Veritec (VRTC) 10-Q 26 Jun 15 2014 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - Mar. 31, 2014 - shares	Total
Document And Entity Information
Entity Registrant Name	VERITEC INC
Entity Central Index Key	773,318
Document Type	10-Q
Document Period End Date	Mar. 31, 2014
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	No
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding	15,920,088
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,014

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Mar. 31, 2014	Jun. 30, 2013
Current Assets:
Cash	$ 99,022	$ 75,918
Accounts receivables, net of allowance of $13,151 and $13,151 respectively	47,004	288,323
Inventories	8,364	4,815
Prepaid expenses	17,144	32,887
Total Current Assets	171,534	401,943
Restricted cash	147,560	$ 499,277
Property and Equipment, net	1,096
Total Assets	320,190	$ 901,220
Current Liabilities:
Notes payable - in default	486,005	787,153
Notes payable, related party - in default	2,593,801	2,525,948
Accounts payable	491,115	497,518
Accounts payable, related party	82,156	82,129
Customer deposits	133,542	71,287
Deferred revenues	376,972	1,026,675
Payroll tax liabilities	607,164	680,461
Accrued expenses	151,772	143,309
Total Current Liabilities	4,922,527	5,814,480
Stockholders' Deficiency:
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 as of March 31, 2014 and June 30, 2013	1,000	1,000
Common stock, par value $.01; authorized 50,000,000 shares, 15,920,088 shares issued and outstanding as of March 31, 2014 and June 30, 2013	159,201	159,201
Common stock to be issued, 450,000 shares and 125,000 shares, respectively	35,545	10,477
Additional paid-in capital	14,594,181	14,594,181
Accumulated deficit	(19,392,264)	(19,678,119)
Total Stockholders' Deficiency	(4,602,337)	(4,913,260)
Total Liabilities and Stockholders' Deficiency	$ 320,190	$ 901,220

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Mar. 31, 2014	Jun. 30, 2013
Allowance for Doubtful Accounts	$ 13,151	$ 13,151
Convertible preferred stock, par value	$ 1	$ 1
Convertible preferred stock, shares authorized	10,000,000	10,000,000
Convertible preferred stock, shares issued	1,000	1,000
Convertible preferred stock, shares outstanding	1,000	1,000
Common stock, par value	$ .01	$ .01
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	15,920,088	15,920,088
Common stock, shares outstanding	15,920,088	15,920,088
Common stock, shares to be issued	450,000	125,000
Series H Convertible
Convertible preferred stock, shares authorized	276,000	276,000

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Income Statement [Abstract]
License and other revenue	$ 211,866	$ 286,928	$ 1,295,879	$ 575,021
Cost of Sales	79,799	78,910	267,487	194,011
Gross Profit	132,067	208,018	1,028,392	381,010
Operating Expenses:
General and administrative	125,970	335,847	406,064	653,103
Sales and marketing	19,357	16,904	66,157	60,842
Research and development	33,453	24,617	125,374	101,810
Total Operating Expenses	178,780	377,368	597,595	815,755
Income (Loss) from Operations	(46,713)	$ (169,350)	430,797	$ (434,745)
Other Expense:
Interest income	29		58
Interest expense, including $38,565 and $41,798 for the three months ended March 31, 2014 and 2013 respectively, and $117,853 and $121,825 for the nine months ended March 31, 2014 and March 31,2013 respectively to related parties	(49,141)	$ (56,527)	(145,000)	$ (223,875)
Total Other Expense	(49,112)	(56,527)	(144,942)	(223,875)
Net Income (Loss)	$ (95,825)	$ (225,877)	$ 285,855	$ (658,620)
Net Income (Loss) Per Common Share
Basic	$ (.01)	$ (0.01)	$ .02	$ (0.04)
Diluted	$ (0.01)	$ (0.01)	$ 0.02	$ (0.04)
Weighted Average Number of Shares Outstanding
Basic	15,920,088	15,920,088	15,920,088	15,920,088
Diluted	15,920,088	15,920,088	15,920,088	15,920,088

