Veritec (VRTC) 10-Q 7 Nov 16 2016 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	3 Months Ended
	Sep. 30, 2016shares
Document And Entity Information
Entity Registrant Name	VERITEC INC
Entity Central Index Key	773,318
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
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	39,538,007
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2,016

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Sep. 30, 2016	Jun. 30, 2016
Current Assets:
Cash	$ 34,720	$ 60,953
Accounts receivable	7,280	9,309
Prepaid expenses	5,760	1,897
Total Current Assets	47,760	72,159
Equipment, net	70	171
Intangibles, net	64,170	80,208
Total Assets	112,000	152,538
Current Liabilities:
Notes payable	555,120	548,384
Notes payable - related party	1,390,020	1,484,211
Accounts payable	671,240	624,153
Accounts payable - related party	96,110	96,110
Customer deposits		25,000
Deferred revenues	113,050	138,760
Payroll tax liabilities	151,700	238,718
Accrued expenses	61,424	75,374
Total Current Liabilities	3,038,664	3,230,710
Contingent earnout liability	155,000	155,000
Total Liabilities	3,193,664	3,385,710
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 September 30, 2016 and June 30, 2016	1,000	1,000
Common stock, par value $.01; authorized 50,000,000 shares, 39,538,007 shares issued and outstanding as of September 30, 2016 and June 30, 2016	395,380	395,380
Common stock to be issued, 955,000 shares and 940,000 shares, respectively	12,500	12,500
Additional paid-in capital	17,948,326	17,939,576
Accumulated deficit	(21,438,870)	(21,581,628)
Total Stockholders' Deficiency	(3,081,664)	(3,233,172)
Total Liabilities and Stockholders' Deficiency	$ 112,000	$ 152,538

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2016	Jun. 30, 2016
Convertible preferred stock, par value	$ 1
Convertible preferred stock, shares authorized	10,000,000
Convertible preferred stock, shares issued	1,000
Convertible preferred stock, shares outstanding	1,000
Common stock, par value	$ .01	$ 0.01
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	39,538,007	39,538,007
Common stock, shares outstanding	39,538,007	39,538,007
Common stock, shares to be issued	145,000	145,000
Series H Convertible
Convertible preferred stock, shares authorized	276,000	276,000
Convertible preferred stock, shares issued	1,000	1,000
Convertible preferred stock, shares outstanding	1,000	1,000
Common stock, par value	$ 1,000	$ 1,000

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Revenue:
Mobile banking technology revenue	$ 47,080	$ 67,263
Barcode technology revenue		133,713
Other revenue, related party	22,900
Total revenue	69,980	200,976
Cost of Sales	58,560	86,636
Gross Profit	11,420	114,340
Operating Expenses:
General and administrative	170,442	214,544
Sales and marketing	5,170	14,075
Research and development	10,740	15,858
Total Operating Expenses	186,352	247,204
Loss from Operations	(174,932)	(132,864)
Other Expense:
Gain on settlement	364,690
Interest expense and financing costs, including $40,265 and $655,265, respectively, to related parties	(47,000)	(662,000)
Total Other Expense	317,690	(662,000)
Net Income (Loss)	$ 142,758	$ (794,864)
Net Income (Loss) Per Common Share
Basic	$ 0	$ (0.05)
Diluted	$ 0	$ (0.05)
Weighted Average Number of Shares Outstanding
Basic	39,538,007	16,776,676
Diluted	39,538,007	16,776,676

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Operations (Parenthetical) - USD ($)	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Income Statement [Abstract]
Interest expense, related parties	$ 40,265	$ 655,265

Condensed Consolidated Stateme6

Condensed Consolidated Statements of Stockholders' Deficiency (Unaudited)	3 Months Ended
	Sep. 30, 2016USD ($)shares
Preferred Stock
Beginning balance, Shares | shares	1,000
Beginning balance, Amount	$ 1,000
Beneficial conversion feature on issuance of convertible notes payable
Net Income
Ending balance, Shares | shares	1,000
Ending balance, Amount	$ 1,000
Common Stock
Beginning balance, Shares | shares	39,538,007
Beginning balance, Amount	$ 395,380
Beneficial conversion feature on issuance of convertible notes payable
Net Income
Ending balance, Shares | shares	39,538,007
Ending balance, Amount	$ 395,380
Common Stock to be Issued
Beginning balance, Amount	12,500
Beneficial conversion feature on issuance of convertible notes payable
Net Income
Ending balance, Amount	12,500
Additional Paid-In Capital
Beginning balance, Amount	17,939,576
Beneficial conversion feature on issuance of convertible notes payable	8,750
Net Income
Ending balance, Amount	17,948,326
Accumulated Deficit
Beginning balance, Amount	(21,581,628)
Beneficial conversion feature on issuance of convertible notes payable
Net Income	142,758
Ending balance, Amount	(21,438,870)
Beginning balance, Amount	(3,233,172)
Beneficial conversion feature on issuance of convertible notes payable	8,750
Net Income	142,758
Ending balance, Amount	$ (3,081,664)

