VRDT (VRDT) 10-Q 2013 Q3 Quarterly report

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 DECEMBER 31, 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 [  ]   No [ x ]

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 February 11, 2013, the Company has 178,611,141 shares of Class A Common Stock outstanding and no other classes of common stock.

2

TABLE OF CONTENTS

VRDT CORPORATION

(FORMERLY A DEVELOPMENT STAGE COMPANY)

Part I – Financial Information
Item 1	Financial Statements	4
	Consolidated Balance Sheet as of December 31, 2012 and March 31, 2012	5
	Consolidated Statements of Operations for the Three Months and Nine Months Ended December 31, 2012, and 2011	6
	Statement of Stockholder’s Equity for the Period from Inception through December 31, 2012	7
	Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2012, and 2011	8
	Notes to the Financial Statements	9
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3	Quantitative and Qualitative Disclosures about Market Risk	21
Item 4	Controls and Procedures	21
Part II – Other Information
Item 1	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2	Unregistered Sales Of Equity Securities And Use Of Proceeds	23
Item 3	Defaults Upon Senior Securities	23
Item 4	Mine Safety Disclosure	23
Item 5	Other Information	23
Item 6	Exhibits	24
Item 9A	Change in Name of Audit Firm	25

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

Formerly a Development Stage Company

Balance Sheet

	December 31, 2012			March 31, 2012
ASSETS
CURRENT ASSETS:
Cash	$	10,648		$	36,447
Accounts Receivable		16,294			0
Inventory		25,244			0
Prepaid expenses		6,775,529			5,403,921
Note Receivable		0			215,383
Total Current Assets		6,827,715			5,655,751
PROPERTY AND EQUIPMENT, NET		16,323			48,144
OTHER ASSETS
Deposits		4,082			6,270
Investment in Subsidiary		0			0
Long-Term Warrant Expense		4,865,416			0
Intangibles		206,405			0
Goodwill		0			0
Total Other Assets		5,075,903			6,270
TOTAL ASSETS	$	11,919,941		$	5,710,165
LIABILITIES AND STOCKHOLDERS' EQUITY / (DEFICIT)
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	2,738,318		$	3,142,645
Accounts payable and accrued expenses - Related party		0			20,679
Deposits from stockholders		10,000			0
Notes Payable		95,000			95,000
Notes Payable - Related parties		664,991			942,759
Total Current Liabilities		3,508,309			4,201,083
LONG TERM LIABILITIES:
Notes Payable - Related parties		413,972			0
Total Long Term Liabilities		413,972			0
STOCKHOLERS' EQUITY / (DEFICIT)
Preferred stock, $.001 par value; 10,000,005 shares authorized 0 shares issued and outstanding at December 31, 2012		0			0
Common Stock, .001 par value: 989,999,995 shares authorized: 126,961,141 and 120,946,840 shares issued and outstanding as of December 31, 2012, and March 31, 2012, respectively		126,961			120,947
Additional paid-in capital		27,144,897			19,607,273
Accumulated Deficit		(19,274,198	)		(18,219,138	)
Total Stockholders' Equity / (Deficit)		7,997,660			1,509,082
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY / (DEFICIT)	$	11,919,941		$	5,710,165

