Veritec (VRTC) 10-Q 14 Nov 18 2019 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	3 Months Ended
	Sep. 30, 2018shares
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, 2018
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Is Entity's Reporting Status Current?	No
Entity Filer Category	Non-accelerated Filer
Is Entity Small Business?	true
Is Entity Emerging Growth Company?	false
Entity Common Stock, Shares Outstanding	39,538,007
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2,019

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Sep. 30, 2018	Jun. 30, 2018
Current Assets:
Cash	$ 144,517	$ 139,086
Accounts receivable	6,502	7,071
Prepaid expenses	4,097	5,328
Total Assets	155,116	151,486
Current Liabilities:
Accounts payable	739,144	671,197
Accounts payable, related party	96,110	96,110
Accrued expenses	68,096	63,507
Convertible notes and notes payable – party (includes $570,560 and $563,826 of convertible notes and notes payable in default)	608,995	602,261
Convertible notes and notes payable, related party (includes $269,228 and $265,729 of notes payable, related party in default)	3,169,006	2,994,599
Deferred revenues	22,500	30,000
Total Current Liabilities	4,703,851	4,457,674
Contingent earnout liability	155,000	155,000
Total Liabilities	4,858,851	4,612,674
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	1,000	1,000
Common stock, par value $.01; authorized 150,000,000 shares and 50,000,000 shares, respectively; 39,538,007 shares issued and outstanding	395,380	395,380
Common stock to be issued, 145,000 shares to be issued as of September 30, 2017 and June 30, 2017, respectively	12,500	12,500
Additional paid-in capital	18,099,576	18,099,576
Accumulated deficit	(23,212,191)	(22,969,645)
Total Stockholders' Deficiency	(4,703,735)	(4,461,189)
Total Liabilities and Stockholders' Deficiency	$ 155,116	$ 151,485

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)	Sep. 30, 2018	Jun. 30, 2018
Convertible preferred stock, par value	$ 1	$ 1
Convertible preferred stock, shares authorized	10,000,000	10,000,000
Convertible preferred stock, shares issued	1,000	1,000
Convertible preferred stock, shares outstanding	1,000	1,000
Common stock, par value	$ .01	$ 0.01
Common stock, shares authorized	150,000,000	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
Convertible notes and notes payable, in default	$ 570,560	$ 563,826
Convertible notes and notes payable, related party, in default	$ 269,228	$ 265,729
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, 2018	Sep. 30, 2017
Revenue:
Mobile banking technology revenue	$ 29,100	$ 30,591
Other revenue, related party	41,631	80,252
Total revenue	70,731	110,843
Cost of Sales	62,984	54,236
Gross Profit	7,747	56,607
Operating Expenses:
General and administrative	178,050	164,053
Sales and marketing
Research and development	50	9,158
Total Operating Expenses	178,100	173,211
Loss from Operations	(170,353)	(116,604)
Other Expense:
Change in fair value of derivative liabilities		463,000
Gain on settlement of note payable to former officer	364,690
Interest expense, including $65,458 and $40,265, respectively, to related parties	(72,193)	(57,061)
Total other income (expense)	(72,193)	405,939
Net Income (Loss)	$ (242,546)	$ 289,335
Net Loss Per Common Share - Basic and Diluted	$ (0.01)	$ 0.01
Weighted Average Number of Shares Outstanding - Basic and Diluted	39,538,007	39,538,007

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Operations (Unaudited) (Parenthetical) - USD ($)	3 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Income Statement [Abstract]
Interest expense, related parties	$ 65,458	$ 40,265

Condensed Consolidated Statem_3

Condensed Consolidated Statement of Stockholders' Equity Deficiency (Unaudited) - 3 months ended Sep. 30, 2018 - USD ($)	Preferred Stock	Common Stock	Common Stock to be Issued	Additional Paid-In Capital	Accumulated Deficit	Total
Beginning balance, Shares at Jun. 30, 2018	1,000	39,538,007
Beginning balance, Amount at Jun. 30, 2018	$ 1,000	$ 395,380	$ 12,500	$ 18,099,576	$ (22,969,645)	$ (4,461,189)
Net Income					(242,546)	(242,546)
Ending balance, Shares at Sep. 30, 2018	1,000	39,538,007
Ending balance, Amount at Sep. 30, 2018	$ 1,000	$ 395,380	$ 12,500	$ 18,099,576	$ (23,212,191)	$ (4,703,735)

