PINX:VRTC Veritec Inc Quarterly Report 10-Q Filing - 3/31/2012

Effective Date 3/31/2012

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM l0-Q

 

(Mark One)

 

[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

for the quarterly period ended MARCH 31, 2012

 

OR

 

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE AC T OF 1934

 

for the transition period from ________________ to ___________________.

 

Commission File Number. 0-15113

 

VERITEC, INC.

(Exact name of Registrant as Specified in its Charter)

 

Nevada 95-3954373

(State or Other Jurisdiction of

Incorporation or Organization)

(IRS Employer

Identification No.)

   
2445 Winnetka Avenue N. Golden Valley, MN 55427
(Address of principal executive offices) (Zip Code)

 

Registrant's telephone number, including area code: (763) 253-2670

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [ X ] No [ ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [ X ] No [ ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule l2b-2 of the Exchange Act. (Check one):

 

Large Accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [ X ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [ X ]

 

 

As of March 31, 2012, there were 15,920,088 shares of the issuer’s common stock outstanding.

 
 

VERITEC, INC.

 

FORM 10-Q

FOR THE FISCAL QUARTER ENDED March 31, 2012

 

TABLE OF CONTENTS

Page No.

PART I FINANCIAL INFORMATION 4
  ITEM 1 CONDENSED FINANCIAL STATEMENTS 4
  ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION  
    AND RESULTS OF OPERATIONS 14
  ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT  
    MARKET RISK 17
  ITEM 4 CONTROLS AND PROCEDURES 17

PART II OTHER INFORMATION 18
  ITEM 1  LEGAL PROCEEDINGS 18
  ITEM 1A RISK FACTORS 18
  ITEM 2 UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS 18
  ITEM 3 DEFAULTS UPON SENIOR SECURITIES 18
  ITEM 4 MINE SAFETY DISCLOSURES 18
  ITEM 5 OTHER INFORMATION 18
  ITEM 6 EXHIBITS 18
  SIGNATURES 19

 

 
 

 

 

Special Note Regarding Forward-Looking Statements

 

This Quarterly Report on Form 10-Q, including "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 2 of Part I of this report include forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by forward-looking statements.

 

In some cases, you can identify forward-looking statements by terminology such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "proposed," "intended," or "continue" or the negative of these terms or other comparable terminology. You should read statements that contain these words carefully, because they discuss our expectations about our future operating results or our future financial condition or state other "forward-looking" information. There may be events in the future that we are not able to accurately predict or control. Before you invest in our securities, you should be aware that the occurrence of any of the events described in this Quarterly Report could substantially harm our business, results of operations and financial condition, and that upon the occurrence of any of these events, the trading price of our securities could decline and you could lose all or part of your investment. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, growth rates, levels of activity, performance or achievements. We are under no duty to update any of the forward-looking statements after the date of this Quarterly Report to conform these statements to actual results.

 

 

3
 

PART I

ITEM 1 FINANCIAL STATEMENTS

 

VERITEC, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   March 31,  June 30,
   2012  2011
ASSETS  (Unaudited)   
           
Current Assets:          
Cash  $57,224   $14,996 
Restricted cash   500,000    —   
Accounts receivable, net of allowance of $8,400   21,645    29,135 
Note receivable   10,168    —   
Inventories   5,163    6,132 
Prepaid expenses   4,350    23,281 
Employee advances   1,337    2,837 
            Total Current Assets   599,887    76,381 
           
Property and Equipment, net of accumulated depreciation of $218,916 and $230,784, respectively   4,600    16,468 
            Total Assets  $604,487   $92,849 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
           
Current Liabilities:          
Notes payable, net of discount of $102,224 and $0, respectively  $521,064   $152,767 
Notes payable, related party   2,229,873    2,087,894 
Accounts payable   811,684    787,799 
Deferred revenue   456,205    71,542 
Payroll tax liabilities   474,781    340,628 
Accrued expenses   134,325    219,028 
            Total Current Liabilities   4,627,932    3,659,658 
           
Commitments and Contingencies          
           
Stockholders’ Deficit:          
Convertible preferred stock, par value $1.00; authorized 10,000,000 shares, 276,000 shares of Series H authorized, 1,000 shares issued and outstanding   1,000    1,000 
Common stock, par value $.01; authorized 50,000,000 shares, 15,920,088 shares issued and outstanding   159,201    159,201 
Additional paid-in capital   14,413,010    14,283,077 
Accumulated deficit   (18,596,656)   (18,010,087)
            Total Stockholders’ Deficit   (4,023,445)   (3,566,809)
           
            Total Liabilities and Stockholders’ Deficit  $604,487   $92,849 
           

See notes to condensed consolidated financial statements

 

4
 

 

VERITEC, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

  

   Three months ended March 31,
   2012  2011
       
License and other revenue  $184,358   $212,851 
Cost of Sales   74,298    83,714 
Gross Profit   110,060    129,137 
           
Operating Expenses:          
     Selling, general and administrative   203,431    274,596 
    Research and development   55,896    38,896 
        Total Operating Expenses   259,327    313,492 
           
Loss from Operations   (149,267)   (184,355)
           
Other Income(Expense):          
Interest income   106    —   
Interest expense, including $37,324 and $36,192, respectively, to related parties   (71,728)   (39,041)
Total Other Income(Expense)   (71,622)   (39,041)
           
Net Loss  $(220,889)  $(223,396)
           
Loss Per Common Share,          
Basic and Diluted  $(0.01)  $(0.01)

 

Weighted Average Number of Shares Outstanding,      
   Basic and Diluted   15,920,088    15,920,088 

 

See notes to condensed consolidated financial statements

5
 

 

