0001437749-12-011243.txt : 20121108 0001437749-12-011243.hdr.sgml : 20121108 20121108130943 ACCESSION NUMBER: 0001437749-12-011243 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20120331 FILED AS OF DATE: 20121108 DATE AS OF CHANGE: 20121108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VRDT Corp CENTRAL INDEX KEY: 0001399480 STANDARD INDUSTRIAL CLASSIFICATION: GEN BUILDING CONTRACTORS - RESIDENTIAL BUILDINGS [1520] IRS NUMBER: 452405975 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-52677 FILM NUMBER: 121189326 BUSINESS ADDRESS: STREET 1: 12223 HIGHLAND AVENUE STREET 2: SUITE 106-542 CITY: RANCHO CUCAMONGA STATE: CA ZIP: 91739 BUSINESS PHONE: 909-786-1981 MAIL ADDRESS: STREET 1: 12223 HIGHLAND AVENUE STREET 2: SUITE 106-542 CITY: RANCHO CUCAMONGA STATE: CA ZIP: 91739 FORMER COMPANY: FORMER CONFORMED NAME: Verdant Automotive Corp DATE OF NAME CHANGE: 20110609 FORMER COMPANY: FORMER CONFORMED NAME: Winwheel Bullion Inc. DATE OF NAME CHANGE: 20081020 FORMER COMPANY: FORMER CONFORMED NAME: SKREEM ENTERTAINMENT CORP NEVADA DATE OF NAME CHANGE: 20070515 10-K/A 1 vrdt_10ka-033112.htm FORM 10K/A vrdt_10ka-033112.htm
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM 10-K/A
 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended March 31, 2012
 
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)

Securities registered pursuant to Section 12(b) of the Act:
None.
 
Securities registered pursuant to Section 12(g) of the Act:
Title of Class
Common Stock
Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes o
 
No x
 
Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes o
 
No x
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
 
Yes o
 
No x
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large Accelerated
Filer o
Accelerated
Filer o
Non-accelerated
Filer o
Smaller reporting
company x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
 
Yes x
 
No o

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter.
 
 
 

 
 
As of September 30, 2011, the aggregate market value of Registrant’s common equity held by non-affiliates was $10,005,480, as based on 13,340,640 shares of common stock held by non-affiliates as of September 30, 2011, at a price of $0.75 (the price at which the Registrant’s common stock was last sold on that date).
 
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
 
As of June 26, 2012, the Company has 124,621,955 shares of common stock issued and outstanding.
 
 
 
EXPLANATORY NOTE
 
This Amendment No. 1 to Form 10-K (this “Amendment”) amends the Annual Report on Form 10-K for the year ending March 31, 2012, originally filed on June 29, 2012 (the “Original Filing”) by VRDT Corporation, a Delaware corporation (“VRDT,” the “Company,” “we,” or “us”). We are filing this Amendment to present the information requested by the Commission.
 
Except as set forth in this Amendment, no other changes have been made to the Original Filing. Unless expressly stated, this Amendment does not reflect events occurring after the filing of the Original Filing, and it does not modify or update in any way the disclosures contained in the Original Filing, which speak as of the date of the Original Filing, and we have not updated the disclosures contained therein to reflect any events which occurred at a date subsequent to the filing of the Original Filing. Accordingly, this Amendment should be read in conjunction with the Original Filing and the Company's other SEC filings subsequent to the filing of the Original Filing.
 
 
FORWARD LOOKING STATEMENTS

This report on Form 10-K contains forward-looking statements within the meaning of Rule 175 of the Securities Act of 1933, as amended, and Rule 3b-6 of the Securities Act of 1934, as amended, that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our industry, our beliefs and our assumptions. Words such as “anticipate”, “expects”, “intends”, “plans”, “believes”, “seeks” and “estimates” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Form 10-K. Investors should carefully consider all of such risks before making an investment decision with respect to the Company’s stock. The following discussion and analysis should be read in conjunction with our financial statements for VRDT Corporation (“VRDT,” the “Company,” or “Verdant,” interchangeably). Such discussion represents only the best present assessment from our Management.
 
PART I
 
Item 1.  Business.
 
Business
The predecessor to VRDT was incorporated on August 1, 2008 in Delaware as Winwheel Bullion, Inc. On November 16, 2008, Winwheel Bullion, Inc.,  merged with Diversified Global Holdings, Inc., a Nevada corporation.  On May 11, 2011, the resulting company acquired Verdant Industries, Inc., a Delaware corporation, and the management of the acquired entity assumed control of the surviving company, VRDT.  On May 19, 2011, we amended our Certificate of Incorporation to reflect a name change to “Verdant Automotive Corporation,” and on January 19, 2012, we amended our Certificate of Incorporation to reflect a name change to “VRDT Corporation.”

Based on the information provided to the current management by the prior management, representations made in the merger agreement between Verdant Industries, Inc., and Winwheel Bullion, Inc., and the public filings made by Winwheel Bullion, Inc., prior to the merger between it and Verdant Industries, Inc., we believe that the Company was previously a “shell company” as defined in Rule 12b-2 of the Exchange Act.  Furthermore, Verdant Inudstries, Inc., was also a “shell company” as the time of the merger.
 
 
 

 
 
VRDT

VRDT is an acquisition, investment and partnership platform formed for the purpose of aggregating leading technology companies with solid management teams and integrating the businesses and systems of those companies to maximize value.  VRDT can deliver state of the art and customized energy solutions and profitable distributed grid management through its unique energy technology aggregation model, which is designed to create synergies by developing and integrating existing products and solutions, while at the same time creating new revenue streams to market by integrating different but related segments of VRDT companies or technologies or between such companies and technologies and third-party technologies.  Our areas of concentration include energy storage, infrastructure, energy generation, automotive, charging and other energy-related industries.

We also intend to integrate consumer participation by developing relationships within the motorsports industry and with prominent universities. These relationships will give us access to advanced development laboratories and testing facilities that are helping develop the latest innovations.  We recognize that fostering relationship building with local communities and government agencies is required for broad acceptance and implementation of our products and services, which also ensures that we are always on the cutting edge of intellectual property and technological advances.  Our approach to integrated electric vehicle (“EV”) systems development incorporates consumer influence and participation in the creation of the pathway to the next generation energy model.  This leads to higher awareness, interest, and demand in a significantly shorter timeframe.

To date, we have formed several strategic relationships with major industry leaders, including the following:

·
WindStrip, LLC;
·
Harbin Coslight Power Co., Ltd;
·
Delta Motorsport Limited;
·
Facility Shield International, Inc.; and
·
Talesun Solar USA, Ltd.
 
We are continuously seeking to implement other substantive relationships with potential development, commercial and other partners.

In August, 2012, we entered into a securities purchase agreement with and GEM Global Yield Fund, a member of the Global Emerging Markets Group (“GEM”), which formalized a stock subscription commitment from GEM to provide up to thirty million dollars in financing to VRDT, structured in the form of a common stock subscription facility.  We intend to draw on the GEM financing commitment to fund both our acquisition and technology development initiatives.

Industry Overview

Currently, many economies around the world are experiencing difficult times. Although there are a multitude of factors contributing to the global recession, oil dependency is a major one. When worldwide demand for oil increases, prices are driven to record highs. Other significant factors have also forced many major automotive manufacturers to re-think their products and streamline their operations in order to remain solvent. Many established brands have therefore been left dormant and inactive. Heightened environmental awareness and climate change research, among other factors, have created an unprecedented interest and demand for new, more efficient and sustainable, energy solutions. The growing excitement and interest that has been building around EVs has created a viable entry point to break through the traditional barriers in the automotive space.

As the demand for electric vehicles and other modern energy technologies increases there is greater strain put on the existing infrastructure for power distribution. Cost issues between energy storage and energy generation has created a scenario of ‘just keep generating more’ and results in tremendous inefficiencies and crippling issues with peak mitigation and frequency regulation. Utilities are struggling to keep up while wasting significant amounts of power during non-peak times.


The Need for Verdant Solutions

The incorporation of solar, wind and other energy generation technologies combined with the introduction of mass produced electric vehicles brings with it a whole new paradigm in energy thought. In order to ensure that energy infrastructure is capable of handling the increased generation and demand for electricity, adequate energy storage and availability emphasizing the need for distributed grid management must be introduced.. This creates a difficult proposition for utility companies that are currently facing high cost of energy storage versus energy generation. In order for new storage solutions to be considered, they must prove to be cost effective and offer a reasonable path to implementation when compared to traditional generation.
 
 
 

 
 
Many companies offer solutions to these problems by erroneously addressing concerns individually (i.e., Company A makes charging stations, Company B makes batteries, etc.) without participating in the broader implementation of the technologies. A few companies attempt to address multiple concerns, but ultimately fail as they always seem to miss critical points in the path (one being the cost of storage versus generation, for example). Outside of Verdant, no company currently offers a complete solution from utility company to consumer that can resolve cost issues, stabilize the grid for increased energy usage and make use of existing infrastructure to ensure energy availability when demanded.

Looking ahead, we believe the terms ‘green’ and ‘alternative’ energy are short-lived. Future markets will embrace the most efficient, profitable and sustainable way forward. Today it’s ‘green’ and ‘alternative.’ Tomorrow it will be the standard.

The Verdant Strategy

Through acquisitions, partnerships and investment, Verdant intends to bring manufacturing, energy and infrastructure solution providers under one umbrella where their unique intellectual property, manufacturing and revenue generating capabilities can be synchronized to create a robust, flexible and diverse response to energy demand. But, that is only the beginning. We also believe that our model will allow us to develop and introduce new more efficient, cleaner and higher quality battery technologies to market cheaper than our competitors.

Verdant has also structured itself to provide utility companies with a multitude of viable and sustainable solutions to the high cost of energy storage and its implementation. Our model allows the utility companies to maintain control of energy flow from source to consumer while greatly reducing (in some cases possibly removing) the cost of energy storage on the grid. Over time, we can expand energy capability and availability by harnessing the currently existing infrastructure. The growth is almost directly linked to demand meaning development is quickly rewarded with revenue. Excessive power generation that would have simply been grounded under historical models is now harnessed and utilized with increased efficiency.

Additionally, our infrastructure upgrade plan makes increased energy from solar, wind and other generation sources viable and predictable. It also makes EV charging available in many convenient locations and greatly reduces cost to consumers. The construction of charging infrastructure and partnerships with retail installations such as grocery stores, small retail, civil parking installations and fueling stations will provide point of sale revenue along with the sale of the assets needed to charge. Because much of the equipment stores energy it can also be used in peak mitigation and energy backup during power failures or other such circumstances bringing additional value to the customer.

Our available technologies offer greatly reduced charging times and fast charge options (times are dependent on voltage and current available). Charging stations are beginning to dot the societal landscape with such a frequency that they are now easy to find and use while participating in normal day-to-day activities.

Verdant offers key solutions to grid management through:
·
Dependable and manageable energy storage;
·
Reduced costs for energy storage;
·
Electrification of transportation;
·
Frequency regulation;
·
Peak power mitigation
·
Charging infrastructure development and distribution;
·
Integration of solar, wind and other energy generation technology;
·
Consumer energy cost reduction;
·
Electric vehicle purchase cost reduction; and
·
Risk mitigation.
 
Due to the extensive availability of 3-phase power in North America and Europe, with small modifications, the current infrastructure in those locations is already capable of delivering ample electricity. Since electricity can be generated from countless sources and captured by our licensed, acquired or developed technologies for storage, efficient energy distribution and usage can be made available.
 
 
 

 
 
Research and Development

During the last 2 fiscal years, we have not spent any funds on research and development, primarily because the current management team only assumed responsibility for the Company in May, 2011.  Since then, management has been focused on the Company’s acquisition and partnership platform as a means to generate revenue and outsource its research and development needs.  In the future, the Company expects to dedicate a considerable percentage of its overall revenue in research and development of its own products and the products of its acquired subsidiaries.

Verdant Technology

In order to bring about our intended shift in energy consumption, we must develop new technologies, make use of existing technologies and successfully implement both. Our team is highly capable of doing so.

Energy technology is a hot topic these days. There are a lot of technologies entering the market through innovation and adaptation. Verdant is steadfast in monitoring the newest and brightest technologies and continues to work to partner with or acquire the technologies that give us the best advantage in the global marketplace. In addition to our own resources, we seek to utilize relationships with prominent universities to assist us with technology research and to collaborate with them to create new intellectual property.

As part of our technology strategy, Verdant will team with sponsors and universities to create motorsports teams in the electric vehicle space and to develop cutting edge technologies leading to substantive discoveries applicable to real world applications. Nearly every aspect of our diverse portfolio will be tested and enhanced in the competitive motorsport field.