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Operations (Parenthetical) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Income Statement [Abstract]
Interest expense, related parties	$ 38,565	$ 41,798	$ 117,853	$ 121,825

Condensed Consolidated Stateme6

Condensed Consolidated Statement of Stockholders' Deficiency (Unaudited) - USD ($)	9 Months Ended
	Mar. 31, 2014
Preferred Stock
Beginning balance, Shares	1,000
Beginning balance, Amount	$ 1,000
Net Income
Ending balance, Shares	1,000
Ending balance, Amount	$ 1,000
Common Stock
Beginning balance, Shares	15,920,088
Beginning balance, Amount	$ 159,201
Net Income
Ending balance, Shares	15,920,088
Ending balance, Amount	$ 159,201
Additional Paid-In Capital
Beginning balance, Amount	$ 14,594,181
Net Income
Ending balance, Amount	$ 14,594,181
Common Stock to be Issued
Beginning balance, Amount	10,477
Stock based compensation	$ 25,068
Net Income
Ending balance, Amount	$ 35,545
Retained Earnings / Accumulated Deficit
Beginning balance, Amount	(19,678,119)
Net Income	285,855
Ending balance, Amount	(19,392,264)
Beginning balance, Amount	(4,913,260)
Stock based compensation	25,068
Net Income	285,855
Ending balance, Amount	$ (4,602,337)

Condensed Consolidated Stateme7

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ 285,855	$ (658,620)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation	136	$ 483
Stock based compensation	$ 25,068
Fair value of stock options issued to employees		$ 181,171
Amortization of discount on notes payable		69,742
Interest accrued on notes payable	$ 130,741	156,138
Changes in operating assets and liabilities:
Accounts receivable	341,319	(15,577)
Restricted cash	351,717	1,503
Inventories	(3,549)	$ 345
Prepaid expenses	15,743
Deferred revenues	$ (649,703)	$ 68,870
Employee advances		600
Payroll tax liabilities	$ (73,297)	$ 119,261
Customer deposits	62,255
Accounts payables and accrued expenses	2,087	$ 60,434
Net cash provided (used) by operating activities	388,372	$ (15,650)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets	(1,232)
Net cash used in investing activities	$ (1,232)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable		$ 180,000
Repayments on notes payable	$ (364,036)	(47,208)
Net cash provided by (used in) financing activities	(364,036)	132,792
NET INCREASE IN CASH	23,104	117,142
CASH AT BEGINNING OF PERIOD	75,918	62,115
CASH AT END OF PERIOD	99,022	$ 179,257
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest	$ 13,421

Nature of Business

Nature of Business	3 Months Ended
	Mar. 31, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Nature of Business	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 mostly in the liquid crystal display (LCD) markets. 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 processes the Company’s Visa branded card program on behalf of the bank. First California Bank was sold to Pacific Western Bank and June 2013 Pacific Western Bank closed its entire debit card division and transferred its contract with VTFS to Central Bank of Kansas City Bank. On February 5 th Our VeriSuite™ card enrollment system was released in July 2009. The VeriSuite™ system 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.

Basis of Presentation

Basis of Presentation	3 Months Ended
	Mar. 31, 2014
Accounting Policies [Abstract]
Basis of Presentation	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, 2014 are not necessarily indicative of the results that may be expected for the year ending June 30, 2014. The Condensed Consolidated Balance Sheet as of June 30, 2013 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, 2013. 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.

Going Concern

Going Concern	3 Months Ended
	Mar. 31, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Going Concern	C. GOING CONCERN The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. At March 31, 2014, the Company had a working capital deficit of $4,750,933 and a stockholders’ deficiency of $4,602,337. The Company is delinquent or in default of $3,079,806 of its notes payable and is delinquent in payment of certain amounts due of $607,164 for payroll taxes and accrued interest and penalties as of March 31, 2014. The Company believes its cash and forecasted cash flow from operations will not be sufficient to continue operations through fiscal 2014 without continued external investment. The Company will require additional funds to continue its operations through fiscal 2014 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 can 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.

