Annual Report (10-k)

U. S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

(Mark one)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1931

For the fiscal year ended June 30, 2015

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission File No. 0-15113

	VERITEC, INC.
	(Exact Name of Registrant as Specified in its Charter)

Nevada	95-3954373
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)

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

Registrant’s Telephone Number, Including Area Code:	763-253-2670

Securities registered under Section 12(b) of the Act:	None

Securities registered under Section 12(g) of the Act:	Common stock, $.01 par value
	(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐

Accelerated filer ☐

Non-accelerated filer ☐

Smaller Reporting Company ☒

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the common stock of the registrant held by non-affiliates, computed by reference to the average bid price of the common stock on December 31, 2014, was $1,273,607.

Number of shares outstanding as of December 15, 2015 was: 39,538,007.

VERITEC, INC.

FORM 10-K

FOR THE FISCAL YEAR ENDED JUNE 30, 2015

TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS		3
PART I
ITEM 1	BUSINESS	3
ITEM 2	PROPERTIES	7
ITEM 3	LEGAL PROCEEDINGS	7
ITEM 4	MINE SAFETY DISCLOSURES	7
PART II
ITEM 5	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	8
ITEM 6	SELECTED FINANCIAL DATA (not applicable)	9
ITEM 7	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL AND REULSTS OF OPERATIONS	9
ITEM 8	FINANCIAL STATEMENTS	12
ITEM 9	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	31
ITEM 9A	CONTROLS AND PROCEDURES	31
ITEM 9B	OTHER INFORMATION	32
PART III
ITEM 10	DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE	33
ITEM 11	EXECUTIVE COMPENSATION	35
ITEM 12	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	36
ITEM 13	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	37
ITEM 14	PRINCIPAL ACCOUNTANT FEES AND SERVICES	37
PART IV
ITEM 15	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	41

PART I

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K (“Annual Report”), the other reports, statements, and information that we have previously filed or that we may subsequently file with the Securities and Exchange Commission (“SEC”) and public announcements that we have previously made or may subsequently make include, may include, incorporate by reference or may incorporate by reference certain statements that may be deemed to be forward-looking statements. The forward-looking statements included or incorporated by reference in this Annual Report and those reports, statements, information and announcements address activities, events or developments that Veritec, Inc. (together with its subsidiaries hereinafter referred to as “we,” “us,” “our”, the "Company" or “Veritec”) expects or anticipates will or may occur in the future. Any statements in this document about expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “will continue,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” and similar expressions. Accordingly, these statements involve estimates, assumptions and uncertainties, which could cause actual results to differ materially from those expressed in them. Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this document. All forward-looking statements concerning economic conditions, rates of growth, rates of income or values as may be included in this document are based on information available to us on the dates noted, and we assume no obligation to update any such forward-looking statements.

ITEM 1 BUSINESS

Summary

The Company was primarily engaged in the development, marketing, sales and licensing of products and rendering of professional services related thereto in the following two fields of technology: (1) proprietary two-dimensional matrix symbology (also commonly referred to as “two-dimensional barcodes” or “2D barcodes”), and (2) mobile banking prepaid debit card solutions. Subsequent to June 30, 2015, the Company sold its barcode technology and focused its efforts solely on its mobile banking technology.

In this Form 10-K, the Company’s two-dimensional matrix symbology technology will hereafter be referred to as the Company’s “Barcode Technology”, and the Company’s mobile software banking technology will hereafter be referred to as its “Mobile Banking Technology”. The Mobile Banking Technology is used to offer Prepaid Card Programs to sponsor banks and approved applicants/cardholders. These programs may also be referred to as the MTC™ card or the Blinx ON-OFF™ Prepaid Card programs.

Company History

Veritec, Inc. was incorporated in the State of Nevada on September 8, 1982 for the purpose of development, marketing and sales of a line of microprocessor based encoding and decoding system products that utilize matrix symbology technology, a two-dimensional barcode technology originally invented by the founders of Veritec under United States patents 4,924,078, 5,331,176, 5,612,524 and 7,159,780.

In 1995, an involuntary proceeding under Chapter 7 of the United States Bankruptcy Code was commenced against Veritec. The proceeding was subsequently converted to a Chapter 11 proceeding and a plan of reorganization was confirmed on April 23, 1997. The Chapter 11 plan was successfully completed and the proceeding was closed on October 13, 1999.

In November 2003, Veritec formed a wholly owned subsidiary, Vcode, Inc., to which it assigned its United States patents 4,924,078, 5,331,176 and 5,612,524, together with all corresponding patent applications, foreign patents, foreign patent applications, and all continuations, continuations in part, divisions, extensions, renewals, reissues and re-examinations. Vcode in turn entered into an Exclusive License Agreement with VData LLC (VData), an Illinois limited liability company unrelated to Veritec.

The purpose of the incorporation of Vcode and the Exclusive Licensing Agreement was to allow VData to pursue enforcement and licensing of the patents against parties who wrongfully exploit the technology of such patents. VData is the wholly owned subsidiary of Acacia Research Corporation (NASDAQ: ACTG). The Exclusive License Agreement provided that all expenses related to the enforcement and licensing of the patents will be the responsibility of VData, with the parties sharing in the net proceeds, as specified under the terms of the agreement, arising from enforcement or licensing of the patents. In November 2008, VData and Vcode mutually agreed to terminate the Exclusive License Agreement between the two companies. As a result of the termination of the Exclusive License Agreement and conclusion of all lawsuits and enforcement activities by VData, infringement revenue has ceased.

In February 2005, an adverse ruling was made in the arbitration proceeding against Veritec in favor of Mitsubishi. This ruling compelled Veritec to file a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court (Bankruptcy Court) for the District of Minnesota on February 28, 2005. After reaching an agreement with Mitsubishi and other creditors, in April 2006, Veritec’s Third Amended Plan of Reorganization was confirmed by the Bankruptcy Court. On August 8, 2006, the Bankruptcy Court entered an Order and Final Decree and closed the Chapter 11 case. In connection with the settlement with Mitsubishi, Veritec obtained a license to certain Mitsubishi EDAC technology and Veritec granted Mitsubishi a license to Veritec’s proprietary VeriCode^®Barcode Technology software.

Pursuant to an April 27, 2007 agreement between Veritec and RBA International, Inc. (“RBA”), Veritec acquired from RBA the source code, documentation and software to RBA’s Java and IVR software (used for the RBA banking system). In furtherance of such agreement, RBA granted Veritec a perpetual royalty-free non-exclusive worldwide license to use, modify and distribute such software, without restriction, to any existing or future customers. Veritec’s development under this license, as well as Veritec’s independent development of its own mobile banking applications and components, and integration of such items comprises Veritec’s Mobile Banking Technology.

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

The program was implemented at First California Bank (FCB) in June, 2011. The blinx On-Off brand was introduced as part of the implementation, at FCB. Going forward, accounts would be issued as blinx ON-OFF™ branded cards under First California Bank. In 2013 First California Bank was acquired by Pacific Western Bank (PWB) in its entirety. PWB decided to exit the Prepaid Card sponsorship business and notified all of its Prepaid Card Program Managers, including (Veritec) that their bank sponsorship agreements were terminated and the programs would be closed by the end of 2013. PWB provided Veritec several references to banks that were interested in sponsoring Prepaid Card programs such as Veritec’s blinx ON-OFF™ program including Central Bank of Kansas City (CBKC). Veritec entered into discussions with CBKC about sponsoring the Veritec program and a sponsorship agreement was reached between Veritec and CBKC in October 2013. The Visa and First Data Payment Networks approved the bank sponsorship change in November, 2013. Unexpected regulatory delays to the transfer process caused PWB to extend the program closure date to February 28, 2014. The transfer and transition of the blinx ON-OFF™ Prepaid Card program from PWB to CBKC was completed on February 5, 2014. The Veritec blinx ON-OFF™ Prepaid Card Program became live at CBKC on that date.

The Veritec Prepaid Card Program provides full services to the sponsor bank. These services include program management, promotion and marketing, application processing, account activation, compliance management, fraud monitoring, accounts reconciliation and dispute resolution. Veritec provides cardholders with automated and live agent customer service, full disclosures, an online account management portal, monthly statements, convenient deposit options, global access to PIN and Signature transactions, and, ATM withdrawals through the Visa and First Data/Star Networks.

On September 30, 2014, Veritec ("Buyer"), and Tangible Payments LLC ("Seller"), a Maryland Limited Liability Company, entered into an Asset Purchase Agreement (the "Asset Purchase Agreement") pursuant to which Veritec acquired certain assets and liabilities of the Tangible Payments LLC. Tangible Payments is a combined-solution software package that incorporates features the market is currently purchasing as an individual-solutions product that requires integrated services at an additional cost. With a one-stop package, Tangible’s Payments solution eliminates costs and reduces deployment time.

On September 30, 2015, the Company sold all of its assets of its Barcode Technology to The Matthews Group, a related party, which was comprised solely of its intellectual property. The sale allows the Company to focus its efforts solely on its growing Mobile Banking Technology.

