--------------------------------------------------------------------------------
                       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 MARCH 31, 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 March 31, 2005 was
42,232,521.



Transitional Small Business Disclosure Format:  Yes       No  X
                                                    ---      ---








<PAGE>



                              VERIDIUM CORPORATION
                         QUARTERLY REPORT ON FORM 10QSB
                   FOR THE FISCAL QUARTER ENDED MARCH 31, 2005

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                                           Page No
Part I            Financial Information
<S>               <C>                                                                                         <C>
Item 1.           Financial Statements (unaudited for March 31, 2005 and 2004) ................................3
                  Consolidated Balance Sheets - March 31, 2005 and December 31, 2004 ..........................3
                  Consolidated Statements of Operations - Three Months Ended March 31, 2005 and 2004 ..........4
                  Consolidated Statements of Cash Flows - Three Months Ended March 31, 2005 and 2004 ..........5
                  Notes to Consolidated Financial Statements ..................................................6
Item 2.           Management's Discussion and Analysis or Plan of Operation ..................................13
Item 3.           Controls and Procedures ....................................................................18

Part II           Other Information
Item 1.           Legal Proceedings ..........................................................................19
Item 2.           Changes in Securities ......................................................................19
Item 3.           Defaults Upon Senior Securities ............................................................19
Item 4.           Submission of Matters to a Vote of Security Holders ........................................19
Item 5.           Other Information ..........................................................................19
Item 6.           Exhibits and Reports on Form 8K ............................................................19

Signatures                                                                                                    20
</TABLE>



<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED)

                      VERIDIUM CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                MARCH 31, 2005 (unaudited) AND DECEMBER 31, 2004
<TABLE>
<CAPTION>

                                                                 3/31/05        12/31/04
                                                             ----------------------------
ASSETS:
Current assets:
<S>                                                          <C>             <C>
   Cash ..................................................   $    241,061    $  1,096,327
   Accounts receivable, net ..............................      3,180,368       2,433,744
   Inventories ...........................................          2,354           3,627
Prepaid expenses and other current assets ................        180,762         143,089
                                                             ------------    ------------
       Total current assets ..............................      3,604,545       3,676,787

Property and equipment, net ..............................      2,373,103       2,352,519

Other Assets:
   Deposits ..............................................        115,051          26,252
   Patents and technologies, net .........................      1,727,372       1,750,019
   Permits, net ..........................................        273,721         278,164
   Goodwill ..............................................      4,020,762       4,020,762
                                                             ------------    ------------
       Total other assets ................................      6,136,906       6,075,197
                                                             ------------    ------------
TOTAL ASSETS .............................................   $ 12,114,554    $ 12,104,503
                                                             ============    ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
   Short term borrowings .................................   $     91,553    $    316,320
   Accounts payable ......................................      2,125,727       2,311,702
   Accrued expenses ......................................      1,595,341       1,114,185
   Current maturities of long-term debt ..................        287,701         287,281
   Current portion of convertible debentures .............      1,970,942       1,736,036
   Current portion of obligations under capital lease ....        109,383         124,686
                                                             ------------    ------------
       Total current liabilities .........................      6,180,647       5,890,210

Long-term debt, net of current maturities ................        327,624         474,349
Convertible debentures, net of current portion ...........      3,731,566       3,731,565
Obligations under capital lease, net of current maturities         15,550          30,177
Other liabilities ........................................         18,485          18,485
                                                             ------------    ------------
       Total long term liabilities: ......................      4,093,225       4,254,576
                                                             ------------    ------------
       Total liabilities: ................................     10,273,872      10,144,786

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

Commitments and contingencies ............................           --              --

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; 1,801,218  and

         1,761,218 issued and outstanding in 2005 and 2004          1,801           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; 42,393,787 and 33,849,132 shares
    issued for 2005 and 2004, respectively ...............         42,393          33,849

   Additional paid-in capital ............................     35,208,638      35,278,025
   Accumulated deficit ...................................    (34,176,027)    (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 ........................      1,015,682       1,134,717
                                                             ------------    ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ...............   $ 12,114,554    $ 12,104,503
                                                             ============    ============

    The notes to the Consolidated Financial Statements are an integral part
                              of these statements.
</TABLE>


<PAGE>

                      VERIDIUM CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED)
                              AND 2004 (UNAUDITED)

<TABLE>
<CAPTION>

                                                                  3/31/05         3/31/04
                                                               ----------------------------
<S>                                                           <C>             <C>
Revenues ..................................................   $  3,973,420    $  3,101,191
   Cost of revenues .......................................      3,211,290       2,296,084
                                                              ------------    ------------
     Gross profit .........................................        762,130         805,107