VERITEC, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

  

   Nine months ended March 31,
   2012  2011
       
License and other revenue  $452,416   $678,919 
Cost of Sales   188,415    260,468 
Gross Profit   264,001    418,451 
           
Operating Expenses:          
    Selling, general and administrative   535,320    883,033 
    Research and development   162,686    183,720 
        Total Operating Expenses   698,006    1,066,753 
           
Loss from Operations   (434,005)   (648,302)
           
Other Income(Expense):          
Interest income   110    —   
Interest expense, including $112,480 and $108,135, respectively, to related parties   (152,674)   (120,606)
Total Other Income(Expense)   (152,564)   (120,606)
           
Net Loss  $(586,569)  $(768,908)
           
Loss Per Common Share,          
Basic and Diluted  $(0.04)  $(0.05)

 

Weighted Average Number of Shares Outstanding,      
   Basic and Diluted   15,920,088    15,920,088 

 

 

                     See notes to condensed consolidated financial statements

 

6
 

 

 

VERITEC, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT

For the Nine Months Ended March 31, 2012

(Unaudited)

 

 

 

`                 Additional        
  Preferred Stock   Common Stock   Paid-in   Accumulated    
  Shares   Amount   Shares   Amount   Capital   Deficit   Total
Balance, July 1, 2011  1,000    $ 1,000    15,920,088    $159,201    $14,283,077    $(18,010,087)    $(3,566,809)
Fair Value of Shareholder Guarantee of Notes Payable -   -   -   -   129,931   -   129,931
Stock Based Compensation -   -   -   -                  2   -            2
Net Loss for the Period        -            -                   -                 -                    -        (586,569)        (586,569)
Balance, March 31, 2012  1,000    $ 1,000    15,920,088    $159,201    $14,413,010    $(18,596,656)    $(4,023,445)

 

 See notes to condensed consolidated financial statements

 

7
 

VERITEC, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

   Nine months ended March 31,
   2012  2011
CASH FLOWS FROM OPERATING ACTIVITIES          
Net loss  $(586,569)  $(768,908)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation   11,868    21,458 
Amortization of discount on notes payable   27,707    7,312 
Fair value of stock options issued to employees   2    1,208 
     Allowance on note receivable   —      60,000 
           
Changes in operating assets and liabilities:          
    Accounts receivable   7,490    50,732 
    Restricted cash   (500,000)   —   
    Inventories   969    (2,923)
    Employee advances   1,500    2,000 
    Prepaid expenses   18,931    (125)
    Deferred revenue   384,663    59,419 
    Payroll tax liabilities   134,153    145,403 
    Accounts payables and accrued expenses   (60,818)   229,004 
Interest accrued on notes payable   123,000    116,244 
           
Net cash used in operating activities   (437,104)   (79,176)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
      Issuance of note receivable   (10,168)   (60,000)
Net cash used by investing activities   (10,168)   (60,000)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
   Proceeds from notes payable   489,500    129,200 
Net cash provided by financing activities   489,500    129,200 
           
NET INCREASE IN CASH   42,228    (9,976)
CASH AT BEGINNING OF PERIOD   14,996    31,915 
CASH AT END OF PERIOD  $57,224   $21,939 
           
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION          
Cash paid for interest  $1,967   $606 
           
NONCASH INVESTING AND FINANCING ACTIVITIES
Fair value of shareholder guarantee on notes payable recorded as a valuation discount.
   129,931    —   
           
           
           

See notes to condensed consolidated financial statements

8
 

 

VERITEC, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Nine Months Ended March 31, 2012 and 2011 (Unaudited)

 

A. NATURE OF BUSINESS

 

References to the “Company” in this Form 10-Q refer to Veritec, Inc. (“Veritec”) and its wholly owned subsidiaries VCode Holdings, Inc. (“VCode”) and Veritec Financial Systems, Inc. (“VTFS”).

 

The Company is primarily engaged in the development, marketing, sales and licensing of products and rendering of professional services related thereto in the following two fields of technology: (1) proprietary two-dimensional matrix symbology (also commonly referred to as “two-dimensional barcodes” or “2D barcodes”) and (2) mobile banking solutions.

 

The Company’s two-dimensional matrix symbology technology will hereafter be referred to as the Company’s “Barcode Technology”, and the Company’s mobile banking technology will hereafter be referred to as its “Mobile Banking Technology”.

 

The Company’s Barcode Technology was originally invented by the founders of Veritec under United States patents 4,924,078, 5,331,176, 5,612,524 and 7,159,780. Our principal licensed product to date that contains our VeriCode® Barcode Technology has been a product identification system for identification and tracking of manufactured parts, components and products. The VeriCode® symbol is a two-dimensional high data density machine-readable symbol that can contain up to approximately 500 bytes of data.

 

The Company’s VSCode® Barcode Technology is a derivative of the VeriCode® symbol with the ability to encrypt a greater amount of data by increasing data density. The VSCode® is a data storage “container” that offers a high degree of security and which can also be tailored to the application requirements of the user. The VSCode® symbol can hold any form of binary information that can be digitized, including numbers, letters, images, photos, graphics, and the minutia for biometric information, including fingerprints and facial image data, to the extent of its data storage capacity, that are likewise limited by the resolution of the marking and reading devices employed by the user. VSCode® is ideal for secure identification documents (such as national identification cards, driver’s licenses, and voter registration cards), financial cards, medical records and other high security applications.