Condensed Consolidated Stateme7

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended		24 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)	$ 142,758	$ (794,864)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation	101	103
Amortization	16,038	16,042
Allowance for inventory obsolescence	3,080
Shares to be issued for services		1,400	$ 9,500
Gain on settlement	(364,690)
Beneficial conversion feature on issuance of convertible notes payable - related party	8,750	18,313
Fair value of shares issued as inducement for conversion of notes payable		452,770
Modification cost of conversion feature of note payable		136,000
Interest accrued on notes payable	38,248	53,997
Changes in operating assets and liabilities:
Accounts receivable	2,029	9,392
Restricted cash		(1,455)
Inventories	(3,080)	2,917
Prepaid expenses	(3,863)	7,496
Deferred revenues	(25,710)	(43,951)
Payroll tax liabilities	(87,018)	(43,900)
Accounts payables and accrued expenses	8,137	71,990
Net cash used in operating activities	(265,220)	(113,750)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from convertible notes payable - related party	124,000	108,500
Proceeds from notes payable, related party	114,987
Payments on notes payable, related party		(2,500)
Net cash provided by financing activities	238,987	106,000
NET DECREASE IN CASH	(26,233)	(7,750)
CASH AT BEGINNING OF YEAR	60,953	52,762
CASH AT END OF YEAR	34,720	45,012	$ 60,953
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest
NON CASH INVESTING AND FINANCING ACTIVITIES
Related party capital contribution on sale of assets offset to related party notes payable balance		670,000
Conversion of notes payable into common stock		1,775,434
Reclassification of customer deposit to accounts payable	$ 25,000

Nature of Business

Nature of Business	3 Months Ended
	Sep. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Nature of Business	NOTE 1 – NATURE OF BUSINESS AND BASIS OF PRESENTATION The Company Veritec, Inc. (Veritec) was formed in the State of Nevada on September 8, 1982. Veritec’s wholly owned subsidiaries include Vcode Holdings, Inc. (Vcode®) and Veritec Financial Systems, Inc. (VTFS) (collectively the “Company”). Nature of Business The Company is primarily engaged in the development, marketing, sales and licensing of products and rendering of professional services related to its mobile banking solutions. Prior to its sale on September 30, 2015, the Company was also focused on its proprietary two-dimensional matrix symbology (also commonly referred to as “two-dimensional barcodes” or “2D barcodes”). Mobile Banking Solutions In January 12, 2009, Veritec formed VTFS, a Delaware corporation, to bring its Mobile Banking Technology, products and related professional services to market. In 2009 through 2016, the Company has had agreements with various banks, including Security First Bank (terminated in October 2010), Palm Desert National Bank (which was later assigned to First California Bank and subsequently Pacific Western Bank that terminated in June 2013), and Central Bank of Kansas City (“CBKC”). Late in the fiscal year ended June 30, 2016, the relationship between CBKC and the Company ended and the Company is currently seeking a bank to sponsor its Prepaid Card programs (see below). As a Cardholder Independent Sales Organization, Veritec is able to promote and sell Visa branded card programs. As a Third-Party Servicer, Veritec provides back-end cardholder transaction processing services for Visa branded card programs on behalf of its sponsoring bank. 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. On September 22, 2016, the Company announced that it has entered into a Non-Binding Letter of Intent (“LOI”) to acquire all of Flathead Bancorporation, Inc.’s (“FB”) issued and outstanding shares. FB is the majority owner of First Citizens Bank of Polson, Montana (“Citizens Bank”). If the Company is successful with its proposal to FB, the Company plans to use its mobile banking technology products and services with Citizens Bank. Under the proposed terms of the LOI, Veritec would acquire 9.9 percent of FB’s issued and outstanding shares for $320,000 at the closing date. Veritec plans to purchase the remaining 90.1 percent of FB’s outstanding common shares within three years of the closing date for $2,880,000. The total purchase price for FB’s outstanding common shares (including the 9.9 percent discussed above) would be $3,200,000 and is subject to, among other things, Veritec being able to obtain funding and obtain regulatory approval from applicable banking authorities. The Company currently plans to raise funds from investors by issuing its common shares, debt, or both. There is no assurance that the Company can be successful in raising such funds, or if the Company is successful in raising such funds from sales of common shares, the terms of these sales may cause significant dilution to existing holders of common stock. Pursuant to the LOI, Veritec would also provide loans to FB to be used for capital purposes of $280,000 at the closing date, $500,000 on or before January 31, 2017 and $400,000 on or before April 1, 2017, for a total of $1,180,000. The loans would mature in five years and require annual interest only payments at interest rates to be determined. The Company anticipates completing an agreement with FB and making its initial investment of $320,000 and initial loan payment of $280,000, or an aggregate of $600,000, by December 2016. The Company anticipates that The Matthews Group (see Note 7), owned 50% by Ms. Van Tran, the Company’s CEO, and 50% by Larry Johanns, a significant stockholder of the Company, will loan the Company the necessary funds to accomplish its initial planned transactions with FB. Barcode Technology (Sold September 30, 2015) The Company’s Barcode Technology was originally invented by the founders of Veritec and as a product identification system for identification and tracking of manufactured parts, components and products mostly in the liquid crystal display (LCD) markets and is ideal for secure identification documents, financial cards, medical records and other high security applications. Veritec developed software to send, store, display, and read Barcode Technology on a mobile phone. On September 30, 2015, the Company sold all of its assets of its Barcode Technology, which was comprised solely of its intellectual property. The sale allows the Company to focus its efforts solely on its growing Mobile Banking Technology (See Note 7). Joint Venture Agreement On January 17, 2016, Veritec Inc. (the “Company”) entered into an agreement with Vietnam Alliance Capital (“VAC”), which is domiciled in Vietnam, to form a joint venture (“JV’) to operate a debit card business in Vietnam. The JV will be named Veritec Asia. The Company will be a 30% member in the JV and VAC will be a 70% member in the JV. Pursuant to the agreement, the Company will grant a license of certain products to the JV, and provide certain technologies and technological support to the JV. VAC will manage, control, and conduct its day-to-day business and development activities. In addition VAC has agreed to raise all funds to capitalize the JV. As of September 30, 2016, the JV has not received funding and anticipates receipt of funding in fiscal year 2017.