Operating expenses:
   Selling expenses .......................................        273,875         247,043
   General and administrative expenses ....................        622,938         469,976
                                                              ------------    ------------
Total operating expenses ..................................        896,813         717,019
                                                              ------------    ------------

Operating (loss) income ...................................       (134,683)         88,088

Other income (expense):
   Forgiveness of interest and finance charges ............         67,197         339,280
   Interest expense .......................................       (165,485)       (226,199)
                                                              ------------    ------------
     Total other income (expense), net ....................        (98,288)        113,081
                                                              ------------    ------------

(Loss) income before provision for income taxes ...........       (232,971)        201,169

Provision for income taxes (net of benefit or net operating
   loss carry-forwards of about $80,000 in 2004) ..........           (313)         (1,162)
                                                              ------------    ------------

Net (loss) income .........................................   $   (233,284)   $    200,007
                                                              ============    ============

Basic (loss) earnings attributable to common shareholders .   $      (0.01)   $       0.01
                                                              ============    ============

Diluted (loss) earnings attributable to common shareholders   $      (0.01)   $       0.01
                                                              ============    ============

Weighted average shares of common stock outstanding .......     35,452,015      23,383,921
                                                              ============    ============

Weighted average shares of common stock outstanding
   plus potentially dilutive common shares ................     44,221,530      29,121,679
                                                              ============    ============


       The notes to the Consolidated Financial Statements are an integral
                           part of these statements.
</TABLE>








<PAGE>



                      VERIDIUM CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED)
                         AND MARCH 31, 2004 (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                  3/31/05        3/31/04
                                                                             ------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                          <C>            <C>
Net (loss) income ........................................................   $  (233,284)   $   200,007
Adjustments to reconcile net (loss) income to net cash
provided by (used in) operating activities
   Depreciation and amortization .........................................       129,681        125,543
   Equity issued in exchange for services rendered .......................        56,000           --
   Provision for doubtful accounts .......................................        (1,065)       (22,883)
   Interest paid directly from lender ....................................          --           37,917
   Repurchase of factored accounts receivable ...........................          --          (11,772)
   Gain on forgiveness of debt ...........................................       (67,197)          --
   Changes in assets and liabilities,
     Accounts receivable .................................................      (745,558)       152,965
Other receivables ........................................................         1,273           --
     Prepaid expenses and other current assets ...........................       (37,673)       (50,463)
     Severance liability - related party .................................       (38,021)          --
     Accounts payable ....................................................       (37,117)       (76,082)
Accrued expenses .........................................................       481,156       (236,351)
                                                                             -----------    -----------
       Net cash (used in) provided by operating activities ...............      (491,805)       118,881
                                                                             -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES

   Change in deposits ....................................................       (88,799)          --
   Additions to and acquisition of property, plant and equipment .........      (125,011)          --
                                                                             -----------    -----------
   Proceeds from sale of fixed assets ....................................         1,836           --
                                                                             -----------    -----------
       Net cash used in investing activities .............................      (211,974)          --
                                                                             -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES

   Repayment of short-term borrowings ....................................      (157,570)      (102,812)
   Repayment of current maturities of long-term debt, net ................        (8,283)       (45,828)
   Repayment of Term Financing ...........................................      (100,000)          --
   Proceeds from long-term convertible debentures ........................       204,908        492,000
   Proceeds from collection of stock subscription receivable ..............       175,000           --
   Proceeds from sale of common stock ....................................        25,000          5,000
   Purchase of treasury stock ............................................      (290,611)       (50,526)
   Repayment of obligations under capital leases .........................       (29,931)       (31,365)
                                                                             -----------    -----------
       Net cash (used in) provided by financing activities ...............      (181,487)       266,469
                                                                             -----------    -----------

(Decrease) Increase in cash ..............................................      (855,266)       385,350

Cash at beginning of period ..............................................     1,096,327         89,392
                                                                             -----------    -----------
Cash at end of period ....................................................   $   241,061    $   474,742
                                                                             ===========    ===========
Supplemental Disclosure of cash flow information

Cash paid during the period for Interest .................................   $    55,770    $   339,914