 

In its PhoneCodes™ product platform, Veritec developed software to send, store, display, and read a VeriCode® Barcode Technology symbol on the LCD screen of a mobile phone. With the electronic media that provide the ease of transferring information over the web, Veritec’s PhoneCodes™ technology enables individuals and companies to receive or distribute gift certificates, tickets, coupons, receipts, or engage in banking transactions using the VeriCode® technology via wireless phone or PDA.

 

On January 12, 2009, Veritec formed VTFS, a Delaware corporation, to bring its Mobile Banking Technology, products and related professional services to market. In May 2009 Veritec was registered by Security First Bank in Visa’s Third Party Registration Program as a Cardholder Independent Sales Organization and Third-Party Servicer. As a Cardholder Independent Sales Organization, Veritec was able to promote and sell Visa branded card programs. As a Third-Party Servicer, Veritec provided back-end cardholder transaction processing services for Visa branded card programs on behalf of Security First Bank. As of October 2010 the Company’s registration with Security First Bank terminated. As of April 2011 the Company signed an ISO and processor agreement with Palm Desert National Bank (which was later assigned to First California Bank) to market and process the Company’s Visa branded card program on behalf of the bank.

 

Our VeriSuite™ card enrollment system was released in July 2009. The VeriSuite™ system is a user friendly and cost effective solution that gives governments and businesses the ability to provide cardholders with an identity card containing Veritec’s VSCode® Barcode Technology. The VeriSuite™ system provides secure Bio-ID Cards such as citizen identification, employee cards, health benefit cards, border control cards, financial cards and more.

 

The Company has a portfolio of five United States and eight foreign patents. In addition, we have seven U.S. and twenty-eight foreign pending patent applications.

9
 

B. BASIS OF PRESENTATION

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States of America generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q. Accordingly, the condensed consolidated financial statements do not include all of the information and footnotes required for complete financial statements.

 

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended March 31, 2012 are not necessarily indicative of the results that may be expected for the year ending June 30, 2012. The Condensed Consolidated Balance Sheet as of June 30, 2011 was derived from the audited consolidated financial statements as of such date, but does not include all of the information and footnotes required by GAAP. For further information, refer to the Consolidated Financial Statements and footnotes thereto included in our Form 10-K as of and for the year ended June 30, 2011.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Those estimates and assumptions include estimates for reserves of uncollectible accounts, accruals for potential liabilities and assumptions made in valuing stock instruments issued for services.

 

The accompanying condensed consolidated financial statements include the accounts of Veritec, VCode, and VTFS. All inter-company transactions and balances were eliminated in consolidation.

C. GOING CONCERN

The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. During the nine months ended March 31, 2012, the Company had a net loss of $586,569. At March 31, 2012, the Company had a working capital deficit of $4,028,045 and a stockholders’ deficiency of $4,023,445. The Company is delinquent or in default of $2,390,778 of its notes payable and is delinquent in payment of certain amounts due of $474,781 for payroll taxes and accrued interest and penalties as of March 31, 2012. The Company believes its cash and forecasted cash flow from operations will not be sufficient to continue operations through fiscal 2012 without continued external investment. The Company will require additional funds to continue its operations through fiscal 2012 and to continue to develop its existing projects and plans to raise such funds by finding additional investors to purchase the Company’s securities, generating sufficient sales revenue, implementing dramatic cost reductions or any combination thereof. There is no assurance that the Company will be successful in raising such funds, generating the necessary sales or reducing major costs. Further, if the Company is successful in raising such funds from sales of equity securities, the terms of these sales may cause significant dilution to existing holders of common stock. The condensed consolidated financial statements do not include any adjustments that may result from this uncertainty.

 

D. SIGNIFICANT ACCOUNTING POLICIES

 

Net Loss per Common Share:

 

Basic earnings (loss) per share is computed by dividing the net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding during the year. Diluted earnings (loss) per share is computed by dividing the net income (loss) applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are excluded from the computation as their effect is anti dilutive.

 

For the three and nine months ended March 31, 2012 and 2011 the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an anti-dilutive effect.

 

There were 7,141,067 and 6,547,987 potentially dilutive securities as of March 31, 2012 and 2011, respectively.

 

 

Concentrations

 

During the three months ended March 31, 2012 and 2011, the Company had one customer that accounted for approximately 15% of sales in 2012, and four customers of which two customers accounted for approximately 13% each with the remaining two accounting for approximately 15% and 38% of sales in 2011, respectively. During the nine months ended March 31, 2012 and

10
 

 

2011, the Company had two customers that accounted for approximately 11% and 24% of sales in 2012, and four customers that accounted for approximately 12%, 13%, 16%, and 29% of sales in 2011, respectively.  No other customers accounted for more than 10% of sales in either period. As of March 31, 2012 and June 30, 2011, the Company had approximately $14,025 (46%) and $6,050 (20%) and $4,125 (14%) and $6,050 (16%), $10,963 (29%), $10,025 (27%), and $5,300 (14%), respectively, of accounts receivable from its major customers.

 

For the three months ended March 31, 2012 and 2011, foreign revenues accounted for 30% (22% Korea and 8% Taiwan) and 87% (72% Korea and 15% Taiwan) of the Company’s total revenues respectively. For the nine months ended March 31, 2012 and 2011, foreign revenues accounted for 47% (40% Korea and 7% Taiwan) and 93% (72% Korea, 19% Taiwan, and 2% others) of the Company’s revenues respectively.

 

Recent Accounting Pronouncements

 

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”. ASU No. 2011-4 does not require additional fair value measurements and is not intended to establish valuation standards or affect valuation practices outside of financial reporting. The ASU is effective for interim and annual periods beginning after December 15, 2011. The Company will adopt the ASU as required. The ASU will affect the Company’s fair value disclosures, but will not affect the Company’s results of operations, financial condition or liquidity.