See the accompanying notes to the financial statements

5

VRDT Corporation

Formerly a Development Stage Company

Statement of Operations

	Three Months Ended December 31,						Nine Months Ended December 31,
	2012			2011			2012			2011
Sales	$	53,382		$	0		$	72,902		$	0
Cost of sales		(20,528	)		0			(24,454	)		0
Gross profit		32,854			0			48,448			0
Operating Expenses
Depreciation and amortization		21,331			1,153			31,600			1,991
General and administrative expenses		412,811			1,344,089			382,739			3,613,601
Impairment of goodwill		0			0			0			3,833,722
Total operating expenses		434,142			1,345,242			414,339			7,449,314
Income / (Loss) from Operations		(401,288	)		(1,345,242	)		(365,891	)		(7,449,314	)
Other Income / (Expense)
Interest Income		0			0			(383	)		0
Interest (expense)		(343,235	)		(3,605	)		(581,022	)		(12,154	)
Interest (expense) - Related parties		(59,347	)		(4,318	)		(107,764	)		(11,063	)
Unrealized Exchange (Gain) / Loss		0			(50	)		0			(50	)
Total Other Income / (Expense)		(402,582	)		(7,973	)		(689,169	)		(23,267	)
Income / (Loss) before Income Taxes		(803,870	)		(1,353,215	)		(1,055,060	)		(7,472,581	)
Provisions for Income Taxes		0			0			0			0
Net Income / (Loss)	$	(803,870	)	$	(1,353,215	)	$	(1,055,060	)	$	(7,472,581	)
Net Income / (Loss) Per Share:
Basic	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.11	)
Diluted	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.11	)
Weighted Average Shares Outstanding
Basic		126,846,000			101,232,069			125,889,657			69,862,888
Diluted		139,346,000			101,232,069			133,022,384			69,862,888

See the accompanying notes to the financial statements

6

VRDT Corporation

Formerly a Development Stage Company

Statement of Stockholder's Deficiency

For the Period April 1, 2011 to December 31, 2012

	Common Stock						Additional  Paid-in			Accumulated			Total Stockholders'
	Shares			Amount			Capital			Deficit			Equity
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
- 2nd Quarter		553,186			553			43,454						44,007
- 3rd Quarter		339,000			339			57,291						57,630
Issuance of common stock		1,802,301			1,802			254,935			0			256,737
Shares issued for services
- 1st Quarter		2,880,000			2,880			285,120						288,000
- 2nd Quarter		20,000			20			4,529						4,549
- 3rd Quarter		12,000			12			2,388						2,400
Shares issued for services		2,912,000			2,912			292,037			0			294,949
Exercised warrants
- 2nd Quarter		300,000			300			2,700						3,000
Exercised warrants		300,000			300			2,700			0			3,000
Investment in Subsidiary
- 2nd Quarter		1,000,000			1,000			199,000						200,000
Investment in Subsidiary		1,000,000			1,000			199,000			0			200,000
Issuance of GEM warrants		0			0			6,788,952			0			6,788,952
Net loss
- 1st Quarter											(1,098,537	)		(1,098,537	)
- 2nd Quarter											847,346			847,346
- 3rd Quarter											(803,870	)		(803,870	)
Net (Loss) / Income		0			0			0			(1,055,061	)		(1,055,061	)
Balance at December 31, 2012		126,961,141			126,961			27,144,897			(19,274,199	)		7,997,659

See the accompanying notes to the financial statements

7

VRDT Corporation

Formerly a Development Stage Company

Consolidated Statement of Cash Flows

	Nine Months Ended December 31,
	2012			2011
CASH FLOWS FROM OPERATIONS:
Net Income / (Loss)		(1,055,060	)		(7,472,581	)
Adjustments to reconcile net income / (loss) to net cash used in operating activities:
Depreciation & Amortization		31,600			1,991
Impairment of Goodwill					3,833,722
Impairment of Long-Lived Assets
Interest expense - amortization of warrants		565,746
Issurance of warrants for services		3,000
Common stock issued for services		294,949			842,800
Assumption of liabilities over value of assets		(38,747	)		(833,722	)
Changes in Assets & Liabilities:
Decrease / (Increase) in accounts receivable		(16,294	)
Decrease / (Increase) in inventory		(25,244	)
Decrease / (Increase) in prepaid expenses		(6,717	)		(60,006	)
Decrease / (Increase) in note receivable		215,384
(Decrease) / Increase in accounts payable and accrued expenses		(425,008	)		1,607,724
(Decrease) / Increase in shareholder deposits		10,000			1,000
(Decrease) / Increase in interest payable to stockholder		136,204			11,063
Net cash provided by operating activities		(310,186	)		(2,068,010	)
CASH FLOWS FROM INVESTING:
Purchase of property plant and equip		25,959			(22,565	)
Deposits		2,188
Intangibles		(500	)
Net cash used in investing activities		27,647			(22,565	)
CASH FLOWS FROM FINANCING:
Net proceeds from notes payable - other					95,000
Payments on notes payable - other					(50,000	)
Proceeds from inssuance of common stock		256,737			2,107,647
Net cash from financing activities		256,737			2,152,647
Net Increase / (Decrease) in cash		(25,802	)		62,072
CASH AT BEGINNING OF PERIOD		36,447			101
CASH AT END OF PERIOD		10,645			62,173

