Veritec (VRTC) 10-Q 18 Aug 15 2012 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - Dec. 31, 2012 - 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	Dec. 31, 2012
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	Q2
Document Fiscal Year Focus	2,012

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Dec. 31, 2012	Jun. 30, 2012
Current Assets:
Cash	$ 35,921	$ 62,115
Accounts receivables, net of allowance of $12,604 and $12,604, respectively	1,767	11,133
Inventories	3,024	3,603
Prepaid expenses	4,350	4,350
Employee advances	37	637
Total Current Assets	45,099	81,838
Restricted cash	500,000	500,000
Property and Equipment, net	322	644
Total Assets	545,421	582,482
Current Liabilities:
Notes payable - in default	916,521	835,602
Notes payable, related party - in default	2,529,011	2,283,985
Accounts payable	636,691	584,109
Accounts payable, related party	56,365	$ 43,306
Customer deposits	71,870
Deferred revenues	308,225	$ 469,114
Payroll tax liabilities	602,223	521,568
Accrued expenses	137,594	128,135
Total Current Liabilities	5,258,500	5,865,819
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 June 30, 2012 and December 31, 2012	1,000	1,000
Common stock, par value $.01; authorized 50,000,000 shares, 15,920,088 shares issued and outstanding as of December 31, 2012 and June 30, 2012	159,201	$ 159,201
Common stock to be issued, 9,500 shares and no shares, respectively	3,000
Additional paid-in capital	14,413,010	$ 14,413,010
Accumulated deficit	(19,289,290)	(18,856,548)
Total Stockholders' Deficiency	(4,713,079)	(4,283,337)
Total Liabilities and Stockholders' Deficiency	$ 545,421	$ 584,482

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Dec. 31, 2012	Jun. 30, 2012
Allowance for Doubtful Accounts	$ 12,604	$ 12,604
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	$ 0.01	$ 0.01
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	75,000	75,000
Series H
Convertible preferred stock, shares authorized	276,000	276,000

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012	Dec. 31, 2011
Income Statement [Abstract]
License and other revenue	$ 129,301	$ 63,342	$ 288,092	$ 268,058
Cost of Sales	51,344	58,860	115,101	114,117
Gross Profit	77,957	4,482	172,991	153,941
Operating Expenses:
General and administrative	134,865	96,322	317,256	256,785
Sales and marketing	17,126	34,879	43,938	75,104
Research and development	35,200	69,680	77,193	106,790
Total Operating Expenses	187,191	200,881	438,387	438,679
Income (Loss) from Operations	(109,234)	(196,399)	(265,396)	(284,738)
Other Expense:
Interest income	3	3	5	3
Interest expense, including $45,382 and $37,656, for 3 months Ended Dec. 31, 2013 & 2012 respectively, and $84,059 and $75,155, for 6 months Ended Dec. 31, 2013 & 2012 respectively to related parties	(86,250)	(40,551)	(167,352)	(80,945)
Total Other Expense	(86,247)	(42,548)	(167,347)	(80,942)
Net Income (Loss)	$ (195,481)	$ (236,947)	$ (432,743)	$ (365,680)
Net Income (Loss) Per Common Share
Basic and Diluted	$ (.01)	$ (0.01)	$ (0.03)	$ (0.02)
Weighted Average Number of Shares Outstanding
Basic and 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		6 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012	Dec. 31, 2011
Income Statement [Abstract]
Interest expense, related parties	$ 45,382	$ 37,656	$ 84,059	$ 75,155

Condensed Consolidate Statement

Condensed Consolidate Statement of Stockholders' Deficit (Unaudited) - 6 months ended Dec. 31, 2012 - USD ($)	Preferred Stock	Common Stock	Additional Paid-In Capital	Common Stock to be Issued	Accumulated Deficit	Total
Beginning balance, Shares at Jun. 30, 2012	1,000	15,920,088
Beginning balance, Amount at Jun. 30, 2012	$ 1,000	$ 159,201	$ 14,413,010		$ (18,856,548)	$ (4,283,337)
Shares to be issued for services				$ 3,000		3,000
Net loss					$ (432,742)
Ending balance, Shares at Dec. 31, 2012	1,000	15,920,088
Ending balance, Amount at Dec. 31, 2012	$ 1,000	$ 159,201	$ 14,413,010	$ 3,000	$ (19,289,290)	$ (4,713,079)