Condensed Consolidated Statem_4

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$ (242,546)	$ 289,335
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Amortization		16,042
Change in fair value of derivative liabilities		(463,000)
Changes in operating assets and liabilities:
Accounts receivable	569	1,249
Prepaid expenses	1,231	890
Accounts payable	67,947	28,997
Accounts payable - related party		4,577
Accrued expenses	4,589	(11,460)
Deferred revenues	(7,500)	(12,501)
Net cash used in operating activities	(103,518)	(88,810)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable, related party	108,949	97,042
Net cash provided by (used in) financing activities	108,949	97,042
NET INCREASE (DECREASE) IN CASH	5,431	8,232
CASH AT BEGINNING OF PERIOD	139,086	46,693
CASH AT END OF PERIOD	144,517	54,925
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest

Nature of Business and Summary

Nature of Business and Summary of Significant Accounting Policies	3 Months Ended
	Sep. 30, 2018
Accounting Policies [Abstract]
Significant Accounting Policies	NOTE 1 – NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company Veritec, Inc. (Veritec) was formed in the State of Nevada on September 8, 1982. Veritec’s wholly owned subsidiaries include Veritec Financial Systems, Inc., Tangible Payment Systems, Inc., and Public Bell, Inc. (collectively the “Company”). Nature of Business The Company is currently engaged in the development, marketing, sales and licensing of products and rendering of professional services related to its mobile banking prepaid debit card solutions. Mobile Banking Solutions 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 a sponsoring bank. The Company is currently seeking a bank to sponsor its Prepaid Card programs. The Company has a portfolio of five United States and eight foreign patents. In addition, the Company has seven U.S. and twenty-eight foreign pending patent applications. 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 months ended September 30, 2018 are not necessarily indicative of the results that may be expected for the year ending June 30, 2019. The Condensed Consolidated Balance Sheet information as of June 30, 2018 was derived from the Company’s audited Consolidated Financial Statements as of and for the year ended June 30, 2018 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on October 5, 2018. These financial statements should be read in conjunction with that report. The accompanying Condensed Consolidated Financial Statements include the accounts of Veritec and its wholly owned subsidiaries, Veritec Financial Systems, Inc., Tangible Payment Systems, Inc., and Public Bell, Inc. Inter-company transactions and balances were eliminated in consolidation. GOING CONCERN The accompanying Condensed 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, 2018, the Company incurred a loss from operations of $170,353 and used cash in operating activities of $103,518, and at September 30, 2018, the Company had a working capital deficit of $4,548,735 and a stockholders’ deficiency of $4,703,735. In addition, as of September 30, 2018, the Company is delinquent in payment of $839,788 of its notes payable. These factors, among others, raise substantial doubt about our ability to continue as a going concern within one year of the date that the financial statements are issued. In addition, the Company’s independent registered public accounting firm, in its report on our June 30, 2018 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 be necessary if the Company is unable to continue as a going concern. The Company believes it will require additional funds to continue its operations through fiscal 2019 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 Use of Estimates The preparation of Condensed 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 Condensed 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 used in valuing derivatives and stock-based compensation, and the valuation of deferred taxes. Revenue Recognition Effective July 1, 2018 the Company adopted the Financial Accounting Standards Board's ("FASB") Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASC 606”) which superseded previous revenue recognition guidance. The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying the Company’s performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients. The Company has concluded that the new guidance did not require any significant change to its revenue recognition processes and the implementation of ASC 606 did not have a material impact on the Company’s financial statements 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 carrying amounts reported in the Condensed Consolidated Balance Sheet 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, 2018 and 2017, 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, 2017, 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, 2017 and 2016, 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, 2018 2017 Series H Preferred Stock 10,000 10,000 Convertible Notes Payable 19,759,993 18,274,580 Options 2,500,000 2,500,000 Total 22,269,993 20,784,580 Concentrations During the three months ended September 30, 2018, the Company had one customer, a related party, which represented 59% of our revenues and one customer that represented 22% of our revenues. No other customer represented more than 10% of our revenues. During the three months ended September 30, 2017, the Company had one customer, a related party, that represented 72% of our revenues and one customer that represented 11% of our revenues. No other customer represented more than 10% of our revenues. Recent Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. In July 2018, the FASB issued ASU 2018-11, which allows for a cumulative-effect adjustment in the period of adoption and will not require restatement of prior periods. The Company is in the process of evaluating the impact of ASU 2016-02 and ASU 2018-11 on the Company’s financial statements and disclosures. 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.