See the accompanying notes to the financial statements

8

VRDT Corporation

Formerly a Development Stage Company

Consolidated Statement of Cash Flows - Continued

	Nine Months Ended December 31,
	2012	2011
SUPPLEMENTAL CASH FLOW INFORMATION:
Common stock issued for services	294,949	842,800
Common stock issued for investment in subsidiary	200,000
Warrants issued to acquire line of credit	6,788,952
Decrease in accrued salaries	2,433,496

See the accompanying notes to the financial statements

9

NOTES TO FINANCIAL STATEMENTS

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 December 31, 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. In the opinion of management, all adjustments consisting of normal recurring adjustments necessary for a fair statement of the financial position at December 31, 2012 and the result of operations and cash flows for the three months ended December 31, 2012 and 2011 have been made.

The consolidated financial statements include by full consolidation all domestic and foreign entities controlled by the Company (i.e., all subsidiaries).  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;

24Tech Corporation, Inc., a California corporation. (acquired September 1, 2012 – results included effective September 1, 2012)

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, and the sale of computer hardware and software and other related technologies and services.

The Company recognizes revenue when it is realized or realizable and earned.  The Company considers revenue realized or realizable and earned when all of the following criteria are met:

o persuasive evidence of an arrangement exists,

o the product has been shipped or the services have been rendered to the customer,

o the sales price is fixed or determinable, and

o collectability is reasonably assured.

Generally, services are provided to listed clients that have contracted with the Company.  Certain service calls billed on an hourly basis when the service call is completed and the client acknowledges the problem has been solved.  Sales and installation of equipment are billed when the equipment has been installed and accepted by the client.

NOTE 3.            RECENTLY ENACTED ACCOUNTING PRONOUNCEMENTS

We have reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term.  The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.  Reference is made to these recent accounting pronouncements as if they are set forth therein in their entirety.

10

NOTES TO FINANCIAL STATEMENTS

NOTE 4.            RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform to the current year presentation.

NOTE 5.            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 $1,055,060 for the nine months ended December 31, 2012, and sustained losses of $9,510,946for the year ended March 31, 2012. The Company had an accumulated deficit of $19,274,198 at December 31, 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 6.            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.

NOTE 7.            INTANGIBLES

The Company acquired 24Tech on September 1, 2012, for 1,000,000 shares of VRDT stock valued at $200,000. This consideration was classified as Intangibles associated with 24Tech’s client list. This Intangible will be amortized over 36 months commencing September 1, 2012.

11

NOTES TO FINANCIAL STATEMENTS

NOTE 8.            NOTES PAYABLE-RELATED PARTIES

The Company’s related party notes payable consist of the following:

	December 31, 2012		March 31, 2012
Note payable, 14% interest, principal and interest due montly commencing January 1, 2014, and due April 15, 2017.	$	17,761	$	0
Note payable, 12% interest, principal and interest due monthly commencing January 1, 2013, and due June 1, 2014. (1)	$	175,669	$	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. (2)	$	885,533		800,000
	$	1,078,963	$	942,759
Current portion of notes payable	$	664,991
Non current portion of notes payable	$	413,972

(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.

(2)  The Company failed to make the interest payment due August 31, 2012.