Condensed Consolidated Stateme7

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ (432,743)	$ (365,680)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation	$ 322	$ 7,912
Allowance on accounts receivable
Shares issued for services
Fair value of stock options issued to employees		$ 2
Amortization of discount on notes payable	$ 64,966
Interest accrued on notes payable	102,386	$ 80,600
Changes in operating assets and liabilities:
Accounts receivable	$ 9,366	5,697
Restricted cash		$ 4,570
Inventories	$ 579
Prepaid expenses		$ 13,250
Deferred revenues	$ (160,889)	(285,458)
Employee advances	600	900
Payroll tax liabilities	80,655	$ 92,917
Customer deposits	71,870
Accounts payables and accrued expenses	78,100	$ (81,042)
Net cash provided by (used in) operating activities	(184,786)	44,584
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable	165,000	$ 19,500
Repayments on notes payable	(6,408)
Net cash used in financing activities	158,592	$ 19,500
NET INCREASE (DECREASE) IN CASH	(26,194)	64,084
CASH AT BEGINNING OF PERIOD	62,115	14,996
CASH AT END OF PERIOD	35,921	79,080
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest	$ 6,408	$ 346

Nature of Business

Nature of Business	6 Months Ended
	Dec. 31, 2012
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 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	6 Months Ended
	Dec. 31, 2012
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 six month periods ended December 31, 2012 are not necessarily indicative of the results that may be expected for the year ending June 30, 2013. The Condensed Consolidated Balance Sheet as of December 31, 2012 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, 2012. 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	6 Months Ended
	Dec. 31, 2012
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. During the six months ended December 31, 2012, the Company had a net loss of $432,742. At December 31, 2012, the Company had a working capital deficit of $5,213,401 and a stockholders’ deficiency of $4,713,079. The Company is delinquent or in default of $3,445,532 of its notes payable and is delinquent in payment of certain amounts due of $602,223 for payroll taxes and accrued interest and penalties as of December 31, 2012. The Company believes its cash and forecasted cash flow from operations will not be sufficient to continue operations through fiscal 2013 without continued external investment. The Company will require additional funds to continue its operations through fiscal 2013 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	6 Months Ended
	Dec. 31, 2012
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 three and six months ended December 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 9,751,079 and 6,890,714 potentially dilutive securities as of December 31, 2012 and 2011, respectively. The potentially dilutive securities consisted of the following as of: December 31, December 31, 2012 2011 Warrants 275,000 275,000 Series H Preferred Stock 10,000 10,000 Convertible Notes Payable 8,755,496 5,821,465 Options 710,583 784,249 Total 9,751,079 6,890,714 Concentrations During the three months ended December 31, 2012 and 2011, the Company had 3 customers that accounted for approximately 30%, 27%, and 23% of sales in 2012, and three customers that accounted for approximately 64%, 15% and 10% of sales in 2011, respectively. During the six months ended December 31, 2012 and 2011, the Company had five customers that accounted for approximately 31%, 18%, 14%, 12% and 10% of sales in 2012, and two customers that accounted for approximately 22% and 41% of sales in 2011, respectively. No other customers accounted for more than 10% of sales in either period. As of December 31, 2012 the Company had no customers that accounted for more than 10% of accounts receivable. At June 30, 2012, the Company had one customer that accounted for approximately 90% of accounts receivable. For the three months ended December 31, 2012 and 2011, foreign revenues accounted for 59% (23% Korea, 27% Taiwan and 9% Japan) and 77% (65% Korea, 2% Taiwan and 10% Germany) of the Company’s total revenues respectively. For the six months ended December 31, 2012 and 2011, foreign revenues accounted for 79% (50% Korea, 21% Taiwan, 5% Japan and 3% 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) 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	6 Months Ended
	Dec. 31, 2012
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 December 31, 2012 and June 30, 2012, the restricted cash totaled $500,000 and $500,000, 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	6 Months Ended
	Dec. 31, 2012
Related Party Transactions [Abstract]
Related Party Transactions	F. RELATED PARTY TRANSACTIONS During the period ended December 31, 2012 and June 30, 2012 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	6 Months Ended
	Dec. 31, 2012
Debt Disclosure [Abstract]
Notes Payable	G. NOTES PAYABLE Notes payable consists of the following as of: December 31, 2012 June 30, 2012 Convertible notes payable (includes $128,953 and $124,921, respectively, to non-related parties), unsecured, interest at 8%, due September 2010 through November 2010. The principal and accrued interest is 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 notes are currently in default. $ 717,996 $ 695,815 Convertible notes payable to related parties, unsecured, principal and interest are convertible into common stock at $0.30 to $0.33 per share, interest at 8% to 10%, due on demand to November 2010. The notes are currently in default. 1,071,235 871,951 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. 250,937 242,871 Note payable to related party, secured by the Company’s intellectual property, interest at 8% due August 2010 and is now in default. 487,334 471,838 Notes payable to related parties, unsecured, interest at 0% to 8%, due on demand. 130,463 126,430 Note payable, unsecured, interest at 10%. The note was due in January 2010 and is now in default. 26,175 25,167 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 30,029 29,293 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 is now in default. 22,766 22,110 Notes payable, unsecured, interest at 5%, due January 2013. (1) 449,051 444,374 Note payable, secured by the Company's intellectual property, interest at variable rates starting September 1, 2012, due December 2012 and is now in default. 262,799 257,957 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%. The note was due November 2009 and is now in default. 1,523 1,523 Total 3,450,308 3,189,329 Less valuation discount on notes payable (4,776 ) (69,742 ) Grand total $ 3,445,532 $ 3,119,587 (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 with the following assumptions: expected life, 1 year, risk free interest rate, 0.10%, volatility, 250%, and dividend rate, 0%. The value of the option is being considered as a valuation discount and was amortized over the one year life of the Note. For the six months ended December 31, 2012, the Company recognized $64,966 of expense related to the amortization of this discount and is included in the interest expense in the consolidated statement of operations. For the purposes of Balance Sheet presentation notes payable have been presented as follows: December 31, 2012 June 30, 2012 Notes payable $ 916,521 $ 835,602 Notes payable, related party 2,529,011 2,283,985 $ 3,445,532 $ 3,119,587