Our Products and Solutions

Barcode Technology

The Company’s Barcode Technology was originally invented by the founders of Veritec under United States patents 4,924,078, 5,331,176, 5,612,524 and 7,159,780. Our principal licensed product to date that contains our VeriCode ® Barcode Technology has been a product identification system for identification and tracking of manufactured parts, components and products mostly in the liquid crystal display (LCD) markets. The VeriCode® symbol is a two-dimensional high data density machine-readable symbol that can contain up to approximately 500 bytes of data.The Company’s VSCode® Barcode Technology is a derivative of the VeriCode® symbol with the ability to encrypt a greater amount of data by increasing data density. The VSCode ® is a data storage “container” that offers a high degree of security and which can also be tailored to the application requirements of the user. The VSCode ® symbol can hold any form of binary information that can be digitized, including numbers, letters, images, photos, graphics, and the minutia for biometric information, including fingerprints and facial image data, to the extent of its data storage capacity, that are likewise limited by the resolution of the marking and reading devices employed by the user. VSCode ® is ideal for secure identification documents (such as national identification cards, driver’s licenses, and voter registration cards), financial cards, medical records and other high security applications. In its PhoneCodes™ product platform, Veritec developed software to send, store, display, and read a VeriCode® Barcode Technology symbol on the LCD screen of a mobile phone. With the electronic media that provide the ease of transferring information over the web, Veritec’s PhoneCodes™ technology enables individuals and companies to receive or distribute gift certificates, tickets, coupons, receipts, or engage in banking transactions using the VeriCode ® technology via wireless phone or PDA.

On 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.

II.

Mobile Banking Technology

The Company believes that its Mobile Banking Technology platform and its blinx On-Off™ debit card Program is a significant advance in mobile banking and close loop/open loop debit technology and is capable of bringing significant value to card issuing and sponsoring organizations, whether they be commercial or government.

(a)

MTC™ Debit Card - Visa® Prepaid Card Programs

In the fourth quarter of fiscal 2009, the Company announced the release of its Mobile Toggle Card (MTC™) Program on the Company’s mobile banking software platform under the sponsorship of Security First Bank. Veritec’s mobile banking software platform is a debit based, pre-paid and gift card solution that is licensed by Veritec’s wholly owned subsidiary, Veritec Financial Systems, Inc. to debit card issuers and sponsoring organizations. Under the MTC™ Program, card issuers and sponsors may provide the MTC™ branded debit or gift cards to individuals with and without demand deposit accounts (e.g., the latter the “under-banked”). The MTC™ card may be part of a Visa® branded program and, as such, the cards are accepted anywhere in the world that Visa cards are accepted.

With an MTC™ card, the cardholders are empowered to combat unpermitted and fraudulent use of their debit cards by “toggling” their cards “on” and “off” with their mobile phones. Cardholders no longer have to completely rely on their card issuers to monitor possible fraudulent activity on their accounts. Cardholders can now de-activate their cards themselves, in real time, any time they choose to do so. In addition to this toggling feature, cardholders may apply for their cards online, arrange for direct deposits to be made to their cards, and transfer money to their card from another account. Cardholders may also elect to receive various alerts on their mobile phones about activity on their card. In the first quarter of fiscal 2010, the Company began accepting applications for the MTC™ card from individual applicants and issuing live Visa® branded debit cards under the MTC Mobile Toggle Card Program.

(b)

blinx ON-OFF Debit Card - Visa® Prepaid Card Programs

In June, 2011 Veritec began marketing the blinx ON-OFF™ branded card under the sponsorship of First California Bank, The blinx ON-OFF™ card is based on the Mobile Banking Technology platform and offers the same features and functions as the MTC™ branded card but with different pricing for First California Bank sponsored cards.

(c)

Custom Branded Debit Card Programs

In addition to the MTC™ and blinx ON-OFF™ branded program, the Company enables card issuers and sponsors to issue debit, pre-paid and gift cards under their own branded programs through licensed use of the mobile banking platform and the Company’s provision of related professional services.

Veritec’s mobile banking solution also enables member card programs to be processed and settled member rewards to its members in either an open or closed loop processing environment. In addition to its front-end licensing and professional services, the Company also provides back-end card processing services to the card issuing institutions for all cardholder transactions on the licensed platform. The Company’s Mobile Banking Technology resides within a Payment Card Industry (PCI) compliant data processing center.

Intellectual Property Rights

The Company was founded upon its intellectual property and in our opinion its intellectual property will give the Company a commercial advantage in the global marketplace. The Company relies on patent, trade secret, copyright and trademark law, as well as the company’s contractual terms with its customers, to define, maintain and enforce the Company’s intellectual property rights in its Barcode Technology, Mobile Banking Technology and other technologies and relationships.

The Company has a portfolio of Seven United States and Eight foreign patents. In addition, we have three U.S. and Eight foreign pending patent applications.

A significant amount of the Company’s intellectual property takes the form of trade secrets and copyrighted works of authorship. The Company treats the source code to its Barcode Technology and Mobile Banking Technology as trade secrets, and its licensed software applications are copyrightable subject matter.

We have a portfolio of registered and pending trademarks in the U.S. and foreign jurisdictions, including registrations for the marks “VSCode®” and “VeriCode®”. The Company uses “Veritec” as a trade mark and service mark, as well as it serving as the Company’s trade name.

On September 30, 2015, the Company sold all of its existing intellectual property relating to its Barcode Technology to The Matthews Group, a related party (see Note 12 to the attached Consolidated Financial Statements).

Major Customers

The Company’s has two customers in fiscal 2015 that represented an aggregate of 23% of our revenue, and three customers in 2014 that represented 55% of our revenue. During fiscal 2015 and 2014, 45% and 70% respectively, of our revenue was from customers outside the United States.

Engineering, Research and Development

As of June 30, 2015, the Company employed two engineers and engaged five engineering independent contractors. During the fiscal year that ended June 30, 2015, we concentrated on several projects which included the development of our Mobile debit and member rewards banking platform, and the continued development and support of the liquid crystal display (LCD) business the VeriSuite™ Bio-ID software platform, the PhoneCodes™ software platform. All of these projects are currently in various stages of development or have been completed.

Competition

Our Mobile Banking Technology competes with other independent sales organizations and third party services of Visa branded card programs, including TransCash Corporation, Ready Debit Card by MetaBank, Millenium Advantage Card by New Millenium Bank, and Wired Plastic by Bancorp Bank. The Company believes, however, that there are very few companies that have the Company’s collective attributes of (1) being an independent sales organization of Visa branded and non-branded prepaid card programs, (2) being a third party servicer (e.g., back end processor) for banks issuing Visa branded and non-branded prepaid card programs, (3) being the developer, marketer and licensor of the mobile banking platform on which Visa branded and non-branded card program cardholder transactions take place, and (4) having a mobile banking platform that enables real-time transaction processing and enabling cardholders to manage their accounts by enabling cardholders to toggle their cards and their website accounts on and off via their mobile phones.

Employees

As of June 30, 2015, the Company employed three employee and nine independent contractor consultants.

Financial Information about Geographic Areas

For the fiscal year ended, June 30, 2015, United States customers accounted for 55% (44% in fiscal 2014) of the Company’s total revenue. The remaining revenue of 45% (56% in fiscal 2014) was from foreign customers. Our foreign revenues have been concentrated primarily in Japan, Korea, Taiwan, China and Germany.

ITEM 2 PROPERTIES

We lease approximately 4,200 square feet of office and laboratory space at 2445 Winnetka Avenue North, Golden Valley, Minnesota, which serves as our primary place of business. This lease is with Van Thuy Tran, the Chairman of the Board and the Chief Executive Officer of the Company. Our lease requires monthly payments of $4,200 which ran through June 30, 2015, and was automatically extended for two one-year terms.

ITEM 3 LEGAL PROCEEDINGS

From time to time, we are a party to claims and legal proceedings arising in the ordinary course of business. Our management evaluates our exposure to these claims and proceedings individually and in the aggregate and provides for potential losses on such litigation if the amount of the loss is estimable and the loss is probable.

In December, 2013, the Company filed a complaint in Eighth Judicial District Court of Clark County, Nevada against Pacific Stock Transfer Company (“Pacific”). Veritec utilized the service of Pacific to administer its securities transfer for a period of time, but because we were dissatisfied with Pacific’s performance Veritec sent Pacific a letter terminating its services as transfer agent. Pacific refused to turn over Veritec’s documents and filed a required termination notice, demanding a termination fee” of $7,500. Believing it was being extorted and its securities documents held hostage, Veritec filed a lawsuit seeking injunctive relief. On September 15, 2014, this case was settled between both parties to split the $11,260 deposited with the Court.

Except as set forth above, there are no material litigation matters at the current time.

ITEM 4 MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5 MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is quoted on the OTCQB under the symbol VRTC. Prior to that, our common stock was quoted on the OTC Bulletin Board. Prior to September 4, 2009, our common stock was traded in the over the counter markets and quoted on the OTC Pink Sheets. The following table sets forth the range of high and low bid quotes of our common stock per quarter as provided by the National Quotation Bureau (which reflect inter-dealer prices without retail mark-up, mark-down or commission and may not necessarily represent actual transactions).

Market Price Range of Common Stock	Fiscal 2015		Fiscal 2014
Quarter Ended	High	Low	High	Low
September 30	$.15	$.05	$.09	$.09
December 31	$.15	$.06	$.11	$.03
March 31	$.11	$.28	$.07	$.07
June 30	$.15	$.18	$.07	$.07

Shareholders

As of December 11, 2015, there were approximately 790 shareholders of record, inclusive of those brokerage firms and/or clearinghouses holding our common shares for their clientele.

Dividend Information

We have not paid or declared any dividends upon our common stock since our inception and, by reason of our present financial status and contemplated financial requirements; we do not anticipate paying any dividends in the foreseeable future.