Some current technologies in the Verdant aggregation pipeline are:

Increased energy density batteries for longer charge duration;
 
Significantly lower cost batteries with higher performance;
New patented modular battery storage and management solutions;
Power grid implementation systems;
Expanded financial models for energy storage reducing cost;
GSA certified battery technologies for medical and military application;
Wireless and plug-in vehicle charging technology,
Increased output motors and drivetrains for electric vehicles,
 
Patented hybrid engines for power generation of in-vehicle batteries,
 
Integrated user controlled applications (smartphone, tablet, etc.) for electric car systems monitoring,
User controlled applications (smartphone, tablet, etc.) for home and business systems monitoring,
 
Charging station self-generating power solutions, and
Charging station power storage solutions.
 
 
Government Approvals, Regulation and Environmental Concerns
Given our current state of business, we do not expect to need any government approvals nor be subjected to any extraordinary  government regulations in the foreseeable future.  However, we have significant operational plans in Asia and Europe that are subject to the legal, political, regulatory and social requirements and economic conditions in these jurisdictions. In addition, we expect to sell a significant portion of our products to customers located outside the United States.  As such, we will become subject to certain domestic and foreign export/import laws and regulations.
 
Should we manufacture a battery cell, we would also be subject to various local and federal environmental laws and regulations requiring permits.  We do not anticipate that we will undertake to manufacture battery cells in the foreseeable future, but believe we could and would obtain any and all necessary environmental permits to do so.
 
Intellectual Property

Our policy is to protect our intellectual property by licensing or obtaining U.S. and foreign patents, where applicable, to protect technology, inventions and improvements important to the development of our business.  We currently own no trademarks, patents or copyrights on any materials.  We do require our employees, consultants and contractors to execute confidentiality agreements with respect to our proprietary information.

 
 

 

Employees

VRDT has a total of eighteen (18) employees inclusive of executive officers. A description of the officers, directors and key employees of both companies are set forth below.


Legal Proceedings

Neither VRDT nor 24Tech is currently party to any material legal proceedings. From time to time, we may be involved in various legal proceedings in the ordinary course of business. We do not believe that any settlement or judgment regarding current or potential future legal proceedings will have a material effect on our financial position.

Implications of Being an Emerging Growth Company

We had less than $1.0 billion in revenue during our last fiscal year, which means that we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:
 
the ability to present only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations in the registration statement of their initial public offering;
 
 
exemption from the auditor attestation requirement in the assessment of the emerging growth company’s internal control over financial reporting;
 
 
exemption from new or revised financial accounting standards applicable to public companies until such standards are also applicable to private companies; and
 
 
exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation or a supplement to our auditor’s report in which the auditor would be required to provide additional information about the audit and our financial statements.
 
We may take advantage of these provisions until the end of the fiscal year following the fifth anniversary of our initial public offering or such earlier time that we are no longer an emerging growth company. We will cease to be an emerging growth company if we have more than $1.0 billion in annual revenues, have more than $700 million in market value of our common units held by non-affiliates, or issue more than $1.0 billion of non-convertible debt over a three-year period.

We may choose to take advantage of some, but not all, of these reduced burdens. For as long as we take advantage of the reduced reporting obligations, the information that we provide shareholders may be different than information provided by other public companies.

We are choosing to “opt out” of the extended transition period relating to the exemption from new or revised financial accounting standards and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

 
 
Item 1A. Risk Factors.
 
RISKS RELATED TO OUR COMPANY
 
Risks Related to VRDT
 
Our management has broad discretion over the use of our cash reserves and might not apply this cash in ways that increase the value of your investment.
 
Our management has broad discretion to use our cash reserves, including the proceeds received from our equity public offerings and our convertible debt offering, and you will be relying on the judgment of our management regarding the application of this cash. Our management might not apply our cash in ways that increase the value of your investment. We expect to use our cash reserves for capital expenditures and other general corporate purposes, which may include investments in, or acquisitions of, complementary businesses, joint ventures, partnerships, services or technologies. Our management might not be able to yield a significant return, if any, on any investment of this cash. You will not have the opportunity to influence our decisions on how to use our cash reserves.
 
 
 

 
 
We have not paid any cash dividends in the past and have no plans to issue cash dividends in the future, which could cause the value of our common stock to have a lower value than other similar companies which do pay cash dividends.
 
We have not paid any cash dividends on our common stock to date and do not anticipate any cash dividends being paid to holders of our common stock in the foreseeable future. While our dividend policy will be based on the operating results and capital needs of the business, it is anticipated that any earnings will be retained to finance our future expansion. As we have no plans to issue cash dividends in the future, our common stock could be less desirable to other investors and as a result, the value of our common stock may decline, or fail to reach the valuations of other similarly situated companies who have historically paid cash dividends in the past.
 
The Company has entered into indemnification agreements with the officers and directors and we may be required to indemnify our Directors and Officers, and if the claim is greater than $1,000,000, it may create significant losses for the Company.
 
We have authority under Delaware and California law to indemnify our directors and officers to the extent provided in that statute. Our Bylaws require the Company to indemnify each of our directors and officers against liabilities imposed upon them (including reasonable amounts paid in settlement) and expenses incurred by them in connection with any claim made against them or any action, suit or proceeding to which they may be a party by reason of their being or having been a director or officer of the company. We maintain officer's and director's liability insurance coverage with limits of liability of $1,000,000. Consequently, if such judgment exceeds the coverage under the policy, the Company may be forced to pay such difference. We have entered into indemnification agreements with each of our officers and directors containing provisions that may require us, among other things, to indemnify our officers and directors against certain liabilities that may arise by reason of their status or service as officers or directors (other than liabilities arising from willful misconduct of a culpable nature) and to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified. Management believes that such indemnification provisions and agreements are necessary to attract and retain qualified persons as directors and executive officers. We are subject to claims arising from disputes with employees, vendors and other third parties in the normal course of business. These risks may be difficult to assess or quantify and their existence and magnitude may remain unknown for substantial periods of time. If the plaintiffs in any suits against us were to successfully prosecute their claims, or if we were to settle such suits by making significant payments to the plaintiffs, our operating results and financial condition would be harmed. In addition, our organizational documents require us to indemnify our senior executives to the maximum extent permitted by Delaware and California law. If our senior executives were named in any lawsuit, our indemnification obligations could magnify the costs of these suits.
 
Future changes in financial accounting standards and other applicable regulations by various governmental regulatory agencies may cause lower than expected operating results and affect our reported results of operations.
 
Changes in accounting standards and their application may have a significant effect on our reported results on a going forward basis and may also affect the recording and disclosure of previously reported transactions. New standards have occurred and will continue to occur in the future. The Securities and Exchange Commission (“SEC”) and the NASDAQ National Market occasionally impose additional reporting and corporate governance practices on public companies.  If we do not adequately continue to comply with these standards and practices in the future, we may not be able to accurately report our financial results or prevent error or fraud, which may result in sanctions or investigation by regulatory authorities, such as the SEC. Any such action could harm our business, financial results or investors’ confidence in our company, and could cause our stock price to fall.
 
Risks Related to VRDT’s Business
 
The Company has a history of unprofitable operations.
 
Since its inception, the Company has incurred significant losses from its operations, has never generated a profit and can give no assurance that we can operate profitably in the future. The Company expects to continue to incur significant expenditures for general administrative activities, including sales and marketing and research and development activities. As a result of these costs, the Company needs to generate significantly higher revenues and positive gross margins to achieve sustained profitability. There can be no assurance that implementation of the Company’s business plan will result in the Company becoming profitable.
 
 
 

 
 
We have yet to achieve positive cash flow, and our ability to generate positive cash flow is uncertain.
 
We anticipate that we will have negative cash flow for the foreseeable future. Our business will also require significant amounts of working capital to support our growth. Therefore, we may need to raise additional capital from investors to achieve our expected growth, and we may not achieve sufficient revenue growth to generate positive future cash flow. An inability to generate positive cash flow for the foreseeable future or raise additional capital on reasonable terms may decrease our long-term viability.
 
Our limited operating history makes it difficult to evaluate our current business and future prospects.
 
We have been in existence since 2001, but the current management team has been in place only since May, 2011.  Our limited operating history may make it difficult to evaluate our current business and our future prospects. We have encountered and will continue to encounter risks and difficulties frequently experienced by growing companies in rapidly changing industries, including increasing expenses as we continue to grow our business. If we do not manage these risks successfully, our business will be harmed.
 
In addition, we are targeting new and emerging markets for our products.  Our products are still under development, and the timing of the ultimate release, if any, of new production quality products is not determinable. We may not be able to achieve market acceptance, create revenue or become profitable.
 
Our business may be adversely affected if we fail to effectively manage our growth.
 
We plan to increase sales and expand our operations substantially during the next several years through internally generated growth and the development of new businesses and products.  To manage our growth, we believe we must continue to implement and improve our operational, manufacturing, and research and development departments. We may not have adequately evaluated the costs and risks associated with this expansion, and our systems, procedures, and controls may not be adequate to support our operations. In addition, our management may not be able to achieve the rapid execution necessary to successfully offer our products and services and implement our business plan on a profitable basis. The success of our future operating activities will also depend upon our ability to expand our support system to meet the demands of our growing business. Any failure by our management to effectively anticipate, implement, and manage changes required to sustain our growth would have a material adverse effect on our business, financial condition, and results of operations. We cannot assure you that we will be able to become profitable in the future or effectively manage any other change. An inability to successfully manage our business could harm our operations.
 
Many factors outside of our control may affect our ability to develop and market products that improve upon existing energy storage technology and gain market acceptance.
 
As part of our business, we intend to develop and sell energy storage systems. The market for advanced rechargeable energy storage systems is at a relatively early stage of development, and the extent to which our products will be able to meet our customers' requirements and achieve significant market acceptance is uncertain. Rapid and ongoing changes in technology and product standards could quickly render our products less competitive, or even obsolete if we fail to continue to improve the performance of our systems. Other companies that are seeking to enhance traditional energy storage technologies have recently introduced or are developing batteries based on nickel metal-hydride, liquid lithium-ion and other emerging and potential technologies. These competitors are engaged in significant development work on these various energy storage systems. One or more new, higher energy rechargeable battery technologies could be introduced which could be directly competitive with, or superior to, our technology. The capabilities of many of these competing technologies have improved over the past several years. Competing technologies that outperform our products could be developed and successfully introduced, and as a result, our products may not compete effectively in our target markets. If our products are not adopted by our customers, or if our products do not meet industry requirements for power and energy storage capacity in an efficient and safe design, our products will not gain market acceptance.
 
In addition, the market for our products depends upon third parties creating or expanding markets for their end-user products that utilize our energy storage systems. If such end-user products are not developed, if we are unable to have our products designed into these end-user products, if the cost of these end-user products is too high, or the market for such end-user products contracts or fails to develop, the market for our products would be expected similarly to contract or collapse. Potential users of our products operate in extremely competitive industries, and competition to supply their needs focuses on delivering sufficient power and capacity in a cost, size and weight efficient package. Their willingness to adopt new energy storage technologies will depend on many factors outside of our control.
 
 
 

 
 
Many other factors outside of our control may also affect the demand for products and the viability of widespread adoption of advanced energy storage applications, including: performance and reliability of battery power products compared to conventional and other non-battery energy sources and products; success of alternative battery chemistries, and the success of other alternative energy technologies; end-users' perceptions of advanced batteries as relatively safe and reliable energy storage solutions, which could change over time if alternative battery chemistries prove unsafe or become the subject of significant product liability claims and negative publicity is generated on the battery industry as a whole; cost-effectiveness of our products compared to products powered by conventional energy sources and alternative battery chemistries; availability of government subsidies and incentives to support the development of the battery power industry; fluctuations in economic and market conditions that affect the cost of energy stored by batteries, such as increases or decreases in the prices of electricity; continued investment by the federal government and consumers in the development of battery powered applications; heightened awareness of environmental issues and concern about global warming and climate change; and regulation of energy industries.
 
Our ability to successfully compete in our industry could be harmed if we fail to raise the additional capital necessary to expand our operations and invest in our products.
 
We may need to raise additional capital in the future to fund our growth and expansion plans and we may not be able to obtain additional debt or equity financing on favorable terms, if at all. If we raise additional equity financing, our stockholders may experience significant dilution of their ownership interests, and the per-share value of our common stock could decline.  If we engage in debt financing, we may be required to accept terms that restrict our ability to incur additional indebtedness and force us to maintain specified liquidity or other ratios. We are also seeking federal and state grants, loans and tax incentives some of which we intend to use to expand our operations. We may not be successful in obtaining these funds or incentives. If we need additional capital and cannot raise or otherwise obtain it on acceptable terms, we may not be able to successfully compete in our markets.
 
The nature of our businesses exposes us to the risk of litigation and liability under environmental, health and safety and product liability laws.
 
