VRDT (VRDT) 10-Q/A 2013 Q3 Quarterly report (amended)

UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

______________________

FORM 10-Q/A

______________________

[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 ]

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

Explanatory Note

This Amendment No. 1 to Form 10-Q (this “Amendment”) amends the Quarterly Report on Form 10-Q for the quarter ending December 31, 2012, originally filed on February 14, 2013 (the “Original Filing”) by VRDT Corporation, a Delaware corporation (“VRDT,” the “Company,” “we,” or “us”). We are filing this Amendment to change the presentation of the Restricted Stock Agreements (RSAs) and to restate certain financial information.

2

 TABLE OF CONTENTS

VRDT CORPORATION
(FORMERLY A DEVELOPMENT STAGE COMPANY)

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

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
	Restated				Restated
ASSETS	Unaudited
CURRENT ASSETS:
Cash	$	15,588		$	36,447
Accounts Receivable		16,645			0
Inventory		25,244			0
Prepaid expenses		3,570,282			38,921
Note Receivable		0			215,383
Total Current Assets		3,627,759			290,751
PROPERTY AND EQUIPMENT, NET		15,481			48,144
OTHER ASSETS
Deposits		4,082			6,270
Long-Term Warrant Expense		2,051,901			0
Intangibles		221,036			0
Total Other Assets		2,277,019			6,270
TOTAL ASSETS	$	5,920,259		$	345,165
LIABILITIES AND STOCKHOLDERS' EQUITY / (DEFICIT)
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	2,875,190		$	3,092,645
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		3,645,181			4,151,083
LONG TERM LIABILITIES:
Notes Payable - Related parties		413,972			0
Total Current Liabilities		413,972			0
STOCKHOLERS' EQUITY / (DEFICIT)
Preferred stock, $.001 par value; 10,000,005 authorized, 0 shares issued and outstanding at December 31, 2012 and March 31, 2012, respectively		0			0
Common Stock, .001 par value: 989,999,995 shares authorized: 72,061,141 and 66,546,840 shares issued and outstanding as of December 31, 2012, and March 31, 2012, respectively		72,061			66,547
Common Stock issued under Restricted Stock Agreements, 54,900,000 shares issued and pending as of December 31, 2012 and March 31, 2012 respectively		0			0
Additional paid-in capital		21,880,933			14,146,673
Accumulated Deficit		(20,091,888	)		(18,019,138	)
Total Stockholders' Equity / (Deficit)		1,861,106			(3,805,918	)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY / (DEFICIT)	$	5,920,259		$	345,165

 

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
	Restated Unaudited				Restated Unaudited		Restated Unaudited				Restated  Unaudited
Sales	$	53,382		$	0		$	72,902		$	0
Cost of sales		(21,348	)		0			(25,273	)		0
Gross profit		32,034			0			47,629			0
Operating Expenses
Depreciation and amortization		22,703			1,153			33,429			1,991
General and administrative expenses		411,443			1,344,089			381,133			3,613,601
Impairment of goodwill		0			0			0			3,833,722
Total operating expenses		434,146			1,345,242			414,562			7,449,314
Income / (Loss) from Operations		(402,112	)		(1,345,242	)		(366,933	)		(7,449,314	)
Other Income / (Expense)
Interest Income		0			0			(383	)		0
Interest (expense)		(958,173	)		(3,605	)		(1,597,669	)		(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)		(1,017,520	)		(7,973	)		(1,705,816	)		(23,267	)
Income / (Loss) before Income Taxes		(1,419,632	)		(1,353,215	)		(2,072,749	)		(7,472,581	)
Provisions for Income Taxes		0			0			0			0
Net Income / (Loss)	$	(1,419,632	)	$	(1,353,215	)	$	(2,072,749	)	$	(7,472,581	)
Net Income / (Loss) Per Share:
Basic	$	(0.02	)	$	(0.03	)	$	(0.03	)	$	(0.15	)
Weighted Average Shares Outstanding
Basic		71,872,304			52,023,923			71,764,392			49,109,709

See the accompanying notes to the financial statements

6

VRDT Corporation 

Formerly a Development Stage Company 

Statement of Stockholder's Equity 

For the Period August 19, 1999 (Inception) to December 31, 2012 

	Common Stock				Additional Paid-in			Accumulated			Total Stockholders'
	Shares		Amount		Capital			Deficit			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	)
Net loss									(6,954	)		(6,954	)
Balance at March 31, 2009		3,400,726	$	3,401	$	8,273,839		$	(8,519,438	)	$	(242,198	)

