PINX:VRDT Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 

 
FORM 10-Q
 


[x]
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOR ENDED JUNE 30, 2012

[  ]
TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITIION PERIOD FROM ____________ TO ____________
 
Commission File number: 000-52677
 
VRDT CORPORATION
(Exact name of registrant as specified in its charter)

Delaware
45-2405975
(State or other jurisdiction of incorporation)
(I.R.S. Employer Identification No.)

 
12223 Highland Avenue, Suite 106-542, Rancho Cucamonga, California  91739
(Address of principal executive offices)

(909) 786-1981
(Issuer’s telephone number)
 
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes [x]   No [  ]
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [x] No [  ]
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer
[  ]
Accelerated filer                       [  ]
 
Non-accelerated filer
[  ]
Smaller reporting company     [x]
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [x]   No [  ]
 
 
1

 
 
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.      

Not applicable.
APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.  

As of August 13, 2012 the Company has 125,565,141 shares of Class A Common Stock outstanding and no other classes of common stock.
 
 
2

 
 
TABLE OF CONTENTS
 
VRDT CORPORATION
(A DEVELOPMENT STAGE COMPANY)
 
Part I – Financial Information
 
Item 1
Financial Statements
4
     
 
Balance Sheets as of June 30, 2012 and March 31, 2012
5
     
 
Statements of Operations for the Nine Months Ended June 30, 2012, and 2011 and for the Period from Inception, August 19, 1999, through June 30, 2012
6
     
 
Statement of Stockholder’s Equity for the Period from Inception through June 30, 2012
7
     
 
Statements of Cash Flows for the Nine Months Ended June 30, 2012, and 2011 and the Period from Inception, August 19, 1999, through June 30, 2012
9
     
 
Notes to the Financial Statements
11
     
Item 2
Management’s Discussion and Analysis of Financial Condition and Results of Operations
16
     
Item 3
Quantitative and Qualitative Disclosures about Market Risk
17
     
Item 4
Controls and Procedures
18
     
Part II – Other Information
     
Item 1
Legal Proceedings
19
     
  Item 1A. Risk Factors 19
     
     
     
Item 2
Unregistered Sales Of Equity Securities And Use Of Proceeds
19
     
Item 3
Defaults Upon Senior Securities
19
     
Item 4
Mine Safety Disclosure
19
     
Item 5
Other Information
19
     
Item 6
Exhibits
20

 
3

 
 
PART I
 
ITEM 1.         FINANCIAL STATEMENTS
The Financial Statements of the Company required to be filed with this 10-Q Quarterly Report were prepared by management and commence below, together with related notes. In the opinion of management, the Financial Statements fairly present the financial condition of the Company.
 
 
4

 
 
VRDT Corporation
(A Development Stage Company)
Consolidated Balance Sheet
 
   
June 30, 2012
   
March 31, 2012
 
ASSETS
           
             
CURRENT ASSETS:
           
             
Cash   $ 9,373     $ 36,447  
Prepaid expenses     5,440,077       5,403,921  
Total Current Assets     5,449,450       5,440,368  
                 
PROPERTY AND EQUIPMENT, NET
    48,368       48,144  
                 
OTHER ASSETS
               
                 
Note Receivable     218,063       215,383  
Deposits     6,270       6,270  
Intangibles     500       0  
Total Other Assets     224,833       221,653  
TOTAL ASSETS   $ 5,722,651     $ 5,710,165  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY / (DEFICIT)
               
                 
CURRENT LIABILITIES:
               
                 
Accounts payable and accrued expenses   $ 3,775,878     $ 3,142,645  
Accounts payable and accrued expenses - Related party     0       20,679  
Notes Payable     95,000       95,000  
Notes Payable - Related parties     323,206       942,759  
Total Current Liabilities     4,194,084       4,201,083  
                 
LONG TERM LIABILITIES:
               
                 
Notes Payable - Related parties     661,922       0  
Total Current Liabilities     661,922       0  
                 
STOCKHOLERS' EQUITY / (DEFICIT)
               