Certain aspects of our business involve risks of liability. In general, litigation in our industry, including class actions that seek substantial damages, arises with increasing frequency. Claims may be asserted under environmental, labor, health and safety or product liability laws. Litigation is invariably expensive, regardless of the merit of the plaintiffs’ claims.  Given the general risks, as stated, there is a chance that the Company could be named as a defendant in the future, and there can be no assurance that regardless of the merit of such claims, we will not be required to make substantial settlement payments in the future.
 
If our products fail to perform as expected or have technical issues, we could lose future business and our ability to develop, market and sell our batteries and battery systems could be harmed.
 
When developed, our products will be complex and could have unknown defects or errors, which may give rise to claims against us, diminish our brand or divert our resources from other purposes. Despite testing, defects and errors may occur as well as manufacturing or design defects, and errors or performance problems. These problems could result in expensive and time-consuming design modifications or warranty charges, delays in the introduction of new products or enhancements, significant increases in our service and maintenance costs, exposure to liability for damages, damaged customer relationships and harm to our reputation, any of which may adversely affect our business and our operating results.
 
We may not be able to successfully recruit and retain skilled employees, particularly scientific, technical and management professionals.
 
We believe that our future success will depend in large part on our ability to attract and retain highly skilled technical, managerial and marketing personnel who are familiar with our key customers and experienced in the battery industry. Additionally, we plan to continue to expand our work force both domestically and internationally. Industry demand for such employees, especially employees with experience in battery chemistry and battery manufacturing processes, however, exceeds the number of personnel available, and the competition for attracting and retaining these employees is intense. This competition will intensify if the advanced battery market continues to grow, possibly requiring increases in compensation for current employees over time. We compete in the market for personnel against numerous companies, including larger, more established competitors who have significantly greater financial resources than we do and may be in a better financial position to offer higher compensation packages to attract and retain human capital. We cannot be certain that we will be successful in attracting and retaining the skilled personnel necessary to operate our business effectively in the future. Because of the highly technical nature of our batteries and battery systems, the loss of any significant number of our existing engineering and project management personnel could have a material adverse effect on our business and operating results.
 
 
 

 
 
Our future success depends on our ability to retain key personnel.
 
Our success will depend to a significant extent on the continued services of our senior management team. The loss or unavailability of these individuals could harm our ability to execute our business plan, maintain important business relationships and complete certain product development initiatives, which could harm our business. Each of these individuals could terminate his or her relationship with us at any time, and we may be unable to enforce any applicable employment or non-compete agreements.
 
We may be unable to complete or integrate acquisitions effectively, which may adversely affect our growth, profitability and results of operations.
 
We may pursue acquisitions as part of our business strategy. However, we cannot be certain that we will be able to identify attractive acquisition targets, obtain financing for acquisitions on satisfactory terms or successfully acquire identified targets. Additionally, we may not be successful in integrating acquired businesses into our existing operations and achieving projected synergies. Competition for acquisition opportunities in the various industries in which we operate may rise, thereby increasing our costs of making acquisitions or causing us to refrain from making further acquisitions. These and other acquisition-related factors could negatively and adversely impact our growth, profitability and results of operations.
 
Our planned international operations will subject us to a number of risks, including unfavorable political, regulatory, labor and tax conditions.
 
We have significant operational plans in China and Europe that are subject to the legal, political, regulatory and social requirements and economic conditions in these jurisdictions. In addition, we expect to sell a significant portion of our products to customers located outside the United States.  Our business in foreign jurisdictions requires us to respond to rapid changes in market conditions in these countries. Our overall success as a global business depends on our ability to succeed in different legal, regulatory, economic, social and political situations and conditions. We may not be able to develop and implement effective policies and strategies in each foreign jurisdiction where we do business.
 
Risks Related to VRDT’s Intellectual Property
 
Other parties may bring intellectual property infringement claims against us which would be time-consuming and expensive to defend, and if any of our products or processes is found to be infringing, we may not be able to procure licenses to use patents necessary to our business at reasonable terms, if at all.
 
Our success depends in part on avoiding the infringement of other parties' patents and proprietary rights. We may inadvertently infringe existing third-party patents or third-party patents issued on existing patent applications. In the United States and most other countries, patent applications are published 18 months after filing. As a result, there may be third-party pending patent applications of which we are unaware, and which we may infringe once they issue. These third parties could bring claims against us that, even if resolved in our favor, could cause us to incur substantial expenses and, if resolved against us, could cause us to pay substantial damages. Under some circumstances in the United States, these damages could be triple the actual damages the patent holder incurs. If we have supplied infringing products to third parties for marketing or licensed third parties to manufacture, use or market infringing products, we may be obligated to indemnify these third parties for any damages they may be required to pay to the patent holder and for any losses the third parties may sustain themselves as the result of lost sales or damages paid to the patent holder. In addition, we may have, and may be required to, make representations as to our right to supply and/or license intellectual property and to our compliance with laws. Such representations are usually supported by indemnification provisions requiring us to defend our customers and otherwise make them whole if we license or supply products that infringe on third party technologies or violate government regulations. Further, if a patent infringement suit were brought against us, we and our customers, development partners and licensees could be forced to stop or delay research, development, manufacturing or sales of products based on our technologies in the country or countries covered by the patent we infringe, unless we can obtain a license from the patent holder. Such a license may not be available on acceptable terms, or at all, particularly if the third party is developing or marketing a product competitive with products based on our technologies. Even if we were able to obtain a license, the rights may be nonexclusive, which would give our competitors access to the same intellectual property.
 
 
 

 
 
Any successful infringement action brought against us may also adversely affect marketing of products based on our technologies in other markets not covered by the infringement action. Furthermore, we may suffer adverse consequences from a successful infringement action against us even if the action is subsequently reversed on appeal, nullified through another action or resolved by settlement with the patent holder. As a result, any infringement action against us would likely harm our competitive position, be costly and require significant time and attention of our key management and technical personnel.
 
We may be involved in lawsuits to protect or enforce our patents, which could be expensive and time consuming.
 
Our business plan anticipates that we will acquire and develop patented technology and competitors or others may infringe our patents. To counter infringement or unauthorized use, we may be required to file patent infringement claims, which can be expensive and time-consuming. In addition, in an infringement proceeding, a court may decide that a patent of ours is not valid or is unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover that technology. An adverse determination of any litigation or defense proceedings could put one or more of our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of not issuing.
 
Interference proceedings brought by the United States Patent and Trademark Office may be necessary to determine the priority of inventions with respect to our patent applications. Litigation or interference proceedings may fail and, even if successful, may result in substantial costs and be a distraction to our management. We may not be able to prevent misappropriation of our proprietary rights, particularly in countries where the laws may not protect such rights as fully as in the United States.
 
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure. In addition, during the course of this litigation, there could be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock.
 
We may not prevail in any litigation or interference proceeding in which we are involved. Even if we do prevail, these proceedings can be expensive and distract our management.
 
Our patent applications may not result in issued patents, which may have a material adverse effect on our ability to prevent others from commercially exploiting products similar to ours.
 
Patent applications in the United States are maintained in secrecy until the patents are published or are issued. Since publication of discoveries in the scientific or patent literature tends to lag behind actual discoveries by several months, we cannot be certain that we are the first creator of inventions covered by pending patent applications or the first to file patent applications on these inventions. We also cannot be certain that our pending patent applications will result in issued patents or that any of our issued patents will afford protection against a competitor. In addition, patent applications filed in foreign countries are subject to laws, rules and procedures that differ from those of the United States, and thus we cannot be certain that foreign patent applications related to issued U.S. patents will be issued. Furthermore, if these patent applications issue, some foreign countries provide significantly less effective patent enforcement than in the United States.
 
The status of patents involves complex legal and factual questions and the breadth of claims allowed is uncertain. Accordingly, we cannot be certain that the patent applications that we file will result in patents being issued, or that our patents and any patents that may be issued to us in the near future will afford protection against competitors with similar technology. In addition, patents issued to us may be infringed upon or designed around by others and others may obtain patents that we need to license or design around, either of which would increase costs and may adversely affect our operations.
 
Our patents and other protective measures may not adequately protect our proprietary intellectual property.
 
We regard our intellectual property, particularly our proprietary rights in our battery and battery system technology, as critical to our success. We anticipate filing for a number of patents for various applications and aspects of our technology or processes and other intellectual property. In addition, we generally enter into confidentiality and invention agreements with our employees and consultants. Such patents and agreements and various other measures we take to protect our intellectual property from use by others may not be effective for various reasons, including the following: our pending patent applications may not be granted for various reasons, including the existence of conflicting patents or defects in our applications; the patents we have been granted may be challenged, invalidated or circumvented because of the pre-existence of similar patented or unpatented intellectual property rights or for other reasons; parties to the confidentiality and invention agreements may have such agreements declared unenforceable or, even if the agreements are enforceable, may breach such agreements; the costs associated with enforcing patents, confidentiality and invention agreements or other intellectual property rights may make aggressive enforcement prohibitive; even if we enforce our rights aggressively, injunctions, fines and other penalties may be insufficient to deter violations of our intellectual property rights; and other persons may independently develop proprietary information and techniques that are functionally equivalent or superior to our intellectual proprietary information and techniques but do not breach our patented or unpatented proprietary rights.
 
 
 

 
 
We may be unable to adequately prevent disclosure or misappropriation of trade secrets and other proprietary information.
 
We rely on trade secrets to protect our proprietary technologies, especially where we do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to protect. We rely in part on confidentiality and non-compete agreements with our employees, former employees, contractors, consultants, outside scientific collaborators and other advisors to protect our trade secrets and other proprietary information. These agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. Such unauthorized disclosure may also be difficult to prevent or enforce against current or former employees in locations outside of the United States. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position.
 
Risks Related to Ownership of VRDT Common Stock
 
An active trading market for our common stock may not be sustained, and you may not be able to resell your Securities at or above the price at which you purchased them.
 
We have a limited history as a public company. An active trading market for our securities may not be sustained. In the absence of an active trading market for our common stock, investors may not be able to sell their common stock at or above the price they paid or at the time that they would like to sell.
 
Our stock price is volatile.
 
The market price of our common stock is highly volatile, and we expect it to continue to be volatile for the foreseeable future.  As a result of this volatility, you may not be able to sell your common stock at or above the price you paid. Some of the factors that may cause the market price of our common stock to fluctuate include: fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us; fluctuations in our recorded revenue, even during periods of significant sales order activity; changes in estimates of our financial results or recommendations by securities analysts; failure of any of our products to achieve or maintain market acceptance; the timing of the shipment and/or installation and validation of our products; product liability issues involving our products or our competitors' products; failure of our suppliers, many of which are sole source suppliers, to deliver products in a timely fashion or at all or any other delay in our supply chain; changes in market valuations of similar companies; success of competitive products or technologies; changes in our capital structure, such as future issuances of securities or the incurrence of debt; announcements by us or our competitors of significant services, contracts, acquisitions or strategic alliances; developments or announcements related to our application for government stimulus funds; regulatory developments in the United States, foreign countries or both; litigation involving us, our general industry or both; additions or departures of key personnel; investors' general perception of us; and changes in general economic, industry and market conditions.  In addition, if the market for technology stocks or the stock market in general experiences a loss of investor confidence, the trading price of our common stock could decline for reasons unrelated to our business, financial condition or results of operations. If any of the foregoing occurs, it could cause our stock price to fall and may expose us to class action lawsuits that, even if unsuccessful, could be costly to defend and a distraction to management.
 
If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline.
 
The trading market for our common stock will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. If any of the analysts who may cover us change their recommendation regarding our stock adversely, or provide more favorable relative recommendations about our competitors, our stock price would likely decline. If any analyst who may cover us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.
 
 
 

 
 
If we fail to establish and maintain an effective system of internal control, we may not be able to report our financial results accurately or to prevent fraud. Any inability to report and file our financial results accurately and timely could harm our reputation and adversely impact the trading price of our common stock.
 
It may be time consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required by the Sarbanes-Oxley Act. We may need to hire additional financial reporting, internal controls and other finance personnel in order to develop and implement appropriate internal controls and reporting procedures. Effective internal control is necessary for us to provide reliable financial reports and prevent fraud. If we cannot provide reliable financial reports or prevent fraud, we may not be able to manage our business as effectively as we would if an effective control environment existed, and our business and reputation with investors may be harmed. In addition, if we are unable to comply with the internal controls requirements of the Sarbanes-Oxley Act, then we may not be able to obtain the independent accountant certifications required by such act, which may preclude us from keeping our filings with the SEC current and may adversely affect any market for, and the liquidity of, our common stock.
 
Offers or availability for sale of a substantial number of Securities of our common stock may cause the price of our common stock to decline.
 
If our stockholders sell substantial amounts of our common stock in the public market, or upon the expiration of any statutory holding period under Rule 144, or issued upon the exercise of outstanding options or warrants, it could create a circumstance commonly referred to as an “overhang” and in anticipation of which the market price of our common stock could fall. The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.
 