Unregistered Sales of Equity Securities

During fiscal year 2015 and 2014, we did not issue any other equity securities that were not registered under the Securities Act of 1933, as amended.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth information with respect to shares of common stock issuable under outstanding awards granted pursuant to our equity compensation plan.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders		—		—		—
Equity compensation plans not approved by security holders (1)		2,520,000	$	0.42		—

Total		2,520,000	$	0.42		—

(1) The Board of Directors authorized the Chief Executive Officer to issue up to 1,000,000 shares of the Company’s common stock in the form of options or stock bonuses to employees and consultants. 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. The Company granted no options or stock bonuses to employees and consultants under this arrangement in 2015 and 2014, respectively.

ITEM 6 SELECTED FINANCIAL DATA

The Company, as a smaller reporting company, is not required to provide disclosure under this Item 6.

ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations – June 30, 2015 compared to June 30, 2014

We had a net loss of $907,474 in the fiscal year ended June 30, 2015 compared to net income of $302,053 in the fiscal year ended June 30, 2014.

License and other revenue

Details of revenues are as follows:

	Year Ended June 30,				Increase (Decrease)
	2015		2014		$			%

Barcode Technology	$	507,960	$	1,623,109	$	(1,115,149	)		(68.7	)
Mobile Banking Technology		437,847		12,254		425,593			3,473.1

Total Revenues	$	945,807	$	1,635,363	$	(689,556	)		(42.2	)

Barcode Technology revenues are derived from our Product Identification systems sold principally to customers in the LCD manufacturing industry. Identification Card revenues in these periods were a result of sales of identification card and mobile banking systems.

The decrease in Barcode Technology revenues was mainly attributable to the decreased demand for LCD screens. Revenues from the LCD market remain unpredictable as they are generated when customers open new production facilities or update production equipment; however, for now the Company continues to experience relatively low demand for product identification product licenses in the LCD industry. A large portion of our license sales are concentrated in the Asia-Pacific market, which decreased in Taiwan, Japan, Germany, and increase in Korea and China.

Mobile Banking Technology revenues includes products such as the Company’s Blinx On-Off™ prepaid toggle Card and its Open Loop/Close Loop System and Bio ID Card Platform. Mobile Banking Technology uses web-based mobile technology to offer financial cardholders the very best technology in conducting secure financial transactions in real time, protecting personal identity, and financial account security. The increase in Mobile Banking Technology revenues is due to its efforts to grow this business line which has led to several recent multiyear agreements to provide services and support.

On September 30, 2015, the Company and The Matthews Group, a related party, entered into an Asset Purchase Agreement pursuant to which the Company sold the intellectual property assets relating to its Barcode Technology. The sale allows the Company to focus its efforts solely on growing its Mobile Banking Technology business.

Cost of Sales

Cost of sales for the year ended June 30, 2015 and 2014, totaled $329,703 and $345,107, respectively. The slight decrease in expense was the result of decreased labor costs associated with projects implemented during the period as compared to the same period of the prior year. As a percentage of revenue, for the year ended June 30, 2015, cost of sales was 34.9% compared to 21.1% for the year ended June 30, 2014.

Operating Expenses

General and administrative expenses for the fiscal year ended June 30, 2015 were $841,816, compared to $578,947 for fiscal year ended June 30, 2014, an increase of $262,869. The increase was the result of $134,215 in operating expenses incurred after acquiring Tangible Payments, LLC (see Note 5 of the attached Consolidated Financial Statements). The remaining increase in expenses of $128,654 was primarily from increased salaries, benefits and professional fees.

Sales and marketing expense for the fiscal year ended June 30, 2015 was $83,863 compared to $31,590 for the fiscal year ended June 30, 2014, an increase of $52,273. The increase was a result of the Company’s increased sales and marketing efforts to support its mobile banking technology and to open new markets in Asia.

Research and development expense for the year ended June 30, 2015 totaled $98,412 compared to $188,810 for the year ended June 30, 2014, a decrease of $90,398. The decrease in expense was the result of the Company’s completion of certain research and development projects associated with its Mobile Banking Technology as compared to the same period of the prior year.

Other Expenses, net

Other expense, net for year ended June 30, 2015 totaled $499,487 compared to $188,856 for the year ended June 30, 2014, an increase of $310,631. The increase was primarily a result of $297,875 of non-cash expense relating to the beneficial conversion feature of convertible notes payables issued during fiscal year 2015. A beneficial conversion feature is realized when the conversion price of a convertible notes payable is below the closing market price on the date of issuance. The remaining increase of $12,767 was additional interest expense associated with our overall increased debt balances.

Capital Expenditures and Commitments

We made no capital purchases in fiscal 2015. In 2014, we made capital expenditures of $1,234.

Liquidity

Our cash and cash equivalents balance at June 30, 2015 increased to $52,762 as compared to $24,665 at June 30, 2014. The increase was the result of $192,903 in cash used in operating activities offset by $221,000 provided by financing activities. Net cash used in operations during 2015 was $192,903 compared with $291,760 provided by operations during the same period in 2014. Cash used in operations during 2015 was primarily due to the net loss in the period. Net cash used in investing activities was $0 during 2015 compared with $1,234 during 2014, which was the result of the purchase of property and equipment. Net cash provided by financing activities of $221,000 during 2015 was primarily due to proceeds received from notes payable of $365,000 offset by payments of $144,000 on notes payable. During the same period in 2014, net cash used in financing activities of $341,779 was from proceeds received from notes payable of $68,500 offset by payments of $410,279 on notes payable.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company experienced a loss of $907,474 during the year ended June 30, 2015, and at June 30, 2015, the Company had a working capital deficit of $5,159,420 and a stockholders’ deficiency of $5,106,433. The Company is currently in default of $3,562,707 of notes payable and is also delinquent in payment of certain amounts due of $453,277 for payroll taxes and accrued interest and penalties as of June 30, 2015. The Company believes its cash and forecasted cash flow from operations will not be sufficient to continue operations through fiscal 2016 without continued external investment. The Company believes it will require additional funds to continue its operations through fiscal 2016 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 consolidated financial statements do not include any adjustments that may result from this uncertainty. Our auditor has issued a “going concern” qualification as part of their opinion in the Audit Report for the year ended June 30, 2015.

The Company has traditionally been dependent on The Matthews Group, LLC, a related party, for its financial support. The Matthews Group is owned 50% by Van Tran, the Company’s CEO/Executive Chair and a director, and 50% by Lawrence J. Johanns, a significant Company stockholder.

In September 2015, The Matthews Group, a related party and the Company’s largest debt holder, elected to convert $1.8 million of its convertible notes payable balance, at a conversion price of $0.08 per share of common stock, into 22.2 million shares of the Company’s common stock.

Commitments and Contractual Obligations

The Company has one annual lease commitment of $50,400 for the corporate office building, which is leased from Ms. Tran, our chief executive officer, which expired on June 30, 2015, and was automatically extended until June 30, 2017. The commitment is for the corporate offices at 2445 Winnetka Avenue North, Golden Valley, Minnesota. The total amount of the two-year lease commitment is $100,800.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Critical Accounting Policies

Stock-Based Compensation

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

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

Revenue Recognition

The Company accounts for revenue recognition in accordance with guidance of the Financial Accounting Standards Board. Revenues for the Company are classified into barcode technology revenue and mobile banking technology revenue.

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 other products, once the software is imported into the hardware and the process is complete, the product is shipped and revenue is recognized at time of shipment. Once the software and/or 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.

Recently Issued Accounting Standards

See Footnote 1 of consolidated financial statements for a discussion of recently issued accounting standards.

ITEM 8 FINANCIAL STATEMENTS

VERITEC, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2015 AND 2014

TABLE OF CONTENTS			PAGE
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			13
CONSOLIDATED BALANCE SHEETS			14
CONSOLIDATED STATEMENTS OF OPERATIONS			15
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY			16
CONSOLIDATED STATEMENTS OF CASH FLOWS			17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			18

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

Veritec, Inc. and Subsidiaries

Golden Valley, Minnesota

We have audited the accompanying consolidated balance sheets of Veritec, Inc. and Subsidiaries (the “Company”) as of June 30, 2015 and 2014, and the related consolidated statements of operations, stockholders’ deficiency and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Veritec, Inc. and Subsidiaries as of June 30, 2015 and 2014, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has had recurring losses from operations and had a stockholders’ deficiency as of June 30, 2015. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 2. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of this uncertainty.

/s/ Weinberg & Company, P.A.

Weinberg & Company, P.A.