Basis of Presentation

Basis of Presentation	3 Months Ended
	Sep. 30, 2016
Accounting Policies [Abstract]
Basis of Presentation	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 month periods ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending June 30, 2017. The consolidated balance sheet information as of June 30, 2016 was derived from the Company’s audited consolidated financial statements as of and for the year ended June 30, 2016 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on September 26, 2016. These financial statements should be read in conjunction with that report. 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, analysis of impairments of long lived assets, 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. Inter-company transactions and balances were eliminated in consolidation.

Going Concern

Going Concern	3 Months Ended
	Sep. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Going Concern	GOING CONCERN The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. During the three months ended September 30, 2016, the Company used cash in operating activities of $265,220, and at September 30, 2016, the Company had a working capital deficit of $2,990,904 and a stockholders’ deficiency of $3,081,664. In addition, as of September 30, 2016, the Company is delinquent in payment of $727,997 of its notes payable and is also delinquent in payment of $151,700 in payroll taxes and accrued interest and penalties. These factors, among others, raise substantial doubt about our ability to continue as a going concern. The Company’s independent registered public accounting firm, in its report on our June 30, 2016 financial statements, has raised substantial doubt about the Company’s ability to continue as a going concern. The Company’s financial statements do not include any adjustments that might result from the outcome of this uncertainty be necessary should we be unable to continue as a going concern. The Company believes it will require additional funds to continue its operations through fiscal 2017 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 major 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 consolidated financial statements do not include any adjustments that may result from this uncertainty.

Significant Accounting Policies

Significant Accounting Policies	3 Months Ended
	Sep. 30, 2016
Accounting Policies [Abstract]
Significant Accounting Policies	NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and 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, analysis of impairments of long lived assets, accruals for potential liabilities and assumptions made in valuing stock-based compensation. Revenue Recognition Revenues from licenses and identification cards are recognized when the product is shipped, the Company no longer has any service or other continuing obligations, and collection is reasonably assured. The process typically begins with a customer purchase order detailing its 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, the software is imported into the hardware and once the process is complete, the product is shipped, and revenue is recognized at time of shipment. Once the software and/or other products 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 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. Fair Value of Financial Instruments Fair value measurements adopted by the Company are based on the authoritative guidance provided by the Financial Accounting Standards Board (“FASB”) which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. FASB authoritative guidance establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels as follows: Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Inputs, other than the quoted prices in active markets that are observable either directly or indirectly. Level 3 - Unobservable inputs based on the Company's assumptions. The Company had no such assets or liabilities recorded to be valued on the basis above at September 30, 2016 or June 30, 2016. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, and current liabilities, including notes payable and convertible notes, approximate their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rates of interest. Net Income (Loss) per Common Share Basic earnings (loss) per share are 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 months ended September 30, 2016 and 2015, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an anti-dilutive effect. At September 30, 2016, the Company’s Series H Preferred Stock, Convertible Notes Payable and Options were antidilutive because their exercise prices and conversion prices were out of the money. As of September 30, 2016 and 2015, 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. As of September 30, 2016 2015 Series H Preferred Stock 10,000 10,000 Convertible Notes Payable 12,298,052 5,452,696 Options 2,500,000 2,510,000 Total 14,808,052 7,792,696 Concentrations The Company’s cash balances on deposit with banks are guaranteed by the Federal Deposit Insurance Corporation up to $250,000. The Company may be exposed to risk for the amounts of funds held in one bank in excess of the insurance limit. In assessing the risk, the Company’s policy is to maintain cash balances with high quality financial institutions. The Company did not have cash balances in excess of the guarantee during the three months ended September 30, 2016. Major Customers During the three months ended September 30, 2016, the Company had four customers that represented an aggregate of 78% (33%, 19%, 15% and 11%) of our revenue. During the three months ended September 30, 2015, the Company had one customer that represented 12% of our revenue. Foreign Revenues The Company had no foreign revenues during the three months ended September 30, 2016. During the three months ended September 30, 2015, foreign revenues accounted for 65% (20% Taiwan, 18% China, 10% Korea, and 17% others) of the Company’s total revenues. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers In February 2016, the FASB issued ASU No. 2016-02, Leases In March 2016, the FASB issued the ASU 2016-09, Compensation - Stock Compensation (Topic 718) Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.