We have been classified by the SEC as a “shell” company and, as a result, Rule 144 is not available for resale of the Shares.
 
The streamlined safe-harbor exemption from the definition of “underwriter” under Section 4(1) of the Securities Act provided by Rule 144 are generally inapplicable to “shell” or former “shell” companies.  The SEC has classified the Company as a “shell” company.  Generally, a “shell” company ceases to be a “shell” when the shell company acquires more than nominal assets (other than cash or cash equivalents).”  Securities Act Release Nos. 33-8587 (July 15, 2005). The Company must therefore “cure” its “shell” status prior to Rule 144(i)’s applicability to the subscribed restricted securities.
 
However, by way of the underlying Agreement as reported in Form 8-K, dated August 31, 2012, the Company has effectively “cured” our status as a “shell” company.
 
Our Common Stock is subject to “penny stock” regulations that may affect the liquidity of our Common Stock.

Our Common Stock is subject to the rules adopted by the SEC that regulate broker-dealer practices in connection with transactions in “penny stocks.” Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges, for which current price and volume information with respect to transactions in such securities is provided by the exchange or system).

The penny stock rules require that a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, deliver a standardized risk disclosure document prepared by the SEC, which contains the following:
 
a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;
 
a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to violation of such duties or other requirements of securities laws;
 
a brief, clear, narrative description of a dealer market, including “bid” and “ask” prices for penny stocks and significance of the spread between the “bid” and “ask” price;
 
a toll-free telephone number for inquiries on disciplinary actions, definitions of significant terms in the disclosure document or in the conduct of trading in penny stocks; and
 
such other information and is in such form (including language, type, size and format), as the SEC shall require by rule or regulation.
 
 
 

 
 
Prior to effecting any transaction in penny stock, the broker-dealer also must provide the customer the following:
 
the bid and offer quotations for the penny stock;
 
the compensation of the broker-dealer and its salesperson in the transaction;
 
the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock;
 
the liquidity of the market for such stock; and
 
monthly account statements showing the market value of each penny stock held in the customer’s account.

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for a stock such as our Common Stock if it is subject to the penny stock rules.

Your stock ownership will be diluted by our issuance of additional securities, including in connection with subsequent rounds of financing.

We will need further financing for the continued growth of our business to achieve our planned growth. No assurance can be given as to the availability of additional financing or, if available, the terms upon which it may be obtained. Raising additional financing may result in our issuing additional securities, which could result in the dilution of your ownership percentage of us. We may also decide to issue shares in exchange for the acquisition of other companies in order to expand business operations. The issuance of any such shares will have the effect of further diluting your ownership percentage.

We may be unable to achieve or sustain profitability or raise sufficient additional capital, which could result in a decline in our stock price.

 
Future operating performance is never certain, and if our operating results fall below the expectations of securities analysts or investors, the trading price of our Common Stock will likely decline. We are a company with no revenue and no commercialized products. We will experience significant losses from operations for the foreseeable future. Moreover, you should anticipate that operating and capital expenditures will increase significantly in future years due to continued development expenses, regulatory expenses and the expenses of commencing manufacturing and marketing of our devices.

 
We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our stock less attractive to investors.
 
We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” as described under “Summary—Implications of Being an Emerging Growth Company.” We cannot predict if investors will find our stock less attractive because we may rely on these exemptions. If some investors find our stock less attractive as a result, there may be a less active trading market for our stock and our unit price may be more volatile.
 
In addition, under the JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of the our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 for so long as we are an emerging growth company. For as long as we take advantage of the reduced reporting obligations, the information that we provide stockholders may be different than information provided by other public companies.
 
 
Item 1B. Unresolved Staff Comments.
 
None.
 
 
 

 
 
Item 2. Properties.
 
The Company’s mailing address is 12223 Highland Avenue, Suite 106-542, Rancho Cucamonga, CA, 91739.
 
The Company’s offices are at 360 S Milliken, Suite B & C, Ontario, CA, 91671. The monthly rent for this facility is $2,850.
 
The Company’s subsidiary, Verdant (Hong Kong) Ltd has its registered address as Unit 1501, Hollywood Plaza, 610 Nathan Road, Kowloon, Hong Kong, for which the Company pays approximately $52 per month.
 
The Company’s subsidiary Verdant (China) Ltd has two facilities. Its offices are at Suite 1009, Tower B, World Financial Center, 4003 Shennan Dong Road, Luohu District, Shenzhen, China, Post Code 518001, for which the Company pays approximately $780 per month. Verdant (China) Ltd also rents an apartment at 19A, Tower C, Golden Metropolis, Chunfeng Road, Shenzhen, Guangdong Province, PRC, Post Code 518002, for approximately $603 per month.
 
Item 3. Legal Proceedings.
 
None.
 
Item 4. Mine Safety Disclosures.
 
None.
 
 
PART II
 
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
 
Market for Common Equity
 
Market Information
 
The Company’s common stock is traded on the NASDAQ OTC Bulletin Board under the symbol “VRDT.” As of March 31, 2012, the Company’s common stock was held by 483 shareholders of record, which does not include shareholders whose shares are held in street or nominee name.
 
The Company’s shares commenced trading on or about February 7, 2007. The following chart is indicative of the fluctuations in the stock prices for the year ending March 31, 2012:
 
     
2012
     
2011
 
     
High
     
Low
     
High
     
Low
 
                                 
First Quarter
  $
1.40
    $
0.18
    $
0.25
    $
0.13
 
Second Quarter
  $
8.50
    $
0.31
    $
0.20
    $
0.16
 
Third Quarter
  $
1.90
    $
0.35
    $
0.16
    $
0.16
 
Fourth Quarter
  $
1.01
    $
0.21
    $
0.30
    $
0.11
 
 
The Company’s transfer agent is OTC Stock Transfer, Inc. of Salt Lake City, Utah.
 
Dividend Distributions
 
We have not historically and do not intend to distribute dividends to stockholders in the foreseeable future.
 
Penny Stock
 
Our common stock is considered "penny stock" under the rules the Securities and Exchange Commission (the "SEC") under the Securities Exchange Act of 1934. The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ Stock Market System, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system.
 
 
 

 
 
The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the Commission, that:
- contains a description of the nature and level of risks in the market for penny stocks in both public offerings and secondary trading;
- contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of Securities' laws; contains
a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price;
- contains a toll-free telephone number for inquiries on disciplinary actions;
- defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and
- contains such other information and is in such form, including language, type, size and format, as the Commission shall require by rule or regulation.
 
The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with:
- bid and offer quotations for the penny stock;
- the compensation of the broker-dealer and its salesperson in the transaction;
- the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the marker for such stock; and
- monthly account statements showing the market value of each penny stock held in the customer's account.
 
In addition, the penny stock rules that require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgement of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitably statement.
 
These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock.
 
Related Stockholder Matters
 
None.
 
Purchase of Equity Securities
 
None.
 
Item 6. Selected Financial Data.
 
As the Company is a “smaller reporting company,” this item is inapplicable.
 
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.
 
Forward-looking Statements
 
Statements made in this 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 Fiscal Year Ending March 31, 2012 as Compared to the Fiscal Year Ended March 31, 2011.

Overview

Total revenues did not change from $0 for the fiscal year ending March 31, 2012 from $0 for the fiscal year ending March 31, 2011.

Total operating expenses increased to $9,479,295 for the fiscal year ending March 31, 2012 from $104,987 for fiscal year ending March 31, 2011. This increase was primarily attributable to significant professional fees, travel and salary costs to enter into the new business activities and hiring personnel.

Liquidity and Capital Resources

As of March 31, 2012, the Company had cash of $36,447 and working capital of $1,239,285. Net loss was $9,510,946 for the fiscal year ending March 31, 2012. The Company generated a negative cash flow from operations of $2,295,439 for fiscal year ending March 31, 2012. The negative cash flow from operating activities for the period is primarily attributable to the Company’s increase in accrued salaries and consulting fees.  During the fiscal year ending March 31, 2012, the Company invested $52,015 in property, plant and equipment. During the fiscal year ending March 31, 2012, the Company raised $2,338,800 from private placements it made by selling 21,021,000 shares of its common stock.
 
The Company sustained losses of $9,510,946 and $115,118 for the years ended March 31, 2012 and 2011, respectively. The Company had an accumulated deficit of $18,219,138 and $8,708,192 at March 31, 2012 and 2011, respectively.  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.
 
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
 
As the Company is a “smaller reporting company,” this item is inapplicable.
 
Item 8. Financial Statements and Supplementary Data.
 
Financial Statements:
 
   
Consolidated Balance Sheets
F-3
Consolidated Statements of Operations
 
Statements of Changes in Stockholders’ Equity
 
Consolidated Statements of Cash Flows
 
Notes to Consolidated Financial Statements
 
Report of Independent Registered Public Accounting Firm
 

 
 

 
 
VRDT Corporation
(A Development Stage Company)
Consolidated Balance Sheet
 
   
March 31, 2012
   
March 31, 2011
 
ASSETS
       
             
CURRENT ASSETS:
       
             
Cash   $ 36,447     $ 101  
Prepaid expenses     5,403,921       3,472  
Total Current Assets     5,440,368       3,573  
                 
PROPERTY AND EQUIPMENT, NET
    48,144       0  
                 
OTHER ASSETS
         
                 
Deposits     6,270       0  
Note Receivable     215,383       0  
Total Other Assets     221,653       0  
                 
TOTAL ASSETS   $ 5,710,165     $ 3,573  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY / (DEFICIT)
 
                 
CURRENT LIABILITIES:
         
                 
Accounts payable and accrued expenses   $ 3,142,645     $ 147,498  
Accounts payable and accrued expenses - Related party     20,679       3,768  
Notes Payable     95,000       0  
Notes Payable - Related parties     942,759       142,759  
Total Current Liabilities     4,201,083       294,025  
                 
STOCKHOLERS' EQUITY / (DEFICIT)
         
                 
Common Stock, .001 par value: 989,999,995 shares authorized: 120,946,840 and 3,700,726 shares issued and outstanding as of March 31, 2012, and March 31, 2011, respectively
    120,947       3,701  
Additional paid-in capital     19,607,273       8,414,039  
Deficit accumulated during the development stage     (18,219,138 )     (8,708,192 )
Total Stockholders' Equity / (Deficit)     1,509,082       (290,452 )
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY / (DEFICIT)   $ 5,710,165     $ 3,573  
 
See the accompanying notes to the financial statements
 
 
 

 

VRDT Corporation
(A Development Stage Company)
Consolidated Statement of Operations
 
 
   
Twelve Months Ended
March 31,
   
For the Period
August 19, 1999
(Inception) to
 
   
2012
   
2011
    March 31, 2012  
                   
Sales   $ 0     $ 0     $ 370,800  
Cost of sales     0       0       0  
                         
Gross profit     0       0       370,800  
                         
Operating Expenses                        
                         
Depreciation and amortization     3,871       0       4,709  
General and administrative expenses     5,641,702       104,987       12,577,304  
Impairment of goodwill     3,833,722       0       3,833,722  
Impairment of long-lived assets     0       0       855  
Impairment of loan receivable     0       0       130,000  
                         
Total operating expenses     9,479,295       104,987       16,546,590  
                         
Income / (Loss) from Operations     (9,479,295 )     (104,987 )     (16,175,790 )
                         
Other Income / (Expense)                        
                         
Other income     0               56,889  
Loss from conversion of shareholder debt     0       0       (1,506,528 )
Interest Income     383       0       383  
Interest (expense)     (15,123 )     (10,131 )     (561,523 )
Interest (expense) - Related parties     (16,911 )     0       (32,569 )
                         
Total Other Income / (Expense)     (31,651 )     (10,131 )     (2,043,348 )
                         
Income / (Loss) before Income Taxes     (9,510,946 )     (115,118 )     (18,219,138 )
                         
Provisions for Income Taxes     0       0       0  
                         
Net Income / (Loss)   $ (9,510,946 )   $ (115,118 )   $ (18,219,138 )
                         
Net Income / (Loss) Per Share:                        
Basic and Diluted   $ (0.12 )   $ (0.03 )        
                         
Weighted Average Shares Outstanding    
Basic and Diluted     79,726,924       3,700,726          
 
See the accompanying notes to the financial statements
 
 
 

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

 
 
VRDT Corporation
(A Development Stage Company)
Statement of Stockholder's Equity - continued
For the Period August, 1999 (Inception) to March 31, 2012
 
 
                Deficit Accumulated During the        
   
Common Stock
    Additional Paid-in     Development     Total Stockholders'  
   
Shares
   
Amount
   
Capital
   
Stage
   
Equity
 
                               
Conversion of Martin debt
    300,000     $ 300     $ 60,700           $ 61,000  
Net loss
                            (73,636 )     (73,636 )
                                         