Los Angeles, California

January 21, 2015

VERITEC, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2015 AND 2014

	2015			2014

ASSETS

Current Assets:
Cash	$	52,762		$	24,665
Accounts receivables, net of allowance of $0 and $13,395, respectively		38,749			70,500
Inventories		14,461			7,829
Prepaid expenses		18,234			17,143
Total Current Assets		124,206			120,137

Restricted cash		63,029			51,957
Property and Equipment, net		583			994
Intangibles, net		144,375			—

Total Assets	$	332,193		$	173,088

LIABILITIES AND STOCKHOLDERS’ DEFICIENCY

Current Liabilities:
Notes payable – in default	$	521,610		$	493,017
Notes payable, related party – in default		3,041,097			2,649,202
Accounts payable		630,490			540,794
Accounts payable, related party		96,110			78,753
Customer deposits		25,482			91,260
Deferred revenue		492,603			258,764
Payroll tax liabilities		453,277			539,218
Accrued expenses		22,957			104,168
Total Current Liabilities		5,283,626			4,755,176

Contingent earnout liability		155,000			—
Total Liabilities		5,438,626			4,755,176

Commitments and Contingencies

Stockholders' Deficiency:
Convertible preferred stock, par value $1.00; authorized 10,000,000 shares, 276,000 shares of Series H authorized, 1,000 shares issued and outstanding as of June 30, 2015 and 2014		1,000			1,000
Common stock, par value $.01; authorized 50,000,000 shares, 16,530,088 and 15,920,088 shares issued and outstanding as of June 30, 2015 and 2014, respectively		165,301			159,201
Common stock to be issued, 940,000 shares and 400,000 shares, respectively		51,800			39,596
Additional paid-in capital		14,959,006			14,594,181
Accumulated deficit		(20,283,540	)		(19,376,066	)
Total Stockholders' Deficiency		(5,106,433	)		(4,582,088	)

Total Liabilities and Stockholders’ Deficiency	$	332,193		$	173,088

The accompanying notes are an integral part of these consolidated financial statements

VERITEC, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 2015 AND 2014

	Years Ended June 30,
	2015			2014

Revenue:
Barcode technology revenue	$	507,960		$	1,623,109
Mobile banking technology revenue		437,847			12,254
Total revenue		945,807			1,635,363

Cost of sales		329,703			345,107

Gross Profit		616,104			1,290,256

Operating Expenses:
General and administrative		841,816			578,947
Sales and marketing		83,863			31,590
Research and development		98,412			188,810
Total operating expenses		1,024,091			799,347

Income (Loss) from Operations		(407,987	)		490,909

Other Expense:
Interest income		—			58
Interest expense, including $172,564 and $152,501, respectively, to related parties		(499,487	)		(188,914	)
Total other expense		(499,487	)		(188,856	)

Net Income (Loss)	$	(907,474	)	$	302,053


Net Loss Per Common Share -
Basic	$	(0.06	)	$	0.02
Diluted	$	(0.06	)	$	0.02

Weighted Average Number of Shares Outstanding -
Basic		16,351,956			15,920,088
Diluted		16,351,956			18,976,588

The accompanying notes are an integral part of these consolidated financial statements.

VERITEC, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY

FOR THE YEARS ENDED JUNE 30, 2015 AND 2014

	Preferred Stock			Common Stock
	Shares		Amount	Shares		Amount	Common Stock to be Issued			Additional Paid-in Capital		Accumulated Deficit			Stockholders’ Deficiency

BALANCE, July 1, 2013	1,000	$	1,000	15,920,088	$	159,201	$	10,477		$	14,594,181	$	(19,678,119	)	$	(4,913,260)

Shares issued for services	—		—	—		—		3,869			—		—			3,869
Stock based compensation	—		—	—		—		25,250			—		—			25,250
Net income	—		—	—		—		—			—		302,053			302,053

BALANCE, June 30, 2014	1,000		1,000	15,920,088		159,201		39,596			14,594,181		(19,376,066	)		(4,582,088)

Shares issued for acquisition	—		—	250,000		2,500		—			35,000		—			37,500
Shares issued for services	—		—	135,000		1,350		9,300			8,950		—			19,600
Shares issued for common stock issuable	—		—	225,000		2,250		(25,250	)		23,000		—			—
Stock based compensation	—		—	—		—		28,154			—		—			28,154
Beneficial conversion feature on issuance of convertible notes payable	—		—	—		—		—			297,875		—			297,875
Net loss	—		—	—		—		—			—		(907,474	)		(907,474)

BALANCE, June 30, 2015	1,000	$	1,000	16,530,088	$	165,301	$	51,800		$	14,959,006	$	(20,283,540	)	$	(5,106,433)

The accompanying notes are an integral part of these consolidated financial statements.

VERITEC, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2015 AND 2014

	Years Ended June 30,
	2015			2014

CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)	$	(907,475	)	$	302,053
Adjustments to reconcile net income (loss) net cash provided by (used in) operating activities:
Depreciation		411			239
Amortization		48,125			—
Allowance on accounts receivable		—			244
Beneficial conversion feature on convertible notes payable		297,875			—
Shares issued for services		19,600			3,869
Stock based compensation expense		28,154			25,250
Interest accrued on notes payable		199,489			170,897
Changes in operating assets and liabilities:
Accounts receivable		31,751			217,579
Restricted cash		(11,072	)		447,320
Inventories		(6,632	)		(3,014	)
Prepaid expenses		(1,091	)		15,744
Deferred revenue		233,839			(767,911	)
Payroll tax liabilities		(85,941	)		(141,242	)
Customer deposits		(65,778	)		19,973
Accounts payables and accrued expenses		25,842			759
Net cash provided by (used in) operating activities		(192,903	)		291,760

CASH FLOWS FROM INVESTING ACTIVITIES
Advances on notes receivable		—			(1,234	)
Net cash used in investing activities		—			(1,234	)

CASH FLOWS FROM FINANCING ACTIVITIES
Payment of notes payable		—			(300,279	)
Proceeds from notes payable, related party		365,000			68,500
Payment on notes payable, related party		(144,000	)		(110,000	)
Net cash provided by (used in) financing activities		221,000			(341,779	)

NET INCREASE (DECREASE) IN CASH		28,097			(51,253	)

CASH AT BEGINNING OF YEAR		24,665			75,918

CASH AT END OF YEAR	$	52,762		$	24,665

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest	$	—		$	14,423

NON CASH INVESTING AND FINANCING ACTIVITIES
Common stock issued for acquisition	$	37,500		$	—
Contingent earnout liability from acquisitions	$	155,000		$	—

The accompanying notes are an integral part of these consolidated financial statements.

VERITEC, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2015 AND 2014

NOTE 1 - OPERATIONS 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, Vcode Holdings, Inc. (Vcode®), and Veritec Financial Systems, Inc. (VTFS) (collectively the “Company”).

Nature of Business

The Company as primarily engaged in the development, marketing, sales and licensing of products and rendering of professional services related thereto in the following two fields of technology: (1) proprietary two-dimensional matrix symbology (also commonly referred to as “two-dimensional barcodes” or “2D barcodes”), and (2) mobile banking solutions. Subsequent to June 30, 2015, the Company began to focus exclusively on mobile banking technology, and sold its barcode technology.

Barcode Technology

The Company’s Barcode Technology was originally invented by the founders of Veritec under United States patents 4,924,078, 5,331,176, 5,612,524 and 7,159,780. Our principal licensed product to date that contains our VeriCode ® Barcode Technology has been a product identification system for identification and tracking of manufactured parts, components and products mostly in the liquid crystal display (LCD) markets. The VeriCode® symbol is a two-dimensional high data density machine-readable symbol that can contain up to approximately 500 bytes of data. The Company’s VSCode® Barcode Technology is a derivative of the VeriCode® symbol with the ability to encrypt a greater amount of data by increasing data density. The VSCode ® is a data storage “container” that offers a high degree of security and which can also be tailored to the application requirements of the user. The VSCode ® symbol can hold any form of binary information that can be digitized, including numbers, letters, images, photos, graphics, and the minutia for biometric information, including fingerprints and facial image data, to the extent of its data storage capacity, that are likewise limited by the resolution of the marking and reading devices employed by the user. VSCode ® is ideal for secure identification documents (such as national identification cards, driver’s licenses, and voter registration cards), financial cards, medical records and other high security applications. In its PhoneCodes™ product platform, Veritec developed software to send, store, display, and read a VeriCode® Barcode Technology symbol on the LCD screen of a mobile phone. With the electronic media that provide the ease of transferring information over the web, Veritec’s PhoneCodes™ technology enables individuals and companies to receive or distribute gift certificates, tickets, coupons, receipts, or engage in banking transactions using the VeriCode ® technology via wireless phone or PDA.

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 May 2009 Veritec was registered by Security First Bank in Visa’s Third Party Registration Program as a Cardholder Independent Sales Organization and Third-Party Servicer. As a Cardholder Independent Sales Organization, Veritec was able to promote and sell Visa branded card programs. As a Third-Party Servicer, Veritec provided back-end cardholder transaction processing services for Visa branded card programs on behalf of Security First Bank. As of October 2010 the Company’s registration with Security First Bank terminated. As of April 2011 the Company signed an ISO and processor agreement with Palm Desert National Bank (which was later assigned to First California Bank) to market and processes the Company’s Visa branded card program on behalf of the bank. First California Bank was sold to Pacific Western Bank and June 2013 Pacific Western Bank closed its entire debit card division and transferred its contract with VTFS to Central Bank of Kansas City Bank. On February 5th, 2014 the entire relationship between Veritec and Pacific Western Bank ended and the new relationship with Central Bank of Kansas City began.

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.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany transactions and balances were eliminated in consolidation.

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 instruments issued for services.

Accounts Receivable

The Company sells to domestic and foreign companies and grants uncollateralized credit to customers, but requires deposits on unique orders. Management periodically reviews its accounts receivable and provides an allowance for doubtful accounts after analyzing the age of the receivable, payment history and prior experience with the customer. The estimated loss that management believes is probable is included in the allowance for doubtful accounts.

While the ultimate loss may differ, management believes that any additional loss will not have a material impact on the Company's financial position. Due to uncertainties in the settlement process, however, it is at least reasonably possible that management's estimate will change during the near term.

Inventories

Inventories, consisting of purchased components for resale, are stated at the lower of cost or market, applying the first-in, first-out (FIFO) method. Inventory is net of reserves of $23,900 at both June 30, 2015 and 2014.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over estimated useful lives of 3 to 7 years. When assets are retired or otherwise disposed, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is recognized. Maintenance and repairs are expensed as incurred; significant renewals and betterments are capitalized.