 

In June 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income”. The ASU eliminates the option to present the components of other comprehensive income as part of the statement of changes in shareholders’ equity, and instead requires consecutive presentation of the statement of net income and other comprehensive income either in a continuous statement of comprehensive income or in two separate but consecutive statements. ASU No. 2011-5 is effective for interim and annual periods beginning after December 15, 2011. The Company will adopt the ASU as required. It will have no affect on the Company’s results of operations, financial condition or liquidity.

 

In September 2011, the FASB issued ASU 2011-08, “Testing Goodwill for Impairment”, an update to existing guidance on the assessment of goodwill impairment. This update simplifies the assessment of goodwill for impairment by allowing companies to consider qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount before performing the two step impairment review process. It also amends the examples of events or circumstances that would be considered in a goodwill impairment evaluation. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted. The Company is currently evaluating the affects adoption of ASU 2011-08 may have on its goodwill impairment testing.

 

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the Securities Exchange Commission (the "SEC") did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.

 

E. RESTRICTED CASH

 

The Company entered into a Store Value Prepaid Card Sponsorship Agreement (the “Agreement”) with a Bank. Whereas the Company has developed for marketing and management purposes, store value prepaid card programs (the “Programs”) which will be marketed and managed daily at the direction of the Bank. In connection with the agreement with the Bank, the Company established a Reserve Account controlled by the bank in the amount of $500,000. Since this amount is restricted for the purposes related to the Programs, it is classified as restricted cash on the condensed consolidated balance sheets.

11
 

F. NOTES PAYABLE

 

Notes payable consist of the following:

   March 31, 2012  June 30, 2011
   (UNAUDITED)   
Convertible notes payable (includes $122,926 and $116,899, respectively, to non-related parties), unsecured, interest at 8%, due September 2010 through November 2010. The principal and accrued interest are convertible at a conversion price of $0.30. The principal and interest is due immediately on the event of default or change of control. The holders also received warrants to purchase one share of common stock for every $2 of investment. The Company recorded a $20,981 discount on the notes payable for the value of the warrants issued. The discount was fully amortized over the term of the notes payable.  There was no unamortized discount as of March 31, 2012 and June 30, 2011, respectively.  The notes are now in default.  $684,845   $651,629 
           
Convertible notes payable to related parties, unsecured, principal and interest are convertible into common stock at $0.08 to $0.33 per share, interest at 8 % to 10%, due July to November 2010.  The notes are now in default.   840,463    766,914 
           
Convertible note payable to related party, secured by the Company’s intellectual property, principal and interest are convertible into common stock at $0.25 per share subject to board of directors’ approval, interest at 8%. The note was due November 2010 and is now in default.   238,882    226,828 
           
Note payable to related party, secured by the Company’s intellectual property, interest at 8% due August 2010 and is now is default.   464,174    441,014 
           
Notes payable to related parties, unsecured, interest at 0% to 8%, due on demand.   124,436    118,408 
           
Note payable, unsecured, interest at 10%, due January 2010 and is now in default.   24,669    23,162 
           
Convertible note payable, unsecured, principal and interest are convertible into common stock at $0.30 per share subject to board of directors’ approval, interest at 8%, due January 2011 and is now in default.   11,786    11,183 
           
Notes payable, unsecured, interest at 5%, due January 2013.(1)   452,349    —   
           
Convertible note payable, unsecured, principal and interest are convertible into common stock at $0.40 per share, interest at 5%, due March 2013.   10,034    —   
           
Convertible note payable, unsecured, principal and interest are convertible into common stock at $1.00 per share subject to board of directors’ approval, interest at 8% due November 2009 and is now in default.   1,523    1,523 
           
Total   2,853,161    2,240,661 
           
Less valuation discount on note payable   (102,224)   —   
           
Grand total  $2,750,937   $2,240,661 
           

 

12
 

 

 

 

(1) In connection with the issuance of the notes payable, two stockholders of the Company granted the lender the option to acquire 1,600,000 unrestricted shares of the Company’s common stock from the stockholder’s at a price of $0.40 per share. The agreement to provide the lender with the option to purchase shares of the two shareholders was presumed to be a separate arrangement between the Company and the lender. As such, the Company valued the shares as if they had provided the lender an option to acquire these shares. The aggregate value of the 1,600,000 shares was valued at $129,931 using Black-Scholes option valuation model. The value of the option is being considered as a valuation discount and will be amortized over the one year life of the Note. For the period ended March 31, 2012, the Company recognized $27,707 of expense related to the amortization of this discount and is included in the interest expense in the condensed consolidated statement of operations. The remaining valuation discount on note payable of $102,224 at March 31, 2012 is reflected as a valuation discount and offset to notes payable in the condensed consolidated balance sheets.

 

For the purposes of Balance Sheet presentation notes payable have been grouped as follows:

 

  March 31,   June 30,
  2012   2011
Notes payable, net of discount of $102,224 and $0, respectively  $      521,064   $    152,767
Notes payable, related party      2,229,873     2,087,894
   $  2,750,937   $ 2,240,661

 

 

F. STOCK-BASED COMPENSATION

 

Stock options

 

The Company has agreements with certain of its employees and independent contractor consultants that provide grants of options to purchase the Company’s common stock.

 

A summary of stock options as of March 31, 2012 is as follows:

 

  Number of   Weighted - Average
  Shares   Exercise Price
           
Outstanding at June 30, 2011 824,249     $0.47  
        Expired (40,000)   $0.25  
Outstanding at March 31, 2012 784,249     $0.48  
Exercisable at March 31, 2012 784,249     $0.48  

 

The weighted-average remaining contractual life of stock options outstanding and exercisable at March 31, 2012 is 2.2 years. The aggregate intrinsic value of stock options outstanding as of March 31, 2012 was $1,800.