Supplemental disclosure of non-cash investing and financing activities:
   Equity issued for deferred financing costs ............................   $      --      $    82,500
   Equity issued to settle accounts payable ..............................       148,807           --
   Payment of Subordinate Loan with common stock .........................          --          504,171
   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
   Deferred financing costs paid with proceeds of Laurus Financing .......          --          279,876
   Issuance of warrants for deferred financing costs .....................          --          489,229
   Settlement of accounts payable with short term notes ..................          --          603,914

       The notes to the Consolidated Financial Statements are an integral
                           part of these statements.
</TABLE>
<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 $233,284  the three  months  ended March 31,  2005.  As of March 31, 2005 the
Company had $241,061 in cash, and current liabilities exceeded current assets by
$2,576,102 including $1,970,942 in liabilities that are 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.  However,  there  can be no
assurances that the Company will be successful in this regard or will be able to
eliminate its working  capital  deficit or operating  losses.  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>
                                                                        3/31/05        3/31/04
                                                                    ----------------------------
<S>                                                                 <C>             <C>
Net (loss) income ...............................................   $    (233,284)  $    200,007

Less: stock based employee compensation expense determined
under the fair value method for all awards ......................            --             --
                                                                    -------------   ------------

Pro forma net (loss) income .....................................   $    (233,284)  $    200,007
                                                                    =============   ============

Basic and diluted net (loss) income per common share, as reported   $       (0.01)  $       0.01
                                                                    =============   ============

Pro forma basic and diluted net (loss) income per common share ..   $       (0.01)  $       0.01
                                                                    =============   ============
</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 utilizes the services of Candent Corporation  (formerly  Cyngularity
Corporation),  for  development  and  administration  of its various  management
information  systems.  Candent is  majority-owned  by the  Company's  Chairman's
spouse. Such services  approximated  $25,000 and $12,000 for the fiscal quarters
ended March 31,  2005 and 2004.  The Company  also  issued  1,200,000  shares of
common  stock  to  Candent  in  full  settlement  of  invoices  relating  to the
development and operations of the Company's computer systems.

<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
(see note 6).

5        FINANCING ARRANGEMENTS

The following is a summary of the Company's  financing  arrangements as of March
31, 2005 and December 31, 2004:
<TABLE>
<CAPTION>
                                                                       3/31/05      12/31/04
                                                                    ------------------------
<S>                                                                 <C>          <C>
Short-term borrowings ...........................................   $   91,553   $  316,320

Current maturities of long-term debt:
   Term financing ...............................................      100,000      100,000
    Severance ...................................................      103,329      108,746
   Vehicle loans and other current obligations ..................       84,372       78,535
                                                                    ----------   ----------
     Total current maturities of long-term debt .................   $  287,701   $  287,281

Current portion of convertible debentures:
   Laurus Master Fund, 9% convertible debentures, currently due .    1,970,942    1,736,036
                                                                    ----------   ----------
Long-term debt:
   Term financing ...............................................         --        100,000
    Severance - related party ...................................      138,925      171,530
   Vehicle loans and other current obligations ..................      188,699      202,819
                                                                    ----------   ----------
     Total long-term debt, net of current maturities ............   $  327,624   $  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 ..    1,184,066    1,184,066
   Subordinate loan, 12% convertible debenture, due December 2008    1,547,500    1,547,500
                                                                    ----------   ----------
     Total Convertible debt, net of current portion .............   $3,731,566   $3,731,566
</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 March 31, 2005 and
the Company's ability to meet such obligations:
<TABLE>
<CAPTION>
Year                                                                  Amount

<S>                                                              <C>
2005                                                             $   2,350,196
2006                                                                 1,157,639
2007                                                                    71,411
2008                                                                 2,772,636
2009                                                                    57,504
                                                                 -------------

Total minimum payments due under current and
   long-term obligations                                         $   6,409,386
                                                                 =============
</TABLE>


<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  $91,000 and $316,000 at March 31, 2005 and December 31,2004.  The
unpaid balances at March 31, 2005 are in default.

TERM FINANCING

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

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.





<PAGE>

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

5        FINANCING ARRANGEMENTS (continued)

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.

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 quarter of 2005,  various common stock  issuances for services,
price protection and debt repayments were as follows: 1,587,853 shares issued to
settle accounts  payable  amounting to $148,807;  6,337,500  shares issued under
various  price  protection  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;  In addition a  stockholder  converted  800,000  shares of
common  stock  into  40,000  shares  of series B  preferred.  The  company  also
purchased  2,642,040  shares of common  stock for a cash payment of $290,611 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
March 31,  2005,  the Company  did not have  sufficient  shares of common  stock
authorized  to  accommodate  conversion of all  outstanding  shares of preferred
stock

At  March  31,  the  Company  has  certain  price  protection  and  anitdilution
agreements in effect with certain stockholders  including certain members of the
board of directors.