Convertible Notes and Notes Pay

Convertible Notes and Notes Payable	3 Months Ended
	Sep. 30, 2018
Debt Disclosure [Abstract]
Notes Payable	NOTE 2 – CONVERTIBLE NOTES AND NOTES PAYABLE Convertible notes and notes payable-in default Notes payable includes principal and accrued interest and consists of the following at September 30, 2018 and June 30, 2018: September 30, 2018 June 30, 2018 (a) Convertible notes (includes $178,506 of convertible notes in default) $ 216,941 $ 214,576 (b) Notes payable-in default 392,054 387,684 Total notes-third parties $ 608,995 $ 602,260 (a) The notes are unsecured, convertible into common stock at amounts ranging from $0.08 to $0.30 per share, bear interest at rates ranging from 5% to 8% per annum, were due through 2011 and are in default or due on demand. At June 30, 2018, convertible notes totaled $214,576. During the three months ended September 30, 2018, interest of $2,365 was added to principal leaving a balance owed of $216,941 at September 30, 2018. At September 30, 2018, $178,506 of the convertible notes were in default, and convertible at a conversion price of $0.30 per share into 595,021 shares of the Company’s common stock. Certain of the amounts due are subject to a legal proceeding (see Note 6). The balance of $38,435 is due on demand and convertible at a conversion price of $0.08 per share into 480,442 shares of the Company’s common stock. (b) The notes are either secured by the Company’s intellectual property or unsecured and bear interest ranging from 6.5% to 10% per annum, were due in 2012, and are in default. At June 30, 2018, the notes totaled $387,684. During the three months ended September 30, 2018, interest of $4,370 was added to principal leaving a balance owed of $392,054 at September 30, 2018. At September 30, 2018, $353,771 of notes are secured by the Company’s intellectual property and $38,283 of notes are unsecured. Convertible notes and notes payable-related party Notes payable-related party includes principal and accrued interest and consists of the following at September 30, 2018 and June 30, 2018: September 30, 2018 June 30, 2018 (a) Convertible notes-The Matthews Group $ 1,371,742 $ 1,344,782 (b) Notes payable-The Matthews Group 1,528,036 1,384,088 (c) Convertible notes-other related-in default 269,228 265,729 Total notes-related party $ 3,169,006 $ 2,994,599 (a) The notes are unsecured, convertible into common stock at $0.08 per share, bear interest at rates ranging from 8% to 10% per annum, and are due on demand. The Matthews Group is a related party (see Note 5) and is owned 50% by Ms. Van Tran, the Company’s CEO, and 50% by Larry Johanns, a significant shareholder of the Company. At June 30, 2018, convertible notes due to The Matthews Group totaled $1,344,782. During the three months ended September 30, 2018, interest of $26,960 was added to principal leaving a balance owed of $1,371,742 at September 30, 2018. At June 30, 2018, the notes are convertible at a conversion price of $0.08 per share into 17,146,775 shares of the Company’s common stock. (b) The notes are unsecured, accrue interest at 10% per annum, and are due on demand. The notes were issued relating to a management services agreement with The Matthews Group (see Note 5) dated September 30, 2015. At June 30, 2018, notes due to The Matthews Group totaled $1,384,088. During the three months ended September 30, 2018, $108,949 of notes payable were issued, interest of $34,999 was added to principal, leaving a balance owed of $1,528,036 at September 30, 2018. (c) The notes are due to a current and a former director, are unsecured, convertible into common stock at per share amounts ranging from $0.10 to $0.30, and bear interest at rates ranging from 8% to 10% per annum. At June 30, 2018, convertible notes due other related parties totaled $265,729. During the three months ended September 30, 2018, interest of $3,499 was added to principal leaving a balance owed of $269,228 at September 30, 2018. At September 30, 2018, $199,374 of the notes were due in 2010 and are in default, and the balance of $69,854 is due on demand. At September 30, 2018, $199,374 of the notes are convertible at a conversion price of $0.30 per share into 664,581 shares of the Company’s common stock, $20,581 of the notes are convertible at a conversion price of $0.10 per share into 205,810 shares of the Company’s common stock, and $49,273 of the notes are convertible at a conversion price of $0.08 per share into 615,913 shares of the Company’s common stock.