 

The weighted-average fair value of options granted for the nine months ended March 31, 2012 and 2011 was $0.00 and $0.14, respectively.

 

Stock-based compensation expense was $0 and $338 during the three months ended March 31, 2012 and 2011, respectively. Stock based compensation expense was $2 and $1,208 during the nine months ended March 31, 2012 and 2011, respectively. As of March 31, 2012, there was no unrecognized compensation costs related to stock options.

 

Warrants

 

In connection with the issuance of certain convertible notes payable, the Company has outstanding 275,000 fully vested warrants to acquire its common stock at an exercise price of $2 per share. The warrants expire in 2014. The warrants have no intrinsic value at March 31, 2012.

13
 

 

 

G. LEGAL PROCEEDINGS

 

On February 15, 2011, the Company filed a complaint in U.S. District Court for the District of Minnesota against Aurora Financial Systems, Inc. (“Aurora”) for declaratory judgment, tortious interference and other related claims concerning assertions by Aurora regarding United States Patent No. 7,229,006. The complaint related to Aurora’s improper and unlawful assertions of patent against certain software owned by the Company which was lawfully acquired from the software’s owner and inventor before the purported assignment of any patent rights to Aurora. Even though Aurora was aware of the lawful acquisition yet they have made repeated claims about the Company’s purported patent infringement relating to the Company’s use and licensing of the software to various financial institutions with which the Company has sought business relationship. The Company is seeking a declaration of non-infringement based on legal estoppel and implied license as well as a judgment that Aurora has committed tortious interference with prospective economic advantage, false advertising under the Lanham Act and has violated Minnesota’s Deceptive Trade Practices Act. As of March 31, 2012 the case has been in discovery and Aurora has not countersued. On May 4, 2012 the case was dismissed with prejudice with each party bearing its own fees and costs. In addition to the preceding lawsuit, the Company is subject to various legal proceedings from time to time in the ordinary course of business, none of which is required to be disclosed.

 

H. AGREEMENTS

 

During the quarter ended September 30, 2011, the Company signed a 5-year agreement with Antero Payment Solutions for the use of each others’ technologies among other things and to promote and market each others’ prepaid debit card programs. Under the terms of the agreement the Company received $25,000 as an up front license fee, which the Company has reflected as deferred revenue to be amortized over the term of the agreement. The agreement has a 5-year automatic renewal clause unless terminated by a written consent of both parties. During the nine months ended March 31, 2012, the Company recognized revenue of $2,833 relating to this agreement. As of March 31, 2012, the balance remaining to be recognized was $22,167.

 

The Company also signed a 5-year strategic agreement with National Identity Solutions (NIS) for the promotion and marketing of the Company’s prepaid debit card program and NIS’ identity theft solutions. The agreement requires NIS to pay an up front license fee of $250,000 of which $125,000 was paid as of September 30, 2011 with the remaining balance of $125,000 paid as of December 31, 2011. Both payments have been reflected as deferred revenue to be amortized over the term of the agreement. The agreement automatically renews annually unless terminated by either party. During the nine months ended March 31, 2012, the Company recognized revenue of $22,153 relating to this agreement. As of March 31, 2012, the balance remaining to be recognized was $227,847.

 

I. SUBSEQUENT EVENTS

 

Subsequent to the quarter ended March 31, 2012, the Company borrowed a total of $4,500 from its current CEO and a board member, Van Tran, at 8% annual interest due on demand. The note is convertible into the Company’s common stock at the rate of one share for every $0.08 of indebtedness.

 

On May 18, 2012, the Company entered into an Amended and Restated Unsecured Promissory Note with Larry Konfirst (“Amended Note”). The Amended Note, amends, restates and supersedes in its entirety that certain promissory note dated January 16, 2012 issued by the Company in favor of Mr. Konfirst (“Original Note”). Under the Amended Note, the Company is obligated to repay $500,000 to Mr. Konfirst plus simple interest at the rate of 5% per annum, accruing from the date of the Original Note, on or before January 16, 2013. The loan amount may only be used for the purpose of funding a certificate of deposit for the purpose of providing security for the Company’s prepaid debit card distribution at First California Bank (or its assigns). The Amended Note is subject to the Letter Agreement by and among the Company, Larry Konfirst and two shareholders of the Company dated May 18, 2012. Pursuant to the Letter Agreement, the shareholders have confirmed their agreement to give Mr. Konfirst an option to purchase up to 1,600,000 shares of unrestricted shares of common stock of the Company at $0.40 per share, payable by cancelling monies owned by the Company under the Amended Note. In the event Mr. Konfirst exercises this option, the Company has agreed to issue a convertible note to the shareholders in an amount equal to the debt cancelled in favor of the Company. This note, if and when issued, will mature after a period of 180 days from the date of issuance, accrue simple interest at 4% per annum, and be convertible into shares of the Company’s restricted common stock at a rate of $0.08 per share at the option of these shareholders.

 

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

 

Results of Operations – March 31, 2012 compared to March 31, 2011

 

We had a net loss of $220,889 for the three months ended March 31, 2012, compared to a net loss of $223,396 for the three months ended March 31, 2011. For the nine months ended March 31, 2012, we had a net loss of $586,569 compared to a net loss of $768,908 for the nine months ended March 31, 2011.