                 
Preferred stock, $.001 par value; 5 shares issued and outstanding at June 30, 2012                
Common Stock, .001 par value: 989,999,995 shares authorized: 124,736,955 and 120,946,840 shares issued and outstanding as of June 30, 2012, and March 31, 2012, respectively
    124,737       120,947  
Additional paid-in capital     20,046,583       19,607,273  
Stock issue payable     13,000       0  
Deficit accumulated during the development stage     (19,317,675 )     (18,219,138 )
Total Stockholders' Equity / (Deficit)     866,645       1,509,082  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY / (DEFICIT)
  $ 5,722,651     $ 5,710,165  
 
See the accompanying  notes to the financial statements
 
 
5

 
 
VRDT Corporation
(A Development Stage Company)
Consolidated Statement of Operations
 
   
Three Months Ended
June 30,
   
For the Period August 19, 1999
(Inception) to June
 
   
2012
   
2011
      30, 2012  
                     
Sales     0       0       370,800  
Cost of sales
    0       0       0  
Gross profit
    0       0       370,800  
                         
Operating Expenses
                       
                         
Depreciation and amortization
    1,880       50       6,589  
General and administrative expenses
    1,069,642       649,853       13,646,946  
Impairment of goodwill
    0       3,833,722       3,833,722  
Impairment of long-lived assets
    0       0       855  
Impairment of loan receivable
    0       0       130,000  
Total operating expenses
    1,071,522       4,483,625       17,618,112  
                         
Income / (Loss) from Operations
    (1,071,522 )     (4,483,625 )     (17,247,312 )
                         
Other Income / (Expense)
                       
                         
Other income
    0       0       56,889  
Loss from conversion of shareholder debt
    0       0       (1,506,528 )
Interest Income
    2,680       0       3,063  
Interest (expense)
    (2,948 )     (4,354 )     (564,471 )
Interest (expense) - Related parties
    (26,747 )     (4,271 )     (59,316 )
Unrealized Exchange (Gain) / Loss
    0       0       0  
Total Other Income / (Expense)
    (27,015 )     (8,625 )     (2,070,363 )
Income / (Loss) before Income Taxes
    (1,098,537 )     (4,492,250 )     (19,317,675 )
                         
Provisions for Income Taxes
    0       0       0  
Net Income / (Loss)
    (1,098,537 )     (4,492,250 )     (19,317,675 )
                         
Net Income / (Loss) Per Share:
                       
Basic and Diluted
    (0.01 )     (0.13 )        
                         
Weighted Average Shares Outstanding
                       
Basic and Diluted
    124,222,044       34,504,511          
 
See the accompanying  notes to the financial statements
 
 
6

 
 
VRDT Corporation
(A Development Stage Company)
Consolidated Statement of Stockholder's Deficiency
For the Period August 19, 1999 (Inception) to June 30, 2012
 
   
Common Stock
   
Additional Paid-in
   
Deficit Accumulated During the Development
   
Total Stockholders'
 
   
Shares
   
Amount
    Capital     Stage     Equity  
                               
Balance at inception, August 19, 1999
    0     $ 0     $ 0     $ 0     $ 0  
Issuance of common stock
    2,000       2       18               20  
Net loss
                            (84,021 )     (84,021 )
                                         
Balance at December 31, 1999
    2,000       2       18       (84,021 )     (84,001 )
Net loss
                            (230,879 )     (230,879 )
                                         
Balance at December 31, 2000
    2,000       2       18       (314,900 )     (314,880 )
Net loss
                            (494,816 )     (494,816 )
                                         
Balance at December 31, 2001
    2,000       2       18       (809,716 )     (809,696 )
Net loss
                            (384,590 )     (384,590 )
                                         
Balance at December 31, 2002
    2,000       2       18       (1,194,306 )     (1,194,286 )
Reclassification of debt to equity
    4,300       4       1,581,979       0       1,581,983  
Net loss
                            (736,364 )     (736,364 )
                                         
Balance at December 31, 2003
    6,300       6       1,581,997       (1,930,670 )     (348,667 )
Net loss
                            (205,994 )     (205,994 )
                                         
Balance at December 31, 2004
    6,300       6       1,581,997       (2,136,664 )     (554,661 )
Net loss
                            (1,592,469 )     (1,592,469 )
                                         
Balance at December 31, 2005
    6,300       6       1,581,997       (3,729,133 )     (2,147,130 )
Net loss
                            (1,376,529 )     (1,376,529 )
                                         