Balance at March 31, 2010
    3,700,726       3,701       8,334,539       (8,593,074 )     (254,834 )
Stock-based compensation - Non-Emp
                    79,500               79,500  
Net loss
                            (115,118 )     (115,118 )
                                         
Balance at March 31, 2011
    3,700,726       3,701       8,414,039       (8,708,192 )     (290,452 )
                                         
Issuance of common stock - Change in Control
    30,000,000       30,000       2,970,000       0       3,000,000  
                                         
Treasury Stock - Redemtion and cancellation
    (1,700,000 )     (1,700 )     (848,300 )             (850,000 )
Issuance of common stock - Purchased for Cash
    16,020,500       16,021       2,272,780       0       2,288,800  
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
    120,946,340     $ 120,947     $ 19,607,273     $ (18,219,138 )   $ 1,509,082  
 
See the accompanying notes to the financial statements
 
 
 

 
 
VRDT Corporation
(A Development Stage Company)
Consolidated Statement of Cash Flows
 
   
Tweleve Months Ended
March 31,
   
For the Period August 19, 1999 (Inception) to
 
   
2012
   
2011
    March 31, 2012  
   
Audited
   
Audited
       
CASH FLOWS FROM OPERATIONS:
                 
                   
Net Income / (Loss)
  $ (9,510,946 )   $ (115,118 )   $ (18,219,138 )
                         
Adjustments to reconcile net income / (loss) to net cash used in operating activities:
 
                         
Depreciation and amortization     3,871               56,660  
Impairment of Goodwill     3,833,722               3,833,722  
Impairment of Long-Lived Assets                     855  
Impairment of Loan Receivable                     130,000  
Accrued Interest on payable converted to debt                     209,817  
Issurance of warrants for services             79,500       79,500  
Common stock issued for services     1,456,680               1,580,279  
Loss on conversion of stockholder debt to C/Stock                     1,506,528  
Expense paid by stockholder and affiliate                     636,796  
Payables and servcies converted to C/Stock                     770,674  
Assumption of liabilities over value of assets     (833,722 )             (833,722 )
Changes in Assets & Liabilities:                        
Decrease / (Increase) in prepaid expenses     (41,719 )     (490 )     (45,191 )
Decrease / (Increase) in note receivable     (215,383 )             (215,383 )
(Decrease) / Increase in accounts payable and accrued expenses     2,995,147       (7,000 )     3,151,899  
(Decrease) / Increase in interest payable to stockholder     16,911       (5,352 )     356,436  
Net cash provided by operating activities     (2,295,439 )     (48,460 )     (7,000,268 )
                         
CASH FLOWS FROM INVESTING:
                       
                         
Purchase of property plant and equipment     (52,015 )             (105,659 )
Loan receivable                     (130,000 )
Net cash used in investing activities     (52,015 )     0       (235,659 )
                         
CASH FLOWS FROM FINANCING:
                       
                         
Proceeds from parent company                     697,193  
Proceeds from notes payable - other     95,000               480,000  
Proceeds from notes payable - shareholder             48,523       1,911,907  
Proceeds from notes payable - affiliates                     2,564,191  
Payments on notes payable - other     (50,000 )             (388,018 )
Payments on notes payable - shareholder                     (190,699 )
Payments on notes payable - affiliates                     (141,000 )
Proceeds from inssuance of common stock     2,338,800               2,338,800  
Net cash from financing activities     2,383,800       48,523       7,272,374  
Net Increase / (Decrease) in cash     36,346       63       36,447  
                         
CASH AT BEGINNING OF PERIOD
    101       38       0  
CASH AT END OF PERIOD
  $ 36,447     $ 101     $ 36,447  
 
See the accompanying notes to the financial statements
 
 
 

 
 
VRDT Corporation
(A Development Stage Company)
Statement of Cash Flows - continued
 
   
Tweleve Months Ended
March 31,
   
April 19. 1999 to
 
   
2012
   
2011
    March 31, 2012  
SUPPLEMENTAL CASH FLOW INFORMATION:
                 
Cash paid for Interest   $ 0     $ 0     $ 0  
Cash paid for Income Taxes   $ 0     $ 0     $ 0  
Converson of related party payable to notes payable to shareholder           $ 141,079     $ 141,079  
Conversion of notes payable to common stock   $ 50,000             $ 111,000  
Issuance of common stock - Change in Control   $ 3,000,000             $ 3,000,000  
Common stock issued for services   $ 1,456,680             $ 1,456,680  
Note Payable issued   $ 850,000             $ 850,000  
 
See the accompanying notes to the financial statements
 
 
 

 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE 1.           BASIS OF PRESENTATION AND RECENT ACCOUNTING PRONOUNCEMENTS
 
The accompanying audited financial statements of VRDT Corporation (the “Company”) have been prepared in accordance with generally accepted accounting principles (“GAAP”) for financial information and the instructions to Form 10-K and Article 10 of Regulation S-X. 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 consolidated financial statements include by full consolidation all domestic and foreign entities controlled by the Company (i.e., all subsidiaries), except where the subsidiary’s effect on the Company’s financial position and results of operations is immaterial.  The following list includes all entities controlled by the Company:
 
Verdant Industries, Inc., a Delaware corporation;
Verdant Ecosystem, Inc, a Delaware corporation;
Verdant (Hong Kong) Ltd.; a Hong Kong corporation; and
Verdant (China) Ltd., a People’s Republic of China corporation.
 
All material intercompany transactions have been eliminated.
 
NOTE 2.           REVENUE RECOGNITION
 
The Company recognizes revenue in accordance with the Securities and Exchange Commission Staff Accounting Bulletin (SAB) number 104, which states that revenues are generally recognized when it is realized and earned.  Specifically, the Company recognizes revenue when services are performed and projects are completed and accepted by the customer.  Revenues are earned from the sale of electric vehicles and other related technologies and services.
 
NOTE 3.           DEVELOPMENT STAGE COMPANY

The Company is a development stage company. The Company is subject to risks and uncertainties, including new product development, actions of competitors, reliance on the knowledge and skills of its employees to be able to service customers, and availability of sufficient capital and a limited operating history. Accordingly, the Company presents its financial statements in accordance with the accounting principles generally accepted in the United States of America that apply in establishing new operating enterprises. As a development stage enterprise, the Company discloses the deficit accumulated during the development stage and the accumulated statement of operations and cash flows from inception of the development stage to the date on the current balance sheet. Contingencies exist with respect to this matter, the ultimate resolution of which cannot presently be determined.
 
NOTE 4.           RECENTLY ENACTED ACCOUNTING PRONOUNCEMENTS
 
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 5.           RECLASSIFICATIONS

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

NOTE 6.           GOING CONCERN

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  The Company sustained losses of $9,510,946 and $115,118 for the years ended March 31, 2012 and 2011, respectively. The Company had an accumulated deficit of $18,219,138 and $8,708,192 at March 31, 2012 and 2011, respectively.  These factors raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time.  The Company is highly dependent on its ability to continue to obtain investment capital and loans from an affiliate and shareholder in order to fund the current and planned operating levels.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.  The Company’s continuation as a going concern is dependent upon its ability to bring in income generating activities and its ability to continue receiving investment capital to sustain its current level of operations.   No assurance can be given that the Company will be successful in these efforts.
 
 
 

 
 
Management intends to raise additional operating funds through equity and/or debt offerings.  However, there can be no assurance management will be successful in its endeavors.  Ultimately, the Company will need to achieve profitable operations in order to continue as a going concern.
 
There are no assurances that the Company will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placement, public offerings and/or bank financing necessary to support its working capital requirements.  To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are insufficient, the Company will have to raise additional working capital.  No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company.  If adequate working capital is not available, the Company may be required to curtail its operations. 
 
NOTE 7.           CHANGE OF CONTROL TRANSACTION
 
In May, 2011, the Company entered into a Securities Exchange Agreement and Plan of Reorganization (the “Agreement”) with Verdant Industries, Inc., a privately-held Delaware corporation (“VII”).  Under the Agreement, the Company issued 30,000,000 shares of its restricted common stock to certain designees of VII.  In exchange, the Company acquired all of the tangible and intangible assets of VII.  As a result of the Agreement, the officers and directors of the Company tendered their respective resignations and the management of VII was appointed as the officers and directors of the Company.  The value of the tangible and intangible assets recorded was $3,838,000, of which $3,833,722 was intangible assets subsequently written off as impaired.
 
NOTE 8.           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 year ended March 31, 2012.

NOTE 9.           NOTES PAYABLE-RELATED PARTIES
 
The Company’s related party notes payable, all due currently, consists of the following:
 
   
March 31, 2012
   
March 31, 2011
 
             
Note payable, 12% interest, principal and interest due monthly commencing January 1, 2013, and due June 1, 2014. (1)
  $ 142,759     $ 142,759  
                 
Note payable, payments are due monthly at 5% of the monthly gross monies raised with the balance due no later than June 1, 2014. (2)
    800,000       0  
                 
    $ 942,759     $ 142,759  
 
(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)           On May 10, 2012, the holder of this note agreed to extend the term thereon until June 1, 2014.  Interest payments up to $10,000 are due on or before August 31, 2012.  Principal and interest payments are due monthly commencing January 1, 2013 and ending June 1, 2014.  The outstanding balance of this note is also convertible to shares of the Company’s common stock at a price of $0.63 per share at any time prior to June 1, 2014.
 
 
 

 
 
NOTE 10.         NOTES PAYABLE
 
The Company’s notes payable consists of the following:
 
   
March 31, 2012
   
March 31, 2011
 
             
Notes payable, 15% interest, principle and interest due April 12, 2012(1)
  $ 45,000     $ 0  
                 
Note payable, 10% interest, principle and interest due March 18, 2013
  $ 50,000     $ 0  
                 
    $ 95,000     $ 0  

(1) Effective April 11, 2012, the holder of this note agreed to extend the term of the note until April 12, 2013, upon the same terms in the original note.
 
Each of two (2) unsecured convertible promissory notes identified in this Note 10 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.
 
During the quarter ended December 31, 2011, a note holder elected to convert his note valued at $50,000 to common stock 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, that note holder received 5,000,000 shares of the Company’s restricted common stock at the time of conversion.

NOTE 11.         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.
 
 
The provision for income taxes consists of the following:
         
                 
 
 
2012
   
2011
 
Current Tax Benefit
 
$
--
   
$
--
 
Deferred Tax(Benefit) Provision
   
--
     
--
 
Total Tax (Benefit) Provision
 
$
--
   
$
--
 
 
 
 

 
 
 
A reconciliation of the expected Federal statutory rate of 34% to the Company’s actual rate as reported for each of the periods presented is as follows:
                 
 
 
2012
   
2011
 
Expected statutory rate
   
34.00
%
   
34.00
%
State Income tax rate, net of federal benefit
   
8.84
%
   
8.84
%
Valuation Allowance
   
(42.84)
%
   
(42.84)
%
 
   
-
%
   
-
%

 
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 years ended March 31, 2012 and 2011.
 
NOTE 12.         PREPAID EXPENSES
 
The Company issued certain restricted 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.
 
NOTE 13.         SUBSEQUENT EVENTS
 
Except as provided herein, the Company has evaluated its activities, pursuant to ASC 855, and has determined that there are no additional reportable subsequent events.
 
As set forth in its current report on Form 8-K filed on April 27, 2012, incorporated by reference as though fully set forth herein, on April 23, 2012, the Company and Talesun Solar USA, Ltd., (“Talesun”), entered into a Joint Development Agreement, effective April 6, 2012 (the “Agreement”). Pursuant to the terms of the Agreement, the Company will provide battery and battery management systems to Talesun and Talesun will provide its photovoltaic cells and modules to the Company to support one another’s respective projects. Further, the Parties have agreed to regularly meet and discuss prospective collaborative ventures and projects.
 
As set forth in its current report on Form 8-K filed on June 15, 2012, incorporated by reference as though fully set forth herein, on June 15, 2012, the Company and GEM Global Yield Fund, a member of the Global Emerging Markets Group (“GEM”), entered into a commitment whereby GEM will provide and fund the Company up to Thirty Million Dollars ($30,000,000USD) structured as a common stock subscription facility (the “Commitment”). The facility, subject to certain restrictions, can be drawn down at the Company’s option as the Company issues shares of common stock to GEM in return for funds. Under the agreed upon structure, the Company controls the timing and amount of any drawdown. The Parties have further agreed to execute a subscription agreement that clarifies the terms and timing of the Commitment.
 
Subsequent to the quarter ended March 31, 2012, and through June 26, 2012, the Company issued 790,500 shares of restricted common stock through a private placement, pursuant to the exemption from registration provided by Section 4(2) of the Securities Act and Rule 506 promulgated thereunder, at a valuation of $0.20 per share for a total consideration of $157,100.  Subsequent to the year ending March 31, 2012, a warrant holder elected to convert warrants into 300,000 shares of the Company’s restricted common stock for a total consideration of $3,000.  Subsequent to the quarter ended March 31, 2012, and until June 26, 2012, the Company issued 300,000 shares of restricted common stock services to 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. 
 