Significant Accounting Policies

Significant Accounting Policies	3 Months Ended
	Mar. 31, 2014
Accounting Policies [Abstract]
Significant Accounting Policies	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 antidilutive. For the nine months ended March 31, 2014 and 2013 the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an anti-dilutive effect. The dilutive effect of potentially dilutive securities is reflected in diluted net income per share if the exercise prices were lower than the average fair market value of common shares during the reporting period. As of March 31, 2014 and 2013, we excluded the outstanding securities summarized below, which entitle the holders thereof to acquire shares of common stock, from our calculation of earnings per share, as their effect would have been anti-dilutive. March 31, 2014 2013 Warrants 50,000 275,000 Series H Preferred Stock 10,000 10,000 Convertible Notes Payable 8,480,973 9,100,752 Options 3,056,500 3,195,583 Total 11,597,473 12,581,335 Concentrations During the three months ended March 31, 2014 and 2013, the Company had 3 customers that accounted for approximately 19%, 20%, and 39% of sales in 2014, and three customers that accounted for approximately 10%, 15% and 64% of sales in 2013, respectively. During the nine months ended March 31, 2014 and 2013, the Company had two customers that accounted for approximately 11% and 48% of sales in 2014, and two customers that accounted for approximately 22% and 41% of sales in 2013, respectively. No other customers accounted for more than 10% of sales in either period. As of March 31, 2014 and June 30, 2013, the Company had approximately $20,400 (64%) and $6,050 (19%) and $250,000 (83%) and $26,563 (9%), respectively, of accounts receivable due from its major customers. For the three months ended March 31, 2014 and 2013, foreign revenues accounted for __% (__% Korea, __% Taiwan and __% Germany) and 77% (65% Korea, 2% Taiwan and 10% Germany) of the Company’s total revenues respectively. For the nine months ended March 31, 2014 and 2013, foreign revenues accounted for 92% (81% Korea, 7% Taiwan, 0% Germany and 5% others) and 67% (56% Korea, 7% Taiwan, 3% Germany and 1% others) of the Company’s revenues respectively. Recent Accounting Pronouncements On May 28, 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers In April 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-08 (ASU 2014-08), Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360) about discontinued operations. Under the new guidance, only disposals representing a strategic shift in operations or that have a major effect on the Company's operations and financial results should be presented as discontinued operations. This new accounting guidance is effective for annual periods beginning after December 15, 2014. The Company is currently evaluating the impact of adopting ASU 2014-08 on the Company's results of operations or financial condition. In August 2014, the FASB issued Accounting Standards Update No. 2014-15 (ASU 2014-15), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. 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 financial statements.

Restricted Cash

Restricted Cash	3 Months Ended
	Mar. 31, 2014
Accounting Policies [Abstract]
Restricted Cash	E. RESTRICTED CASH The Company entered into Store Value Prepaid Card Sponsorship Agreements (the “Agreement”) with certain banks whereas the Company markets and sells store value prepaid card programs (the “Programs”). The Programs are marketed and managed daily at the direction of the Bank, for which the company receives a transaction fee. In connection with the agreements the Company is required to establish a Reserve Account controlled by the bank. At March 31, 2014 and June 30, 2013, the restricted cash totaled $147,560 and $499,277, respectively. Since this amount is restricted for the purposes related to the Programs, it is classified as restricted cash on the consolidated balance sheet.