Balance at March 31, 2006
    6,300       6       1,581,997       (5,105,662 )     (3,523,659 )
Shares issued for services
    88,285       88       123,511               123,599  
Expenses paid by related party
                    515,000               515,000  
Stock issued as dividend
    2,636,564       2,637       (2,637 )             0  
Conversion of SKRM Interactive payable to equity
              4,382,718               4,382,718  
Net loss
                            (1,810,502 )     (1,810,502 )
                                         
Balance at March 31, 2007
    2,731,149       2,731       6,600,589       (6,916,164 )     (312,844 )
Stock issued for debt
    669,577       670       1,673,250               1,673,920  
Net loss
                            (1,596,320 )     (1,596,320 )
                                         
Balance at March 31, 2008
    3,400,726       3,401       8,273,839       (8,512,484 )     (235,244 )
 
See the accompanying  notes to the financial statements
 
 
7

 
 
VRDT Corporation
(A Development Stage Company)
Consolidated Statement of Stockholder's Deficiency - continued
For the Period August, 1999 (Inception) to June 30, 2012
 
   
Common Stock
    Additional Paid-in     Deficit Accumulated During the Development     Total Stockholders'  
   
Shares
   
Amount
    Capital     Stage     Equity  
Net loss
                      (6,954 )     (6,954 )
Balance at March 31, 2009
    3,400,726       3,401       8,273,839       (8,519,438 )     (242,198 )
                                         
Conversion of Martin debt
    300,000       300       60,700               61,000  
Net loss
                            (73,636 )     (73,636 )
Balance at March 31, 2010
    3,700,726       3,701       8,334,539       (8,593,074 )     (254,834 )
Stock-based compensation - Non-Emp
                    79,500               79,500  
Net loss
                            (115,118 )     (115,118 )
Balance at March 31, 2011
    3,700,726       3,701       8,414,039       (8,708,192 )     (290,452 )
                                         
Treasury Stock - Redemtion and cancellation
    (1,700,000 )     (1,700 )     (848,300 )             (850,000 )
Issuance of common stock
    46,021,000       46,021       5,242,780       0       5,288,800  
Shares issued for services
    14,015,500       14,016       1,442,405       0       1,456,420  
Restricted Stock - Employees & Directors
    53,650,000       53,650       5,311,350       0       5,365,000  
Exercised warrants
    259,614       260       0       0       260  
Conversion of debt to equity
    5,000,000       5,000       45,000       0       50,000  
Net (Loss) / Income
    0       0       0       (9,510,946 )     (9,510,946 )
                                         
Balance at March 31, 2012
    120,946,840       120,947       19,607,273       (18,219,138 )     1,509,082  
                                         
Issuance of common stock - 1st Quarter
    910,115       910       154,190               155,100  
                                         
Shares issued for services - 1st Quarter
    2,880,000       2,880       285,120               288,000  
                                         
Net loss - 1st Quarter
                            (1,098,537 )     (1,098,537 )
Balance at June 30, 2012
    124,736,955       124,737       20,046,583       (19,317,675 )     853,645  
 
See the accompanying  notes to the financial statements
 
 
8

 
 
VRDT Corporation
(A Development Stage Company)
Consolidated Statement of Cash Flows
 
   
Three Months Ended
June 30,
   
For the Period August 19, 1999 (Inception) to
 
   
2012
   
2011
    June 30, 2012  
CASH FLOWS FROM OPERATIONS:
                 
                   
Net Income / (Loss)
    (1,098,537 )     (4,492,249 )     (19,317,675 )
                         
Adjustments to reconcile net income / (loss) to net cash used in operating activities:
 
                         
Depreciation & Amortization
    1,880       50       58,540  
Impairment of Goodwill
            3,833,722       3,833,722  
Impairment of Long-Lived Assets
                    855  
Impairment of Loan Receivable
                    130,000  
Accrued Interest on payable converted to debt
                    209,817  
Issurance of warrants for services
                    79,500  
Common stock issued for services
    288,000       550,000       1,868,279  
Loss on conversion of stockholder debt to Common Stock
                    1,506,528  
Expense paid by stockholder and affiliate
                    636,796  
Payables and servcies converted to Common Stock
                    770,674  
Assumption of liabilities over value of assets
    0       (833,722 )     (833,722 )
Changes in Assets & Liabilities:
                       