Management regularly reviews property, equipment and other long-lived assets for possible impairment. This review occurs quarterly, or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows (undiscounted and without interest charges) expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. Based upon management’s assessment, there were no indicators of impairment at June 30, 2015 or 2014.

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 had cash balances in excess of the guarantee during the year ended June 30, 2015.

Major Customers:

Customers in excess of 10% of total revenues were as follows:

	Years Ended June 30,
	2015			2014

Customer A		--%			31	%
Customer B		12	%		16	%
Customer C		11	%		8	%
		23	%		55	%

As of June 30, 2015, the Company had approximately $6,025 (16%), $5,650 (15%), and $4,575 (12%) of accounts receivable due from its major customers. As of June 30, 2014, the Company had approximately $86,361 (69%) and $23,250 (19%), respectively, of accounts receivable due from its major customers.

Foreign Revenues

Foreign revenues accounted for 45% (9% Korea, 19% Taiwan, and 17% others) of the Company’s total revenues in fiscal 2015 and 70% (54% Korea, 10% Taiwan, and 6% others) in fiscal 2014.

Fair Value of Financial Instruments

Fair Value Measurements are adopted by the Company based on the authoritative guidance provided by the Financial Accounting Standards Board, with the exception of the application of the statement to non-recurring, non-financial assets and liabilities as permitted. The adoption based on the authoritative guidance provided by the Financial Accounting Standards Board did not have a material impact on the Company's fair value measurements. Based on the authoritative guidance provided by the Financial Accounting Standards Board 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 June 30, 2015 or 2014.

For certain financial instruments, 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, each qualify as financial instruments and are a reasonable estimate of 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.

Revenue Recognition

Shipping and Handling Fees and Costs

For the years ended June 30, 2015 and 2014, shipping and handling fees billed to customers of $997 and $2,125, respectively were included in revenues and shipping and handling costs of $997 and $2,032, respectively were included in cost of sales.

Research and Development

Research and development costs were expensed as incurred.

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 year ended June 30, 2015 the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an anti-dilutive effect. For the year ended June 30, 2014 the calculation of diluted earnings per share included stock options and warrants, calculated under the treasury stock method, and excluded preferred stock and convertible notes payable since the effect was antidilutive.

The following table sets forth the computation of basic and diluted income per common share.

	June 30,
	2015			2014

Net Income (Loss)	$	(907,475	)	$	302,053

Weighted average common shares – basic		16,351,956			15,920,088
Dilutive effect of outstanding stock options		—			3,056,500
Weighted average shares outstanding – diluted		16,351,956			18,976,588

As of June 30, 2015 and 2014, 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

	June 30,
	2015		2014

Series H Preferred Stock	$	10,000	$	10,000
Convertible Notes Payable		19,563,168		6,347,046
Options		2,520,000		—
Total		22,093,168		6,357,046

Stock-Based Compensation

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

Intangible Assets

The Company accounts for intangible assets in accordance with the authoritative guidance issued by the ASC Topic 350 – Goodwill and Other. Intangibles are valued at their fair market value and are amortized taking into account the character of the acquired intangible asset and the expected period of benefit. The Company evaluates intangible assets for impairment, at a minimum, on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable from its estimated undiscounted future cash flows. Recoverability of intangible assets is measured by comparing their net book value to the related projected undiscounted cash flows from these assets, considering a number of factors, including past operating results, budgets, economic projections, market trends and product development cycles. If the net book value of the asset exceeds the related undiscounted cash flows, the asset is considered impaired, and a second test is performed to measure the amount of impairment loss.

At June 30, 2015, the intangibles assets of $144,375 relates to our acquisition of Tangible Payments LLC during fiscal year 2015 (see Note 5). Our first impairment test will be conducted in fiscal year 2016, however management believes there were no indications of impairment based on management’s assessment of these assets at June 30, 2015. Factors we consider important that could trigger an impairment review include significant underperformance relative to historical or projected future operating results, significant changes in the manner of the use of our assets or the strategy for our overall business, and significant negative industry or economic trends. If current economic conditions worsen causing decreased revenues and increased costs, we may have to record an impairment to our goodwill and intangible assets.

Income Taxes

Current income tax expense is the amount of income taxes expected to be payable for the current year. A deferred income tax asset or liability is established for the expected future consequences of temporary differences in the financial reporting and tax bases of assets and liabilities. The Company considers future taxable income and ongoing, prudent and feasible tax planning strategies, in assessing the value of its deferred tax assets. If the Company determines that it is more likely than not that these assets will not be realized, the Company will reduce the value of these assets to their expected realizable value, thereby decreasing net income. Evaluating the value of these assets is necessarily based on the Company’s judgment. If the Company subsequently determined that the deferred tax assets, which had been written down, would be realized in the future, the value of the deferred tax assets would be increased, thereby increasing net income in the period when that determination was made.

Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company is in the process of evaluating the impact of ASU 2014-09 on the Company’s financial statements and disclosures.

In June 2014, the FASB issued Accounting Standards Update No. 2014-12, Compensation – Stock Compensation (Topic 718). The pronouncement was issued to clarify the accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The pronouncement is effective for reporting periods beginning after December 15, 2015. The adoption of ASU 2014-12 is not expected to have a significant impact on the Company’s consolidated financial position or results of operations.

In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. ASU 2014-15 requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company is currently evaluating the impact of the adoption of ASU 2014-15 on the Company’s financial statements and disclosures.

In November 2014, the FASB issued Accounting Standards Update No. 2014-16 (ASU 2014-16), Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity. The amendments in this ASU do not change the current criteria in U.S. GAAP for determining when separation of certain embedded derivative features in a hybrid financial instrument is required. The amendments clarify that an entity should consider all relevant terms and features, including the embedded derivative feature being evaluated for bifurcation, in evaluating the nature of the host contract. The ASU applies to all entities that are issuers of, or investors in, hybrid financial instruments that are issued in the form of a share and is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The Company is in the process of evaluating the impact of 2014-16 on the Company’s financial statements and disclosures.

In July 2015, the FASB issued Accounting Standards Update 2015-11, Simplifying the Measurement of Inventory, which requires that inventory within the scope of ASU 2015-11 be measured at the lower of cost and net realizable value. Inventory measured using last-in, first-out (LIFO) and the retail inventory method are not impacted by the new guidance. ASU 2015-11 applies to all other inventory, which includes inventory that is measured using first-in, first-out (FIFO) or average cost. An entity should measure inventory within the scope of ASU 2015-11 at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. ASU 2015-11 is effective for public business entities in fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2015-11 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.

NOTE 2 - GOING CONCERN

The Company believes it will require additional funds to continue its operations through fiscal 2016 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 consolidated financial statements do not include any adjustments that may result from this uncertainty.

The Company has relied on The Matthews Group, LLC (TMG), a related party owned 50% by Van Tran, the Company’s CEO/Executive Chair and a director, and 50% by Lawrence J. Johanns, a significant stockholder of the Company, for funding.

NOTE 3 – RESTRICTED CASH

The Company entered into Store Value Prepaid Card Sponsorship Agreements (the “Agreement”) with certain banks whereas the Company markets and sells store value prepaid card programs (the “Programs”). The Programs are marketed and managed daily at the direction of the Bank, for which the Company receives a transaction fee. In connection with the agreements the Company is required to establish a Reserve Account controlled by the Bank. At June 30, 2015 and 2014, the restricted cash totaled $63,029 and $51,957, respectively. Since this amount is restricted for the purposes related to the Programs, it is classified as restricted cash on the consolidated balance sheets.

NOTE 4 - PROPERTY AND EQUIPMENT

Property and equipment consists of the following as of:

	June 30,
	2015			2014

Furniture and equipment	$	140,316		$	140,316
Software		73,000			73,000
Vehicles		23,301			23,301
		236,617			236,617
Less accumulated depreciation		(236,034	)		(235,623	)
Total	$	583		$	944

Depreciation expense for the years ended June 30, 2015 and 2014 was $411 and $239, respectively.

NOTE 5 – ACQUISITION

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 is a combined-solution software package that incorporates features the market is currently purchasing as an individual-solutions product that requires integrated services at an additional cost. With a one-stop package, Tangible’s Payments LLC solution eliminates costs and reduces deployment time.

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.

The Company assigned $192,500 of the purchase price to contract commitments which will be amortized over a three year period. During the twelve months ended June 30, 2015, the Company recorded $48,125 of amortization expense related to this intangible which is included in general and administrative expense in the Consolidated Statements of Operations.

Total estimated amortization expense with respect to intangible assets for 2016 through 2018 is as follows:

Years Ending June 30,		Amount
	2016	$	64,167
	2017		64,167
	2018		16,041
	Total	$	144,375

The following table presents our unaudited pro forma combined historical results of operations as if we had consummated the acquisition as of July 1, 2013.

	June 30,
	2015			2014
	(Unaudited)			(Unaudited)

Revenues	$	1,007,932		$	1,909,323
Net income (loss)	$	(919,775	)	$	190,156

NOTES 6 – RELATED PARTY TRANSACTIONS

During the years ended June 30, 2015 and 2014 the Company received various unsecured, non-interest bearing, due on demand advances from its CEO Ms. Van Tran, a related party. The balances due Ms. Tran as of June 30, 2015 and 2014 were $96,110 and $78,753, respectively. These advances have been classified as accounts payable, related party on the accompanying consolidated balance sheets.

The Company has relied on The Matthews Group, LLC (TMG), 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 (see Note 11).