Intangible Assets and Contingen

Intangible Assets and Contingent Earnout Liability	3 Months Ended
	Sep. 30, 2016
Business Combinations [Abstract]
Acquisition	NOTE 3 – INTANGIBLE ASSETS AND CONTINGENT EARNOUT LIABILITY On September 30, 2014, the Company and Tangible Payments LLC, a Maryland Limited Liability Company, entered into an Asset Purchase Agreement pursuant to which the Company acquired certain assets and liabilities of the Tangible Payments LLC. Tangible Payments LLC developed online payment technology that encrypts sensitive information securely between customers and merchants during online transactions. The purchase price for the acquisition was comprised of 250,000 shares of restricted common stock of Veritec valued at $37,500, issued on closing, and an earnout payment of $155,000 for an aggregate purchase price of $192,500. The earnout payment is payable on a monthly basis from the net profits derived from the acquired assets commencing three months after the closing. The earnout payment is accelerated and the balance of the earnout payment shall be due in full at such time as Veritec receives equity investments aggregating $1.3 million. From the date of the acquisition and up to September 30, 2016, there was no net profit derived from the acquired assets and accordingly, no payments were made on the earnout. The Company assigned $192,500 of the purchase price to contract commitments which are amortized over a three year period. As of September 30, 2016 and June 30, 2016, the unamortized balance of contract commitments was $64,170 and $80,208, respectively. For the three months ended September 30, 2016 and 2015, the Company recorded $16,038 and $16,042 of amortization expense, respectively, related to this intangible which is included in general and administrative expense in the accompanying Condensed Consolidated Statements of Operations.

Notes Payable

Notes Payable	3 Months Ended
	Sep. 30, 2016
Debt Disclosure [Abstract]
Notes Payable	NOTE 4 – NOTES PAYABLE Notes payable Notes payable includes accrued interest and consists of the following at September 30, 2016 and June 30, 2016: September 30, 2016 June 30, 2016 (a) Convertible notes $ 198,021 $ 195,655 (b) Notes payable 357,099 352,729 Total notes - third parties $ 555,120 $ 548,384 (a) At June 30, 2016, convertible notes totaled $195,655. During the three months ended September 30, 2016, accrued interest increased by $2,366, and at September 30, 2016, convertible notes totaled $198,021. The notes are unsecured, and interest is at various rates ranging up to 10% per annum. At September 30, 2016, $161,507 of the notes are in default, and the balance of $36,514 is due on demand. At September 30, 2016, the notes are convertible into 980,278 shares of the Company’s common stock at conversion prices ranging from $0.08 per share to $0.30 per share. (b) At June 30, 2016, notes payable totaled $352,729. During the three months ended September 30, 2016, accrued interest increased by $4,370, and at September 30, 2016, notes payable totaled $357,099. $322,816 of notes are secured by the Company’s intellectual property, and $34,283 of notes are unsecured. Interest is at various rates ranging up to 10% per annum. The notes were due on various dates through 2011 or on demand and at September 30, 2016, the Company was in default on notes totaling $321,586. Notes payable-related party Notes payable-related includes accrued interest and consists of the following at September 30, 2016 and June 30, 2016: September 30, 2016 June 30, 2016 (c) Convertible notes-The Matthews Group 898,841 751,498 (d) Notes payable-The Matthews Group 338,925 216,648 (e)Convertible notes-other related 152,254 513,065 Notes payable-other related — 3,000 Total notes-related party 1,390,020 1,484,211 (c) The Matthews Group (see Note 7) is owned 50% by Ms. Van Tran, the Company’s CEO, and 50% by Larry Johanns, a significant stockholder of the Company. At June 30, 2016, convertible notes due to The Matthews Group totaled $751,498. During the three months ended September 30, 2016, $124,000 of convertible notes were issued to The Matthews Group, and accrued interest increased by $23,343. At September 30, 2016, convertible notes-The Matthews Group totaled $898,841. The notes are unsecured, and interest is at various rates ranging up to 10% per annum. At September 30, 2016, $40,000 of the notes are in default, and the balance of $858,841 are due on demand. At September 30, 2016, the notes are convertible into 10,810,261 shares of the Company’s common stock at conversion prices ranging from $0.08 per share to $0.30 per share. During the three months ended September 30, 2016, the market price on the date some of the notes were issued was in excess of the conversion price, and as a result the Company recorded a beneficial conversion feature on issuance of the notes of $8,750 which is included as interest expense for the three months ended September 30, 2016. (d) At June 30, 2016, notes payable due to The Matthews Group totaled $216,648. During the three months ended September 30, 2016, $114,987 of notes payable were issued to The Matthews Group, and accrued interest increased by $7,290. At September 30, 2016, notes payable-The Matthews Group totaled $338,925. The notes are unsecured, interest is at 10% per annum, and are due on demand. The notes were made in relation to a management services agreement with The Matthews Group (see Note 7). (e) At June 30, 2016, convertible notes due other related parties totaled $513,065. During the three months ended September 30, 2016, accrued interest increased by $875, and loans aggregating $361,686 were settled (see Note 8). At September 30, 2016 convertible notes due other related parties totaled $152,254. The notes are unsecured, and interest is at various rates ranging up to 8% per annum, were due in 2010 and are currently in default.