Stockholders' Deficiency

Stockholders' Deficiency	3 Months Ended
	Sep. 30, 2018
Equity [Abstract]
Stockholders' Deficiency	NOTE 3 - STOCKHOLDERS’ DEFICIENCY At September 30, 2018 and June 30, 2018, 145,000 shares of common stock to be issued with an aggregate value of $12,500 have not been issued and are reflected as common stock to be issued in the accompanying Condensed Consolidated Financial Statements.

Stock Options

Stock Options	3 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock Options	NOTE 4 – STOCK OPTIONS A summary of stock options as of September 30, 2018 and for the two years then ended is as follows: Number of Shares Weighted - Average Exercise Price Outstanding at June 30, 2018 2,500,000 $ 0.08 Granted — — Forfeited — $ — Outstanding at September 30, 2018 2,500,000 $ 0.08 Exercisable at September 30, 2018 2,500,000 $ 0.08 At September 30, 2018, the Company had 2,500,000 of options outstanding and exercisable. The options expire in February, 2020, and are exercisable at $0.08 per share. There were no options granted during the three months ended September 30, 2018 and the Company recognized no stock-based compensation expense related to stock options during the three months ended September 30, 2018 and 2017, respectively. As of September 30, 2018, there was no remaining unrecognized compensation costs related to stock options and no intrinsic value. Additional information regarding options outstanding as of September 30, 2018 is as follows: Options Outstanding at September 30, 2018 Options Exercisable at September 30, 2018 Range of Exercise Number of Shares Outstanding Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Number of Shares Exercisable Weighted Average Exercise Price $ 0.08 2,500,000 1.39 $ 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, 2018 is 1.39 years.	NOTE 4 – STOCK OPTIONS A summary of stock options as of September 30, 2018 and for the two years then ended is as follows: Number of Shares Weighted - Average Exercise Price Outstanding at June 30, 2018 2,500,000 $ 0.08 Granted — — Forfeited — $ — Outstanding at September 30, 2018 2,500,000 $ 0.08 Exercisable at September 30, 2018 2,500,000 $ 0.08 At September 30, 2018, the Company had 2,500,000 of options outstanding and exercisable. The options expire in February, 2020, and are exercisable at $0.08 per share. There were no options granted during the three months ended September 30, 2018 and the Company recognized no stock-based compensation expense related to stock options during the three months ended September 30, 2018 and 2017, respectively. As of September 30, 2018, there was no remaining unrecognized compensation costs related to stock options and no intrinsic value. Additional information regarding options outstanding as of September 30, 2018 is as follows: Options Outstanding at September 30, 2018 Options Exercisable at September 30, 2018 Range of Exercise Number of Shares Outstanding Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Number of Shares Exercisable Weighted Average Exercise Price $ 0.08 2,500,000 1.39 $ 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, 2018 is 1.39 years.