Stock-Based Compensation

Stock-Based Compensation	6 Months Ended
	Dec. 31, 2012
Accounting Policies [Abstract]
Stock-Based Compensation	H. 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 December 31, 2012 and for the six months then ended is as follows: Number of Weighted - Average Shares Exercise Price Outstanding at June 30, 2012 754,249 $ 0.42 Forfeited (43,666 ) $ 1.26 Outstanding at December 31, 2012 710,583 $ 0.37 Exercisable at December 31, 2012 710,583 $ 0.37 The weighted-average remaining contractual life of stock options outstanding and exercisable at December 31, 2012 is 1.7 years. The options have no intrinsic value at December 31, 2012. Stock-based compensation expense was $0 and $0 during the three and six months ended December 31, 2012 and 2011, respectively. As of December 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 invested 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 December 31, 2012.

Legal Proceedings

Legal Proceedings	6 Months Ended
	Dec. 31, 2012
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	6 Months Ended
	Dec. 31, 2012
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, 2013 filed on June 26, 2015 with the Securities and Exchange Commission, which contains additional information of events subsequent to December 31, 2012.

Significant Accounting Polici18

Significant Accounting Policies (Policies)	6 Months Ended
	Dec. 31, 2012
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 three and six months ended December 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 9,751,079 and 6,890,714 potentially dilutive securities as of December 31, 2012 and 2011, respectively. The potentially dilutive securities consisted of the following as of: December 31, December 31, 2012 2011 Warrants 275,000 275,000 Series H Preferred Stock 10,000 10,000 Convertible Notes Payable 8,755,496 5,821,465 Options 710,583 784,249 Total 9,751,079 6,890,714
Concentrations	Concentrations During the three months ended December 31, 2012 and 2011, the Company had 3 customers that accounted for approximately 30%, 27%, and 23% of sales in 2012, and three customers that accounted for approximately 64%, 15% and 10% of sales in 2011, respectively. During the six months ended December 31, 2012 and 2011, the Company had five customers that accounted for approximately 31%, 18%, 14%, 12% and 10% of sales in 2012, and two customers that accounted for approximately 22% and 41% of sales in 2011, respectively. No other customers accounted for more than 10% of sales in either period. As of December 31, 2012 the Company had no customers that accounted for more than 10% of accounts receivable. At June 30, 2012, the Company had one customer that accounted for approximately 90% of accounts receivable. For the three months ended December 31, 2012 and 2011, foreign revenues accounted for 59% (23% Korea, 27% Taiwan and 9% Japan) and 77% (65% Korea, 2% Taiwan and 10% Germany) of the Company’s total revenues respectively. For the six months ended December 31, 2012 and 2011, foreign revenues accounted for 79% (50% Korea, 21% Taiwan, 5% Japan and 3% 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) -11- 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)	6 Months Ended
	Dec. 31, 2012
Accounting Policies [Abstract]
Calculation of securities excluded from computation of EPS	December 31, December 31, 2012 2011 Warrants 275,000 275,000 Series H Preferred Stock 10,000 10,000 Convertible Notes Payable 8,755,496 5,821,465 Options 710,583 784,249 Total 9,751,079 6,890,714