Stockholders' Deficiency

Stockholders' Deficiency	3 Months Ended
	Sep. 30, 2016
Equity [Abstract]
Stockholders' Equity (Deficit)	NOTE 5 - STOCKHOLDERS’ DEFICIENCY Common Stock to be issued In July 2014 through June 2016, the Company granted 70,000 shares of the Company’s common stock to consultants for services valued at $9,500. In addition, the Company granted 75,000 shares of the Company’s common stock to the Company’s directors in 2012 valued at $3,000. As of September 30, 2016 and June 30, 2016, the 145,000 shares of common stock with an aggregate value of $12,500 have not been issued and are reflected as common shares to be issued in the accompanying consolidated balance sheet.

Stock Options

Stock Options	3 Months Ended
	Sep. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock-Based Compensation	NOTE 6 – STOCK OPTIONS Stock Options A summary of stock options for the three months ended September 30, 2016 is as follows: Number of Weighted - Average Shares Exercise Price Outstanding at June 30, 2015 2,510,000 $0.08 Granted — $0.00 Forfeited (10,000) $0.08 Outstanding at September 30, 2016 2,500,000 $0.08 Exercisable at September 30, 2016 2,500,000 $0.08 At September 30, 2016, the Company had 2,500,000 of options outstanding and exercisable. There were no options granted during the three months ended September 30, 2016 and the Company recognized no stock-based compensation expense related to stock options during the three months ended September 30, 2016 and 2015, respectively. As of September 30, 2016, there was no remaining unrecognized compensation costs related to stock options, and there was no intrinsic value of these options. Additional information regarding options outstanding as of September 30, 2016 is as follows: Options Outstanding at September 30, 2016 Options Exercisable at September 30, 2016 Weighted Average Weighted Weighted Number of Remaining Average Number of Average Range of Shares Contractual Life Exercise Shares Exercise Exercise Outstanding (Years) Price Exercisable Price $0.13 - $1.45 2,500,000 3.50 $0.08 2,500,000 $0.08 2,500,000 2,500,000 The weighted-average remaining contractual life of stock options outstanding and exercisable at September 30, 2016 is 3.50 years.

Related Party Transactions

Related Party Transactions	3 Months Ended
	Sep. 30, 2016
Related Party Transactions [Abstract]
Related Party Transactions	NOTE 10. RELATED PARTY TRANSACTIONS The Company has relied on The Matthews Group, LLC, owned 50% by Ms. Van Tran, the Company’s CEO/Executive Chair and a director, and 50% by Larry Johanns, a significant stockholder of the Company, for funding (see Note 7). The Company also leases its office facilities from Ms. Van Tran. For the three months ended September 30, 2015 and 2014, rental payments to Ms. Van Tran totaled $12,750 and $12,750, respectively. During the year ended June 30, 2015, the Company received various unsecured, non-interest bearing, due on demand advances from its CEO Ms. Van Tran, a related party. No additional advances were received from Ms. Tran during the three months ended September 30, 2015. The balances due Ms. Tran as of September 30, 2015 and June 30, 2015 were $96,110 and $96,110, respectively. These advances have been classified as accounts payable, related party on the accompanying consolidated balance sheets.

Settlement

Settlement	3 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
Settlement	NOTE 8 – SETTLEMENT On September 21, 2016, the Company entered into a settlement agreement with an individual who was a former officer of the Company. The individual had loaned the Company $250,000 in prior years and was also issued 500,000 shares of common stock for services. The Company alleged that the individual used the Company's intellectual property without approval. Under the terms of the settlement agreement, the individual agreed to relinquish a convertible note payable and unpaid interest aggregating $361,686 (see Note 4), a note payable of $3,000, and return the 500,000 shares of common stock issued to him. In turn, the Company agreed to release and discharge the individual against all claims arising on or prior to the date of the settlement agreement. The Company recorded this as a gain on settlement of $364,686 for the three months ended September 30, 2016. As of September 30, 2016, the shares have not been relinquished. When the Company receives the shares, it will record a cancellation of shares.