Decrease / (Increase) in prepaid expenses
    (36,156 )     (311,014 )     (81,347 )
Decrease / (Increase) in note receivable
    (2,680 )     0       (218,063 )
(Decrease) / Increase in accounts payable and accrued expenses
    633,233       845,656       3,785,132  
                         
(Decrease) / Increase in interest payable to stockholder
    (20,679 )     4,271       335,757  
(Decrease) / Increase in notes payable related party - current
    42,369               42,369  
Net cash provided by operating activities
    (192,569 )     (403,287 )     (7,192,838 )
                         
CASH FLOWS FROM INVESTING:
                       
                         
Purchase of property plant and equip
    (2,104 )     (8,501 )     (107,763 )
Note Receivable
                    (130,000 )
Intangibles
    (500 )             (500 )
Net cash used in investing activities
    (2,604 )     (8,501 )     (238,263 )
                         
CASH FLOWS FROM FINANCING:
                       
                         
Proceeds from parent company
                    697,193  
Net proceeds from notes payable - other
            145,000       91,982  
Net proceeds from notes payable - shareholder
                    1,721,208  
Net proceeds from notes payable - affiliates
                    2,423,191  
Net proceedsfrom stock issue payable
    13,000       39,000       13,000  
Proceeds from inssuance of common stock
    155,100       320,300       2,493,900  
Net cash from financing activities
    168,100       504,300       7,440,474  
                         
Net Increase / (Decrease) in cash
    (27,074 )     92,512       9,373  
                         
CASH AT BEGINNING OF PERIOD
    36,447       101       0  
CASH AT END OF PERIOD
    9,373       92,613       9,373  
 
See the accompanying  notes to the financial statements
 
 
9

 
 
Verdant Automotive Corporation
(A Development Stage Company)
Statement of Cash Flows - Continued
 
   
Three Months Ended
June 30,
    April 19. 1999 to  
   
2012
   
2011
    June 30, 2012  
SUPPLEMENTAL CASH FLOW INFORMATION:
                 
                   
Common stock issued for services
    288,000       588,800       1,868,279  
 
See the accompanying  notes to the financial statements
 
 
10

 
 
NOTE 1.         BASIS OF PRESENTATION AND RECENT ACCOUNTING PRONOUNCEMENTS
 
 
The accompanying unaudited financial statements of VRDT Corporation (the “Company”) have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. The results of operations for the interim period ended June 30, 2012 shown in this report are not necessarily indicative of results to be expected for the full fiscal year ending March 31, 2013. In the opinion of the Company’s management, the information contained herein reflects all adjustments necessary for a fair presentation of the Company’s results of operations, financial position and cash flows. The Company has reclassified certain amounts previously reported in our financial statements to conform to the current presentation. The unaudited interim financial statements should be read in conjunction with the audited financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2012, and Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
The consolidated financial statements include by full consolidation all domestic and foreign entities controlled by the Company (i.e., all subsidiaries), except where the subsidiary’s effect on the Company’s financial position and results of operations is immaterial.  The following list includes all entities controlled by the Company:
 
Verdant Industries, Inc., a Delaware corporation;
Verdant Ecosystem, Inc, a Delaware corporation;
Verdant (Hong Kong) Ltd.; a Hong Kong corporation; and
Verdant (China) Ltd., a People’s Republic of China corporation.

 
All material intercompany transactions have been eliminated.
 
NOTE 2.         REVENUE RECOGNITION
 
The Company recognizes revenue in accordance with the Securities and Exchange Commission Staff Accounting Bulletin (SAB) number 104, which states that revenues are generally recognized when it is realized and earned.  Specifically, the Company recognizes revenue when services are performed and projects are completed and accepted by the customer.  Revenues are earned from the sale of electric vehicles and other related technologies and services.
 
NOTE 3.         DEVELOPMENT STAGE COMPANY
 
The Company is a development stage company. The Company is subject to risks and uncertainties, including new product development, actions of competitors, reliance on the knowledge and skills of its employees to be able to service customers, and availability of sufficient capital and a limited operating history. Accordingly, the Company presents its financial statements in accordance with the accounting principles generally accepted in the United States of America that apply in establishing new operating enterprises. As a development stage enterprise, the Company discloses the deficit accumulated during the development stage and the accumulated statement of operations and cash flows from inception of the development stage to the date on the current balance sheet. Contingencies exist with respect to this matter, the ultimate resolution of which cannot presently be determined.
 