Related Party Transactions

Related Party Transactions	3 Months Ended
	Mar. 31, 2014
Related Party Transactions [Abstract]
Related Party Transactions	F. RELATED PARTY TRANSACTIONS During the period ended March 31, 2014 and 2013 the Company received various unsecured, non-interest bearing, due on demand advances from its CEO Ms. Van Tran, a related party. These advances have been classified as accounts payable, related party on the balance sheet. The Company also leases its office facilities from Ms. Van Tran.

Notes Payable

Notes Payable	3 Months Ended
	Mar. 31, 2014
Debt Disclosure [Abstract]
Notes Payable	G. NOTES PAYABLE Notes payable consist of the following: March 31, 2014 June 30, 2013 (UNAUDITED) Convertible notes payable (includes $128,921 and $132,921, 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, 2014 and June 30, 2013, respectively. The notes are now in default. $ 709,815 $ 739,815 -11- Convertible notes payable to related parties, unsecured, principal and interest are convertible into common stock at $0.05 to $0.33 per share, interest at 8 % to 10%, due on demand November 2010. The notes are now in default. 1,075,420 1,023,173 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. 270,871 258,871 Note payable to related party, secured by the Company’s intellectual property, interest at 8% due August 2010 and is now is default. 525,633 502,578 Notes payable to related parties, unsecured, interest at 0% to 8%, due on demand. 140,504 134,430 Note payable, unsecured, interest at 10%, due January 2010 and is now in default. 30,192 27,167 Notes payable, secured by the Company's certificate of deposit with a financial institution and classified on the balance sheet as restricted cash, interest at 5%, convertible into common stock at $0.08 per share, due on demand. 31,849 30,753 Convertible note payable, unsecured, principal and interest are convertible into common stock at $0.30 to $0.40 per share subject to board of directors’ approval, interest at 5% to 8%, due January 2011 to March 2013 and $12,187 is now in default. 13,850 23,411 Notes payable, unsecured, interest at 5%, due January 2013. — 301,228 Note payable, secured by the Company’s intellectual property, interest at variable rates starting September, 2012, due December 2012 and is now in default. 281,672 270,150 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. — 1,525 Grand total $ 3,079,806 $ 3,313,101 For the purposes of Balance Sheet presentation notes payable have been grouped as follows: March 31, June 30, 2014 2013 Notes payable $ 486,005 $ 787,153 Notes payable, related party 2,593,801 2,525,948 $ 3,079,806 $ 3,313,101

Stock-Based Compensation

Stock-Based Compensation	3 Months Ended
	Mar. 31, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock-Based Compensation	H. STOCK-BASED COMPENSATION Common Stock to be issued Shares to be issued to directors for services During the nine months ended March 31, 2014, the Company granted an aggregate of 275,000 shares of the Company’s common stock to four of the Company’s directors for services rendered and recognized as directors’ -12- fees during the nine months ended March 31, 2014 based on their fair value on their grant dates in the aggregate amount of $25,068. The shares due have not been issued as of March 31, 2014 and have been reflected as common shares to be issued in the accompanying consolidated balance sheet. 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, 2014 and for the nine months then ended is as follows: Number of Shares Weighted - Average Exercise Price Outstanding at June 30, 2013 3,165,583 $ 0.13 Expired (109,083) $ 0.63 Outstanding at March 31, 2014 3,056,500 $ 0.12 Exercisable at March 31, 2014 3,056,500 $ 0.12 The weighted-average remaining contractual life of stock options outstanding and exercisable at March 31, 2014 is 4.98 years. The options have no intrinsic value at March 31, 2014. Stock-based compensation expense was $0 and $0 during the three and nine months ended March 31, 2014 and 2013, respectively. As of March 31, 2014, 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 50,000 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, 2014.

Legal Proceedings

Legal Proceedings	3 Months Ended
	Mar. 31, 2014
Commitments and Contingencies
Legal Proceedings	I. LEGAL PROCEEDINGS From time to time, we are a party to claims and legal proceedings arising in the ordinary course of business. Our management evaluates our exposure to these claims and proceedings individually and in aggregate and provides for potential losses on such litigation if the amount of the loss is estimable and the loss is probable.