Related Party Transactions

Related Party Transactions	3 Months Ended
	Sep. 30, 2018
Related Party Transactions [Abstract]
Related Party Transactions	NOTE 5 – RELATED PARTY TRANSACTIONS The Matthews Group is 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. The Company has relied on The Matthews Group for funding (see Note 4). Management Services Agreement and Related Notes Payable with Related Party The Company’s Barcode Technology was invented by the founders of Veritec as a product identification system for identification and tracking of parts, components and products mostly in the liquid crystal display (LCD) markets and for secure identification documents, financial cards, medical records and other high security applications. On September 30, 2015, the Company sold all of its assets of its Barcode Technology comprised solely of its intellectual property to The Matthews Group. The Company then entered into a management services agreement with The Matthews Group to manage all facets of the barcode technology operations, on behalf of The Matthews Group, through June 30, 2019. The Matthews Group bears the risk of loss from the barcode operations and has the right to the residual benefits of the barcode operations. In consideration of the services provided by the Company to The Matthews Group, the Company earned a fee of 20% of all revenues up to May 31, 2017 and 35% of all revenues up to June 30, 2019 from the barcode technology operations. During the three months ended September 30, 2018 and 2017, the Company recorded management fee revenue related to this agreement of $29,100 and $30,591, respectively. Additionally, pursuant to the management services agreement, all cash flow (all revenues collected less direct costs paid) of the barcode technology operations is retained by the Company as proceeds from unsecured notes payable due The Matthews Group. During the three months ended September 30, 2018 and 2017, cash flow loans of $108,949 and $97,042, respectively, were made to the Company at 10% interest per annum and due on demand. At September 30, 2018, cash flow loans of $1,528,036 are due to The Matthews Group (see Note 2). Advances from Related Parties From time to time, Ms. Van Tran provides advances to finance the Company’s working capital requirements. As of September 30, 2018 and June 30, 2018, total advances to Ms. Van Tran amounted to $96,110, and have been presented as accounts payable, related party on the accompanying Condensed Consolidated Balance Sheets. The advances are unsecured, non-interest bearing, and due on demand. Other Transactions with Related Parties The Company leases its office facilities from Ms. Tran. For the three months ended September 30, 2018 and 2017, rental payments to Ms. Van Tran totaled $12,750 and $12,600, respectively.

Legal Proceedings

Legal Proceedings	3 Months Ended
	Sep. 30, 2018
Commitments and Contingencies
Legal Proceedings	NOTE 6 – LEGAL PROCEEDINGS On or about November 13, 2017, David A. Badhwa and Denise a Badhwa (collectively “Plaintiffs”) filed a lawsuit in district court in Hennepin County, Minnesota asserting that the Company breached the terms of a promissory note. Plaintiffs seek repayment on the principal of the promissory note, in the amount of $100,000, $10,000 of which Plaintiffs contend Veritec previously paid, plus interest, collection costs and attorney’s fees. As of May 15, 2018, the date of the last communication on the amount of recovery that Plaintiffs seek, Plaintiffs sought an award or settlement in the amount of $162,990. If Plaintiffs prevail on their claims, the Court could award Plaintiffs the unpaid principal in the amount of $90,000, plus interest at the rate of eight percent (8%) per annum on the unpaid balance, as well as attorney’s fees incurred by Plaintiffs in seeking payment on the promissory note in an amount determined by the Court. An award of attorney’s fees could be significant. Veritec has vigorously defended Plaintiffs claims and has asserted a variety of counterclaims against Plaintiffs. Veritec has also attempted to engage Plaintiffs in settlement discussions, but Plaintiffs have not engaged in meaningful negotiations to resolve the claims in dispute. Management has recorded a liability related to this proceeding that it feels is adequate. On September 21, 2016, the Company entered into a settlement agreement with an individual who was a former officer of the Company. The individual in prior years 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 $364,686, and return 500,000 shares of common stock previously 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 a gain on the settlement of $364,686 in the accompanying Consolidated Statements of Operations for the year ended June 30, 2017. As of September 30, 2018, the 500,000 shares have not been relinquished. When the Company receives the shares, it will record a cancellation of shares.