NOTE 7 – NOTES PAYABLE AND NOTES PAYABLE, RELATED PARTY

Notes payable includes accrued interest and consists of the following as of June 30, 2015 and 2014:

	2015		2014

Convertible Notes Payable
Convertible notes payable (includes $138,120 and $130,898, respectively, to non-related parties), unsecured, interest at 8%, due September 2010 through November 2010. The principal and accrued interest is convertible at a conversion price of $0.30. The principal and interest is due immediately on the event of default or change of control. The notes are currently in default.	$	759,763	$	720,302

Convertible notes payable to related parties, unsecured, principal and interest are convertible into common stock at $0.30 to $0.33 per share, interest at 8% to 10%, due on demand to November 2010. The notes are currently in default.		1,414,260		1,017,435

Convertible note payable to related party, secured by the Company’s intellectual property, principal and interest are convertible into common stock at $0.25 per share subject to board of directors’ approval, interest at 8%. The note was due November 2010 and is now in default.		290,871		274,871

Notes payable, secured by the Company's certificate of deposit with a financial institution and classified on the balance sheet as restricted cash, interest at 5%, convertible into common stock at $0.08 per share, due on demand		33,688		32,215

Convertible note payable, unsecured, principal and interest are convertible into common stock at $0.30 to $0.40 per share subject to board of directors’ approval, interest at 5% to 8%, due January 2011 to March 2013 and is now in default.		14,385		13,586

Convertible note payable, unsecured, principal and interest are convertible into common stock at $1.00 per share subject to board of directors’ approval, interest at 8%. The note was paid in full.		—		1,766
Subtotal convertible notes		2,512,967		2,150,175

Promissory Notes
Note payable to related party, secured by the Company’s intellectual property, interest at 8% due August 2010 and is now in default.		564,058		533,318

Notes payable to related parties, unsecured, interest at 0% to 8%, due on demand.		150,430		142,430

Note payable, unsecured, interest at 10%. The note was due in January 2010 and is now in default		31,783		29,167

Note payable, secured by the Company's intellectual property, interest at variable rates starting September 1, 2012, due December 2012 and is now in default.		303,469		287,129
Subtotal notes payable		1,049,740		992,044

Total	$	3,562,707	$	3,142,219

During fiscal year 2015, the Company issued $365,000 of convertible notes payable that could be converted at a price of $0.08 per share. The market price on the date the convertible notes payable were issued was in excess of the conversion price. The difference between the conversion price of $0.08 per share and the market price was recognized as an expense of $297,875 and was included in interest expense in the Condensed Consolidated Statements of Operations for the year ended June 30, 2015. No similar activity occurred during fiscal year 2014.

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

	June 30,
	2015		2014

Notes payable	$	521,610	$	493,017
Notes payable, related party		3,041,097		2,649,202
Total	$	3,562,707	$	3,142,219

NOTE 8 - STOCKHOLDERS’ DEFICIENCY

Preferred Stock

The articles of incorporation of Veritec authorize 10,000,000 shares of preferred stock with a par value of $1.00 per share. The Board of Directors is authorized to determine any number of series into which shares of preferred stock may be divided and to determine the rights, preferences, privileges and restrictions granted to any series of the preferred stock.

In 1999, a new Series H convertible preferred stock was authorized. Each share of Series H convertible preferred stock is convertible into 10 shares of the Veritec’s common stock at the option of the holder. As of June 30, 2015 and 2014, there were 1,000 shares of Series H convertible preferred stock issued and outstanding.

Common Stock

Shares issued to consultants for services

During the twelve months ended June 30, 2015, the Company granted and issued 135,000 shares of common stock for services received. The common shares, based on the fair value on the dates granted, were valued at $0.05 to $0.51 per share, for an aggregate of $19,600. No similar activity occurred during the twelve months ended June 30, 2014.

Common Stock to be issued

Shares to be issued to consultants for services rendered

On July 15, 2014, the Company entered into a "Consulting Agreement" with a consultant to be a general advisor on technical issues to both the Company’s President and its subsidiary, Veritec Financial Systems, Inc. Per the payment terms of the Consulting Agreement, the consultant is to receive both monthly cash compensation and 5,000 shares of common stock. During the year ended June 30, 2015, the Company recorded an obligation to issue 55,000 shares of common stock with an aggregate fair value of $8,150 of which 5,000 shares of common stock were issued in December 2014. As of June 30, 2015, the remaining 50,000 shares of common stock with a value of $7,400 have not been issued and have been reflected as common shares to be issued in the accompanying consolidated balance sheet.

On June 23, 2014, the Company entered into an "Advisory Agreement" with a consultant to be an executive advisor to the Company’s President. Per the payment terms of the Advisory Agreement, the consultant is to receive both monthly cash compensation and 5,000 shares of common stock. The Advisory Agreement was terminated in January 2015. During the year ended June 30, 2015, the Company recorded an obligation to issue 35,000 shares of common stock with an aggregate fair value of $4,050 of which 20,000 shares of common stock were issued in December 2014. As of June 30, 2015, the remaining 15,000 shares of common stock with a value of $1,900 have not been issued and have been reflected as common shares to be issued in the accompanying consolidated balance sheet.

On June 7, 2013, the Company entered into a "Business Development Agreement" with a consultant to assist the Company in establishing business relationships in the United States and to assist in seeking financing for the Company. Upon signing of the agreement the Company granted the consultant 50,000 shares of common stock with a fair value at the date of grant of $7,000 as an initial non-refundable engagement fee and recognized such amount as consulting fee during the fiscal year June 30, 2013. In December 2013 and in March 2014, the Company authorized an additional 50,000 shares of common stock issuable under the agreement, and recorded the aggregate fair value as of their grant dates of $3,869 as consulting fees during the fiscal year ended June 30, 2014. The consultant subsequently agreed to receive 50,000 shares as full settlement of the Company’s obligation under the agreement. The 50,000 shares due with a value of $7,000 have not been issued as of June 30, 2015 and have been reflected as common shares to be issued in the accompanying consolidated balance sheet.

Shares to be issued to directors and employees for services

During the year ended June 30, 2015, the Company granted an aggregate of 750,000 shares of the Company’s common stock to four of the Company’s directors and certain employees for services rendered and recognized as stock based compensation expense during the fiscal year ended June 30, 2015 based on their fair value at grant dates in the aggregate amount of $28,154. The shares due have not been issued as of June 30, 2015 and have been reflected as common shares to be issued in the accompanying consolidated balance sheet.

During the year ended June 30, 2014, the Company granted an aggregate of 225,000 shares of the Company’s common stock to four of the Company’s directors for services rendered and recognized as directors’ fees during the fiscal year ended June 30, 2014 based on their fair value on their grant dates in the aggregate amount of $25,250. The shares due had not been issued as of June 30, 2014 and had been reflected as common shares to be issued. The 225,000 shares were issued in 2015.

NOTE 9 – STOCK OPTIONS AND WARRANTS

Stock Options

A summary of stock options as of June 30, 2015 and for the two years then ended is as follows:

	Number of			Weighted - Average
	Shares			Exercise Price

Outstanding at June 30, 2013	3,165,653		$	0.42
Granted	—		$	0.00
Forfeited	(109,153	)	$	0.00
Outstanding at June 30, 2014	3,056,500		$	0.42
Granted	—		$	0.00
Forfeited	(536,500	)	$	0.42
Outstanding at June 30, 2015	2,520,000		$	0.42
Exercisable at June 30, 2015	2,520,000		$	0.42

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. The Company granted 2,500,000 options under this arrangement during fiscal year 2013. There were no options granted in 2015 and 2014 under this agreement. The Company recognized no stock-based compensation expense related to stock options during the years ended June 30, 2015 and 2014, respectively. As of June 30, 2015, there was no remaining unrecognized compensation costs related to stock options. Based upon the trading value of the common shares, there was no intrinsic value of these options as of June 30, 2015.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model that uses the weighted-average assumptions noted in the following table. The risk-free rate for periods within the contractual life of the options is based on the U. S. Treasury yield in effect at the time of the grant. Volatility was based on the historical volatility of the Company’s common stock. The Company estimated the expected life of options based on historical experience and other averaging methods.

Additional information regarding options outstanding as of June 30, 2015 is as follows:

Options Outstanding at June 30, 2015						Options Exercisable at June 30, 2015
	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

	$0.13 - $1.45	2,520,000	4.64	$	0.42		2,520,000	$	4.64
		2,520,000					2,520,000

Stock Warrant

A summary of stock warrants as of June 30, 2015 and for the two years then ended is as follows:

	Number of Shares			Weighted - Average Exercise Price

Outstanding at June 30, 2013	275,000		$	2.0
Granted	—
Forfeited	(275,000	)	$	2.0
Outstanding at June 30, 2014	—
Granted	—
Forfeited	—
Outstanding at June 30, 2015	—

The Company issued 275,000 warrants related to notes payable issued in fiscal year 2009. The warrants are fully vested as of the issue date, and were exercisable at $2.00 per share. The weighted average contractual life of the warrants was 5 years, and the warrants expired in March 2014 and May 2014.

NOTE 10 - INCOME TAXES

Veritec files a consolidated income tax return in the United States. For the year ended June 30, 2015, our net loss was $907,475 and there was no provision for income taxes. We made no provision for income taxes due to our utilization of federal net operating loss carry forwards to offset both regular taxable income and alternative minimum taxable income. For the year ended June 30, 2014, net income was $302,053 and no income tax provision was recorded.