See the accompanying notes to the financial statements

7

VRDT Corporation 

Formerly a Development Stage Company 

Statement of Stockholder's Equity - Continued 

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

	Common Stock						Additional Paid-in			Accumulated			Total Stockholders'
	Shares			Amount			Capital			Deficit			Equity
	Restated			Restated			Restated			Restated			Restated
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-Employee								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	)
Issuance of common stock - Change in Control		30,000,000			30,000			2,970,000						3,000,000
Treasury Stock - Redemtion and cancellation		(1,700,000	)		(1,700	)		(848,300	)					(850,000	)
Issuance of common stock		16,021,000			16,021			2,272,780			0			2,288,800
Shares issued for services		13,265,500			13,266			1,293,155			0			1,306,420
Restricted Stock - Employees & Directors		54,400,000			0			0			0			0
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			(9,310,946	)		(9,310,946	)
Balance at March 31, 2012		120,946,840			66,547			14,146,673			(18,019,138	)		(3,805,918	)
Issuance of common stock		1,802,301			1,802			254,935			0			256,737
Shares issued for services		2,412,000			2,412			242,537			0			244,949
Restricted Stock - Employees & Directors		500,000			0			0			0			0
Exercised warrants		300,000			300			2,700			0			3,000
Investment in Subsidiary		1,000,000			1,000			199,000			0			200,000
Issuance of GEM warrants		0			0			7,035,088			0			7,035,088
Net (Loss) / Income		0			0			0			(2,072,750	)		(2,072,750	)
Balance at December 31, 2012		126,961,141		$	72,061		$	21,880,933		$	(20,091,888	)	$	1,861,106

See the accompanying notes to the financial statements

8

VRDT Corporation 

Formerly a Development Stage Company 

Statement of Cash Flows 

	Nine Months Ended December 31,
	2012			2011
	Restated Unaudited				Unaudited
CASH FLOWS FROM OPERATIONS:
Net Income / (Loss)		(2,072,750	)		(7,472,581	)
Adjustments to reconcile net income / (loss) to net cash used in operating activities:
Depreciation & Amortization		33,429			1,991
Impairment of Goodwill					3,833,722
Impairment of Long-Lived Assets
Impairment of Loan Receivable
Interest expense - amortization of warrants		1,465,643
Accrued Interest on payable converted to debt
Interest expense - warrant structure fee		116,750
Common stock issued for services		244,949			842,800
Loss on conversion of stockholder debt to Common Stock
Expense paid by stockholder and affiliate
Payables and servcies converted to Common Stock
Assumption of liabilities over value of assets		(38,747	)		(833,722	)
Changes in Assets & Liabilities:
Decrease / (Increase) in accounts receivable		(16,645	)
Decrease / (Increase) in inventory		(25,244	)
Decrease / (Increase) in prepaid expenses		(13,817	)		(60,006	)
Decrease / (Increase) in note receivable		215,384
(Decrease) / Increase in accounts payable and accrued expenses		(363,400	)		1,607,724
(Decrease) / Increase in shareholder deposits		10,000			1,000
(Decrease) / Increase in interest payable to stockholder		136,204			11,063
(Decrease) / Increase in notes payable related party - current
Net cash provided by operating activities		(308,243	)		(2,068,010	)
CASH FLOWS FROM INVESTING:
Purchase of property plant and equipment		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	)
Exercise of warrants		3,000
Proceeds from inssuance of common stock		256,737			2,107,647
Net cash from financing activities		259,737			2,152,647
Net Increase / (Decrease) in cash		(20,859	)		62,072
CASH AT BEGINNING OF PERIOD		36,447			101
CASH AT END OF PERIOD		15,588			62,173

See the accompanying notes to the financial statements

9

Verdant Automotive Corporation 

Formerly a Development Stage Company 

Statement of Cash Flows - Continued 

	Nine Months Ended December 31,
	2012		2011
	Unaudited			Unaudited
SUPPLEMENTAL CASH FLOW INFORMATION:
Common stock issued for services		244,949		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

10

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.

11

NOTES TO FINANCIAL STATEMENTS

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.

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 ($2,072,749) for the nine months ended December 31, 2012,and sustained losses of $9,310,946for the year ended March 31, 2012. The Company had an accumulated deficit of $20,091,888 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.

12

NOTES TO FINANCIAL STATEMENTS

NOTE 7.     INTANGIBLES

The Company acquired 24Tech on September 1, 2012, for 1,000,000 shares of VRDT stock valued at $200,000. In addition, 24Tech had negative retained earnings of $48,103, raising the total consideration to $248,103. This consideration was classified as Intangibles associated with 24Tech’s client list. This Intangible will be amortized over 36 months commencing September 1, 2012.

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.

13

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.

14

NOTES TO FINANCIAL STATEMENTS

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.

NOTE 12.     PREPAID EXPENSES

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 two year life of the agreement. 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
	Restated Unaudited		Restated
Insurance		38,788		32,071
Current Portion Warrant Expense		3,517,544		0
Other Prepaid Items		13,950		6,850
Total Prepaid Expense		3,570,282		38,921

 

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.