7        COMMITMENTS AND CONTINGENCIES

EMPLOYMENT AGREEMENTS

The Company is party to certain  employment  agreements with its Chief Executive
Officer,  Chairman and Chief  Compliance  Officer.  Each agreement  calls for an
annual  base  salary,   reimbursement  of  business  expenses,  use  of  Company
automobile,  periodic  bonuses,  and  participation  in  any  employee  benefits
provided to all employees of the Company

<PAGE>



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

7        COMMITMENTS AND CONTINGENCIES (CONTINUED)

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 the 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.

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 ongoing and we are  therefore  unable to  evaluate  the
probability of an unfavorable outcome or range of potential loss at this time.

Veridium  assumed  and is party to various  material  administrative  compliance
proceedings  for which  Veridium  has accrued  $384,336 in  potential  expenses.
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 amount
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 $110,000 as of March 31, 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  $15,000.
Environmental  liability  insurance is carried with policy  limits of $1,000,000
per occurrence and $2,000,000 aggregate.

Viridis Capital,  LLC, an affiliate of Kevin Kreisler,  purchased 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.

8        SUBSEQUENT EVENT

On April 1, 2005,  Veridium  entered  into an agreement to acquire the assets of
North Country Environmental Services, Inc. ("North Country"). Under the terms of
the  acquisition  agreement,  Veridium will acquire  substantially  all of North
Country's  assets  in return  for the  assumption  by  Veridium  of  liabilities
totaling  $533,000.  This acquisition closed on May 10th of 2005 and is expected
to add about $2 million in gross annualized sales to Veridium.

<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"), is 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-bearing  and chemical  hazardous  wastes.  The Company's  services include
collection  and  transportation  of industrial  wastes,  site  remediation,  and
recycling  of  metal-bearing  and chemical  wastes.  The  Company's  focus is to
provide  its   clients   with   value-added,   environmentally   conscious   and
cost-effective  hazardous  waste  management  services  based  on its  efficient
managing of wastes and use of green technologies.

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 four 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 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.


The table and below discussions should be read in conjunction with Item 1,
Financial Statements, of this report.
<TABLE>
<CAPTION>
                                                  Percentage of Total Revenues
                                                      For the Period Ended
                                                  ---------------------------
                                                   3/31/05        3/31/04
                                                  ---------------------------
<S>                                                 <C>           <C>
Revenue .......................................     100.0%        100.0%
Cost of revenue ...............................      80.8          74.0
                                                    -----         -----
   Gross profit ...............................      19.2          26.0

Selling expenses ..............................       6.9           8.0
General and administrative expenses ...........      15.7          15.2
                                                    -----         -----
   Total operating expenses ...................      22.6          23.2
                                                    -----         -----
Income (loss) from operations .................      (3.4)          2.8

Forgiveness of interest and finance charges ...       1.7          10.9
Interest expense ..............................      (4.2)         (7.3)
                                                    -----         -----
   Total other income (expense) ...............      (2.5)          3.6
                                                    -----         -----
Income (loss) before provision for income taxes      (5.9)          6.4
   Provision for income taxes .................       --            --
                                                    -----         -----
Net income (loss) .............................      (5.9)          6.4
                                                    =====         =====
</TABLE>

<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  $0.2 million during the quarter ended March 31, 2005,
current  liabilities  exceeded  current  assets by  approximately  $2.6 million,
including about $2.0 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.

EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA")

We define "EBITDA" as net income or loss, less interest, taxes, depreciation and
amortization.  We  consider  EBITDA  to be a  measurement  of  performance  that
provides useful information to both management and investors.  EBITDA should not
be considered an alternative to net income or loss or other  measurements  under
accounting  principles  generally accepted in the United States of America as an
indicator of operating performance or as a measure of liquidity. EBITDA does not
reflect working capital changes, cash expenditures for interest,  taxes, capital
improvements or principal payments on indebtedness. While EBITDA is a good means
to evaluate the  probability of cash flow, it does not measure actual cash flow.
Our operating cash flow is a better measure of how much cash as a company we are
generating because it adds non-cash charges (depreciation and amortization) back
to net income and includes  the changes in working  capital that also provide or
use cash.  Additionally,  our measurement of EBITDA might be  inconsistent  with
similar measures presented by other companies. The following is a reconciliation
of net income (loss) to EBITDA for the following three months ended March 31:
<TABLE>
<CAPTION>
                                                            3/31/05         3/31/04
                                                          -------------------------
<S>                                                        <C>            <C>
Net income (loss) ......................................   $(233,284)     $ 200,007
Depreciation and amortization ..........................     129,681        125,543
Interest expense, net ..................................     165,485        226,199
Provision for income taxes .............................         313          1,162
Equity in exchange for non-recurring services rendered          --             --
                                                           ---------      ---------