 
 

 
 
NOTE 14.         STOCKHOLDERS’ EQUITY
 
The Company has identified its unregistered sales of securities for the respective quarters ending June 30, 2011, September 30, 2011, and December 31, 2011, in its Current Reports on Form 10-Q filed for each respective quarter and incorporates those figures by reference herein.
 
Common Stock
 
The Company has authorized 989,999,995 shares of common stock, of which 124,621,955 shares of Class A Common Stock have been issued and are outstanding as of June 26, 2012.   As of June 26, 2012, the Company has no other classes of common stock authorized, issued or outstanding.
 
The Company, under its Securities Exchange Agreement and Plan of Reorganization, issued 30,000,000 shares of its common stock to various assignees of Verdant Industries, Inc., valued at $.10 per share.

During the quarter ended June 30, 2011, the Company issued 5,105,000 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 $0.10 per share for a total consideration of $510,500. During the quarter ended June 30, 2011, the Company issued 5,888,000 shares for services to consultants and directors pursuant to the exemption from the registration requirements of Section 5 of the Securities Act provided by Section 4(2) of the Securities Act, Rule 506 of Regulation D promulgated thereunder, and Regulation S promulgated under the Securities Act.

During the quarter ended September 30, 2011, the Company issued 3,840,000 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 $0.10 per share for a total consideration of $384,000. Also during the quarter ended September 30, 2011, the Company issued 387,000 shares 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 $0.50 per share for a total consideration of $193,500. Additionally, the Company granted 2,500 shares of restricted common stock to an existing investor. The Company, during the quarter ended September 30, 2011, granted a cumulative total of 42,000,000 shares of restricted common stock to 24 key employees and executives and an additional 750,000 shares of restricted common stock to a newly appointed director. The grants of the restricted shares are exempt from registration as not constituting sales for value within the meaning of Section 2(a)(3) of the Securities Act. On September 20, 2011 following an amendment to Registrant’s Certificate of Incorporation, the Registrant issued five (5) shares of Class A Convertible Preferred Stock to four officers of the Registrant and one existing shareholder of the Registrant in consideration of service performed for the Registrant. The shares of Class A Convertible Preferred Stock so issued were issued 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. Further, during the quarter ended September 30, 2011, the Company issued a cumulative total of 1,800,000 shares of restricted common stock to a consultant and a newly appointed director 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.

During the quarter ended December 31, 2011, the Company issued 200,000 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 $0.10 per share for a total consideration of $20,000. During the quarter ended December 31, 2011, the Company issued 90,000 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 $0.19 per share for a total consideration of $17,100. During the quarter ended December 31, 2011, the Company issued 4,606,000 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 $0.20 per share for a total consideration of $926,200. During the quarter ended December 31, 2011, the Company issued 800,000 shares of restricted common stock services to a consultant 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.
 
During the quarter ended March 31, 2012, the Company issued 1,187,500 shares of restricted common stock through a private placement, pursuant to the exemption from registration provided by Section 4(2) of the Securities Act and Rule 506 promulgated thereunder, at a valuation of $0.20 per share for a total consideration of $237,500.  During the quarter ended March 31, 2012, the Company issued 1,605,000 shares of restricted common stock services to consultants for services, pursuant to the exemption from the registration requirements of Section 5 of the Securities Act provided by Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder.  The Company, during the quarter ended March 31, 2012, granted a cumulative total of 11,650,000 shares of restricted common stock to 6 key employees and executives and an additional 8,000,000 shares of restricted common stock to 3 directors. The grants of the restricted shares are exempt from registration as not constituting sales for value within the meaning of Section 2(a)(3) of the Securities Act. 
 
 
 

 
 
Preferred Stock
 
As of June 26, 2012, the Company is authorized to issue ten million five (10,000,005) shares of preferred stock with a par value of One Thousandths of One Cent ($0.001).
 
Treasury Stock
 
During the quarter ended December 31, 2011, the Company repurchased a cumulative total of 31,000 shares of restricted common stock from a total of three (3) investors. Pursuant to the acquisition of Verdant Industries, Inc., the Company acquired 1,700,000 shares of the Company’s common stock purchased from a majority shareholder in February, 2011.  The cost of the shares was $850,000 that has been reflected as treasury stock upon the acquisition of the assets and liabilities of Verdant Industries, Inc.
 
All treasury stock has been cancelled as of March 31, 2012.
 
Warrants
 
During the quarter ended March 31 2012, the Company did not issue any new warrants.
 
During the quarter ended December 31 2011, the Company did not issue any new warrants.
 
During the quarter ended September 30, 2011, the Company did not issue any warrants.
 
During the quarter ended June 30, 2011, and prior to the acquisition of Verdant Industries, Inc., Verdant Industries, Inc. issued 600,000 warrants, having a de minimus value, to two (2) members of its advisory board. The warrants were assumed by the Company during the acquisition of the assets and liabilities of Verdant Industries, Inc. The warrants are convertible to common stock of the Company at a strike price of $0.01 per share and, as of the date of this Report, 300,000 of said warrants have been exercised by one (1) holder as set forth in Note 13 herein.
 
 
 

 
 
Prior to the acquisition of Verdant Industries, Inc., for the year ending March 31, 2011, the Company granted warrants to non-employee individuals and entities as follows:
 
   
Number of
Warrants
   
Weighted Average Exercise Price
   
Weighted Average Remaining Contractual Terms
   
Aggregate Intrinsic Value
 
                         
Outstanding at March 31, 2010
                       
Granted
    500,000     $ 0.16              
Exercised
                           
Exchanged for Shares                            
Expired                            
                             
Outstanding at March 31, 2011
    500,000     $ 0.16       4.87       70,000  
                                 
Granted
    0                          
Exercised
                               
Exchanged for Shares     (300,000 )   $ 0.16                  
Expired     0                          
                                 
Outstanding at March 31, 2012
    200,000     $ 0.16       3.87       28,000  
                                 
Exercisable at March 31, 2012
    200,000     $ 0.16       3.87       28,000  
Weighted Average Grant Date Fair Value
    $ 0.16                  
 
On February 18, 2011, the Company granted 500,000 warrants to five non-employees. The warrants were valued at $0.159 per warrant or $79,500 using a Black-Scholes option-pricing model with the following assumptions:
 
Stock Price
$0.16
Expected Term
5 Years
Expected Volatility
252.35%
Dividend Yield
0
Rick Free Interest Rate
1.125%
 
The expected term equals the contractual terms for this non-employee grant. The volatility is based on comparable volatility of other companies since the Company was not yet trading and had no historical volatility.

Subsequent to the quarter ended December 31, 2011, 1 warrant holder exercised the cashless exercise of its warrant for a total of 87,200 shares of restricted common stock at a strike price of $0.16 per share, which is not reflected in the table, above.
 
 
 

 
 
Drake & Klein CPAs
A PCAOB Registered Accounting Firm

 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
To the Board of Directors and Stockholders of VRDT Corporation:
 
 
We have audited the accompanying balance sheets of VRDT Corporation as of March 31, 2012 and 2011, and the related statements of income, stockholders’ deficiency, and cash flows for the years then ended and the period from August 19, 1999 (Inception) through March 31, 2012. The management of VRDT Corporation is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of VRDT Corporation as of March 31, 2012 and 2011, and the results of its operations and its cash flows for each of the years then ended and the period from August 19, 1999 (Inception) through March 31, 2012 in conformity with accounting principles generally accepted in the United States of America.
 
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in footnote 3 to the financial statements, the Company has not generated revenue and has not established operations which raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
 
/s/ Drake & Klein CPAs
 
Drake & Klein CPAs
Clearwater, Florida
June 29, 2012
 
 
 

 
 
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
 
On January 1, 2012, the audit firm of Randall N. Drake CPA, P.A. changed its name to Drake & Klein CPAs.  The change was reported to the PCAOB as a change of name.  This is not a change of auditors for the Company.
 
Item 9A. 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 year ending March 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.
 
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 March 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
 
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. 
 
 
 

 
 
Item 9B. Other Information.
 
None.
 
PART III
 
Item 10. Directors, Executive Officers and Corporate Governance.
 
Executive Officers and Directors of VRDT
 
Executive Officers
 
Graham Norton-Standen; Age 55; Executive Chairman; Chairman of the Board
 
Prior Business Experience:
 
Employer
Dates
Position
Cortis Capital LLP
2006 – Present
Managing Partner
VSL Group
2006 – July 2012
Chairman
Applied Intelligence Resource
2003 – Present
Managing Partner
Unisys Corporation
2008 – 2009
Advisor to the Management Board
Cable & Wireless
2007 - 2008
Advisor to the Management Board
 
 
Daniel J Elliott, Age 41, Chief Production Officer; Director
 
Prior Business Experience:
 
Employer
Dates
Position
Kimridge Consulting
01/2009 – 01/2011
Partner
Microvast, Inc.
03/2010 – 08/2010
Chief Executive Officer
Phoenix MC, Inc.
11/2006 – 12/2009
Chairman; Chief Executive Officer
 
 
Steve Aust; Age 54; President; Director
 
Prior Business Experience:
 
Employer
Dates
Position
Self-Employed
2007-Present
Business Development Consultant
 
 
Dennis Hogan, Age 59, Chief Financial Officer; Director
 
Prior Business Experience:
 
Employer
Dates
Position
Phoenix Motorcars
2/2007-2/2011
Chief Financial Officer
Greenhouse Capital
1/2007-Present
Consultant  
 
 
David Edgar, Age 39, Chief Technology and Operating Officer; Director
 
Prior Business Experience:
 
Employer
Dates
Position
Microvast, Inc.
3/2010-01/2011
General Manager
Phoenix Motorcars
12/2007-3/2010
Director
Rapiscan Systems
12/2006-1/2008
Program Manager

 
 

 
 
Larry Pendleton, Age 56, Chief Information Officer
 
Prior Business Experience:
 
Employer
Dates
Position
24Tech Corporation
9/2007- Present
VP/Director

 
Bryon Bliss; Age 33; Secretary, Chief of Staff
 
Prior Business Experience:
 
Employer
Dates
Position
Phoenix Motorcars
11/2006 to 06/2011
VP, Sales & Marketing

 
Dan Malstrom, Age 41, Chief Marketing Officer
 
Prior Business Experience:
 
Employer
Dates
Position
Malstrom Consulting
2004-Present
Principal
Microvast, Inc.
4/2010-1/2011
Senior VP, Business Development

 
Non-Employee Directors
 
AC Green; Age 49; Director
 
Prior Business Experience
 
Employer
Dates
Position
A.C. Green Youth Foundation
1989- Present
Principal and Founder
National Basketball Association
2004-Present
Global Ambassador
Going Green with AC Green
2009-Present
Principal and founder
 
 
Donald A. Driftmier, CPA, Age 66, Director, Chairman-Audit Committee
 
Prior Business Experience:
 
Employer
Dates
Position
Noble House Entertainment Pictures, Inc.
11/2007 – Present
Chief Financial Officer
     
Other Boards:
   
     
Casa Colina Centers for Rehabilitation
1984-Present
Chairman-Audit Committee, Finance
    Committee, Centers Operating Committee
California Board of Accountancy
2004 – Present
Board Member; President (2008)
 
Item 11. Executive Compensation.
 
Non-Employee Director Compensation
 
The following table shows, for the year ended March 31, 2012, certain information with respect to the compensation of all of our non-employee directors.
 
 
 

 
 
Director
 
Accrued Fees
   
Stock Compensation
   
Total Compensation
 
Don Driftmier
  $ 60,000     $ 200,000     $ 260,000  
AC Green
  $ 90,000     $ 250,000     $ 340,000  
Graham Norton-Standen1
  $ 90,000     $ 550,000     $ 640,000  
    $ 240,000     $ 1,000,000     $ 1,240,000  

 
The directors have each agreed to temporarily forego their respective cash compensation, which has accrued as unpaid executive compensation owed by the Company until paid, until such time as the Company determines that it has sufficient capital to begin distributing said cash compensation.
 
Executive Officer Compensation
 
Our named executive officers as of June 26, 2012, are:
 
Graham Norton-Standen – Executive Chairman and Chief Executive Officer
Dan Elliott- Chief Production Officer
Steve Aust- President
Dennis Hogan- Chief Financial Officer
Dan Malstrom- Chief Marketing Officer
David Edgar- Chief Technology Officer
Bryon Bliss- Secretary, Chief of Staff and Executive Vice President
Larry Pendleton- Chief Technology Officer
 
Historical Compensation Decisions
 
Our compensation approach is related to our stage of development.  In determining executive compensation, we informally considered a wide variety of factors in arriving at our compensation decisions, including the competitive market for corresponding positions within comparable geographic areas and companies of similar size and stage of development operating in the biotechnology and clean technology industries.  This consideration was based on the general and personal knowledge possessed by members of our board of directors, based on their experiences with other companies, and also included consultations with our Chief Executive Officer and human resources staff and their personal knowledge, such as from contacts with other professionals in the industry and from prior experience.  We expect that as a public company we will adopt a more formal process for executive compensation.
 