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.

15

NOTES TO FINANCIAL STATEMENTS

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 be 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.

The Company’s Certificate of Incorporation authorizes us to issue989,999,995 shares of common stock, par value $.001 per share.  As of December 31, 2012, there were126,961,141shares of Class A Common Stock issued and outstanding.   As of March 31, 2012, the Company had no other classes of capitalstock authorized, issued or outstanding.  The126,961,141shares of Class A Common Stock that were issued and outstanding as of December 31, 2012 include 54,900,000 shares of Class A Common Stock that were issued in 2011 and 2012 to key employees and executives and yet at December 31, 2012 remained subject to a repurchase or cancellation right in favor of the Company if certain conditions were not met, including for instance, continued employment of the holder by the Company.  The Company had not at December 31, 2012 exercised its repurchase/cancellation right as to any of such unvested shares, but the Company’s repurchase/cancellation right was exercisable as to all54,900,000 unvested shares at such date. For accounting presentationpurposes herein, all54,900,000 issued but unvested shares will notbe consideredas outstanding securities. However, pursuant to Delaware state law, which governs the issuance and repurchase of our capital stock, all such shares areduly and validly issued, outstanding and eligible to vote.

16

 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		270	%
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		4.83
Exercisable at December 31, 2012		12,000,000	$	0.85		4.83
Weighted Average Grant Date Fair Value			$	0.586

 

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.

17

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

18

NOTES TO FINANCIAL STATEMENTS

NOTE 16.     EARNINGS PER SHARE 

The Company’s Certificate of Incorporation authorizes us to issue989,999,995 shares of common stock, par value $.001 per share.  As of December 31, 2012, there were126,961,141shares of Class A Common Stock issued and outstanding.   As of December 31, 2012, the Company had no other classes of capitalstock authorized, issued or outstanding.  The126,961,141shares of Class A Common Stock that were issued and outstanding as of December 31, 2012 include 54,900,000 shares of Class A Common Stock that were issued in 2011 and 2012 to key employees and executives and yet at December 31, 2012 remained subject to a repurchase or cancellation right in favor of the Company if certain conditions were not met, including for instance, the termination of continued employment of the holder by the Company.  The Company had not at December 31, 2012 exercised its repurchase/cancellation right as to any of such unvested shares, but the Company’s repurchase/cancellation right was exercisable as to all54,900,000 unvested shares at such date. For accounting presentationpurposes herein, all54,900,000 issued but unvested shares will notbe consideredas outstanding securities for earnings per share calculation. However, pursuant to Delaware state law, which governs the issuance and repurchase of our capital stock, all such shares areduly and validly issued, outstanding and eligible to vote.

Due to the net loss realized by the Company, warrants were not considered for earnings per share calculation.

NOTE 17.     AMENDED FINANCIAL STATEMENTS

The financial statements for the fiscal year ended March 31, 2012, have been amended and restated. The financial statements for the nine months ended December 31, 2012, have incorporated the results of these changes. While multiple quarters are affected by these changes, the Commission is only requiring the amendment and restatement of the 10-K for the period ended March 31, 2012, this quarter’s 10-Q.

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

The financial statements have been restated to reflect the following changes:

●  Reclassification of Restricted Stock Agreements (RSAs)

●  Change in Amortization Period for GEM warrants and accrual of Warrant Structure Fee

● Adjustments in beginning balances for 24Tech

Reclassification of Restricted Stock Agreements (RSAs):

In August, 2011 and March 2012, the Company and several of its employees and consultants (the “Recipients”) entered into the RSAs on an individual basis. A total of 54,900,000 shares of Class A Common Stock were so issued. Pursuant to the terms of the RSAs, and each of them, the Recipients each received a block grant of restricted stock (“Restricted Securities”), which shall vest and become non-forfeitable under certain conditions. Of these shares, 54,900,000 shares were issued and outstanding as of December 31, 2012.

Until the vesting of the restricted stock granted by way of the RSAs, the Company retains the ability to repurchase the restricted stock from the Recipient at par value ($0.001) per share, and, under certain conditions, including for instance, the termination of continued employment of the holder by the Company, cancel the restricted stock. As of the date of this Report, none of the restricted stock granted in the RSAs has vested.

19

NOTES TO FINANCIAL STATEMENTS

Since the shares issued under RSAs are outstanding and eligible to vote, they were originally considered in the number of outstanding shares of the Company. Until vesting, their value was considered a Prepaid Expense to be recognized as a valid expense of the Company at vesting.Due to the Company’s right to cancel the shares under certain conditions, for financial presentation purposes, the entire 54,900,000 shares are no longer considered as outstanding securities for financial calculation purposes, though they remain duly issued, outstanding and eligible to vote.