NOTE 4.         RECENTLY ENACTED ACCOUNTING PRONOUNCEMENTS
 
There have been no developments to recently issued accounting standards, including the expected dates of adoption and estimated effects on our financial statements, from those disclosed in the our Annual Report on Form 10-K for the year ended March 31, 2012.
 
 
11

 
 
NOTE 5.         RECLASSIFICATIONS
 
Certain prior year amounts have been reclassified to conform to the current year presentation.
 
NOTE 6.         GOING CONCERN
 
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  The Company sustained losses of $1,098,537and $9,510,946 for the three months ended June 30, 2012 and the year ended March 31, 2012, respectively. The Company had an accumulated deficit of $19,317,675 at June 30, 2012.  These factors raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time.  The Company is highly dependent on its ability to continue to obtain investment capital and loans from an affiliate and shareholder in order to fund the current and planned operating levels.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.  The Company’s continuation as a going concern is dependent upon its ability to bring in income generating activities and its ability to continue receiving investment capital to sustain its current level of operations.   No assurance can be given that the Company will be successful in these efforts.
 
Management intends to raise additional operating funds through equity and/or debt offerings.  However, there can be no assurance management will be successful in its endeavors.  Ultimately, the Company will need to achieve profitable operations in order to continue as a going concern.
 
There are no assurances that the Company will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placement, public offerings and/or bank financing necessary to support its working capital requirements.  To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are insufficient, the Company will have to raise additional working capital.  No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company.  If adequate working capital is not available, the Company may be required to curtail its operations. 
 
NOTE 7.         GOODWILL
 
Goodwill represents the excess of the cost of the amount paid over the acquired assets over the fair value of their net assets at the dates of acquisitions, plus the assumption of certain liabilities. Under ASC 350, Goodwill and Other Intangible Assets, the Company is required to annually assess the carrying value of goodwill to determine if impairment in value has occurred.
 
The Company determined that its Goodwill was impaired and recorded an impairment charge of $3,833,722 for the three months ended June 30, 2011.
 
 
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NOTE 8.         NOTES PAYABLE-RELATED PARTIES
 
The Company’s related party notes payable consist of the following:
 
   
June 30, 2012
   
March 31, 2012
 
             
Note payable, 12% interest, principal and interest due monthly commencing January 1, 2013, and due June 1, 2014. (1)
  $ 167,758     $ 142,759  
             
Note payable, 12% interest, principal and interest due monthly commencing January 1, 2013, and due June 1, 2014. Interst payment due 8/31/2012 of 10% of funds raised between date of extension and 8/31/2012 up to $10,000.
  817,370     800,000  
    $ 985,128     $ 942,759  
Current portion of notes payable
  $ 323,206     $ 942,759  
                 
Non current portion of notes payable
  $ 661,922     $ 0  
 
(1)                 This note is convertible into 881,744 shares of common stock for its cancellation and the conversion price is based on the 10-day volume-weighted average price (“VWAP”) of the Company’s common stock or $0.16, whichever is less.  The accrued interest shall be converted at the same rate.
 
 
NOTE 9.         NOTES PAYABLE
 
The Company’s notes payable consists of the following:
 
   
June 30, 2012
   
March 31, 2012
 
             
Notes payable, 15% interest, principle and interest due April 12, 2013
  $ 45,000     $ 45,000  
                 
Note payable, 10% interest, principle and interest due March 18, 2013
    50,000       50,000  
    $ 95,000     $ 95,000  
 
 
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Each of two (2) unsecured convertible promissory notes identified in this Note 9 are convertible to common stock of the Company at one-tenth of one percent of the Company’s initial private placement offering, which, in this case, was $0.10 per share.  As such, the notes are convertible to common stock of the Company at $0.01 per share.  The $45,000 note bears interest at 15% per annum and the $50,000 note bears interest at 10% per annum.   The notes are scheduled to be converted on or before April 12, 2013 and March 18, 2013, respectively.
 
NOTE 10.       INCOME TAXES
 
The application of income tax law is inherently complex. Laws and regulation in this area are voluminous and are often ambiguous. As such, the Company is required to make many subjective assumptions and judgments regarding the income tax exposures. Because interpretations of, and guidance surrounding, income tax laws and regulations change over time, changes in the subjective assumptions and judgments can materially affect amounts recognized in the balance sheets and statements of income.
 