Compensation Philosophy and Objectives
 
We favor a “pay-for-performance” compensation philosophy that is driven by individual and corporate performance.  We also continue to review what we think are best practices with respect to compensation and benefits and review market data.  In addition, we believe that internal pay equity is an important factor in determining executive compensation.  As we gain experience as a public company, we expect that the specific direction, emphasis and components of our executive compensation program will continue to evolve.
 
Our executive compensation program is intended to balance short-term and long-term goals with a combination of cash payments and equity awards that we believe to be appropriate for motivating our executive officers.  Our executive compensation program is designed to:
 
·           align the interests of our executive officers with stockholders by motivating executive officers to increase stockholder value and reward executive officers when stockholder value increases;
·           attract and retain talented and experienced executives that strategically address our short-term and long-term needs;
·           reward executives whose knowledge, skills and performance are critical to our success;
·           ensure fairness among the executive management team by recognizing the contributions each executive makes to our success;
·           foster a shared commitment among executives by aligning their individual goals with the goals of the executive management team and our stockholders; and
·           compensate our executives in a manner that motivates them to manage our business to meet our long-term objectives and create stockholder value.
 

 
 
1 Graham Norton-Standen was initially not an executive officer, but only the chairman of the board.  He was subsequently elected as the Chief Executive Officer.  Hence, he is included as a non-employee director for the period of time that he served only as the chairman of the board, prior to his election as the Chief Executive Officer.
 
 
 

 
 
To help achieve these objectives, the compensation committee has tied a substantial portion of the executives’ overall compensation to key strategic business, financial and operational goals, such as revenue, product development and manufacturing metrics, business development and innovation.
 
Our executive compensation program rewards corporate achievement, as well as both team and individual accomplishments, by emphasizing a combination of corporate results and individual accountability.  A portion of total compensation is placed at risk through annual performance bonuses and long-term incentives.  Our historic practice with regard to issuing long-term incentives has been to grant stock options at the time of hire or promotion, as well as yearly stock option awards related to yearly performance reviews.  We occasionally, based upon individual circumstances, issue restricted stock or stock options on an ad-hoc basis, in each case with approval from the board of directors.  Such ad-hoc awards are generally related to promotion, recognition of specific achievements or to better align our internal equity goals.  Going forward we expect to use a mix of restricted stock (or restricted stock units) and stock options (or stock appreciation rights) to optimize the alignment of the interests of our named executive officers with those of our stockholders.  This combination of cash and equity incentives is designed to balance annual business and operating objectives, and our financial performance, with longer-term stockholder value creation.
 
We also seek to promote a long-term commitment to us by our executives.  We believe that there is great value to us in having a team of long-tenured, seasoned managers.  Our team-focused culture and management processes are designed to foster this commitment.
 
Executive Compensation Procedures
 
Our board of directors has historically reviewed and recommended, and the board of directors has approved, the compensation of our named executive officers.  Our compensation committee will review and approve the compensation of all of our executive officers and oversee and administer our executive compensation programs and initiatives.  The compensation committee will also be responsible for the evaluation of the performance of our named executive officers.  The compensation committee will continue to take into consideration input from our Chief Executive Officer regarding performance of the other named executive officers’ performance and recommendations for their compensation amounts.  However, the compensation committee will retain the authority to make the final decision with respect to amounts approved or recommended to the board for approval.  Furthermore, the compensation committee will meet outside the presence of the Chief Executive Officer when determining his compensation.
 
Elements of Compensation and Pay Mix
 
For the year ending March 31, 2012, executive compensation consisted of the following elements (discussed in detail below) to promote our pay-for-performance philosophy and compensation goals and objectives:
 
·           base salary;
·           annual cash incentive awards linked to our overall performance;
·           periodic grants of long-term equity-based compensation; and
·           health and retirement benefits generally available to employees.
 
We combine these elements in order to formulate compensation packages that provide competitive pay, reward the achievement of financial, operational and strategic objectives and align the interests of our executive officers and other senior personnel with those of our stockholders. We also provide executives with severance and double-trigger change in control benefits as described below.
 
Although we do not have a policy to allocate specific percentages of compensation to any particular element, we believe the combination of elements provides a well-proportioned mix of secure compensation, retention value and at-risk compensation that produces short-term and long-term performance incentives and rewards. By following this approach, we motivate our executives to focus on business results that will produce a high level of short-term and long-term performance for us and potential long-term value creation for our executives, as well as reducing the risk of recruitment of top executive talent by competitors. We do not have a formula for determining the amount of each element of compensation. Instead, each element is determined based on a combination of the factors described under “Short-Term Incentives,” “Long-Term Incentives” and “2011 Compensation Actions for Our Named Executive Officers.” Except as otherwise described in these sections, there was no particular primary factor in determining the amount of any element and instead, as a private company, our compensation decisions were based on subjective judgments about appropriate amounts after considering the factors listed in these sections. We believe a mix of annual cash incentive awards and long-term equity compensation provides an appropriate balance between short-term business performance and long-term financial and stock performance.
 
Short-Term Incentives
 
Base Salary.  Base salary is designed to provide our executive officers with steady cash flow during the course of the year that is not contingent on short-term variations in our corporate performance.  The base salaries established for 2011 for each of our named executive officers were intended to reflect wages that we believe are competitive for positions in companies of similar size and stage of development based on the experience and general knowledge of our Chief Executive Officer and our board of directors.  The setting of salaries also includes a subjective judgment as to appropriate levels taking into account each individual’s job duties, responsibilities and experience and comparisons to the salaries of our other executive officers.  The base salary increases described below under “2011 Compensation Actions for Our Named Executive Officers” were based on these considerations, except as specifically described below.
 
 
 

 
 
Base salaries are reviewed at least annually (or more frequently in specific circumstances) and may be recommended for adjustment from time to time based on the results of this review.  We expect that salary increases will continue to be determined using a combination of relevant competitive market data and assessment of individual performance.
 
Cash Bonuses.  We have an annual cash bonus plan under which cash bonuses may be paid to each of our employees, including our executive officers, shortly after the end of each calendar year.  Bonus payout is not based on a specific formula, but instead is based on a subjective analysis that includes an assessment of our accomplishments, performance and achievements as measured against our business and financial goals.  Target bonus amounts are determined based on the executive officer’s specific position, subjective analysis of an executive officer’s skills and potential contributions and, for new hires, the individual’s historical bonus levels with previous employers and individual negotiations at the time of employment.  For the year ending March 31, 2012, we did not award any cash bonuses.
 
The board of directors has not adopted a policy for recovering bonuses from our executive officers if the performance objectives that led to the bonus determination were to be restated, or found not to have been met to the extent originally believed by the board of directors or the compensation committee, but we will comply with applicable law and adopt an appropriate recoupment policy pursuant to the rules issued under the Dodd–Frank Wall Street Reform and Consumer Protection Act.
 
Long-Term Incentives
 
Long-term Equity Compensation.  Our equity incentive program is intended to reward longer-term performance and to help align the interests of our executive officers with those of our stockholders.  We believe that long-term performance is achieved through an ownership culture that rewards such performance by our executive officers through the use of equity incentives.  Our long-term incentives to date have consisted of restricted stock grants.  We believe that our equity incentive program is an important retention tool for our employees, including our executive officers.
 
Initial equity compensation awards for executive officers are individually negotiated with each executive officer at the time they are hired.  In determining initial equity grants, our Chief Executive Officer and board of directors considered a number of factors, including the competitive market for corresponding positions within comparable companies, the general and personal knowledge possessed by our Chief Executive Officer, human resources staff and board members, internal equity and a subjective evaluation of the potential contributions of the executive officer to the company given the executive’s particular position within the company (such as potential impact on long-term results or impact on operational results).  The individual grants approved in 2011, as described below under “2011 Compensation Actions for Our Named Executive Officers,” were determined based on a review of the executive’s job performance in addition to a review of the criteria described above.  Equity awards to executive officers have not historically been based upon a formula.
 
The board of directors expects the compensation committee to continue an annual stock option grant program for executive officers considering the same type of criteria as described above to continue aligning the interests of our executive officers with those of our stockholders. Participation in our Employee Stock Purchase Plan as part of our Stock Compensation Program will also be available to all executive officers on the same basis as our other employees.
 
Other Compensation and Benefits
 
Other Employee Benefits.  We provide health care, dental, and life insurance to all full-time employees, including our executive officers.  These benefits are available to all employees, subject to applicable laws. Other than as described above, we do not provide perquisites to executive officers that are not available to all Company employees on the same terms.
 
2011 Compensation Actions for Our Named Executive Officers (through March 31, 2012)
 
Name
Position
Salary($/month)2
Stock Awards (Fair Value in $)3
Graham Norton-Standen
Executive Chairman
26,000
400,000
Daniel J, Elliott
Chief Production Officer
26,000
400,000
Steve Aust
President
26,000
400,000
Dennis Hogan
Chief Financial Officer
22,000
200,000
David Edgar
Chief Technical Officer
20,000
200,000
 
2 The respective base salary in the amounts for each executive officer has accrued as unpaid executive compensation owed by the Company until paid, until such time as the Company determines that it has sufficient capital to begin distributing said salaries.
 
3The stock awards identified herein refer to shares of stock granted to officers, directors, employees, and consultants on August 8, 2011, pursuant to a written Restricted Stock Agreement (“RSA”) between the Company and each individual recipient and described more fully below (See- “Grants of Plan-Based Awards in Fiscal 2011”).  Fair Value for the shares issued pursuant to RSAs has been computed in accordance with FASB ASC Topic 718 and identified as pre-paid expenses in the Company’s financial reports.
 
 
 
 

 
 
No executive officer received any bonus pay, option awards, non-equity incentive plan compensation, non-qualified deferred compensation earnings, or other compensation not identified in the above chart.  Additionally, each executive officer has served in that capacity for only 1 year.  Thus, there is no data available for fiscal year 2010 with respect to each.
 
Accounting and Tax Considerations
 
 
Section 162(m) of the Internal Revenue Code of 1986, which only applies to public companies, limits the deduction for federal income tax purposes to not more than $1 million of compensation paid to certain executive officers in a calendar year.  Compensation above $1 million may be deducted if it is “performance-based compensation.”  The compensation committee has not established a policy for determining which forms of incentive compensation awarded to our executive officers should be designed to qualify as “performance-based compensation” following our initial public offering.  To maintain flexibility in compensating our executive officers in a manner designed to promote our objectives, the compensation committee has not adopted a policy that requires all compensation to be deductible.
 
Grants of Plan-Based Awards in Fiscal 2011
 
In August, 2011, the Company and several of its employees and consultants (the “Recipients”) entered into the RSAs on an individual basis.  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 as set forth below:
 
 
 
(i)           Fifty percent (50%) of the Restricted Securities shall vest and become non-forfeitable immediately upon the effective date of a registration statement filed by the Company with the Securities and Exchange Commission registering the Restricted Securities; and
 
(ii)           Fifty percent (50%) of the Restricted Securities shall vest and become non-forfeitable 180 days after the registration statement identified in Section 2(a)(i), above, becomes effective.
 
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.  As of the date of this Report, none of the restricted stock granted in the RSAs has vested.
 
Outstanding Equity Awards at Fiscal Year-End
 
As the Restricted Securities granted by way of the respective RSAs have not vested as of the Company’s fiscal year end, each of those shares remains an outstanding equity award.  There are, however, no outstanding option awards or equity incentive plan awards for any person or entity.  The following chart illustrates the outstanding unvested stock awards for the executive officers identified in this Report:
 
Name
Number of Unvested Shares
Market Value of Unvested Shares ($)4
Graham Norton-Standen
4,000,000
2,040,000
Daniel J, Elliott
4,000,000
2,040,000
Steve Aust
4,000,000
2,040,000
Dennis Hogan
2,000,000
1,020,000
David Edgar
2,000,000
1,020,000
 
4 The closing market price of the Company’s common stock as of March 30, 2012, was $0.51 per share, which serves as the basis for the market value of the unvested shares identified herein.
 
 
 

 
 
Equity Benefit Plan
2012 Stock Compensation Program
Our board of directors has instructed counsel to prepare a employee stock compensation program and intends to consider the draft presented to it at a its next meeting, subject to stockholder approval.  The Stock Compensation Program will become effective as of the date of the effectiveness of stockholder approval.
 