12

NOTES TO FINANCIAL STATEMENTS

NOTE 9.            NOTES PAYABLE

The Company’s notes payable consists of the following:

	December 31, 2012		March 31, 2012
Notes payable, 15% interest, principle and interest due April 19, 2012	$	45,000	$	45,000
Note payable, 10% interest, principle and interest due March 18, 2012		50,000		50,000
	$	95,000	$	95,000

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 December 31, 2012.

NOTE 11.          ACCOUNTS RECEIVABLE

On October 1, 2012, the Board of Directors retroactively reduced the salaries of all employees to the California minimum for exempt employees, currently $16 per hour, to the employees’ date of hire. Advances made to employees were reclassified from a contra to Deferred Salaries to Employee Advances. Any advance which had been reported for tax purposes were written off. A repayment plan will be negotiated with each employee. Repayment can be made through a formal note with the Company, deductions from future salaries and bonuses, or through Company repurchase of employee stock. If the employee so elects, the Employee Advance will be written off and the employee will accept the tax consequences in the then-current tax year. The amount reclassified as Employee Advances was $698,782. An allowance for bad debt has been established against the full amount of the Employee Advances.

13

NOTES TO FINANCIAL STATEMENTS

NOTE 12.         PREPAID EXPENSES

The Company issued certain restricted stock to various officers and key persons to assist with a registration statement.   The value of the stock issued has been recorded as a prepaid expense until such time as the shares have been earned.  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. The value of the restricted stock recorded as prepaid expense is $5,365,000.

During the three months ended September 30, 2012, the Company issued 12,000,000 warrants to GEM in consideration for a line of credit of up to $30 million. These warrants were valued at $6,788,952, using Black-Scholes option pricing model. These warrants will be expensed over the five year life of the warrants. The portion of the warrants to be expensed in the twelve month period, $1,357,790, was recorded as a prepaid expense. That portion of the warrant expense to be realized over periods after the next twelve months, $5,204,863, as of September 30, 2012, was recorded as Long Term Warrant Expense.

The balances of Prepaid Expenses for December 31, 2012 and March 31, 2012 has been summarized below:

	Balance As Of
	December 31, 2012		March 31, 2012
Insurance		42,049		32,071
Current Portion Warrant Expense		1,357,790		0
Deferred Employee Restricted Stock Grants		4,765,000		4,765,000
Deferred Directors' Fees		600,000		600,000
Other Prepaid Items		10,690		6,850
Total Prepaid Expense		6,775,529		5,403,921

NOTE 13.         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.

14

NOTES TO FINANCIAL STATEMENTS

During the three months ended September 30, 2012, the Company acquired 24Tech for 1,000,000 shares of VRDT stock, with acquisition value set at $200,000.

NOTE 14.         SUBSEQUENT EVENTS

On December 14, 2012, The Company entered into a Share Exchange Agreement (the “Agreement”) with Arch Hill Capital NV (“AHC”), whereby The Company will acquire all of AHC’s interest in Lithium Technology Corporation (“LTC”) in exchange for common stock in The Company.  Pursuant to the Agreement, upon Closing, The Company will acquire a 56.6% interest in LTC from AHC and AHC will obtain a 26.43% ownership interest in The Company.

On December 14, 2012, The Company also received a conditional funding commitment (the “Commitment”) from a private funding source in an amount up to $4 million, which funds The Company expects shall be used to provide capital for the ongoing and near term operational needs of The Company and LTC.  The Company will supplement this filing with the terms of the resulting funding agreement represented by the Commitment as soon as those terms have been formalized.