  

 

14
 

 

Revenue

 

License and other revenues are derived from our product identification systems sold principally to customers in the LCD monitor industry. For the three months ended March 31, 2012, license and other revenue was $184,358 compared to $212,851 for the three months ended March 31, 2011, a decrease of $28,493. The license and other revenue decreases are attributable to the decrease in demand for licenses during the quarter. Revenues from the LCD market remain unpredictable as they are generated when customers open new production facilities or update production equipment. For the nine months ended March 31, 2012 and 2011, license and other revenues was $452,416 and $678,919, respectively. The decrease was due to the decrease in demand for licenses.

 

Cost of Goods Sold

 

Cost of sales for the three months ended March 31, 2012 totaled $74,298 and for the three months ended March 31, 2011, cost of sales were $83,714, a net decrease of $9,416. The decrease in cost of sales for the three months ended March 31, 2012, was the result of a reduction in the use of hardware inventories during the quarter. For the nine months ended March 31, 2012, the cost of sales totaled $188,415 compared to the nine months ended March 31, 2011 of $260,468. The net decrease of $72,053 was mainly due to a reduction in cost of maintaining the Company’s data processing center for its mobile banking operations and the reduction in the use of hardware inventories for the period. This decrease was offset by increases in network costs that increased by $5,632.

 

Operating Expenses

 

Sales and marketing expense for the three months ended March 31, 2012 were $34,075 compared to $38,717 for the three months ended March 31, 2011, a decrease of $4,642. For the three months ended March 31, 2012, the Company had one direct sales staff person. The Company, for the three months ended March 31, 2012, paid out commissions of $299 compared to $185 for the three month period ended March 31, 2011. Sales and marketing expense for the nine months ended March 31, 2012 was $109,848 compared to $114,474 for the nine months ended March 31, 2011, a difference of $4,626. For the nine months ended March 31, 2012 the Company had one direct sales staff.

 

General and administrative expenses for the three months ended March 31, 2012 were $169,356 compared to $235,879 for the three months ended March 31, 2011, a decrease of $66,523 over the three months ended March 31, 2011. The decrease was mainly the result of decreases in some of the expenditures for the three months ended March 31, 2012, compared to the three months ended March 31, 2011. Legal fees decreased by $59,860 due to the waning down of the Aurora case discussed under legal proceedings. The Company also saw decreases of $3,197 in depreciation expense, $6,588 in payroll and related costs and $6,405 in health insurance expense. These decreases were offset by increases in temporary/contract help of $13,413 and patent renewal expense of $6,556 over the three months ended March 31, 2011. For the nine months ended March 31, 2012, general and administrative expenses were $425,472 versus $768,559 for the nine months ended March 31, 2011, a decrease of $343,087. The reduction was mainly the result of decreases in most of the expenditure for the nine months ended March 31, 2012. Payroll expense decreased by $38,301 due to a reduction in staff levels. The Company also saw decreases in legal fees of $161,274, $9,000 in professional fees, $9,591 in depreciation expense, $34,576 in patent renewal expense, $60,000 in bad debts expense, $24,374 in payroll penalty and interest expense, $8,259 in health insurance expense, and $7,326 in travel expense. These decreases were offset by an increase in contract/temporary help expense of $22,375.

 

Research and development expense for the three months ended March 31, 2012 totaled $55,896 versus $38,896 for the three months ended March 31, 2011. The increase of $17,000 was principally the result of an increase in contract/temporary expense that increased by $31,884 but was offset by a decrease of $14,884 in payroll costs. For the nine months ended March 31, 2012, research and development costs was $162,686 compared to $183,720 for the nine months ended March 31, 2011, a difference of $21,034. For the nine month ended March 31, 2012, the engineering payroll costs decreased by $91,704 due to a reduction in staff levels but consulting expense increased by $70,669 as the Company used more consulting services.

 

Other Income (Expense)

 

Interest income for the three months ended March 31, 2012 and 2011 was $106 and $0, respectively. Interest expense for the three months ended March 31, 2012 was $71,622 compared to $39,041 in the same period ended March 31, 2011. The increase was the result of issuance of notes payable. For the nine months ended March 31, 2012 and 2011 interest income was $110 and $0, respectively. For the nine months ended March 31, 2012 and 2011, interest expense was $152,674 and $120,606, respectively. The increase was the result of issuance of notes payable.

 

Liquidity

 

Our increase in cash and cash equivalent to $57,224 at March 31, 2012 compared to $14,996 at June 30, 2011 was mainly the result of $437,104 used in operating activities and $489,500 provided by financing activities.  Net cash used in operations during 2012 was $437,104 compared with $79,176 used in operations during the same period in 2011.  Cash used in operations during 2012 was primarily due to the $500,000 we were required to provide a bank as a guarantee for a prepaid card program, the increase in deferred revenue offset by the net loss in the period, decreases in accounts receivable and decreases in accrued expenses.  Net cash used in investing activities was $10,168 during 2012 compared with $60,000 net cash used in investing activities during 2011 which was primarily the result of payment on note receivable.  Net cash provided by financing activities of $489,500 during 2012 was due to proceeds from notes payable of $489,500.  During the same period in 2011, the net cash provided by financing activities of $129,200 was from net proceeds from notes payable.

15
 

 

 

The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. During the nine months ended March 31, 2012, the Company had a net loss of $586,569. At March 31, 2012, the Company had a working capital deficit of $4,028,045 and a stockholders’ deficiency of $4,023,445. The Company is delinquent or in default of $2,390,778 of its notes payable and is delinquent in payment of certain amounts due of $474,781 for payroll taxes and accrued interest and penalties as of March 31, 2012. The Company’s operations are currently being supported by borrowings from affiliated parties, and its cash and forecasted cash flow from operations will not be sufficient to continue operations without continued external investment. The Company believes it will require additional funds in the near future to continue its operations and to continue to develop its existing projects and plans to raise such funds by finding additional investors to purchase the Company’s securities, generating sufficient sales revenue, implementing further dramatic cost reductions or any combination thereof. There is no assurance that the Company can be successful in raising such funds, generating the necessary sales or reducing major costs. Further, if the Company is successful in raising funds from sales of equity securities, the terms of these sales may cause significant dilution to existing holders of common stock. The condensed consolidated financial statements do not include any adjustments that may result from this uncertainty.