Nature of Business and Summar_2

Nature of Business and Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Sep. 30, 2018
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 months ended September 30, 2018 are not necessarily indicative of the results that may be expected for the year ending June 30, 2019. The Condensed Consolidated Balance Sheet information as of June 30, 2018 was derived from the Company’s audited Consolidated Financial Statements as of and for the year ended June 30, 2018 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on October 5, 2018. These financial statements should be read in conjunction with that report. The accompanying Condensed Consolidated Financial Statements include the accounts of Veritec and its wholly owned subsidiaries, Veritec Financial Systems, Inc., Tangible Payment Systems, Inc., and Public Bell, Inc. Inter-company transactions and balances were eliminated in consolidation.
Going Concern	GOING CONCERN The accompanying Condensed 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, 2018, the Company incurred a loss from operations of $170,353 and used cash in operating activities of $103,518, and at September 30, 2018, the Company had a working capital deficit of $4,548,735 and a stockholders’ deficiency of $4,703,735. In addition, as of September 30, 2018, the Company is delinquent in payment of $839,788 of its notes payable. These factors, among others, raise substantial doubt about our ability to continue as a going concern within one year of the date that the financial statements are issued. In addition, the Company’s independent registered public accounting firm, in its report on our June 30, 2018 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 be necessary if the Company is unable to continue as a going concern. The Company believes it will require additional funds to continue its operations through fiscal 2019 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
Use of Estimates	Use of Estimates The preparation of Condensed 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 Condensed 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 used in valuing derivatives and stock-based compensation, and the valuation of deferred taxes.
Revenue Recognition	Revenue Recognition Effective July 1, 2018 the Company adopted the Financial Accounting Standards Board's ("FASB") Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASC 606”) which superseded previous revenue recognition guidance. The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying the Company’s performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients. The Company has concluded that the new guidance did not require any significant change to its revenue recognition processes and the implementation of ASC 606 did not have a material impact on the Company’s financial statements
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 carrying amounts reported in the Condensed Consolidated Balance Sheet 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, 2018 and 2017, 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, 2017, 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, 2017 and 2016, 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, 2018 2017 Series H Preferred Stock 10,000 10,000 Convertible Notes Payable 19,759,993 18,274,580 Options 2,500,000 2,500,000 Total 22,269,993 20,784,580
Concentrations	Concentrations During the three months ended September 30, 2018, the Company had one customer, a related party, which represented 59% of our revenues and one customer that represented 22% of our revenues. No other customer represented more than 10% of our revenues. During the three months ended September 30, 2017, the Company had one customer, a related party, that represented 72% of our revenues and one customer that represented 11% of our revenues. No other customer represented more than 10% of our revenues.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. In July 2018, the FASB issued ASU 2018-11, which allows for a cumulative-effect adjustment in the period of adoption and will not require restatement of prior periods. The Company is in the process of evaluating the impact of ASU 2016-02 and ASU 2018-11 on the Company’s financial statements and disclosures. 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.

Nature of Business and Summar_3

Nature of Business and Summary of Significant Accounting Policies (Tables)	3 Months Ended
	Sep. 30, 2018
Accounting Policies [Abstract]
Summary of securities excluded from EPS calculation	As of September 30, 2018 2017 Series H Preferred Stock 10,000 10,000 Convertible Notes Payable 19,759,993 18,274,580 Options 2,500,000 2,500,000 Total 22,269,993 20,784,580

Convertible Notes and Notes P_2

Convertible Notes and Notes Payable (Tables)	3 Months Ended
	Sep. 30, 2018
Debt Disclosure [Abstract]
Convertible notes and notes payable - in default	September 30, 2018 June 30, 2018 (a) Convertible notes (includes $178,506 of convertible notes in default) $ 216,941 $ 214,576 (b) Notes payable-in default 392,054 387,684 Total notes-third parties $ 608,995 $ 602,260
Convertible notes and notes payable- related party	September 30, 2018 June 30, 2018 (a) Convertible notes-The Matthews Group $ 1,371,742 $ 1,344,782 (b) Notes payable-The Matthews Group 1,528,036 1,384,088 (c) Convertible notes-other related-in default 269,228 265,729 Total notes-related party $ 3,169,006 $ 2,994,599