It is the Company’s practice to recognize penalties and/or interest related to income tax matters in the interest and penalties expense. There are no interest and penalties recognized in the consolidated statement of operations or accrued on the consolidated balance sheets.

The Company is subject to U.S. federal, state, or local income tax examination by tax authorities for all years for which a loss carry forward is utilized in subsequent periods.

Reconciliation between the expected federal income tax rate and the actual tax rate is as follows:

	Year Ended June 30,
	2015			2014

Federal statutory tax rate		35	%		35	%
State tax, net of federal benefit		6	%		6	%
Total tax rate		40	%		40	%
Allowance		(40)	%		(40)	%
Effective tax rate		-	%		-	%

The following is a summary of the deferred tax assets:

	June 30,
	2015			2014

Net operating loss carryforwards	$	4,224,000			4,021,600
Valuation allowance		(4,224,000	)		(4,021,600	)
Net deferred tax asset	$	—		$	—

Deferred income tax assets have been reduced by a valuation allowance as it is more likely than not that they will not be realized.

Veritec has net operating loss carryforwards of approximately $10 million for federal purposes available to offset future taxable income that expire in varying amounts through 2034. The ability to utilize the net operating loss carry forwards could be limited by Section 382 of the Internal Revenue Code which limits their use if there is a change in control (generally a greater than 50% change in ownership).

NOTE 11 – COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company leases approximately 4,200 square feet of office and laboratory space at 2445 Winnetka Avenue North, Golden Valley, Minnesota, which serves as our primary place of business. This lease is with Van Thuy Tran, the
Chairman of the Board and the Chief Executive Officer of the Company. Our lease requires monthly payments of $4,200 which runs through June 30, 2015, and was automatically extended for two one-year terms. Future annual minimum lease payments are $50,400 in each fiscal year through 2017 totaling $100,800.

Strategic Partnership Agreements

On October 25, 2010, the Company entered into a Strategic Services Agreement with a customer. The term of the license is for 5 years commencing on the effective date, which was the date of the first payment, or September 28, 2011. The customer has paid the total fee of $250,000 in two installments. The Company initially classified this fee as deferred revenue to be recognized over the license term of 5 years as the Company has a continuing obligation. As of June 30, 2014, the amount of deferred revenues was $115,347. During the year ended June 30, 2015, the Company recognized revenue of $50,000 relating to this agreement. As of June 30, 2015, the balance remaining to be recognized was $65,347.

On November 14, 2012 (effective date), the Company entered into a Strategic Product License Agreement with a customer for a $100,000 license fee. The term of the license is for 5 years commencing on the effective date. The Company has classified the license fee as deferred revenue to be recognized ratably over the license term of 5 years as the Company has a continuing obligation. As of June 30, 2014, the amount of deferred revenue was $72,500. During the year ended June 30, 2015, the Company recognized revenue of $20,000 relating to this agreement. As of June 30, 2015, the balance remaining to be recognized was $52,500.

On July 1, 2014 (effective date), the Company entered into a Strategic Product License Agreement with one its customers for a $150,000 license fee. The term of the license is for 5 years commencing on the effective date. The Company has classified the license fee as deferred revenue to be recognized ratably over the license term of 5 years as the Company has a continuing obligation. During the year ended June 30, 2015, the Company recognized revenue of $30,000 relating to this agreement. As of June 30, 2015, the balance remaining to be recognized was $120,000.

On August 14, 2014 (effective date), the Company entered into a Pilot Program Agreement with one its customers for a $175,000 fee, which was paid in advance of completion. The Company is responsible for certain deliveries as defined in the agreement. The Company partially completed a portion of its deliverables under the agreement and recognized $86,361 as revenues. The Company had not completed its remaining obligations as of June 30, 2015, and has classified the remaining balance as deferred revenue to be recognized as revenue upon completion of its obligations. As of June 30, 2015, the balance remaining to be recognized was $88,639.

On April 4, 2015 (effective date), the Company entered into a Continuing Services Agreement with one its customers for a $142,500 fee, which was paid in advance of completion. The Company is responsible for certain deliveries as defined in the agreement. As the Company had not completed its obligations as of June 30, 2015, the Company has classified the fees as deferred revenue to be recognized upon completion of its obligations. As of June 30, 2015, the balance remaining to be recognized was $142,500.

Incentive Compensation Bonus Plan

On December 5, 2008, the Company adopted an incentive compensation bonus plan to provide payments to key employees in the aggregated amount of 10% of pre-tax earnings in excess of $3,000,000 after the end of each fiscal year to be distributed annually to employees. As of June 30, 2015, the Company had not achieved an annual pre-tax earnings in excess of $3,000,000.

NOTE 12 – SUBSEQUENT EVENTS

In September 2015, the Company sold its Barcode Technology assets to The Matthews Group, a related party, for $670,000. The proceeds from the sale were used to reduce the Company’s notes payable balance to The Matthews Group. For the years ended June 30, 2015 and 2014, barcode technology revenues were $507,960 and $1,623,109, respectively.

In December 2015, the Company issued 815,000 shares of its common stock to both partially fulfill its obligation of its directors and certain employees for its stock to be issued balance as of June 30, 2015 and to pay for services received during fiscal year 2016.

On January 17, 2016, Veritec Inc. (the “Company”) entered into an agreement with Vietnam Alliance Capital (“VAC”), who 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.

ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A CONTROLS AND PROCEDURES

Managements’ Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable assurance of achieving the desired objectives, and we necessarily are required to apply our judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. It was concluded that the disclosure controls and procedures were not effective, because certain deficiencies involving internal control over financial reporting constituted material weaknesses, as identified below. The material weaknesses identified did not result in the restatement of any previously reported financial statements or any other related financial disclosures, nor does management believe that it had any effect on the accuracy of our financial statements for the current reporting period.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control over financial reporting is a process, under the supervision of our Chief Executive Officer and Chief Financial Officer, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Our internal control over financial reporting include those policies and procedures that:

•

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets;

•

provide reasonable assurance that our transactions are recorded as necessary to permit preparation of our financial statements in accordance with accounting principles generally accepted in the United States of America, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our directors; and

•

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

Our management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on its evaluation, our management concluded that there are material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

The material weaknesses relate to lack of proper financial statement closing procedures, limited oversight from our audit committee on the external financial reporting process and internal control over financial reporting and lack of segregation of duties. Under the segregation of duties issues, our Chief Financial Officer was the sole preparer of the financial statements and periodic SEC reports with limited separate independent detailed review to prevent material errors. Also the Chief Executive Officer has had authority to enter into significant contracts, as well as authority to sign checks, which could result in material fraud.

We are undergoing ongoing evaluation and improvements in our internal control over financial reporting. Regarding our identified weaknesses, we have performed the following remediation efforts:

In order to mitigate these material weaknesses to the fullest extent possible, the Company has assigned its audit committee with oversight responsibilities. Financial statements, periodic SEC reports and monthly bank statement and imaged checks are continuously reviewed by the Chief Financial Officer and the Chief Executive Officer. In addition all significant contracts are now being reviewed and signed off by the Company’s board of directors in conjunction with the Chief Executive Officer.

As a result of the material weaknesses described above, management concluded that, as of June 30, 2015, we did not maintain effective internal control over financial reporting based on the criteria established in Internal Control – Integrated Framework, issued by COSO.

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm, pursuant to provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act that permit us to provide only management’s report in this Annual Report on Form 10-K.

This report shall not be deemed to be filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Internal Control over Financial Reporting

There have not been any other changes in our internal control over financial reporting during the fiscal year ended June 30, 2015 to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B OTHER INFORMATION

None

PART III

ITEM 10 DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

The members of the present Board of Directors and Officers are:

Name	Office	Age
Van Thuy Tran	Chief Executive Officer, Chairman of the Board, Treasurer	70
Laird Powers	Director	67
Keith Lane	Director	56
Joseph Valandra	Director	63

Each director will serve until the next annual meeting of shareholders, or until their respective successors have been elected and duly qualified. Directors serve one-year terms. The Board of Directors appoints officers.

Ms. Van Thuy Tran is the Chairman of the Board. Ms. Tran controls a majority interest in the Company. She was President of Asia Consulting and Trading Company from 1979 to 1999, a company dealing with trade in the Pacific Rim countries. She is the co-founder of Circle of Love, providing mission work in Vietnam since 1993. She is the founder of Caring for Others, a non-profit organization with the vision of sharing what we have with others. She was the founder of Equal Partners, Inc., a construction and building company in Minnesota. Ms. Van Tran has a medical degree and worked in the medical field for over 17 years.

Laird E. Powers is a member of the Board and is a private investor in emerging technology companies. He has been involved with the Company since its early stages in 1986. In addition, for the past 31 years, he is the president and owner of a construction company in the Silicon Valley of California. He holds a Bachelor of Science degree in Psychology with a Mathematics minor from California State University - Hayward.

Keith Lane was appointed as a member of the Board on March 19, 2014. High school class of 1968, Keith was member National Honor society 1966-1968 and a graduate of U of M School of Journalism. He worked for the Minneapolis Star Tribune newspaper in charge of advertising art and creative department and advertising sales department for many years. Keith went on to open his own Lane-Gorton advertising company in 1977 and now Lane & Associate Productions from 1984 to the present. Keith is specializing in consumer retail, financial institution advertising and marketing, packaging, graphic design and audio/video production.