Change in Amortization Period for GEM warrants and accrual of Warrant Structure Fee:

The estimate of stock volatility has been changed. Originally, the volatility for the year prior to the issuance of the warrants was used to calculate the stock volatility. Subsequently, the volatility for a period more in line with the life of the warrants was used. Volatility changed from 218% to 270%.

The terms of the debt agreement underlying the issuance of the warrants calls for a Warrant Structure Fee equal to two percent (2%) of the aggregate limit payable of the line of credit from the gross proceeds from the first draw down. If the agreement is terminated before a draw down occurs, then the Structuring Fee is due upon the termination of the agreement. The Company has instituted an accrual for this fee as an additional interest expense.

Adjustments in beginning balances for 24Tech:

Further review of the beginning balances for 24Tech have been conducted, resulting in some changes to these balances, with associated changes in the financial statements.

The line-by-line effect of these changes are reflected as follows:

20

NOTES TO FINANCIAL STATEMENTS   

VRDT Corporation 

(A Development Stage Company) 

Consolidated Balance Sheet 

December 31, 2012 

	As Originally Filed			RSAs			GEM Warrants			24Tech			As Restated
ASSETS
CURRENT ASSETS:
Cash	$	10,648								$	4,940		$	15,588
Accounts Receivable		16,294									351			16,645
Inventory		25,244												25,244
Prepaid expenses		6,775,529			(5,365,000	)		2,159,753						3,570,282
Total Current Assets		6,827,715			(5,365,000	)		2,159,753			5,291			3,627,759
PROPERTY AND EQUIPMENT, NET		16,323									(841	)		15,482
OTHER ASSETS
Deposits		4,082												4,082
Long-Term Warrant Expense		4,865,416						(2,813,515	)					2,051,901
Intangibles		206,405									14,631			221,036
Total Other Assets		5,075,903			0			(2,813,515	)		14,631			2,277,019
TOTAL ASSETS	$	11,919,941		$	(5,365,000	)	$	(653,762	)	$	19,081		$	5,920,260
LIABILITIES AND STOCKHOLDERS' EQUITY / (DEFICIT)
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	2,738,318					$	116,750		$	20,122		$	2,875,190
Deposits from stockholders		10,000												10,000
Notes Payable		95,000												95,000
Notes Payable - Related parties		664,991												664,991
Total Current Liabilities		3,508,309			0			116,750			20,122			3,645,181
LONG TERM LIABILITIES:
Notes Payable - Related parties		413,972												413,972
Total Current Liabilities		413,972			0			0			0			413,972
STOCKHOLERS' EQUITY / (DEFICIT)
Preferred stock
Common Stock		126,961			(54,900	)								72,061
Additional paid-in capital		27,144,897			(5,510,100	)		246,136						21,880,933
Deficit accumulated during the development stage		(19,274,198	)		200,000			(1,016,648	)		(1,042	)		(20,091,888	)
Total Stockholders' Equity / (Deficit)		7,997,660			(5,365,000	)		(770,512	)		(1,042	)		1,861,106
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY / (DEFICIT)	$	11,919,941		$	(5,365,000	)	$	(653,762	)	$	19,081		$	5,920,259

 

21

NOTES TO FINANCIAL STATEMENTS

VRDT Corporation

(A Development Stage Company)

Consolidated Balance Sheet

For Fiscal Year Ended 3/31/2012

	As
	Originally						GEM				As
	Filed			RSAs			Warrants		24Tech		Restated
ASSETS
CURRENT ASSETS:
Cash	$	36,447		$	-		$	-	$	-	$	36,447
Prepaid expenses		5,403,921			(5,365,000	)		-		-		38,921
Total Current Assets		5,440,368			(5,365,000	)		-		-		75,368
PROPERTY AND EQUIPMENT, NET		48,144										48,144
OTHER ASSETS
Deposits		6,270			-			-		-		6,270
Note Receivable		215,383			-			-		-		215,383
Total Other Assets		221,653			-			-		-		221,653
TOTAL ASSETS	$	5,710,165		$	(5,365,000	)	$	-	$	-	$	345,165
LIABILITIES AND STOCKHOLDERS' EQUITY / (DEFICIT)
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	3,142,645		$	(50,000	)	$	-	$	-	$	3,092,645
Accounts payable and accrued expenses - Related party		20,679			-			-		-		20,679
Notes Payable		95,000			-			-		-		95,000
Notes Payable - Related parties		942,759			-			-		-		942,759
Total Current Liabilities		4,201,083			(50,000	)		-		-		4,151,083
STOCKHOLERS' EQUITY / (DEFICIT)
Preferred stock		-			-			-		-		-
Common Stock		120,947			(54,400	)		-		-		66,547
Common Stock issued under Restricted Stock Agreements		-			-			-		-		-
Additional paid-in capital		19,607,273			(5,460,600	)		-		-		14,146,673
Deficit accumulated during the development stage		(18,219,138	)		200,000			-		-		(18,019,138	)
Total Stockholders' Equity / (Deficit)		1,509,082			(5,315,000	)		-		-		(3,805,918	)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY / (DEFICIT)	$	5,710,165		$	(5,365,000	)	$	-	$	-	$	345,165