On January 28, 2013, the Company entered into an Acquisition Agreement (the “Agreement”) with Stichting Beheer Arch Hill I and Stichting Beheer Arch Hill II (collectively, “Stichting”) whereby The Company agreed to issue an aggregate of 51,600,000 shares of its restricted Common Stock, warrants to purchase an aggregate of 7,500,000 shares of Common Stock, and pay the sum of €1,000,000 in cash to Stichting in exchange for all of Stichting’s right title and interest in shares of Arch Hill Capital N.V. owned collectively by them (which shares represented all of the issued and outstanding shares of capital in Arch Hill).  Prior to the transaction, the Company was a depository receipt holder of Stichting Beheer Arch Hill II.  In accordance with the Agreement, Stichting will have a right to nominate 2 persons to stand for appointment or election as directors of The Company.

In connection with the Agreement, the Company issued a total of 51,600,000 restricted shares of its Common Stock to the designees of the Sellers and agreed to issue warrants giving the holders the right to acquire, in aggregate, 7.5 million shares of the Company’s Common Stock at an exercise price of $1.20 per share or participate in contingent value that may achieved with respect upon disposition of certain of Arch Hill’s present holdings. The offer and sale of restricted Common Stock and the warrants described herein were made in reliance on exemptions from registration provided for in Section 4(2) of the Securities Act, Rule 506 of Regulation D promulgated thereunder and Regulation S promulgated under the Securities Act.

NOTE 15.         STOCKHOLDERS’ EQUITY

Common Stock

The Company has authorized 989,999,995 shares of common stock, of which 178,611,141shares of Class A Common Stock have been issued and are outstanding as of February 11, 2013.   As of February 11, 2013, the Company has no other classes of common stock authorized, issued or outstanding.

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NOTES TO FINANCIAL STATEMENTS

Preferred Stock

The Company is authorized to issue up to ten million five (10,000,005) shares of preferred stock with a par value of One Thousandths of One Cent ($0.001).  As of February 11, 2013, the Company has no series of preferred stock designated and no shares of preferred stock issued or outstanding.

Warrants

During the quarter ended September 30, 2012, the Company issued 12,000,000 new warrants to GEM.

On August 2, 2012, the Company granted 12,000,000 warrants to GEM in consideration for a credit line of up to $30 million. The warrants were valued at $0.566 per warrant or $6,788,952using a Black-Scholes option-pricing model with the following assumptions:

Stock Price	$	0.60
Expected Term (Years)		3
Expected Volatility		228	%
Dividend Yield		0
Risk Free Interest Rate		0.31	%
Strike Price	$	0.85

The expected term equals three years of the five year contractual term 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.

	Number of Warrants		Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms		Aggregate Intrinsic Value
Granted		12,000,000
Exercised
Exchanged for Shares		0
Expired		0
Outstanding at December 31, 2012		12,000,000	$	0.85		4.58		0
Exercisable at December 31, 2012		12,000,000	$	0.85		4.58		0
Weighted Average Grant Date Fair Value			$	0.566

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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NOTES TO FINANCIAL STATEMENTS

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:

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 (Years)		5
Expected Volatility		252.35	%
Dividend Yield		0
Risk 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.

	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 December 31, 2012		200,000		$	0.16		3.12		26,000
Exercisable at December 31, 2012		200,000		$	0.16		3.12		26,000
Weighted Average Grant Date Fair Value				$	0.16

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NOTES TO FINANCIAL STATEMENTS

NOTE 16.         AMENDED FINANCIAL STATEMENTS

The financial statements for the three months ended September 30, 2012, have been amended and restated. The financial statements for the three months ended December 31, 2012, have incorporated the results of these changes.

NOTE 17.         PRO-FORMA FINANCIAL STATEMENTS

The following table displays the three and nine month Pro-Forma Statements of Operations for 2012 and 2011 assuming that the acquisition of 24Tech took place April 1, 2011.