Stock Options (Tables)

Stock Options (Tables)	3 Months Ended
	Sep. 30, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Summary of Stock Options	Number of Shares Weighted - Average Exercise Price Outstanding at June 30, 2018 2,500,000 $ 0.08 Granted — — Forfeited — $ — Outstanding at September 30, 2018 2,500,000 $ 0.08 Exercisable at September 30, 2018 2,500,000 $ 0.08
Additional information regarding outstanding options	Options Outstanding at September 30, 2018 Options Exercisable at September 30, 2018 Range of Exercise Number of Shares Outstanding Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Number of Shares Exercisable Weighted Average Exercise Price $ 0.08 2,500,000 1.39 $ 0.08 2,500,000 $ 0.08 2,500,000 2,500,000

Summary of securities excluded

Summary of securities excluded from EPS calculation (Details) - shares	3 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Accounting Policies [Abstract]
Series H Preferred Stock	10,000	10,000
Convertible Notes Payable	19,759,993	18,274,580
Options	2,500,000	2,500,000
Total	22,269,993	20,784,580

Nature of Business and Summar_4

Nature of Business and Summary of Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Jun. 30, 2018
Net income (loss)	$ (242,546)	$ 289,335
Loss from Operations	(170,353)	(116,604)
Cash used in operating activities	103,518	$ 88,810
Working capital deficit	4,548,735
Stockholders' deficiency	(4,703,735)		$ (4,461,189)
Derivative liabilities	728,000
Notes payable, delinquent	$ 839,788
Customer 1
Sales percentage from major customers	59.00%	72.00%
Customer 2
Sales percentage from major customers	22.00%	11.00%

Convertible Notes and Notes P_3

Convertible Notes and Notes Payable - Convertible notes and notes payable in default (Details) - USD ($)		Sep. 30, 2018	Jun. 30, 2018
Debt Disclosure [Abstract]
Convertible notes payable - in default	[1]	$ 216,941	$ 214,576
Notes payable - in default	[2]	392,054	387,684
Total notes - third parties		$ 608,995	$ 602,260
[1]	(a) The notes are unsecured, convertible into common stock at amounts ranging from $0.08 to $0.30 per share, bear interest at rates ranging from 5% to 8% per annum, were due through 2011 and are in default or due on demand.
[2]	(b) The notes are either secured by the Companys intellectual property or unsecured and bear interest ranging from 6.5% to 10% per annum, were due in 2012, and are in default.

Convertible Notes and Notes P_4

Convertible Notes and Notes Payable - Convertible notes and notes payable related party (Details) - USD ($)	Sep. 30, 2018	Jun. 30, 2018	Jun. 30, 2016
Notes Payable Related Party	$ 3,169,006	$ 2,994,599
The Matthews Group
Convertible Notes, Related Party	1,371,742	1,344,782
Notes Payable Related Party	1,528,036	1,384,088
Other
Convertible Notes, Related Party	$ 269,228	$ 265,729	$ 237,725

Convertible Notes and Notes P_5

Convertible Notes and Notes Payable (Details Narrative) - USD ($)	3 Months Ended
	Sep. 30, 2018	Jun. 30, 2018	Sep. 30, 2017	Jun. 30, 2016
Notes Payable Related Party	$ 3,169,006	$ 2,994,599
The Matthews Group
Conversion price		$ 0.08
Accrued interest	26,960
Shares issued upon conversion		17,146,775
Interest rate			10.00%
Convertible Notes Payable (In Default)
Conversion price		$ 0.30
Notes payable	216,941	$ 214,576
Accrued interest	2,365
Notes in Default	178,506
Balance due on demand	$ 38,435
Shares issued upon conversion	595,021
Notes Payable (In Default)
Notes payable	$ 392,054	387,684
Accrued interest	$ 4,370
Notes Payable (In Default) | Minimum
Interest rate	6.50%
Notes Payable (In Default) | Maximum
Interest rate	10.00%
Secured Interest Bearing Notes
Notes in Default	$ 353,771
Unsecured Interest Bearing Notes
Notes in Default	38,283
The Matthews Group
Convertible Notes, Related Party	1,371,742	1,344,782
Notes Payable Related Party	1,528,036	$ 1,384,088
Other
Conversion price		$ 0.08
Accrued interest	3,499
Notes in Default	199,374
Balance due on demand	69,854
Convertible Notes, Related Party	$ 269,228	$ 265,729		$ 237,725
$0.30 per share
Conversion price		$ 0.30
Shares issued upon conversion		664,581
Convertible Notes, Related Party		$ 199,374
$0.10 per share
Conversion price		$ 0.10
Shares issued upon conversion		205,810
Convertible Notes, Related Party		$ 20,581
$0.08 per share
Conversion price		$ 0.08
Shares issued upon conversion		615,913
Convertible Notes, Related Party		$ 49,273