Subsequent Events

Subsequent Events	3 Months Ended
	Sep. 30, 2016
Subsequent Events [Abstract]
Subsequent Events	NOTE 9 – SUBSEQUENT EVENTS During October 2016, The Matthews Group loaned the Company $200,000 and the Company paid-in-full its remaining balance owed of $151,700 for delinquent payroll taxes and accrued interest and penalties. The notes are unsecured, interest is at 10% per annum, and are due on demand.

Significant Accounting Polici19

Significant Accounting Policies (Policies)	3 Months Ended
	Sep. 30, 2016
Accounting Policies [Abstract]
Use of Estimates	Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and 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, analysis of impairments of long lived assets, accruals for potential liabilities and assumptions made in valuing stock-based compensation.
Revenue Recognition	Revenue Recognition Revenues from licenses and identification cards are recognized when the product is shipped, the Company no longer has any service or other continuing obligations, and collection is reasonably assured. The process typically begins with a customer purchase order detailing its 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, the software is imported into the hardware and once the process is complete, the product is shipped, and revenue is recognized at time of shipment. Once the software and/or other products 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 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.
Fair Value of Financial Instruments	Fair Value of Financial Instruments Fair value measurements adopted by the Company are based on the authoritative guidance provided by the Financial Accounting Standards Board (“FASB”) which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. FASB authoritative guidance establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels as follows: Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Inputs, other than the quoted prices in active markets that are observable either directly or indirectly. Level 3 - Unobservable inputs based on the Company's assumptions. The Company had no such assets or liabilities recorded to be valued on the basis above at September 30, 2016 or June 30, 2016. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, and current liabilities, including notes payable and convertible notes, approximate their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rates of interest.
Net Income (Loss) per Common Share	Net Income (Loss) per Common Share Basic earnings (loss) per share are 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 months ended September 30, 2016 and 2015, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an anti-dilutive effect. At September 30, 2016, the Company’s Series H Preferred Stock, Convertible Notes Payable and Options were antidilutive because their exercise prices and conversion prices were out of the money. As of September 30, 2016 and 2015, 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. As of September 30, 2016 2015 Series H Preferred Stock 10,000 10,000 Convertible Notes Payable 12,298,052 5,452,696 Options 2,500,000 2,510,000 Total 14,808,052 7,792,696
Concentrations	Concentrations The Company’s cash balances on deposit with banks are guaranteed by the Federal Deposit Insurance Corporation up to $250,000. The Company may be exposed to risk for the amounts of funds held in one bank in excess of the insurance limit. In assessing the risk, the Company’s policy is to maintain cash balances with high quality financial institutions. The Company did not have cash balances in excess of the guarantee during the three months ended September 30, 2016.
Major Customers	Major Customers During the three months ended September 30, 2016, the Company had four customers that represented an aggregate of 78% (33%, 19%, 15% and 11%) of our revenue. During the three months ended September 30, 2015, the Company had one customer that represented 12% of our revenue.
Foreign Revenues	Foreign Revenues The Company had no foreign revenues during the three months ended September 30, 2016. During the three months ended September 30, 2015, foreign revenues accounted for 65% (20% Taiwan, 18% China, 10% Korea, and 17% others) of the Company’s total revenues.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers In February 2016, the FASB issued ASU No. 2016-02, Leases In March 2016, the FASB issued the ASU 2016-09, Compensation - Stock Compensation (Topic 718) Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.

Significant Accounting Polici20

Significant Accounting Policies (Tables)	3 Months Ended
	Sep. 30, 2016
Accounting Policies [Abstract]
Summary of securities excluded from EPS calculation	As of September 30, 2016 2015 Series H Preferred Stock 10,000 10,000 Convertible Notes Payable 12,298,052 5,452,696 Options 2,500,000 2,510,000 Total 14,808,052 7,792,696

Notes Payable (Tables)

Notes Payable (Tables)	3 Months Ended
	Sep. 30, 2016
Debt Disclosure [Abstract]
Notes Payable	September 30, 2016 June 30, 2016 (a) Convertible notes $ 198,021 $ 195,655 (b) Notes payable 357,099 352,729 Total notes - third parties $ 555,120 $ 548,384
Notes Payable Related Parties	September 30, 2016 June 30, 2016 (c) Convertible notes-The Matthews Group 898,841 751,498 (d) Notes payable-The Matthews Group 338,925 216,648 (e)Convertible notes-other related 152,254 513,065 Notes payable-other related — 3,000 Total notes-related party 1,390,020 1,484,211

Stock Options (Tables)