VRDT Corporation

Pro-Forma Statement of Operations

	Three Months Ended December 31,						Nine Months Ended December 31,
	2012			2011			2012			2011
Sales	$	53,382		$	33,400		$	186,784		$	203,987
Cost of sales		(20,528	)		(10,927	)		(67,955	)		(85,998	)
Gross profit		32,854			22,473			118,828			117,989
Operating Expenses
Depreciation and amortization		21,331			21,226			67,605			65,832
General and administrative expenses		412,811			1,370,900			449,535			3,742,976
Impairment of goodwill		0			0			0			3,833,722
Total operating expenses		434,142			1,392,126			517,139			7,642,530
Income / (Loss) from Operations		(401,288	)		(1,369,653	)		(398,311	)		(7,524,541	)
Other Income / (Expense)
Other income					0			14,555			95
Loss from conversion of shareholder debt					0			0			0
Interest Income		0			0			(383	)		0
Interest (expense)		(343,235	)		(3,617	)		(582,609	)		(12,238	)
Interest (expense) - Related parties		(59,347	)		(4,318	)		(107,764	)		(11,063	)
Unrealized Exchange (Gain) / Loss		0			(50	)		0			(50	)
Total Other Income / (Expense)		(402,582	)		(7,985	)		(676,201	)		(23,256	)
Income / (Loss) before Income Taxes		(803,870	)		(1,377,638	)		(1,074,512	)		(7,547,797	)
Provisions for Income Taxes		0			0			0			0
Net Income / (Loss)	$	(803,870	)	$	(1,377,638	)	$	(1,074,512	)	$	(7,547,797	)

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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.

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 December 31, 2012 as Compared to the Three Months Ended December 31, 2011.

Overview

Total revenues changed to $53,382 for the three months ended December 31, 2012, from $0 for the three months ended December 31, 2011. The revenue for the three months ended December 31, 2012, were from computer services and parts by the Company’s newly acquired subsidiary 24Tech and from sales of battery systems.

Cost of goods increased to $20,528 for the three months ended December 31, 2012, from $0 for the three months ended December 31, 2011. The cost of goods sold for the three months ended December 31, 2012, were associated with computer services and parts by the Company’s newly acquired subsidiary 24Tech and from sales of battery systems.

Gross profit increased to $32,854 for the three months ended December 31, 2012, from $0 for the three months ended December 31, 2011. Gross margin increased to 62% for the three months ended December 31, 2012, from 0% for the three months ended December 31, 2011.

Total operating expenses decreased to $412,811for the three months ended December 31, 2012, from $1,344,089for the three months ended December 31, 2011. This decrease was primarily attributable to a salary action taken by the Board of Directors during the three months ended September 30, 2012 reducing employee salaries.

Non-operating expenses increased to $402,582 for the three months ended December 31, 2012, from $7,973 for the three months ended December 31, 2011. This increase was associated with the interest on debt to related parties and to amortization of the GEM warrant expense.

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Net loss for the three months ended December 31, 2012, was $803,870, from a net loss for the three months ended December 31, 2011 of $1,353,215. The decrease in loss was associated with the salary action taken by the Board of Directors, partially offset by the increase in non-operating expenses.

Liquidity and Capital Resources

As of December 31, 2012, the Company had cash of $10,648and working capital of $3,319,406. Net loss was $803,870 for the three months ended December 31, 2012. The Company generated a negative cash flow from operations of $39,754 for three months ended December 31, 2012. The negative cash flow from operating activities for the period is primarily attributable to the Company’s general operating expense.  During the quarter ended December 31, 2012, the Company raised $57,630 from a private placement it made by selling shares of its common stock.

Results of Operations for the Nine Months Ended December 31, 2012 as Compared to the Nine Months Ended December 31, 2011.

Overview

Total revenues changed to $72,902 for the nine months ended December 31, 2012, from $0 for the nine months ended December 31, 2011. The revenue for the nine months ended December 31, 2012, were from computer services and parts by the Company’s newly acquired subsidiary 24Tech and from sales of battery systems.

Cost of goods increased to $24,454 for the nine months ended December 31, 2012, from $0 for the nine months ended December 31, 2011. The cost of goods sold for the nine months ended December 31, 2012, were associated with computer services and parts by the Company’s newly acquired subsidiary 24Tech and from sales of battery systems.