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
 
PRINCIPAL STOCKHOLDERS
 
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Principal Stockholders
The following table sets forth information about the beneficial ownership of our common stock as of June 26, 2012 for:
 
·           each person, or group of affiliated persons, known to us to be the beneficial owner of more than 5% of our common stock;
·           each named executive officer;
·           each of our directors; and
·           all of our executive officers and directors as a group.
 
Unless otherwise noted below, the address of each beneficial owner listed on the table is c/o VRDT Corporation, 12223 Highland Avenue, Suite 106-542, Rancho Cucamonga, California 91739.  We have determined beneficial ownership in accordance with the rules of the SEC.  We believe that, based on the information furnished to us by the stockholders, the persons and entities named in the tables below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws.
 
Name
Shares Beneficially Owned
Percentage of Class Beneficially Owned
Graham Norton-Standen
9,500,000
7.62
Daniel J. Elliott
8,817,500
7.08
Steve Aust
8,817,500
7.08
Dennis Hogan
6,700,000
5.38
David Edgar
6,700,000
5.38
Raymond Chin
6,700,000
5.38
AC Green
4,500,000
3.61
Bryon Bliss
4,500,000
3.61
Dan Malstrom
4,500,000
3.61
Don Driftmier
1,250,000
1.00
Larry Pendleton
1,100,000
0.88
 
Total Shares Owned By Executive Officers and Directors as a Group: 63,085,000
Total Percent of Class Owned By Executive Officers and Directors as a Group: 50.62%
 
 
Item 13. Certain Relationships and Related Transactions, and Director Independence.
 
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
 
Below we describe transactions and series of similar transactions, from May 11, 2011 to March 31, 2012, to which we have been a party or will be a party, in which:
 
·           the amounts involved exceeded or will exceed $120,000; and
·           a director, executive officer, beneficial holder of more than 5% of our capital stock or any member of their immediate family had or will have a direct or indirect material interest.
 
Below we also describe certain other transactions with our directors, executive officers and stockholders.   Other than as described below, there has not been, nor is there currently proposed, any such transaction or series of similar transactions to which we have been or will be a party other than compensation arrangements described elsewhere herein.
 
 
 

 
 
Formation Transactions
 
The Company was formed on August 1, 2008 in Delaware as Winwheel Bullion, Inc.  On November 16, 2008, the Company merged with Diversified Global Holdings, Inc., a Nevada corporation.  On May 11, 2011, the Company acquired Verdant Industries, Inc., a Delaware corporation, and the management of the acquired entity assumed control of the Company.  On May 19, 2011, the Company amended its Articles of Incorporation to reflect a name change to Verdant Automotive Corporation.  On January 19, 2012, the Company amended its Articles of Incorporation to reflect a name change to VRDT Corporation.
 
 
Indemnification of Executive Officers and Directors
 
Our amended and restated certificate of incorporation and our amended and restated bylaws provide that we will indemnify each of our directors and executive officers to the fullest extent permitted by the Delaware General Corporation Law.  Further, we have entered into indemnification agreements with each of our directors and executive officers, and we have purchased a policy of directors’ and officers’ liability insurance that insures our directors and executive officers against the cost of defense, settlement or payment of a judgment under certain circumstances.
 
Restricted Common Stock Grants to Executive Officers and Directors
 
We have granted restricted common stock to our executive officers and directors.  For a description of these restricted common stock grants, see “Grants of Plan-Based Awards in Fiscal 2011.”
 
Contract Work from 24Tech Corporation
 
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 fiscal year ended March 31, 2012, the Company purchased $28,981.78 of equipment and services from 24Tech. Of this amount, $28,118 was converted into 480,000 shares of the Company’s common stock on March 21, 2012.
 
Policies and Procedures for Related Party Transactions
 
Our executive officers, directors, and principal stockholders, including their immediate family members and affiliates, are not permitted to enter into a related party transaction with us without the prior consent of our nominating and corporate governance committee, or other independent committee of our board of directors in the case it is inappropriate for our nominating and corporate governance committee to review such transaction due to a conflict of interest.  Any request for us to enter into a transaction with an executive officer, director, principal stockholder, or any of such persons’ immediate family members or affiliates, in which the amount involved exceeds $120,000 must first be presented to our nominating and corporate governance committee for review, consideration and approval.  All of our directors, executive officers and employees are required to report to our nominating and corporate governance committee any such related party transaction.  In approving or rejecting the proposed agreement, our nominating and corporate governance committee shall consider the relevant facts and circumstances available and deemed relevant to the nominating and corporate governance committee, including, but not limited to the risks, costs and benefits to us, the terms of the transaction, the availability of other sources for comparable services or products, and, if applicable, the impact on a director’s independence.  Our nominating and corporate governance committee shall approve only those agreements that, in light of known circumstances, are in, or are not inconsistent with, our best interests, as our nominating and corporate governance committee determines in the good faith exercise of its discretion.  All of the transactions described above were approved by our board of directors.
 
 
DIRECTOR INDEPENDENCE
 
Although our stock is not eligible for trading on a national shares exchange, in January, 2012, our board of directors undertook a review of the independence of each director within the meaning of NASDAQ listing standards and considered whether any director has a material relationship with us that could compromise his ability to exercise independent judgment in carrying out his responsibilities.  As a result of this review, our board of directors determined that AC Green and Don Driftmier are “independent” within the meaning of NASDAQ listing standards, which does not constitute a majority of independent directors of our board of directors as would be required by NASDAQ listing standards if our stock were to be listed on NASDAQ.
 
 
 

 
 
Committees of the Board of Directors
 
Our board of directors currently has an audit committee and a compensation committee.  The entire board of directors performs all functions that would customarily be delegated to other committees.  In the immediate future, we expect to have a nominating committee and a corporate governance committee.  The proposed initial composition and primary responsibilities of each committee are described below.  Our board of directors may establish other committees to facilitate the management of our business.
 
Audit Committee
 
The members of our audit committee are Don Driftmier and AC Green.  Don Driftmier is the chair of the audit committee.  Our board of directors has determined that all members of our audit committee satisfy the independence and financial literacy requirements of Rule 10A-3 of the Shares Exchange Act of 1934, as amended, or the Exchange Act, and the NASDAQ listing standards.  Our board of directors has also determined that Don Driftmier is an audit committee “financial expert” as defined under the SEC rules implementing Section 407 of the Sarbanes-Oxley Act of 2002 and satisfies the financial sophistication requirements of the NASDAQ listing standards.  In making this determination, our board of directors considered the nature and scope of experience Mr. Driftmier has had with reporting companies, and Mr. Driftmier’s prior experience, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities.
 
The primary purpose of the audit committee is to discharge the responsibilities of our board of directors with respect to our accounting and financial reporting processes, our internal control over financial reporting processes and audits of financial statements and to oversee the performance and independence of our independent registered public accounting firm.  Specific responsibilities of our audit committee include:
 
·
evaluating the performance of our independent registered public accounting firm and determining whether to retain or terminate their services;
 
·
determining and pre-approving the engagement of our independent registered public accounting firm to perform audit services and any permissible non-audit services;
 
·
monitoring the rotation of the partners of the independent registered public accounting firm;
 
·
reviewing and discussing with management and our independent registered public accounting firm the results of the annual audit and the independent registered public accounting firm’s review of our annual and quarterly financial statements and reports;
 
·
reviewing with management and our independent registered public accounting firm significant issues that arise regarding accounting principles and financial statement presentation;
 
·
conferring with management and our independent registered public accounting firm regarding the scope, adequacy and effectiveness of our internal control over financial reporting; and
 
·
establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting control or auditing matters.
 
 
Compensation Committee
 
The members of our compensation committee are Daniel Elliott, Don Driftmier and AC Green.  The purpose of our compensation committee is to discharge the responsibilities of our board of directors to oversee our executive compensation and benefits policies and to review and determine the compensation to be paid to our executive officers, as well as to prepare and review the compensation committee report included in our annual proxy statement in accordance with applicable rules and regulations of the SEC.  Specific responsibilities of our compensation committee include:
 
·
determining the compensation and other terms of employment of our executive officers and reviewing and approving corporate performance goals and objectives relevant to such compensation;
 
·
reviewing and evaluating our executive compensation and benefits policies;
 
·
reviewing and approving the terms of any employment agreements, severance arrangements, change-of-control protections and any other compensatory arrangements for our executive officers; and
 
·
evaluating the efficacy of our compensation policy and strategy in achieving expected benefits to us and otherwise furthering the compensation committee’s policies.
 
 
Compensation Committee Interlocks and Insider Participation
 
For the year ending March 31, 2012, our entire board of directors performed the duties of the compensation committee.  Of the members of the board, Graham Norton- Standen, Daniel Elliott, Steve Aust, Dennis Hogan and David Edgar are currently or have been previously one of our officers or employees.  However, no director has served as a member of the board of directors or compensation committee of any entity that has one or more officers serving as a member of our board of directors or compensation committee. None of our officers currently serve, nor have served during the last completed fiscal year, as a member of the board of directors or compensation committee of any entity that has one or more officers serving as a member of our board of directors or compensation committee.
 
 
 

 
 
Code of Business Conduct and Ethics
 
Our board of directors has adopted a Code of Business Conduct and Ethics that applies to all of our employees, officers and directors.  The full text of our Code of Business Conduct and Ethics is posted on our web site at www.vrdt.com.  We intend to disclose future amendments to provisions of our Code of Business Conduct and Ethics, or waivers of such provisions, that are applicable to any principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions or our directors on our web site identified above.  The inclusion of our web site address in this Report does not include or incorporate by reference the information on our web site into this Report.
 
Limitation of Liability and Indemnification of Officers and Directors
 
Our certificate of incorporation and bylaws limit the liability of our directors, officers, employees and other agents to the fullest extent permitted by Delaware law.  Section 145 of the Delaware General Corporation Law permits indemnification of officers, directors and other agents under certain circumstances and subject to certain limitations.  Delaware law also permits a corporation to not hold its directors personally liable for monetary damages for breach of their fiduciary duties as directors, except for liability for:
 
·           breach of their duty of loyalty to us or our stockholders;
·           acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;
·           unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; and
·           any transaction from which the director derived an improper personal benefit.
 
These limitations of liability do not apply to liabilities arising under the federal or state Shares laws and do not affect the availability of equitable remedies such as injunctive relief or rescission.
 
Our certificate of incorporation also permits us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in this capacity.  We have obtained directors’ and officers’ liability insurance to cover the liabilities described above.
 
We have entered into or will enter into separate indemnity agreements with each of our directors and executive officers, that require us to indemnify such persons against any and all expenses (including attorneys’ fees), witness fees, judgments, fines, settlements and other amounts incurred (including expenses of a derivative action) in connection with any action, suit or proceeding or alternative dispute resolution mechanism, inquiry hearing or investigation, whether threatened, pending or completed, to which any such person may be made a party by reason of the fact that such person is or was a director, an officer or an employee of us or any of our affiliated enterprises, provided that such person must follow the procedures for determining entitlement to indemnification set out in the indemnity agreements.  The indemnity agreements also set forth other procedures that will apply in the event of a claim for indemnification thereunder.  We believe that these provisions and agreements are necessary to attract and retain qualified persons as executive officers and directors of our company.
 
At present, there is no pending litigation or proceeding involving any of our directors or executive officers as to which indemnification is required or permitted, and we are not aware of any threatened litigation or proceeding that may result in a claim for indemnification.
 
Item 14. Principal Accounting Fees and Services.
 
Audit Fees
 
The Company’s auditors for the years ended March 31, 2012 and March 31, 2011 are Drake & Klein, CPAs, located in Clearwater, Florida.  The Company has paid $7,500 and $7,500 for its quarterly financial reviews, Form 10-Q reviews, and Form 10-K reviews for the years ending March 31, 2012 and March 31, 2011, respectively. The Company has paid $10,000 and $10,000 for its annual financial audits for the years ending March 31, 2012 and March 31, 2011, respectively.
 
Tax Fees
 
The Company’s taxes are prepared internally therefore no fees have been paid associated with tax preparation.
 
 
 

 
 
All Other Fees
 
The Company has no other related fees.
 
PART IV
 
Item 15. Exhibits, Financial Statement Schedules.
 
31.1
Certification of Chief Executive Officer of the Company 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
Certification of Chief Financial Officer of the Company  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
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
Certification of Chief Financial Officer of the Company pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C. 63.
 
SIGNATURES

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


/s/ Graham Norton-Standen
 
June 29, 2012
Graham Norton-Standen, Chief Executive Officer
 
Date


/s/ Dennis Hogan
 
June 29, 2012
Dennis Hogan, Chief Financial Officer
 
Date
 
 
  /s/ Don Driftmier  
November 8, 2012
  Don Driftmier, Director   Date
       
  /s/ Steve Aust  
November 8, 2012
  Steve Aust, Director and President   Date