Stock Options (Tables)	3 Months Ended
	Sep. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Summary of Stock Options	Number of Weighted - Average Shares Exercise Price Outstanding at June 30, 2015 2,510,000 $0.08 Granted — $0.00 Forfeited (10,000) $0.08 Outstanding at September 30, 2016 2,500,000 $0.08 Exercisable at September 30, 2016 2,500,000 $0.08
Additional information regarding outstanding options	Options Outstanding at September 30, 2016 Options Exercisable at September 30, 2016 Weighted Average Weighted Weighted Number of Remaining Average Number of Average Range of Shares Contractual Life Exercise Shares Exercise Exercise Outstanding (Years) Price Exercisable Price $0.13 - $1.45 2,500,000 3.50 $0.08 2,500,000 $0.08 2,500,000 2,500,000

Nature of Business (Details Nar

Nature of Business (Details Narrative) - USD ($)	Sep. 30, 2016	Sep. 30, 2016	Sep. 22, 2019	Sep. 30, 2019	Apr. 01, 2017	Jan. 31, 2017	Sep. 21, 2016	Jan. 17, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Percent of shares acquired by Veritec	9.90%	9.90%		90.10%
Purchase price of shares	$ 320,000	$ 3,200,000	$ 2,880,000
Note receivable from Flathead Bancorporation, Inc	$ 1,180,000	$ 1,180,000			$ 400,000	$ 500,000	$ 280,000
Note receivable terms		The loans would mature in five years and require annual interest only payments at interest rates to be determined. The Company anticipates completing an agreement with FB and making its initial investment of $320,000 and initial loan payment of $280,000, or an aggregate of $600,000, by December 2016. The Company anticipates that The Matthews Group (see Note 7), owned 50% by Ms. Van Tran, the Company’s CEO, and 50% by Larry Johanns, a significant stockholder of the Company, will loan the Company the necessary funds to accomplish its initial planned transactions with FB.
Percent Ownership in Joint Venture of Company								30.00%
Percent Ownership of Joint Venture by Vietnam Alliance Capital								70.00%

Going Concern (Details Narrativ

Going Concern (Details Narrative) - USD ($)	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Net income (loss)	$ 142,758	$ (794,864)
Net cash used in operating activities	(265,220)	$ (113,750)
Working capital deficit	2,990,904
Stockholders' deficiency	(3,081,664)		$ (3,233,172)
Note payable obligations - in default	727,997
Payroll taxes and accrued interest and penalties	$ 151,700		$ 238,718

Significant Accounting Polici25

Significant Accounting Policies - Summary of securities excluded from EPS calculation (Details) - shares	Sep. 30, 2016	Sep. 30, 2015
Accounting Policies [Abstract]
Series H Preferred Stock	10,000	10,000
Convertible Notes Payable	12,298,052	5,452,696
Options	2,500,000	2,510,000
Total	14,808,052	7,792,696

Significant Accounting Polici26

Significant Accounting Policies (Details Narrative)	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Sales percentage from major customers	78.00%	12.00%
Foreign revenues		65.00%
Taiwan
Foreign revenues		20.00%
China
Foreign revenues		18.00%
Korea
Foreign revenues		10.00%
Other
Foreign revenues		17.00%
Customer 1
Sales percentage from major customers	33.00%	12.00%
Customer 2
Sales percentage from major customers	19.00%
Customer 3
Sales percentage from major customers	15.00%
Customer 4
Sales percentage from major customers	11.00%

Intangible Assets and Conting27

Intangible Assets and Contingent Earnout Liability (Details Narrative) - USD ($)	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2016
Business Combinations [Abstract]
Shares issued	250,000
Value of shares issued	$ 37,500
Earnout Payment	155,000
Aggregate purchase price	192,500
Equity investments received	1,300,000
Contract commitments	192,500
Unamortized balance of contract commitments	64,170		$ 80,208
Amortization expense	$ 16,038	$ 16,042

Notes Payable - Notes Payable (

Notes Payable - Notes Payable (Details) - USD ($)	Sep. 30, 2016	Jun. 30, 2016
Debt Disclosure [Abstract]
Convertible notes payable	$ 198,021	$ 195,655
Notes payable	357,099	352,729
Total Notes payable	$ 555,120	$ 548,384

Notes Payable - Notes Payable R

Notes Payable - Notes Payable Related Party (Details) - USD ($)	Sep. 30, 2016	Jun. 30, 2016
Notes Payable Related Party	$ 1,390,020	$ 1,484,211
Matthews Group
Convertible Notes, Related Party	898,841	751,498
Notes Payable Related Party	338,925	216,648
Other
Convertible Notes, Related Party	152,254	513,065
Notes Payable Related Party		$ 3,000