Gross profit increased to $48,448 for the nine months ended December 31, 2012, from $0 for the nine months ended December 31, 2011. Gross margin increased to 66% for the nine months ended December 31, 2012, from 0% for the nine months ended December 31.

Total operating expenses decreased to $382,739 for the nine months ended December 31, 2012, from $7,449,314 for the nine months ended December 31, 2011. This decrease was primarily attributable to the $3,833,722 write-off of Goodwill for the nine months ended December 31, 2011 and the salary action taken in the nine months ended December 31, 2012.

Non-operating expenses increased to $689,169 for the nine months ended December 31, 2012, from $23,267 for the nine months ended December 31, 2011. This increase was associated with the interest on debt to related parties and to amortization of the GEM warrant expense.

Net loss for the nine months ended December 31, 2012, was $1,055,060, compared to a net loss of $7,472,581 for the nine months ended December 31, 2011.

Salary Action

At a Board Meeting dated October 1, 2012, the Board of Directors retroactively reduced the salaries of all employees to the California minimum for exempt employees, currently $16 per hour, to the employees’ date of hire. Advances made to employees were reclassified from a contra to Deferred Salaries to Employee Advances. Any advance which had been reported for tax purposes were written off. A repayment plan will be negotiated with each employee. Repayment can be made through a formal note with the Company, deductions from future salaries and bonuses, or through Company repurchase of employee stock. If the employee so elects, the Employee Advance will be written off and the employee will accept the tax consequences in the then-current tax year. All accrued salaries at the new rate will be accrued until such time as the Board of Directors determines that the Company is adequately funded. At such time, all deferred accrued salaries will be paid and new salaries will be established by the Compensation Committee of the Board of Directors following the recommendations of management.

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Liquidity and Capital Resources

As of December 31, 2012, the Company had cash of $10,648 and working capital of $3,319,406. Net loss was $1,055,060 for the nine months ended December 31, 2012. The Company generated a negative cash flow from operations of $310,186 for nine months ended December 31, 2012. The negative cash flow from operating activities for the period is primarily attributable to the Company’s general operating expenses.  During the nine months ended December 31, 2012, the Company invested $2,104 in property, plant and equipment and reclassed $24,639 in property, plant and equipment to inventory. During the nine months ended December 31, 2012, the Company raised $256,737 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 realized revenue of $72,902 and loss of $1,055,060 for the nine months ended December 31, 2012 compared to revenue of $0 and losses of $7,472,581 for the nine months ended December 31, 2011.  The Company had an accumulated deficit of $19,274,198 at December 31, 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.

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 December 31, 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.

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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 December 31, 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.

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. 

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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 December 31, 2012, the Company issued 339,000 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 $0.17 per share for a total consideration of $57,630.  During the quarter ended December 31, 2012, the Company issued 12,000 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, at a valuation of $0.20 per share for a total consideration of $2,400.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.   MINE SAFETY DISCLOSURES   None.

ITEM 5.   OTHER INFORMATION

On December 10, 2012, Daniel Elliott tendered his resignation as an officer and director of the Company to address personal matters.  Mr. Elliott will, however, remain associated with the Company as a consultant.

On December 17, 2012, the audit firm of Drake & Klein CPAs changed its name to DKM Certified Public Accountants.  The change was reported to the PCAOB as a change of name.  This is not a change of auditors for the Company.

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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
101.INS*	XBRL Instance
101.SCH*	XBRL Taxonomy Extension Schema
101.CAL*	XBRL Taxonomy Extension Calculation
101.DEF*	XBRL Taxonomy Extension Definition
101.LAB*	XBRL Taxonomy Extension Labels
101.PRE*	XBRL Taxonomy Extension Presentation

* XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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: February 14, 2013	By:	/s/ Graham Norton-Standen
		Graham Norton-Standen
		Executive Chairman
Date: February 14, 2013	By:	/s/ Dennis Hogan
		Dennis Hogan
		Chief Financial Officer

24