The Company uses the liability method to account for income tax expense. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.  Valuation allowances are established for deferred tax assets if, after assessment of available positive and negative evidence, it is more likely than not that the deferred tax asset will not be fully realized.
 
 
 
Due to various changes in ownership over the years, management does not believe that any significant net operating losses from prior years will be recognized.  The current year losses should have created federal tax benefits for net operating losses and various deferrals in the amount of approximately $3,200,000.  A valuation allowance in an equal amount has been recognized for the year ended March 31, 2012.
 
The Company is currently open to audit under the statute of limitations by the Internal Revenue Service for the years ending March 31, 2009 through 2012. The Company state income tax returns are open to audit under the statute of limitations for the years ending March 31, 2009 through 2012.
 
The Company recognizes interest and penalties related to income taxes in income tax expense. The Company knew of no incurred penalties and interest for the three months ended June 30, 2012.
 
 
 
NOTE 11.       PREPAID EXPENSES
 
The items identified as prepaid expenses are current as Registrant anticipates filing an S-8 registration statement immediately upon the effectiveness of a S-1 registration statement registering many of the outstanding shares of currently restricted common stock.  Registrant anticipates that any S-1 registration statement will be effective within four (4) months of the filing date thereof. Registrant anticipates that it should shortly be in a position to file “Form 10-type” information to effectively cure its status as a “shell” company, at which time the Company   shall proceed to file its anticipated S-1 registration statement.  Upon the effectiveness of the S-1 registration statement, the Company shall file an S-8 registration statement registering the amount of shares identified herein as prepaid expenses according to the vesting schedules of the restricted stock agreements pursuant to which the restricted common stock identified as prepaid expenses have been issued.  The Registrant therefore expects that the prepaid expenses shall vest within one (1) year of the date hereof and are therefore properly categorized as current prepaid expenses.
 
 
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NOTE 12.       RELATED PARTY TRANSACTIONS
 
The Company has, from time to time, contracted with 24Tech Corporation for the latter to perform information technology services for the Company.  Larry Pendleton, the Company’s Chief Information Officer, is a principal of 24Tech Corporation.  The board of directors of the Company is fully aware of Mr. Pendleton’s interest in 24Tech Corporation and has deemed the terms of the Company’s contractual relationship with 24Tech Corporation to be fair and reasonable and in the best interests of the Company. During the three months ended June 30, 2012, The Company purchased $3,686 of services from 24Tech. The amount due to 24Tech as of June 30, 2012, was $4,549, compared to $854 at March 31, 2012.
 
NOTE 13.       SUBSEQUENT EVENTS
 
Subsequent to the quarter ended June 30, 2012, and through August 13, 2012, the Company issued 177,500 shares of restricted common stock through a private placement, pursuant to the exemption from registration provided by Section 4(2) of the Securities Act and Rule 506 promulgated thereunder, at a valuation of $0.20 per share for a total consideration of $35,500.  Subsequent to the year ending March 31, 2012, a warrant holder elected to convert warrants into 300,000 shares of the Company’s restricted common stock for a total consideration of $3,000.  The converted shares were issued to the warrant holder subsequent to the quarter ending June 30, 2012.  Subsequent to the quarter ended June 30, 2012, the Company issued 350,686 to a previous convertible note holder who elected to convert his note into shares of common stock during the fiscal year 2012 as payment of the interest on said note.
 
Except as provided herein, the Company has evaluated its activities, pursuant to ASC 855, and has determined that there are no additional reportable subsequent events.
 
NOTE 14.       STOCKHOLDERS’ EQUITY
 
Common Stock
 
The Company has authorized 989,999,995 shares of common stock, of which 125,565,141 shares of Class A Common Stock have been issued and are outstanding as of August 13, 2012.   As of August 13, 2012, the Company has no other classes of common stock authorized, issued or outstanding.
 
Preferred Stock
 
As of August 13, 2012, the Company is authorized to issue ten million five (10,000,005) shares of preferred stock with a par value of One Thousandths of One Cent ($0.001).  As of August 13, 2012, the Company has five (5) shares of preferred stock issued and outstanding.
 