22

NOTES TO FINANCIAL STATEMENTS

VRDT Corporation 

(Previously a Development Stage Company) 

Consolidated Statement of Operations 

Three-Months Ended 12/31/2012 

	As Originally Filed			RSAs			GEM Warrants			24Tech			As Restated
Sales	$	53,382		$	-		$	-		$	-		$	53,382
Cost of sales		(20,528	)		-			-			(820	)		(21,348	)
Gross profit		32,854			-			-			(820	)		32,034
Operating Expenses
Depreciation and amortization		21,331			-			-			1,372			22,703
General and administrative expenses		412,811			-			-			(1,368	)		411,443
Total operating expenses		434,142			-			-			4			434,146
Income / (Loss) from Operations		(401,288	)		-			-			(824	)		(402,112	)
Other Income / (Expense)
Interest (expense)		(343,235	)		-			(614,938	)		-			(958,173	)
Interest (expense) - Related parties		(59,347	)		-			-			-			(59,347	)
Total Other Income / (Expense)		(402,582	)		-			(614,938	)		-			(1,017,520	)
Income / (Loss) before Income Taxes		(803,870	)		-			(614,938	)		(824	)		(1,419,632	)
Provisions for Income Taxes		-			-			-			-			-
Net Income / (Loss)	$	(803,870	)	$	-		$	(614,938	)	$	(824	)	$	(1,419,632	)
Net Income / (Loss) Per Share:
Basic	$	(0.01	)	$	(0.00	)	$	(0.01	)	$	(0.00	)	$	(0.02	)
Weighted Average Shares Outstanding
Basic		126,846,000			(55,081,608	)		-			-			71,764,392

23

NOTES TO FINANCIAL STATEMENTS

VRDT Corporation 

(Previously a Development Stage Company) 

Consolidated Statement of Operations 

Nine-Months Ended 12/31/2012 

	As Originally Filed			RSAs			GEM Warrants			24Tech			As Restated
Sales	$	72,902		$	-		$	-		$	-		$	72,902
Cost of sales		(24,454	)		-			-			(819	)		(25,273	)
Gross profit		48,448			-			-			(819	)		47,629
Operating Expenses
Depreciation and amortization		31,600			-			-			1,829			33,429
General and administrative expenses		382,739			-			-			(1,606	)		381,133
Total operating expenses		414,339			-			-			223			414,562
Income / (Loss) from Operations		(365,891	)		-			-			(1,042	)		(366,933	)
Other Income / (Expense)
Interest Income		(383	)		-			-			-			(383	)
Interest (expense)		(581,022	)		-			(1,016,647	)		-			(1,597,669	)
Interest (expense) - Related parties		(107,764	)		-			-			-			(107,764	)
Total Other Income / (Expense)		(689,169	)		-			(1,016,647	)		-			(1,705,816	)
Income / (Loss) before Income Taxes		(1,055,060	)		-			(1,016,647	)		(1,042	)		(2,072,749	)
Provisions for Income Taxes		-			-			-			-			-
Net Income / (Loss)	$	(1,055,060	)	$	-		$	(1,016,647	)	$	(1,042	)	$	(2,072,749	)
Net Income / (Loss) Per Share:
Basic	$	(0.01	)	$	-		$	(0.01	)	$	-		$	(0.03	)
Weighted Average Shares Outstanding
Basic		125,889,657			(54,125,265	)		-			-			71,764,392

24

NOTES TO FINANCIAL STATEMENTS

VRDT Corporation

(Previously a Development Stage Company)

Consolidated Statement of Operations

Three-Months Ended 12/31/2011

	As
	Originally						GEM				As
	Filed			RSAs			Warrants		24Tech		Restated
Sales	$	-		$	-		$	-	$	-	$	-
Cost of sales		-			-			-		-		-
Gross profit		-			-			-		-		-
Operating Expenses
Depreciation and amortization		1,153			-			-		-		1,153
General and administrative expenses		1,344,089			-			-		-		1,344,089
Total operating expenses		1,345,242			-			-		-		1,345,242
Income / (Loss) from Operations		(1,345,242	)		-			-		-		(1,345,242	)
Other Income / (Expense)
Interest (expense)		(3,605	)		-			-		-		(3,605	)
Interest (expense) - Related parties		(4,318	)		-			-		-		(4,318	)
Unrealized Exchange (Gain) / Loss		(50	)		-			-		-		(50	)
Total Other Income / (Expense)		(7,973	)		-			-		-		(7,973	)
Income / (Loss) before Income Taxes		(1,353,215	)		-			-		-		(1,353,215	)
Provisions for Income Taxes		-			-			-		-		-
Net Income / (Loss)	$	(1,353,215	)	$	-		$	-	$	-	$	(1,353,215	)
Net Income / (Loss) Per Share:
Basic	$	(0.01	)	$	(0.02	)	$	-	$	-	$	(0.03	)
Weighted Average Shares Outstanding
Basic		101,232,069			(52,122,360	)		-		-		49,109,709