EBITDA  ................................................   $  62,195      $ 552,911

The following reconciles EBITDA to net cash provided from operating activities
for the following quarters ended March 31:

                                                            3/31/05         3/31/04
                                                          -------------------------

Adjustments to reconcile EBITDA to net cash provided by (used in) operating
activities:
   Interest expense ....................................   $(165,485)     $(188,282)
   Provision for income taxes ..........................        (313)        (1,162)
   Equity issued for services ..........................      56,000           --
   Forgiveness of debt .................................     (67,197)          --
   Repayment of factored receivables ...................        --          (11,772)
   Provision for doubtful accounts .....................      (1,065)       (22,883)
Changes in assets and liabilities:
   Accounts receivable .................................    (745,558)       152,965
Other receivables ......................................       1,273           --
   Prepaid expenses and other current assets ...........     (37,673)       (50,463)
   Severance liability .................................     (38,021)

   Accounts payable ....................................     (37,117)       (76,082)
Accrued expenses .......................................     481,156       (236,351)
                                                         -----------    -----------
     Net cash provided by (used in) operating activities $  (491,805)   $   118,881
                                                         ===========    ===========

Selected Financial Data:
Working capital, net of convertible debentures ......... $  (605,160)   $(1,070,015)

Selected Margin Data (%):
Gross profit ...........................................        19.2           26.0
EBITDA .................................................         1.6            7.0
Net income (loss) ......................................        (5.9)           6.4

Selected Growth Data (%):
Revenue ................................................        28.1          206.8
Gross Profit ...........................................        (5.3)         312.2
EBITDA .................................................       (88.7)         249.6
Net income (loss) ......................................      (213.8)         161.8
</TABLE>


<PAGE>

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

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.

THREE MONTHS ENDED MARCH 31, 2005 VERSUS THE THREE MONTHS ENDED MARCH 31, 2004

Revenues

Total  revenues  were $4.0  million for the three  months  ended March 31, 2005,
corresponding  to an increase of $0.9  million,  or 29%,  over the three  months
ended March 31, 2004 revenues of $3.1 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 March 31, 2005 were $3.2 million, or
79% of  revenue,  as compared  to $2.3  million,  or 74% of revenue for the same
period in 2004. The change in cost of revenues during the first quarter 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 March
31, 2005 were $0.9 million,  or 22% of revenue,  as compared to $0.7 million, or
23% of revenue  for the same  period in 2004.  Operating  results  for the three
months ended March 31, 2005,  decreased about $220,000 from an operating  income
of about $90,000 from the period ending March 31, 2004..

Depreciation and Amortization

Depreciation and amortization expenses for the three months ended March 31, 2005
were $0.13 million, or 3.3% of revenue, as compared to $0.13 million, or 4.0% of
revenue for the same period in 2004.

<PAGE>


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

THREE MONTHS ENDED MARCH 31, 2005 VERSUS THE THREE MONTHS ENDED MARCH 31, 2004

Interest Expense

Interest  expenses for the three months ended March 31, 2005 were $0.17 million,
or 4.2% of revenue,  as compared  to $0.18  million,  or 5.8% of revenue for the
same period in 2004.  The  decrease is  attributable  to the  Company's  various
financings  completed  during  2004,  including  certain  non-recurring  charges
incurred in connection with the Company's completion of the Laurus Financing.

EBITDA Contribution

Earnings before interest, taxes,  depreciation,  amortization ("EBITDA") for the
three months ended March 31, 2005 were about $0.1 million,  or 3% of revenue, as
compared to income before interest, taxes,  depreciation,  amortization of $0.55
million,  or 18% of  revenue  from the same  period  in 2004.  The  decrease  is
attributable  to the $0.3  million of interest and finance  charges  forgiven in
2004.  While a useful metric of performance  because it eliminates the impact of
certain financing and accounting activities,  EBITDA should not be considered an
alternative  to net income or as an indicator of operating  performance  or as a
measure of liquidity.  EBITDA does not include  working  capital  changes,  cash
expenditures for interest,  taxes, capital improvements or principal payments on
indebtedness.  While EBITDA is a good means to evaluate the  probability of cash
flow, it does not measure  actual cash flow. Our operating cash flow is a better
measure of how much cash as a company we are generating because it adds non-cash
charges  (depreciation  and  amortization)  back to net income and  includes the
changes in working  capital that also provide or consume cash. A  reconciliation
of EBITDA to net cash provided by our operating  activities is provided above in
this Item 2, Management's Discussion and Analysis and Plan of Operation.