Subsequent Events

Subsequent Events	3 Months Ended
	Mar. 31, 2014
Subsequent Events [Abstract]
Subsequent Events	J. SUBSEQUENT EVENTS These unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Form 10-K for the year ended June 30, 2014 filed on October 20, 2014 with the Securities and Exchange Commission, which contains additional information of events subsequent to March 31, 2014.

Significant Accounting Polici18

Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2014
Accounting Policies [Abstract]
Net Loss per Common Share	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 antidilutive. For the nine months ended March 31, 2014 and 2013 the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an anti-dilutive effect. The dilutive effect of potentially dilutive securities is reflected in diluted net income per share if the exercise prices were lower than the average fair market value of common shares during the reporting period. As of March 31, 2014 and 2013, we excluded the outstanding securities summarized below, which entitle the holders thereof to acquire shares of common stock, from our calculation of earnings per share, as their effect would have been anti-dilutive. March 31, 2014 2013 Warrants 50,000 275,000 Series H Preferred Stock 10,000 10,000 Convertible Notes Payable 8,480,973 9,100,752 Options 3,056,500 3,195,583 Total 11,597,473 12,581,335
Concentrations	Concentrations During the three months ended March 31, 2014 and 2013, the Company had 3 customers that accounted for approximately 19%, 20%, and 39% of sales in 2014, and three customers that accounted for approximately 10%, 15% and 64% of sales in 2013, respectively. During the nine months ended March 31, 2014 and 2013, the Company had two customers that accounted for approximately 11% and 48% of sales in 2014, and two customers that accounted for approximately 22% and 41% of sales in 2013, respectively. No other customers accounted for more than 10% of sales in either period. As of March 31, 2014 and June 30, 2013, the Company had approximately $20,400 (64%) and $6,050 (19%) and $250,000 (83%) and $26,563 (9%), respectively, of accounts receivable due from its major customers. For the three months ended March 31, 2014 and 2013, foreign revenues accounted for __% (__% Korea, __% Taiwan and __% Germany) and 77% (65% Korea, 2% Taiwan and 10% Germany) of the Company’s total revenues respectively. For the nine months ended March 31, 2014 and 2013, foreign revenues accounted for 92% (81% Korea, 7% Taiwan, 0% Germany and 5% others) and 67% (56% Korea, 7% Taiwan, 3% Germany and 1% others) of the Company’s revenues respectively.
Recent Accounting Pronouncements	Recent Accounting Pronouncements On May 28, 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers In April 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-08 (ASU 2014-08), Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360) -10- about discontinued operations. Under the new guidance, only disposals representing a strategic shift in operations or that have a major effect on the Company's operations and financial results should be presented as discontinued operations. This new accounting guidance is effective for annual periods beginning after December 15, 2014. The Company is currently evaluating the impact of adopting ASU 2014-08 on the Company's results of operations or financial condition. In August 2014, the FASB issued Accounting Standards Update No. 2014-15 (ASU 2014-15), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. 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 financial statements.

Significant Accounting Polici19

Significant Accounting Policies (Tables)	3 Months Ended
	Mar. 31, 2014
Accounting Policies [Abstract]
Summary of securities excluded from EPS calculation	March 31, 2014 2013 Warrants 50,000 275,000 Series H Preferred Stock 10,000 10,000 Convertible Notes Payable 8,480,973 9,100,752 Options 3,056,500 3,195,583 Total 11,597,473 12,581,335

Notes Payable (Tables)