25

NOTES TO FINANCIAL STATEMENTS

VRDT Corporation

(Previously a Development Stage Company)

Consolidated Statement of Operations

Nine-Months Ended 12/31/2011

	As
	Originally						GEM				As
	Filed			RSAs			Warrants		24Tech		Restated
Sales	$	-		$	-		$	-	$	-	$	-
Cost of sales		-			-			-		-		-
Gross profit		-			-			-		-		-
Operating Expenses
Depreciation and amortization		1,991			-			-		-		1,991
General and administrative expenses		3,613,601			-			-		-		3,613,601
Impairment of goodwill		3,833,722			-			-		-		3,833,722
Total operating expenses		7,449,314			-			-		-		7,449,314
Income / (Loss) from Operations		(7,449,314	)		-			-		-		(7,449,314	)
Other Income / (Expense)
Interest Income		-			-			-		-		-
Interest (expense)		(12,154	)		-			-		-		(12,154	)
Interest (expense) - Related parties		(11,063	)		-			-		-		(11,063	)
Unrealized Exchange (Gain) / Loss		(50	)		-			-		-		(50	)
Total Other Income / (Expense)		(23,267	)		-			-		-		(23,267	)
Income / (Loss) before Income Taxes		(7,472,581	)		-			-		-		(7,472,581	)
Provisions for Income Taxes		-			-			-		-		-
Net Income / (Loss)	$	(1,353,215	)	$	-		$	-	$	-	$	(7,472,581	)
Net Income / (Loss) Per Share:
Basic	$	(0.11	)	$	(0.04	)	$	-	$	-	$	(0.15	)
Weighted Average Shares Outstanding
Basic		69,862,888			(20,753,179	)		-		-		49,109,709

26

NOTES TO FINANCIAL STATEMENTS

VRDT Corporation 

(Previously a Development Stage Company) 

Consolidated Statement of Cash Flows 

Nine-Months Ended 12/31/2012 

	As Originally Filed			RSAs			GEM Warrants			24Tech			As Restated
CASH FLOWS FROM OPERATIONS:
Net Income / (Loss)	$	(1,055,060	)	$	-		$	(1,016,647	)	$	(1,042	)	$	(2,072,750	)
Adjustments to reconcile net income / (loss) to net cash used in operating activities:
Depreciation and amortization		31,600			-			-			1,829			33,429
Interest expense - amortization of warrants		565,746			-			899,897			-			1,465,643
Interest expense - warrant structure fee		-			-			116,750			-			116,750
Common stock issued for services		294,949			(50,000	)		-			-			244,949
Assumption of liabilities over value of assets		(38,747	)		-			-			-			(38,747	)
Decrease / (Increase) in accounts receivable		(16,294	)		-						(351	)		(16,645	)
Decrease / (Increase) in inventory		(25,244	)		-						-			(25,244	)
Decrease / (Increase) in prepaid expenses		(6,717	)		-			-			(7,100	)		(13,817	)
Decrease / (Increase) in note receivable		215,384			-			-			-			215,384
(Decrease) / Increase in accounts payable and accrued expenses		(425,008	)		50,000			-			11,608			(363,400	)
(Decrease) / Increase in shareholder deposits		10,000			-			-			-			10,000
(Decrease) / Increase in interest payable to stockholder		136,204			-			-			-			136,204
Net cash provided by operating activities		(313,186	)		-			-			4,944			(308,243	)
CASH FLOWS FROM INVESTING:
Purchase of property plant and equipment		25,959			-			-			-			25,959
Deposits		2,188			-			-			-			2,188
Intangibles		(500	)		-			-			-			(500	)
Net cash used in investing activities		27,647			-			-			-			27,647
CASH FLOWS FROM FINANCING:
Exercise of warrants		3,000			-			-			-			3,000
Proceeds from inssuance of common stock		256,737			-			-			-			256,737
Net cash from financing activities		259,737			-			-			-			259,737
Net Increase / (Decrease) in cash		(25,802	)		-			-			4,944			(20,859	)
CASH AT BEGINNING OF PERIOD		36,447			-			-			-			36,447
CASH AT END OF PERIOD	$	10,645		$	-		$	-		$	4,944		$	15,588

 