Notes Payable (Tables)

Notes Payable (Tables)	6 Months Ended
	Dec. 31, 2012
Debt Disclosure [Abstract]
Notes payable	Notes payable consists of the following as of: December 31, 2012 June 30, 2012 Convertible notes payable (includes $128,953 and $124,921, respectively, to non-related parties), unsecured, interest at 8%, due September 2010 through November 2010. The principal and accrued interest is 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 notes are currently in default. $ 717,996 $ 695,815 Convertible notes payable to related parties, unsecured, principal and interest are convertible into common stock at $0.30 to $0.33 per share, interest at 8% to 10%, due on demand to November 2010. The notes are currently in default. 1,071,235 871,951 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. 250,937 242,871 Note payable to related party, secured by the Company’s intellectual property, interest at 8% due August 2010 and is now in default. 487,334 471,838 Notes payable to related parties, unsecured, interest at 0% to 8%, due on demand. 130,463 126,430 Note payable, unsecured, interest at 10%. The note was due in January 2010 and is now in default. 26,175 25,167 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 30,029 29,293 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 is now in default. 22,766 22,110 Notes payable, unsecured, interest at 5%, due January 2013. (1) 449,051 444,374 Note payable, secured by the Company's intellectual property, interest at variable rates starting September 1, 2012, due December 2012 and is now in default. 262,799 257,957 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%. The note was due November 2009 and is now in default. 1,523 1,523 Total 3,450,308 3,189,329 Less valuation discount on notes payable (4,776 ) (69,742 ) Grand total $ 3,445,532 $ 3,119,587 (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 with the following assumptions: expected life, 1 year, risk free interest rate, 0.10%, volatility, 250%, and dividend rate, 0%. The value of the option is being considered as a valuation discount and was amortized over the one year life of the Note. For the six months ended December 31, 2012, the Company recognized $64,966 of expense related to the amortization of this discount and is included in the interest expense in the consolidated statement of operations.
Notes payable as presented on Balance Sheet	December 31, 2012 June 30, 2012 Notes payable $ 916,521 $ 835,602 Notes payable, related party 2,529,011 2,283,985 $ 3,445,532 $ 3,119,587

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	6 Months Ended
	Dec. 31, 2012
Accounting Policies [Abstract]
Summary of Stock Options	Number of Weighted - Average Shares Exercise Price Outstanding at June 30, 2012 754,249 $ 0.42 Forfeited (43,666 ) $ 1.26 Outstanding at December 31, 2012 710,583 $ 0.37 Exercisable at December 31, 2012 710,583 $ 0.37

Going Concern (Details Narrativ

Going Concern (Details Narrative) - USD ($)	Dec. 31, 2012	Jun. 30, 2012
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Working capital deficit	$ (5,213,401)
Stockholders' deficiency	(4,713,079)	$ (4,283,337)
Note payable obligations - in default	3,445,532
Payroll taxes and accrued interest and penalties	$ 602,223	$ 521,568

Significant Accounting Polici23

Significant Accounting Policies - Summary of securities excluded from EPS calculation (Details) - shares	Dec. 31, 2012	Dec. 31, 2011
Accounting Policies [Abstract]
Warrants	275,000	275,000
Series H Preferred Stock	10,000	10,000
Convertible Notes Payable	8,755,496	5,821,465
Options	710,583	784,249
Total	9,751,079	6,890,714