Net Income or Loss

Net loss for the three months ended March 31, 2005, was $0.23  million,  or 5.9%
of revenue,  as compared to an income of $0.2  million,  or 6.4% of revenue from
the same period in 2004. The net loss realized  during the period was due to the
seasonally  slow first  quarter.  We expect that net loss will be  eliminated in
future periods as we move out of the less productive first quarter.

LIQUIDITY AND CAPITAL RESOURCES

Cash

Our primary  sources of liquidity are cash provided by operating,  investing and
financing activities,  and availability under our various credit facilities. For
the three months ended March 31, 2005, net cash used by our operating activities
was $0.49  million as compared to the net cash  provided by  operations of about
$0.13 million as of the quarter ended March 31, 2004.

Liquidity

Our  operating  activities  during the first  quarter 2005 used $0.49 million in
cash, as compared to cash  provided by  operations  of $0.13 million  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 March 31,  2005 the  Company  had cash of about $0.2
million.  This cash represents a decrease of $0.3 million from the quarter ended
March 31, 2004.


<PAGE>

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

LIQUIDITY AND CAPITAL RESOURCES (continued)

Cash Flows for the Three Months Ended March 31, 2005

Our  operating  activities  during the first  quarter 2005 used $0.49 million in
cash.  Accounts  receivable  at March 31, 2005,  net of  allowance  for doubtful
accounts,  totaled $3.2  million as compared to the March 31,  2004,  balance of
$2.4  million.  Accounts  payable  at March 31,  2005  totaled  $2.1  million as
compared to the March 31, 2004,  balance of $2.3  million.  Accrued  expenses at
March 31, 2005 totaled $1.6 million as compared to the March 31, 2004 balance of
$1.1  million.  These  increases  and  decreases  are  primarily due to the 2005
stronger balance sheet as a result of normal operational activity.

For the three months ended March 31, 2005,  we used $0.2 million from  investing
activities,  and we provided net cash from financing of $0.02  million.  We used
these funds to further provide  working  capital for  operations.  Our financing
arrangements  are  discussed  further below in this Item 2 and in more detail in
Item 1, Note 5, Financing Arrangements, below.

The Company had a negative working capital position of $2.6 million at March 31,
2005, of which convertible debentures accounted for approximately $2.0 million.

STOCKHOLDER MATTERS

Stockholders'  equity  was $1.0  million at March 31,  2005,  or $0.02 per share
outstanding,  as compared to $1.1  million at December  31,  2004,  or $0.03 per
share outstanding.  Stockholders'  equity decreased during the period due to the
operating  losses  during  2005.  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 March 31,  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, 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 December 31, 2004,  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 $333,000. 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 March
31, 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 March 31, 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,  three  shareholders  had price
protection   agreements   totaling   about   $150,000  as  of  March  31,  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.
<PAGE>

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.

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,  purchased 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.


<PAGE>


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.


REPORTS ON FORM 8K

The following is a list of reports filed on Form 8-K during the period:

     1)   On February 3, 2005,  Veridium filed a Report on Form 8K,  pursuant to
          Section 13 or 15(d).

     2)   On February 22, 2005,  Veridium filed a Report on Form 8K, pursuant to
          Section 13 or 15(d).


<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:                     May 12, 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:                    May 12, 2005

                /S/      MICHAEL J. DESROSIES
                -----------------------------
By:                      MICHAEL J. DESROSIERS
                         Chief Financial Officer
Date:                    May 12, 2005

                /S/      RICHARD KRABLIN
                ------------------------
By:                      RICHARD KRABLIN
                         Secretary and Chief Compliance Officer
Date:                    May 12, 2005

                         JAMES HANRAHAN
                         Director
Date:                    May12, 2005

                         STEPHEN LEWEN
                         Director
Date:                    May 12, 2005

                /S/      KEVIN E. KREISLER
                --------------------------
By:                      KEVIN E. KREISLER
                         Attorney-In-Fact
Date:                    May12, 2005