27

NOTES TO FINANCIAL STATEMENTS

VRDT Corporation

Statement of Stockholder's Equity

(Previously a Development Stage Company)

December 31, 2012

	As Originally Filed			RSAs			GEM Warrants		24Tech		As Restated
Common Stock: Shares
Balance at March 31, 2011		3,700,726			-			-		-		3,700,726
Issuance of common stock - Change in Control		30,000,000			-			-		-		30,000,000
Treasury Stock - Redemtion and cancellation		(1,700,000	)		-			-		-		(1,700,000	)
Issuance of common stock - Purchased for Cash		16,021,000			-			-		-		16,021,000
Shares issued for services		14,015,500			(750,000	)		-		-		13,265,500
Restricted Stock - Employees & Directors		53,650,000			750,000			-		-		54,400,000
Exercised warrants		259,614			-			-		-		54,659,614
Conversion of debt to equity		5,000,000			-			-		-		5,000,000
Balance at March 31, 2012		120,946,840			-			-		-		120,946,840
Issuance of common stock
Issuance of common stock - Purchased for Cash		1,802,301			-			-		-		1,802,301
Shares issued for services		2,912,000			(500,000	)		-		-		2,412,000
Restricted Stock - Employees & Directors		-			500,000			-		-		500,000
Exercised warrants		300,000			-			-		-		300,000
Issuance of GEM warrants		-			-			-		-		-
Investment in subsidiary		1,000,000			-			-		-		1,000,000
Balance at December 31, 2012		126,961,141			-			-		-		126,961,141
Common Stock: Amount
Balance at March 31, 2011	$	3,701		$	-						$	3,701
Issuance of common stock - Change in Control		30,000			-							30,000
Treasury Stock - Redemtion and cancellation		(1,700	)		-							(1,700	)
Issuance of common stock - Purchased for Cash		16,021			-			-		-		16,021
Shares issued for services		14,016			(750	)		-		-		13,266
Restricted Stock - Employees & Directors		53,650			(53,650	)		-		-		-
Exercised warrants		260			-			-		-		260
Conversion of debt to equity		5,000			-			-		-		5,000
Balance at March 31, 2012		120,947			(54,400	)		-		-		66,547
Issuance of common stock - Purchased for Cash		1,802			-			-		-		1,802
Shares issued for services		2,912			(500	)		-		-		2,412
Restricted Stock - Employees & Directors		-			-			-		-		-
Exercised warrants		300			-			-		-		300
Issuance of GEM warrants		-			-			-		-		-
Investment in subsidiary		1,000			-			-		-		1,000
Balance at December 31, 2012		127,088,102			(54,900	)		-		-		127,033,202

28

VRDT Corporation

Statement of Stockholder's Equity - Continued 

(Previously a Development Stage Company)

December 31, 2012

		As Originally Filed			RSAs			GEM Warrants			24Tech			As Restated
Additional Paid-In Capital
Balance at March 31, 2011		8,414,039			-			-			-			8,414,039
Issuance of common stock - Change in Control		2,970,000			-			-			-			2,970,000
Treasury Stock - Redemtion and cancellation		(848,300	)		-			-			-			(848,300	)
Issuance of common stock - Purchased for Cash		2,272,780			-			-			-			2,272,780
Shares issued for services		1,442,405			(149,250	)		-			-			1,293,155
Restricted Stock - Employees & Directors		5,311,350			(5,311,350	)		-			-			-
Exercised warrants		-			-			-			-			-
Conversion of debt to equity		45,000			-			-			-			45,000
Balance at March 31, 2012		19,607,273			(5,460,600	)		-			-			14,146,673
Issuance of common stock - Purchased for Cash		254,935			-			-			-			254,935
Shares issued for services		292,037			(49,500	)		-			-			242,537
Restricted Stock - Employees & Directors		-			-			-			-			-
Exercised warrants		2,700			-			-			-			2,700
Issuance of GEM warrants		6,788,952			-			246,136			-			7,035,088
Investment in subsidiary		199,000			-			-			-			199,000
Conversion of debt to equity		-			-			-			-			-
Balance at December 31, 2012	$	27,144,897		$	(5,510,100	)	$	246,136		$	-		$	21,880,933
Total Stockholders' Equity
Balance at March 31, 2011		(290,452	)		-			-			-			(290,452	)
Issuance of common stock - Change in Control		3,000,000			-			-			-			3,000,000
Treasury Stock - Redemtion and cancellation		(850,000	)		-			-			-			(850,000	)
Issuance of common stock - Purchased for Cash		2,288,800			-									2,288,800
Shares issued for services		1,456,420			(150,000	)		-			-			1,306,420
Restricted Stock - Employees & Directors		5,365,000			(5,365,000	)		-			-			-
Exercised warrants		260			-			-			-			260
Conversion of debt to equity		50,000			-			-			-			50,000
Net (Loss) / Income		(9,510,946	)		200,000			-			-			(9,310,946	)
Balance at March 31, 2012		1,509,082			(5,315,000	)		-			-			(3,805,918	)
Issuance of common stock - Purchased for Cash		256,737			-			-			-			256,737
Shares issued for services		294,949			(50,000	)		-			-			244,949
Restricted Stock - Employees & Directors		-			-			-			-			-
Exercised warrants		3,000			-			-			-			3,000
Issuance of GEM warrants		6,788,952			-			246,136			-			7,035,088
Investment in subsidiary		200,000			-			-			-			200,000
Net (Loss) / Income		(1,055,061	)		-			(1,016,647	)		(1,042	)		(2,072,750	)
Balance at December 31, 2012	$	7,997,659		$	5,365,000		$	(770,511	)	$	(1,042	)	$	1,861,106