Significant Accounting Polici24

Significant Accounting Policies (Details Narrative)	3 Months Ended		6 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Jun. 30, 2012
Accounts receivable					90.00%
Foreign revenues	59.00%	77.00%	79.00%	67.00%
Korea
Foreign revenues	23.00%	65.00%	50.00%	56.00%
Taiwan
Foreign revenues	27.00%	2.00%	21.00%	7.00%
Japan
Foreign revenues	9.00%		5.00%
Germany
Foreign revenues		10.00%		3.00%
others
Foreign revenues	3.00%		1.00%
Customer 1
Sales	30.00%	64.00%	31.00%	22.00%
Customer 2
Sales	27.00%	15.00%	18.00%	41.00%
Customer 3
Sales	23.00%	10.00%	14.00%
Customer 4
Sales			12.00%
Customer 5
Sales			10.00%

Restricted Cash (Details Narrat

Restricted Cash (Details Narrative) - USD ($)	Dec. 31, 2012	Jun. 30, 2012
Accounting Policies [Abstract]
Restricted Cash	$ 500,000	$ 500,000

Notes Payable - Notes payable (

Notes Payable - Notes payable (Details) - USD ($)	Dec. 31, 2012	Jun. 30, 2012
Notes payable	$ 3,450,308	$ 3,189,329
Less valuation discont on notes payable	(4,776)	(69,742)
Grand Total	3,445,532	3,119,587
Unsecured, due Sept 2010 to Nov 2010
Convertible notes payable	717,996	695,815
Convertible notes payable, non-related parties	$ 128,953	$ 124,921
Interest rate, minimum	8.00%	8.00%
Conversion price	$ .30	$ .30
Secured, due Nov 2010
Convertible notes payable	$ 250,937	$ 242,871
Interest rate, minimum	8.00%	8.00%
Conversion price	$ 0.25	$ 0.25
Secured, due Aug 2010
Notes payable	$ 487,334	$ 471,838
Interest rate, minimum	8.00%	8.00%
Unsecured, due on demand
Notes payable	$ 130,463	$ 126,430
Interest rate, minimum	0.00%	0.00%
Interest rate, maximum	8.00%	8.00%
Unsecured, due Jan 2010
Notes payable	$ 26,175	$ 25,167
Interest rate, minimum	10.00%	10.00%
Secured, due on demand
Notes payable	$ 30,029	$ 29,293
Interest rate, minimum	5.00%	5.00%
Conversion price	$ 0.08	$ 0.08
Unsecured, due Jan 2011 to March 2013
Convertible notes payable	$ 22,766	$ 22,110
Interest rate, minimum	5.00%	5.00%
Interest rate, maximum	8.00%	8.00%
Conversion price	$ .30	$ .30
Conversion price, maximum	$ .40	$ .40
Unsecured, due Jan 2013
Notes payable	$ 449,051	$ 444,374
Interest rate, minimum	5.00%	5.00%
Secured, due Dec 2012
Notes payable	$ 262,799	$ 257,957
Unsecured, due Nov 2009
Convertible notes payable	$ 1,523	$ 1,523
Interest rate, minimum	8.00%	8.00%
Conversion price	$ 1	$ 1

Notes Payable - Notes payable a

Notes Payable - Notes payable as presented on Balance Sheet (Details) - USD ($)	Dec. 31, 2012	Jun. 30, 2012
Debt Disclosure [Abstract]
Notes payable	$ 916,521	$ 835,602
Notes payable, related party	2,529,011	2,283,985
Total	$ 3,445,532	$ 3,119,587

Stock-Based Compensation - Summ

Stock-Based Compensation - Summary of Stock Options (Details) - USD ($)	6 Months Ended	12 Months Ended
	Dec. 31, 2012	Jun. 30, 2012
Accounting Policies [Abstract]
Number of Options Outstanding (in shares)	710,583	754,249
Weighted Average Exercise Price Outstanding	$ .37	$ .42
Number of shares; forfeited	$ (43,666)
Weighted-average exercise price; forfeited	$ 1.26
Number of Options Exercisable (in shares)	710,583
Weighted Average Exercise Price; Options Excercisable (in shares)	$ .37

Stock-Based Compensation (Detai

Stock-Based Compensation (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012	Dec. 31, 2011
Accounting Policies [Abstract]
Weighted-average remaining contractual life of stock options, outstanding	1 year 8 months 12 days
Stock-based compensation	$ 0	$ 0	$ 0	$ 0
Fully vested warrants outstanding	275,000		275,000
Warrant exercise price	$ 2		$ 2

Uncategorized Items - vrtc-2012

Label	Element	Value
Net income (loss)	us-gaap_NetIncomeLoss	$ (195,481)
Net income (loss)	us-gaap_NetIncomeLoss	$ (236,947)