Notes Payable (Tables)	3 Months Ended
	Mar. 31, 2014
Debt Disclosure [Abstract]
Notes Payable	March 31, 2014 June 30, 2013 (UNAUDITED) Convertible notes payable (includes $128,921 and $132,921, 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, 2014 and June 30, 2013, respectively. The notes are now in default. $ 709,815 $ 739,815 Convertible notes payable to related parties, unsecured, principal and interest are convertible into common stock at $0.05 to $0.33 per share, interest at 8 % to 10%, due on demand November 2010. The notes are now in default. 1,075,420 1,023,173 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. 270,871 258,871 Note payable to related party, secured by the Company’s intellectual property, interest at 8% due August 2010 and is now is default. 525,633 502,578 Notes payable to related parties, unsecured, interest at 0% to 8%, due on demand. 140,504 134,430 Note payable, unsecured, interest at 10%, due January 2010 and is now in default. 30,192 27,167 Notes payable, secured by the Company's certificate of deposit with a financial institution and classified on the balance sheet as restricted cash, interest at 5%, convertible into common stock at $0.08 per share, due on demand. 31,849 30,753 Convertible note payable, unsecured, principal and interest are convertible into common stock at $0.30 to $0.40 per share subject to board of directors’ approval, interest at 5% to 8%, due January 2011 to March 2013 and $12,187 is now in default. 13,850 23,411 Notes payable, unsecured, interest at 5%, due January 2013. — 301,228 Note payable, secured by the Company’s intellectual property, interest at variable rates starting September, 2012, due December 2012 and is now in default. 281,672 270,150 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. — 1,525 Grand total $ 3,079,806 $ 3,313,101
Notes payable- Balance Sheet presentation	March 31, June 30, 2014 2013 Notes payable $ 486,005 $ 787,153 Notes payable, related party 2,593,801 2,525,948 $ 3,079,806 $ 3,313,101

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Summary of Stock Options	Number of Shares Weighted - Average Exercise Price Outstanding at June 30, 2013 3,165,583 $ 0.13 Expired (109,083) $ 0.63 Outstanding at March 31, 2014 3,056,500 $ 0.12 Exercisable at March 31, 2014 3,056,500 $ 0.12

Going Concern (Details Narrativ

Going Concern (Details Narrative) - USD ($)	Mar. 31, 2014	Jun. 30, 2013
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Working capital deficit	$ 4,750,933
Stockholders' deficiency	(4,602,337)	$ (4,913,260)
Note payable obligations - in default	3,079,806
Payroll taxes and accrued interest and penalties	$ 607,164	$ 680,461

Significant Accounting Polici23

Significant Accounting Policies - Concentrations (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Sales percentage from major customers		77.00%	92.00%	67.00%
64%
Accounts receivable	$ 20,400		$ 20,400
19%
Accounts receivable	$ 6,050		$ 6,050
83%
Accounts receivable		$ 250,000		$ 250,000
9%
Accounts receivable		$ 26,563		$ 26,563
Korea
Sales percentage from major customers		65.00%	81.00%	56.00%
Taiwan
Sales percentage from major customers		2.00%	7.00%	7.00%
Germany
Sales percentage from major customers		10.00%	0.00%	3.00%
Other
Sales percentage from major customers			5.00%	1.00%
Customer 1
Sales percentage from major customers	19.00%	10.00%	11.00%	22.00%
Customer 2
Sales percentage from major customers	20.00%	15.00%	48.00%	41.00%
Customer 3
Sales percentage from major customers	39.00%	64.00%

Significant Accounting Polici24

Significant Accounting Policies - Summary of securities excluded from EPS calculation (Details) - shares	Mar. 31, 2014	Sep. 30, 2012
Accounting Policies [Abstract]
Warrants	200,000	275,000
Series H Preferred Stock	10,000	10,000
Convertible Notes Payable	7,326,220	7,258,196
Options	631,500	717,249
Total	8,167,720	12,581,335

Restricted Cash (Details Narrat

Restricted Cash (Details Narrative) - USD ($)	Mar. 31, 2014	Jun. 30, 2013
Accounting Policies [Abstract]
Restricted Cash	$ 147,560	$ 499,277