 

If the Company is not successful in raising additional funds, generating sufficient revenues or implementing sufficient cost reductions, the Company may be forced to suspend or discontinue its operations or seek relief from its debt obligations under the United States Bankruptcy Code. Any of these actions is likely to result in a common stockholder’s loss of his or her complete investment in the Company’s common stock.

 

Subsequent to the quarter ended March 31, 2012, the Company borrowed a total of $4,500 from its current Chief Executive Officer and director, Van Tran, pursuant to a convertible demand note that bears interest at rate of 8% per annum. The note is convertible into the Company’s common stock at the rate of one share per every $0.08 of indebtedness.

 

 

Recent Accounting Pronouncements

 

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”. ASU No. 2011-4 does not require additional fair value measurements and is not intended to establish valuation standards or affect valuation practices outside of financial reporting. The ASU is effective for interim and annual periods beginning after December 15, 2011. The Company will adopt the ASU as required. The ASU will affect the Company’s fair value disclosures, but will not affect the Company’s results of operations, financial condition or liquidity.

 

In June 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income”. The ASU eliminates the option to present the components of other comprehensive income as part of the statement of changes in shareholders’ equity, and instead requires consecutive presentation of the statement of net income and other comprehensive income either in a continuous statement of comprehensive income or in two separate but consecutive statements. ASU No. 2011-5 is effective for interim and annual periods beginning after December 15, 2011. The Company will adopt the ASU as required. It will have no affect on the Company’s results of operations, financial condition or liquidity.

 

In September 2011, the FASB issued ASU 2011-08, “Testing Goodwill for Impairment”, an update to existing guidance on the assessment of goodwill impairment. This update simplifies the assessment of goodwill for impairment by allowing companies to consider qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount before performing the two step impairment review process. It also amends the examples of events or circumstances that would be considered in a goodwill impairment evaluation. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted. The Company is currently evaluating the affects adoption of ASU 2011-08 may have on its goodwill impairment testing.

 

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the Securities Exchange Commission (the "SEC") did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.

 

Off-Balance Sheet Arrangements

 

The Company does not have any off-balance sheet arrangements.

 

Critical Accounting Policies

 

Stock-Based Compensation:

16
 

 

 

The Company periodically issues stock options and warrants to employees and non-employees in capital raising transactions, for services and for financing costs.  Stock-based compensation for employees is measured at the grant date, based on the fair value of the award, and is recognized as expense over the requisite service period.  Options vest and expire according to terms established at the grant date. The value of the stock compensation to non-employees is based upon the measurement date as determined at either (a) the date at which a performance commitment is reached or (b) at the date at which the necessary performance to earn the equity instruments is complete.

 

We estimate volatility and forfeitures based upon historical data. As permitted by the authoritative guidance issued by the FASB, we use the “simplified” method to determine the expected life of an option due to the Company’s lack of sufficient historical exercise data to provide a reasonable basis, which is a result of the relative high turnover rates experienced in the past for positions granted options. All of these variables have an effect on the estimated fair value of our share-based awards.

 

Revenue Recognition:

 

The Company accounts for revenue recognition in accordance with SEC Staff Accounting Bulletin (SAB) No. 101 "Revenue Recognition in Financial Statements" and related amendments. Revenues for the Company are classified into four separate products; license revenue (Veritec’s Multi-Dimensional matrix symbology), hardware revenue, identification card revenue, and debit card revenue.  Revenues from licenses, hardware, and identification cards are recognized when the product is shipped and collection is reasonably assured. The process typically begins for license and hardware revenue with a customer purchase order detailing its hardware specifications so the Company can import its software into the customer's hardware. Once importation is completed, if the customer only wishes to purchase a license, the Company typically transmits the software to the customer via the Internet.  Revenue is recognized at that point. If the customer requests both license and hardware products, once the software is imported into the hardware and the process is complete, the product is shipped and revenue is recognized at time of shipment.  Once the software and/or hardware are either shipped or transmitted, the customers do not have a right of refusal or return.  Under some conditions, the customers remit payment prior to the Company having completed importation of the software.  In these instances, the Company delays revenue recognition and reflects the prepayments as customer deposits.

 

The process for identification cards begins when a customer requests, via the Internet, an identification card.  The card is reviewed for design and placement of the data, printed and packaged for shipment.  At the time the identification cards are shipped and collection is reasonably assured, revenue is recognized.

 

The Company, as a processor and a distributor, recognizes revenue from transaction fees charged cardholders for the use of its issued mobile debit cards. The fees are recognized on a monthly basis after all cardholder transactions have been summarized and reconciled with third party processors.

 

 

 

ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

A smaller reporting company is not required to provide the information required by this Item 3.

 

 

ITEM 4 CONTROLS AND PROCEDURES

 

 

Evaluation of Disclosure Controls and Procedures.

 

Our management, with the participation of our chief executive officer and our chief financial officer, carried out an evaluation of the effectiveness of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 (the “Exchange Act”) Rules 13a-15(e) and 15-d-15(e)) as of the end of the period covered by this report (the “Evaluation Date”).  Based upon that evaluation, our chief executive officer and our chief financial officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were not effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to our management, including our chief executive officer and our chief financial officer, as appropriate to allow timely decisions regarding required disclosure.  As of March 31, 2012, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses in our internal control over financial reporting described in our Form 10-K at June 30, 2011.