As of the date of this Report, the Registrant has no other classes of preferred stock.
 
Warrants
 
During the quarter ended June 30, 2012, the Company did not issue any new warrants.
 
During the quarter ended June 30, 2011, and prior to the acquisition of Verdant Industries, Inc., Verdant Industries, Inc. issued 600,000 warrants, having a de minimus value, to two (2) members of its advisory board. The warrants were assumed by the Company during the acquisition of the assets and liabilities of Verdant Industries, Inc. The warrants are convertible to common stock of the Company at a strike price of $0.01 per share and, as of the date of this Report, 300,000 of said warrants have been exercised by one (1) holder as set forth in Note 13 herein.
 
 
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Prior to the acquisition of Verdant Industries, Inc., for the year ending March 31, 2011, the Company granted warrants to non-employee individuals and entities as follows:
 
   
Number of Warrants
   
Weighted Average Exercise Price
   
Weighted Average Remaining Contractual Terms
   
Aggregate Intrinsic Value
 
                         
Outstanding at March 31, 2010
                       
Granted     500,000     $ 0.16              
Exercised
                           
Exchanged for Shares
                           
Expired
                           
                             
Outstanding at March 31, 2011
    500,000     $ 0.16       4.87       70,000  
                                 
Granted     0                          
Exercised
                               
Exchanged for Shares
    (300,000 )   $ 0.16                  
Expired
    0                          
                                 
Outstanding at March 31, 2012
    200,000     $ 0.16       3.87       28,000  
                                 
Granted     0                          
Exercised
                               
Exchanged for Shares
    0                          
Expired
    0                          
                                 
Outstanding at June 30, 2012
    200,000     $ 0.16       3.62       26,000  
                                 
Exercisable at June 30, 2012
    200,000     $ 0.16       3.62       26,000  
Weighted Average Grant Date Fair Value
          $ 0.16                  
 
On February 18, 2011, the Company granted 500,000 warrants to five non-employees. The warrants were valued at $0.159 per warrant or $79,500 using a Black-Scholes option-pricing model with the following assumptions:
 
Stock Price
$0.16
 
Expected Term
5 Years
 
Expected Volatility
252.35%
 
Dividend Yield
0
 
Rick Free Interest Rate
1.125%
 
 
The expected term equals the contractual terms for this non-employee grant. The volatility is based on comparable volatility of other companies since the Company was not yet trading and had no historical volatility.
 
 

ITEM 2.         MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-looking Statements

Statements made in this Quarterly Report which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and our business, including, without limitation, (i) our ability to raise capital, and (ii) statements preceded by, followed by or that include the words “may,” “would,” “could,” “should,” “expects,” “projects,” “anticipates,” “believes,” “estimates,” “plans,” “intends,” “targets” or similar expressions.

Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following, general economic or industry conditions, nationally and/or in the communities in which we may conduct business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting our current or potential business and related matters.
 
 
16

 
 
Accordingly, results actually achieved may differ materially from expected results in these statements.  Forward-looking statements speak only as of the date they are made. The Company does not undertake, and specifically disclaim, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.
 
Results of Operations for the Three Months Ended June 30, 2012 as Compared to the Three Months Ended June 30, 2011.
 
Overview
 
Total revenues did not change from $0 for the three months ended June 30, 2012 from $0 for the three months ended June 30, 2011.
 
Total operating expenses decreased to $1,071,522 for the three months ended June 30, 2012 from $4,483,625 for the three months ended June 30, 2011. This decrease was primarily attributable to the $3,833,722 write-off of Goodwill for the three months ended June 30, 2011.
 
Liquidity and Capital Resources
 
As of June 30, 2012, the Company had cash of $9,373 and working capital of $1,255,366. Net loss was $1,098,537 for the three months ended June 30, 2012. The Company generated a negative cash flow from operations of $179,569 for three months ended June 30, 2012. The negative cash flow from operating activities for the period is primarily attributable to the Company’s increase in accrued salaries and consulting fees.  During the three months ended June 30, 2012, the Company invested $2,104 in property, plant and equipment. During the quarter ended June 30, 2012, the Company raised $155,100 from a private placement it made by selling shares of its common stock.
 