Notes Payable - Notes Payable (

Notes Payable - Notes Payable (Details) - USD ($)	Mar. 31, 2014	Jun. 30, 2013
Notes payable	$ 3,079,806	$ 3,313,101
Unsecured, due Sept 2010 to Nov 2010
Convertible notes payable	709,815	739,815
Convertible notes payable, non-related paries	$ 128,921	$ 132,921
Interest rate	8.00%	8.00%
Conversion price	$ .30	$ .30
Warrant to purchase common stock for every dollar of investment	$ 2	$ 2
Recorded discount on notes payable	20,981	20,981
Unsecured, due Nov 2010
Convertible notes payable	$ 1,075,420	$ 1,023,173
Interest rate	8.00%	8.00%
Interest rate, maximum	10.00%	10.00%
Conversion price	$ 0.05	$ 0.05
Conversion price, maximum	$ 0.33	$ 0.33
Secured, due Nov 2010
Convertible notes payable	$ 270,871	$ 258,871
Interest rate	8.00%	8.00%
Conversion price	$ .25	$ .25
Secured, due Aug 2010
Interest rate	8.00%	8.00%
Notes payable	$ 525,633	$ 502,578
Unsecured, due on demand
Interest rate	0.00%	0.00%
Interest rate, maximum	8.00%	8.00%
Notes payable	$ 140,504	$ 134,430
Unsecured, due Jan 2010
Interest rate	10.00%	10.00%
Notes payable	$ 30,192	$ 27,167
Secured, due on demand
Interest rate	5.00%	5.00%
Conversion price	$ .08	$ .08
Notes payable	$ 31,849	$ 30,753
Unsecured, due Jan 2011 to March 2013
Convertible notes payable	$ 13,850	$ 23,411
Interest rate	5.00%	5.00%
Interest rate, maximum	8.00%	8.00%
Conversion price	$ .30	$ .30
Conversion price, maximum	$ .40	$ .40
Amount in default	$ 12,187	$ 12,187
Unsecured, due Jan 2013
Interest rate	5.00%	5.00%
Notes payable		$ 301,228
Secured, due Dec 2012
Notes payable	$ 281,672	270,150
Unsecured, due Nov 2009
Convertible notes payable		$ 1,525
Interest rate	8.00%	8.00%
Conversion price	$ 1	$ 1

Notes Payable - Notes payable-

Notes Payable - Notes payable- Balance Sheet presentation (Details) - USD ($)	Mar. 31, 2014	Jun. 30, 2013
Debt Disclosure [Abstract]
Notes payable	$ 486,005	$ 787,153
Notes payable, related party	$ 2,593,801	$ 2,525,948

Stock-Based Compensation - Summ

Stock-Based Compensation - Summary of Stock Options (Details) - 3 months ended Mar. 31, 2014 - $ / shares	Total
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Beginning number of shares; outstanding	3,165,583
Beginning weighted-average exercise price; outstanding	$ 0.13
Number of shares; expired	(109,083)
Weighted-average exercise price; expired	$ .63
Ending number of shares; outstanding	3,056,500
Ending weighted-average exercise price; outstanding	$ .12
Number of Shares; exercisable	3,056,500
Weighted-average exercise price; exercisable	$ .12

Stock-Based Compensation (Detai

Stock-Based Compensation (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Common stock issued for services			275,000
Directors fee			$ 25,068
Weighted-average remaining contractual life of stock options, outstanding			4 years 11 months
Weighted-average remaining contractual life of stock options, exercisable			4 years 11 months
Stock-based compensation	$ 0	$ 0	$ 0	$ 0
Fully vested warrants outstanding	50,000		50,000
Warrant exercise price	$ 2		$ 2

Uncategorized Items - vrtc-2014

Label	Element	Value
Net income (loss)	us-gaap_NetIncomeLoss	$ (225,877)
Net income (loss)	us-gaap_NetIncomeLoss	$ (95,825)