 

29

NOTES TO FINANCIAL STATEMENTS

NOTE 18.     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		$	210,092		$	203,987
Cost of sales		(21,348	)		(10,927	)		(69,249	)		(85,998	)
Gross profit		32,034			22,473			140,843			117,989
Operating Expenses
Depreciation and amortization		22,703			23,639			71,444			69,450
General and administrative expenses		411,443			1,370,901			489,866			3,742,976
Impairment of goodwill		0			0			0			3,833,722
Total operating expenses		434,146			1,394,540			561,309			7,646,148
Income / (Loss) from Operations		(402,112	)		(1,372,067	)		(420,466	)		(7,528,159	)
Other Income / (Expense)
Other income		0			0			10,606			95
Interest Income		0			0			(383	)		0
Interest (expense)		(958,173	)		(3,617	)		(1,599,256	)		(12,238	)
Interest (expense) - Related parties		(59,347	)		0			0			0
Unrealized Exchange (Gain) / Loss		0			(50	)		0			(50	)
Total Other Income / (Expense)		(1,017,520	)		(3,668	)		(1,589,033	)		(12,193	)
Income / (Loss) before Income Taxes		(1,419,632	)		(1,375,735	)		(2,009,499	)		(7,540,352	)
Provisions for Income Taxes		0			0			0			0
Net Income / (Loss)	$	(1,419,632	)	$	(1,375,735	)	$	(2,009,499	)	$	(7,540,352	)

30

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 $21,348for 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 $32,034for the three months ended December 31, 2012, from $0 for the three months ended December 31, 2011. Gross margin increased to 60% for the three months ended December 31, 2012, from 0% for the three months ended December 31, 2011.

Total operating expenses decreased to $434,146for the three months ended December 31, 2012, from $1,345,242for 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 $1,017,520 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, amortization of the GEM warrant expense and accrual of the GEM warrant structure fee.

31

Net loss for the three months ended December 31, 2012, was $1,419,632 , from a net loss for the three months ended December 31, 2011 of $1,353,215. The increase in loss was associated with the increase in non-operating expenses associated with the GEM warrants, partially offset by the dalary action taken by the Board of Directors..

Liquidity and Capital Resources

As of December 31, 2012, the Company had cash of $15,588and negative working capital of $17,422. Net loss was $1,419,632 for the three months ended December 31, 2012. The Company generated a negative cash flow from operations of $50,705 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 $57,630from 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 $25,273 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 $47,629 for the nine months ended December 31, 2012, from $0 for the nine months ended December 31, 2011. Gross margin increased to 65% for the nine months ended December 31, 2012, from 0% for the nine months ended December 31.

Total operating expenses decreased to $(366,933)for the nine months ended December 31, 2012, from $7,449,314for 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 $(1,705,816) 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, amortization of the GEM warrant expense and the accrual for the GEM warrant structure fee.

Net loss for the nine months ended December 31, 2012, was $2,072,749 , 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.

32

Liquidity and Capital Resources

As of December 31, 2012, the Company had cash of $15,588and negative working capital of $17,422. Net loss was $2,072,749for the nine months ended December 31, 2012. The Company generated a negative cash flow from operations of $308,243for 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 $2,104in property, plant and equipment and reclassed $24,639in property, plant and equipment to inventory. During the nine months ended December 31, 2012, the Company raised $256,737from 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 $2,072,749for the nine months ended December 31, 2012, compared to revenue of $0 and losses of $7,472,581for the nine months ended December 31, 2011.  The Company had an accumulated deficit of $20,091,888 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 satisfaction of liabilities in the normal course of business.

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.

33

Changes in Internal Control over Financial Reporting

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. 

34

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.

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

35

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: August 5, 2013	By:	/s/ Graham Norton-Standen
		Graham Norton-Standen
		Executive Chairman
Date: August 5, 2013	By:	/s/ Dennis Hogan
		Dennis Hogan
		Chief Financial Officer and
		Principal Accounting Officer

36