Stockholders Deficiency (Detail

Stockholders Deficiency (Details Narrative) - USD ($)	Sep. 30, 2018	Jun. 30, 2018
Equity [Abstract]
Common stock to be issued	145,000	145,000
Common stock to be issued, value	$ 12,500	$ 12,500

Stock Options - Summary of Stoc

Stock Options - Summary of Stock Options (Details)	3 Months Ended
	Sep. 30, 2017$ / sharesshares
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Beginning number of shares; outstanding | shares	2,500,000
Beginning weighted-average exercise price; outstanding | $ / shares	$ 0.08
Options Granted | shares
Options granted, weighted average exercise price | $ / shares
Options Forfeited | shares
Options Forfeited, weighted average exercise price | $ / shares
Ending number of shares; outstanding | shares	2,500,000
Ending weighted-average exercise price; outstanding | $ / shares	$ .08
Number of Shares; exercisable | shares	2,500,000
Weighted-average exercise price; exercisable | $ / shares	$ 0.08

Stock Options - Additional info

Stock Options - Additional information regarding outstanding options (Details)	3 Months Ended
	Sep. 30, 2018$ / sharesshares
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Options outstanding, shares | shares	2,500,000
Weighted average remaining contractual life	1 year 3 months
Weighted average exercise price | $ / shares	$ 0.08
Options excercisable | shares	2,500,000
Options exercisable, weighted average exercise price | $ / shares	$ .08

Stock Options (Details Narrativ

Stock Options (Details Narrative)	Sep. 30, 2018$ / sharesshares
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Options outstanding | shares	2,500,000
Weighted average exercise price | $ / shares	$ 0.08

Related Party Transactions (Det

Related Party Transactions (Details Narrative)	3 Months Ended		20 Months Ended	25 Months Ended
	Sep. 30, 2018USD ($)	Sep. 30, 2017USD ($)	May 31, 2017	Jun. 30, 2019	Jun. 30, 2018USD ($)
Accounts payable, related party	$ 96,110				$ 96,110
Managament fee, percent of revenue			0.20	0.35
Other revenue, related party	29,100	$ 30,591
Proceeds from notes payable, related party	108,949	$ 97,042
Notes Payable Related Party	3,169,006				2,994,599
Matthews Group #2
Notes Payable Related Party	$ 1,528,036
Unsecured related party note, interest	10.00%
Unsecured related party note	$ 108,949
The Matthews Group
Unsecured related party note, interest		10.00%
Unsecured related party note		$ 97,042
Van Tran
Advances due to related party	96,110				$ 96,110
Rental Payments	$ 12,750	$ 12,600
Larry Johanns
Ownership of TMG	50.00%
Van Tran
Ownership of TMG	50.00%

Legal Proceedings (Details Narr

Legal Proceedings (Details Narrative) - USD ($)	12 Months Ended
	Jun. 30, 2017	Nov. 13, 2017	Sep. 21, 2016
Commitments and Contingencies
Promissory Note		$ 100,000
Settlement amount		$ 162,990
Interest		8.00%
Convertible note payable relinquished			$ 364,686
Shares to be returned			500,000
Gain on settlement of note payable to former officer	$ 364,690