Notes Payable (Details Narrativ

Notes Payable (Details Narrative) - USD ($)	3 Months Ended
	Sep. 30, 2016	Oct. 31, 2016	Jun. 30, 2016
Notes payable	$ 357,099		$ 352,729
Recorded increase on interest	$ 4,370
Interest rate	10.00%		10.00%
Notes in Default	$ 321,586
Convertible Notes Payable
Notes payable	198,021		$ 195,655
Recorded increase on interest	$ 2,366
Interest rate	10.00%		10.00%
Notes in Default	$ 161,507
Balance due on demand	36,514
Converted shares of common stock, value	980,278
Convertible Notes Payable | Matthews Group
Notes payable	898,841		$ 751,498
Recorded increase on interest	$ 23,343
Interest rate	10.00%		10.00%
Notes in Default	$ 40,000
Balance due on demand	858,841
Converted shares of common stock, value	10,810,261
Notes issued	124,000
Beneficial conversion feature	8,750
Convertible Notes Payable | Other Related Parties
Notes payable	152,254		$ 513,065
Recorded increase on interest	$ 875
Interest rate	8.00%		8.00%
Converted shares of common stock, value	$ 507,513
Conversion price	$ .30
Loans settled	$ 361,686
Secured Debt
Notes payable	322,816
Unsecured Debt
Notes payable	$ 34,283
Maximum
Conversion price	$ .30
Minimum
Conversion price	$ .08
Matthews Group
Notes payable	$ 338,925		$ 216,648
Recorded increase on interest	$ 7,290
Interest rate	10.00%	10.00%	10.00%
Ownership by CEO and Significant Stockholder	50.00%
Notes issued	$ 114,987

Stockholders Deficiency (Detail

Stockholders Deficiency (Details Narrative) - USD ($)	3 Months Ended		12 Months Ended	24 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2012	Jun. 30, 2016
Equity [Abstract]
Common stock issued for services	500,000			70,000
Value of common stock issued for services		$ 1,400		$ 9,500
Shares issued to directors	2,510,000		75,000
Value of shares issued to directors			$ 3,000
Common stock to be issued, shares	145,000
Common stock to be issued, value	$ 12,500			$ 12,500

Stock Options - Summary of Stoc

Stock Options - Summary of Stock Options (Details) - $ / shares	3 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2013	Dec. 31, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Beginning number of shares; outstanding	2,510,000		75,000
Beginning weighted-average exercise price; outstanding	$ 0.08
Options Granted		2,500,000
Options granted, weighted average exercise price	$ 0
Options Forfeited	(10,000)
Options Forfeited, weighted average exercise price	$ 0.08
Ending number of shares; outstanding	2,500,000
Ending weighted-average exercise price; outstanding	$ 0.08
Number of Shares; exercisable	2,500,000
Weighted-average exercise price; exercisable	$ 0.08

Stock Options - Additional info

Stock Options - Additional information regarding outstanding options (Details)	3 Months Ended
	Sep. 30, 2016$ / sharesshares
Options outstanding, shares | shares	2,500,000
Weighted average remaining contractual life	3 years 6 months
Options excercisable | shares	2,500,000
Options exercisable, weighted average exercise price	$ 0.08
Min
Weighted average exercise price	0.13
Max
Weighted average exercise price	$ 1.45

Stock Options (Details Narrativ

Stock Options (Details Narrative) - shares	3 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Options granted		2,500,000
2013 Agreement terms	The Company has agreements with certain employees that provide for five years of annual grants of options, on each employment anniversary date, to purchase shares of the Company’s common stock. The option price is determined based on the market price on the date of grant, the options vest one year from the date of grant, and the options expire five years after vesting.
Weighted average remaining contractual life	3 years 6 months

Related Party Transactions (Det

Related Party Transactions (Details Narrative) - USD ($)	3 Months Ended
	Sep. 30, 2016	Jun. 30, 2016	Jun. 30, 2015
Owed to related party	$ 1,237,766	$ 968,146
Accounts payable, related party	96,110	96,110
Rental payments	16,800	$ 16,800
Matthews Group
Notes issued	$ 114,987
Barcode Technology
Revenue agreement	20.00%
Recorded revenue from agreement	$ 22,900
Larry Johanns
Ownership of TMG			50.00%
Van Tran
Ownership of TMG			50.00%
Matthews Group | Convertible Notes Payable
Notes issued	124,000
Cash flow loans	$ 114,987
Interest on cash flow loan	10.00%

Settlement (Details Narrative)

Settlement (Details Narrative) - USD ($)	3 Months Ended	24 Months Ended
	Sep. 30, 2016	Jun. 30, 2016
Loan from officer of company	$ 250,000
Stock issued for services	500,000	70,000
Shares to be cancelled	500,000
Gain on settlement	$ 364,686
Convertible Note
Debt forgiven	361,686
Note Payable
Debt forgiven	$ 3,000

Subsequent Events (Details Narr

Subsequent Events (Details Narrative) - USD ($)	Apr. 01, 2017	Jan. 31, 2017	Oct. 31, 2016	Sep. 30, 2016	Sep. 21, 2016	Jun. 30, 2016
Note Receivable	$ 400,000	$ 500,000		$ 1,180,000	$ 280,000
Payroll tax liabilities				$ 151,700		$ 238,718
Unsecured note interest rate				10.00%		10.00%
Matthews Group
Note Receivable			$ 200,000
Payroll tax liabilities			$ 151,700
Unsecured note interest rate			10.00%	10.00%		10.00%