Going Concern
 
The accompanying unaudited financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  The Company sustained income of $0 and losses of $1,098,537 for the three months ended June 30, 2012 compared to income of $0 and losses of $4,492,250 for the three months ended June 30, 2011.  The Company had an accumulated deficit of $19,317,675 at June 30, 2012.  The accompanying unaudited financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the
 
These factors raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time.  The Company is highly dependent on its ability to continue to obtain investment capital in order to fund the current and planned operating levels.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company’s continuation as a going concern is dependent upon its ability to bring in income generating activities and its ability to continue receiving investment capital to sustain its current level of operations.  No assurance can be given that the Company will be successful in these efforts.
 
ITEM 3.         QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
As the Company is a “smaller reporting company,” this item is inapplicable.
 
 
17

 
 
ITEM 4.         CONTROLS AND PROCEDURES
 
Evaluation of Disclosure Controls and Procedures
 
The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15I and 15d-15(e) under the Exchange Act) as of the quarter ending June 30, 2012 covered by this Form 10-Q. Based upon such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were not effective as required under Rules 13a-15(e) and 15d-15(e) under the Exchange Act.
 
Management’s Report on Internal Control Over Financial Reporting
 
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) of the Company. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
 
The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of its management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
 
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
Management is still in the process of evaluating its internal controls over financial reporting, based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this ongoing evaluation, management has concluded that the Company’s internal control over financial reporting were not effective as of June 30, 2012 under the criteria set forth in the Internal Control—Integrated Framework.  The determination was made partially due to the small size of the company and a lack of segregation of duties.
 
Changes in Internal Control over Financial Reporting
 
Except as set forth above, there were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
 
18

 
 
Limitations on the Effectiveness of Controls
 
The Company’s management, including the CEO and CFO, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and all fraud.  A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.  Further, the design of the control system must reflect that there are resource constraints and that the benefits must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected.  These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.  Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of controls.  The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.  Projections of any evaluation of controls effectiveness to future periods are subject to risks.  Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. 
 
PART II- OTHER INFORMATION
 
ITEM 1.         LEGAL PROCEEDINGS
 
None.
 
ITEM 1A.      RISK FACTORS
 
As the Company is a “smaller reporting company,” this item is inapplicable.  Nonetheless, there are no material changes from the risk factors previously disclosed in the Registrant’s Form 10-K for the year ending March 31, 2012.
 
ITEM 2.         UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
During the quarter ended June 30, 2012, the Company issued 775,500 shares of restricted common stock through a private placement, pursuant to the exemption from registration provided by Section 4(2) of the Securities Act and Rule 506 promulgated thereunder, at a valuation of $0.20 per share for a total consideration of $155,100.  During the quarter ended June 30, 2012, the Company issued 3,014,615 shares of restricted common stock to various consultants for services, pursuant to the exemption from the registration requirements of Section 5 of the Securities Act provided by Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder.  The monies raised through the above-referenced private placement were used for general operating expenses.
 
ITEM 3.         DEFAULTS UPON SENIOR SECURITIES.
 
None.
 
ITEM 4.         MINE SAFETY DISCLOSURES
 
None.
 
Not applicable.
 
ITEM 5.         OTHER INFORMATION
 
None.
 
 
19

 
 
ITEM 6.          EXHIBITS
Number
Description
 
31.1 (2)
Certification of Chief Executive Officer of the Company as required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 (2)
Certification of Chief Financial Officer of the Company as required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 (2)
Certification of Chief Executive Officer of the Company pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 Of 18 U.S.C. 63
32.2 (2)
Certification of Chief Financial Officer of the Company pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 Of 18 U.S.C. 63

 
 
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the date indicated.
 
 

 
         
VRDT CORPORATION
 
   
  
 
       
Date: August 13, 2012
By:  
/s/ Graham Norton-Standen
 
   
Graham Norton-Standen
 
   
Executive Chairman
 
       
Date: August 13, 2012
By:  
/s/ Dennis Hogan
 
   
Dennis Hogan
 
   
Chief Financial Officer
 
 

20

PINX:VRDT Quarterly Report 10-Q Filling

PINX:VRDT Stock - Get Quarterly Report SEC Filing of PINX:VRDT stocks, including company profile, shares outstanding, strategy, business segments, operations, officers, consolidated financial statements, financial notes and ownership information.

PINX:VRDT Quarterly Report 10-Q Filing - 6/30/2012
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