief  Executive  Officer  pursuant to Exchange  Act
          Rules 13a-15(e) and 15d-15(e).

     31.2 Certification  of Chief  Financial  Officer  pursuant to Exchange  Act
          Rules 13a-15(e) and 15d-15(e).

     32.1 Certification  Chief  Executive  Officer and Chief  Financial  Officer
          pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
          of the Sarbanes-Oxley Act of 2002.

<PAGE>
SIGNATURES  Pursuant  to  the  requirements  of  Section  13 or 15  (d)  of  the
Securities  Exchange Act of 1934,  the registrant has duly caused this report to
be signed on its behalf by the  undersigned,  thereunto  duly  authorized on the
date indicated.


VERIDIUM CORPORATION
By:             /S/      KEVIN E. KREISLER
                --------------------------
                         KEVIN E. KREISLER
                         Chairman
Date:                    August 15, 2005

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.

                /S/      JAMES F. GREEN
                -----------------------
By:                      JAMES F. GREEN
                         President and Chief Executive Officer
Date:                    August 15, 2005

                /S/      MICHAEL J. DESROSIERS
                -----------------------------
By:                      MICHAEL J. DESROSIERS
                         Chief Financial Officer
Date:                    August 15, 2005

                /S/      RICHARD KRABLIN
                ------------------------
By:                      RICHARD KRABLIN
                         Secretary and Chief Compliance Officer
Date:                    August 15, 2005

                         JAMES HANRAHAN
                         Director
Date:                    August 15, 2005

                         STEPHEN LEWEN
                         Director
Date:                    August 15, 2005

                /S/      KEVIN E. KREISLER
                --------------------------
By:                      KEVIN E. KREISLER
                         Attorney-In-Fact
Date:                    August 15, 2005