 

17
 

 

Changes in Internal Control over Financial Reporting.

 

In our Form 10-K at June 30, 2011, we identified certain matters that constitute material weaknesses (as defined under the Public Company Accounting Oversight Board Auditing Standard No. 2) in our internal control over financial reporting as discussed on Management’s Report on Internal Control Over Financial Reporting.  We are undergoing ongoing evaluation and improvements in our internal control over financial reporting.  Regarding our identified weaknesses, we have performed the following remediation efforts:

 

We have assigned our audit committee with oversight responsibilities.
Our financial statements, periodic reports filed pursuant to the Securities Exchange Act of 1934, as amended, our monthly bank statements and imaged checks are now continuously reviewed by our chief financial officer and chief executive officer.
All significant contracts are now being reviewed and approved by our board of directors in conjunction with the chief executive officer.

 

There was no other change in our internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

 

PART II

 

ITEM 1 LEGAL PROCEEDINGS

 

On February 15, 2011, the Company filed a complaint in U.S. District Court for the District of Minnesota against Aurora Financial Systems, Inc. (“Aurora”) for declaratory judgment, tortious interference and other related claims concerning assertions by Aurora regarding United States Patent No. 7,229,006. The complaint related to Aurora’s improper and unlawful assertions of patent against certain software owned by the Company which was lawfully acquired from the software’s owner and inventor before the purported assignment of any patent rights to Aurora. Even though Aurora was aware of the lawful acquisition yet they have made repeated claims about the Company’s purported patent infringement relating to the Company’s use and licensing of the software to various financial institutions with which the Company has sought business relationship. The Company is seeking a declaration of non-infringement based on legal estoppel and implied license as well as a judgment that Aurora has committed tortious interference with prospective economic advantage, false advertising under the Lanham Act and has violated Minnesota’s Deceptive Trade Practices Act. As of March 31, 2012 the case has been in discovery and Aurora has not countersued. On May 4, 2012 the case was dismissed with prejudice with each party bearing its own fees and costs. In addition to the preceding lawsuit, the Company is subject to various legal proceedings from time to time in the ordinary course of business, none of which is required to be disclosed under this Item 1.

 

 

 

ITEM 1A RISK FACTORS

 

A smaller reporting company is not required to provide the information required by this Item.

 

ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None.

 

 

 

ITEM 3 DEFAULTS UPON SENIOR SECURITIES

 

The Company is in default on its various notes payable totaling $2,390,778 representing principal and accrued interest as of the date of filing this report.

 

 

ITEM 4 MINE SAFETY DISCLOSURES

 

Not applicable.

 

 

ITEM 5 OTHER INFORMATION

 

The Company is delinquent in payment of $474,781 for payroll taxes and accrued interest and penalties as of March 31, 2012.

 

On May 18, 2012, the Company entered into an Amended and Restated Unsecured Promissory Note with Larry Konfirst (“Amended Note”). The Amended Note, amends, restates and supersedes in its entirety that certain promissory note dated January 16, 2012 issued by the Company in favor of Mr. Konfirst (“Original Note”). Under the Amended Note, the Company is obligated to repay $500,000 to Mr. Konfirst plus simple interest at the rate of 5% per annum, accruing from the date of the Original Note, on or before January 16, 2013. The loan amount may only be used for the purpose of funding a certificate of deposit for the purpose of providing security for the Company’s prepaid debit card distribution at First California Bank (or its assigns). The Amended Note is subject to the Letter Agreement by and among the Company, Larry Konfirst and two shareholders of the Company dated May 18, 2012. Pursuant to the Letter Agreement, the shareholders have confirmed their agreement to give Mr. Konfirst an option to purchase up to 1,600,000 shares of unrestricted shares of common stock of the Company at $0.40 per share, payable by cancelling monies owned by the Company under the Amended Note. In the event Mr. Konfirst exercises this option, the Company has agreed to issue a convertible note to the shareholders in an amount equal to the debt cancelled in favor of the Company. This note, if and when issued, will mature after a period of 180 days from the date of issuance, accrue simple interest at 4% per annum, and be convertible into shares of the Company’s restricted common stock at a rate of $0.08 per share at the option of these shareholders.

 

18
 

 

 ITEM 6 EXHIBITS

 

10.1 Amended and Restated Promissory Note by Veritec, Inc. in favor of Larry Konfirst dated May 18, 2012.
10.2 Letter Agreement by and among Veritec, Inc. and Larry Konfirst, John Johanns and Mary Adams dated May 18, 2012.
31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1** Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

101.1+

The following financial information from Veritec, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 formatted in XBRL: (i) Consolidated Balance Sheets at March 31, 2012 and June 30, 2011; (ii) Consolidated Statement of Operations for the three and nine months ended March 31, 2012 and 2011; (iii) Consolidated Statement of Stockholders’ Deficit as at March 31, 2012; (iv) Consolidated Statements of Cash Flows for the nine months ended March 31, 2012 and 2011; (v) Notes to the Consolidated Financial Statements.

 

 

 

**In accordance with SEC Release 33-8238, Exhibit 32.1 and 32.2 are being furnished and not filed.

 

+ Furnished herewith. XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

VERITEC, INC.

 

By /s/ Van Tran May 22, 2012

Van Tran

Chief Executive Officer

(Principal Executive Officer)

 

 

By /s/ John Quentin May 22, 2012

John Quentin

Chief Financial Officer (Principal Financial Officer)

 

19
 

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