Joseph Valandra was appointed as a member of the Board on October 10, 2014. Mr. Valandra is the Chairman and CEO of Great Luck, LLC. He is responsible for all development and operations as well as for strategic planning and execution. He has over 30 years of experience in the areas of finance; executive management of public, private and government operations; and the development of strategies for restructuring. Past positions include Vice President of development for a major casino management company and the CEO and Chairman of a worldwide manufacturer and supplier of bingo and pull-tab gaming products and equipment. He also served for two years as the Chief of Staff of the National Indian Gaming Commission in Washington, DC. In the area of gaming, he has particular expertise in Tribal gaming, Internet gaming, and gaming manufacturing. In addition to Great Luck, Joe is managing partner of VAdvisors, LLC--a political consulting firm specializing in gaming and other issues relevant to Indian Country--and of MYNEXUS, LLC—a venture developing an online 3-D virtual world where customers participate in social interactions, gambling/gaming activities, commerce, entertainment transactions, and community happenings. Joe is a Sicangu Lakota and member of the Rosebud Sioux Tribe located on the Rosebud Reservation in South Dakota. He is a graduate of the University of South Dakota Business School and the University of Minnesota Law School

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) requires our directors and executive officers and beneficial holders of more than 10% of our common stock to file with the SEC initial reports of ownership and reports of changes in ownership of our equity securities.

To our knowledge, based solely upon a review of Forms 3 and 4 and amendments thereto furnished to Veritec under 17 CFR 240.16a-3(e) during our most recent fiscal year and Forms 5 and amendments thereto furnished to Veritec with respect to our most recent fiscal year or written representations from the reporting persons, we believe that during the year ended December 31, 2011 our directors, executive officers and persons who own more than 10% of our common stock complied with all Section 16(a) filing requirements.

Committee and Board Meetings

One meeting of our Board of Directors was held in fiscal 2015. Our audit committee members did not change during fiscal year 2015. The directors have regularly communicated to discuss our affairs in addition to formal board meetings to transact and approve appropriate business.

As of August 29, 2011, our Board has formed an audit committee composed of two of the current board members. The board of directors has determined that two members of the Audit Committee are independent under the rules of the SEC and the Nasdaq National Market and that Sandra Hartfield qualifies as an “audit committee financial expert,” as defined by the rules of the SEC. Our board of directors has adopted a written charter for the Audit Committee meeting applicable standards of the SEC and the Nasdaq Capital Market.

Director Independence

The board of directors has determined that two members of our board of directors, Laird Powers and Sandra Hartfield, are independent under the revised listing standards of The Nasdaq Stock Market, Inc. We intend to maintain at least two independent directors on our board of directors in the future.

Code of Ethics

We have adopted a code of ethics, which is available on our website at http://www.veritecinc.com/. Our code of ethics applies to all of our employees, including our officers and directors. If our Board grants any waivers of, or amendments to, the code of ethics to any of our executive officers or directors, we will disclose these matters through our website.

Family Relationships

None of our directors or executive officers is related to one another.

Legal Proceedings

To the best of our knowledge, none of our executive officers or directors are parties to any material proceedings adverse to Veritec, have any material interest adverse to Veritec or have, during the past ten years:

•

been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

•

had any bankruptcy petition filed by or against him/her or any business of which he/she was a general partner or executive officer, either at the time of the bankruptcy or within two years prior to that time;

•

been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his/her involvement in any type of business, securities, futures, commodities or banking activities;

•

been found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

•

been subject to, or party to, any judicial or administrative order, judgment, decree , or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of (i) any Federal or State securities or commodities law or regulation, (ii) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Corporate Governance

We are committed to having sound corporate governance principles. We believe that such principles are essential to running our business efficiently and to maintaining our integrity in the marketplace.

There have been no changes to the procedures by which stockholders may recommend nominees to our Board of Directors.

Director Qualifications

We believe that our directors should have the highest professional and personal ethics and values, consistent with our longstanding values and standards. They should have broad experience at the policy-making level in business or banking. They should be committed to enhancing stockholder value and should have sufficient time to carry out their duties and to provide insight and practical wisdom based on experience. Their service on other boards of public companies should be limited to a number that permits them, given their individual circumstances, to perform responsibly all director duties for us. Each director must represent the interests of all stockholders. When considering potential director candidates, the board of directors also considers the candidate’s character, judgment, diversity, age and skills, including financial literacy and experience in the context of our needs and the needs of the board of directors.

ITEM 11. EXECUTIVE COMPENSATION

Summary Compensation Table

The following table summarizes all compensation for fiscal years 2015 and 2014 who was the only individual that served as a principal executive officer during the last fiscal year, and who was the only “Named Executive Officer” of the Company.

Name	Year		Salaries ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		All Other Compensation ($)		Total ($)
Van Thuy Tran Chief Executive Officer		2015	$	150,000		—	$	11,250		—		—	$	161,250
		2014	$	150,000		—		—		—		—	$	150,000

Employment Agreements

Van Thuy Tran

On December 5, 2008, the Company entered into an employment agreement with Van Thuy Tran providing for an annual base salary of $150,000 and customary medical and other benefits. The agreement may be terminated by either party upon 30 days’ notice. In the event the Company terminates the agreement without cause, Ms. Tran will be entitled to $1,000,000 payable upon termination. If Ms. Tran is terminated by the Company without cause, she will be entitled to severance equal to 12 months compensation and benefits. The Company has also agreed to indemnify Ms. Tran against any liability or damages incurred within the scope of her employment.

Director Compensation

The following table summarizes the compensation paid to our directors for the fiscal year ended June 30, 2015:

Name	Year		Fees Earned or Paid in Cash ($)		Bonus ($)		Stock Awards ($)		Option Awards) ($)		All Other Compensation ($)		Total ($)

Van Tran Director and Chief Executive Officer (1)	2015		-		-		-		-		-		-
Sandra Hartfield Director (1) (2)		2015		—		—	$	3,750		—		—	$	3,750
Keith Lane Director (1)		2015		—		—		—		—		—
Laird Powers Director (1)		2015		—		—	$	11,250		—		—	$	11,250
Joseph Valandra Director (1)(2)		2015		—		—		—		—		—		—

(1)

Directors who are employed by the Company do not receive separate compensation for services on the Board of Directors. Members of the Board of Directors who are not employees of the Company currently receive no fees. In addition, members of the Board of Directors are reimbursed for any expenses incurred in attending the meetings.

(2)

On October 10, 2014, the Company named Joseph Valandra to the Board of Directors of Veritec, Inc. Sandra Hartfield resigned as a Board member on October 10, 2014.

Outstanding Equity Awards at Fiscal Year End

None of our Named Executive Officers has outstanding equity awards received as compensation, including unexercised options, stock that has not vested or equity incentive plan awards, as of the end of the Company's last completed fiscal year.

ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Beneficial ownership is determined in accordance with the rules of the SEC. Shares of common stock subject to options or warrants currently exercisable or exercisable within 60 days of December 15, 2015 are deemed outstanding for computing the percentage ownership of the stockholder holding the options or warrants but are not deemed outstanding for computing the percentage ownership of any other stockholder. Unless otherwise indicated in the footnotes to this table, we believe stockholders named in the table have sole voting and sole investment power with respect to the shares set forth opposite such stockholder’s name. Percentage of ownership is based on approximately 39,538,007 shares of common stock outstanding as of December 15, 2015.

The following table reflects, as of the date of this Annual Report, the beneficial common stock ownership of: (a) each of our directors, (b) each of our current named executive officers, (c) each person known by us to be a beneficial holder of 5% or more of our common stock, and (d) all of our executive officers and directors as a group.

Except as otherwise indicated below, the persons named in the table have sole voting and investment power with respect to all shares of common stock held by them. Unless otherwise indicated, the principal address of each listed executive officer and director is 2445 Winnetka Avenue North, Golden Valley, MN 55427.

Name	Number of Shares Beneficially Owned	Percent of Shares
Laird Powers(2)	277,984	0.7%
Van Thuy Tran	229,250	0.6%
Keith Lane	150,000	0.4%
Joseph Valandra	100,000	0.3%
All Officers and Directors as a group (4 persons)	757,234	1.9%
The Matthews Group LLC (1)	29,977,547	75.8%

	(1)	The above shares include 50% of the shares owned or issuable to The Matthews Group. Van Thuy Tran and Lawrence J. Johanns each own 50% of The Matthews Group.

	(2)	Includes 25,000 unexercised warrants issued for note payable that vested in March 2009.

ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The Company's transactions with its officers, directors and affiliates have been and such future transactions will be, on terms no less favorable to the Company than could have been realized by the Company in arms-length transactions with non-affiliated persons and will be approved by the board of directors.

The Company leases its U.S. office facilities from its Chief Executive Officer under a lease that expired June 30, 2015 and was automatically extended for two one-year term and requiring monthly payments of $4,200 plus common area costs. Rent expense, included in operating cost, to related parties was $52,200 and $52,200 in 2015 and 2014, respectively. Future remaining minimum lease payments total $100,800 through 2017.

During 2015, the Company issued to The Mathews Group unsecured notes totaling $327,500 at interest rate of 10%, due on demand. During 2014, the Company issued to The Mathews Group unsecured notes totaling $68,500 at interest rate of 10%, due on demand.

Item 14 Principal Accountant Fees and Services

Audit Fees

The aggregate fees billed by Weinberg & Company, P.A. for professional services rendered for the audit of our annual consolidated financial statements, including reviews of the interim consolidated financial statements, for fiscal year ended June 30, 2015 and 2014 was $48,200 and $39,800 respectively.

Audit Related Fees

None.

Tax Fees

None.

All Other Fees

None.

Audit Committee Pre-Approval Policies and Procedures

Under the SEC’s rules, the Audit Committee is required to pre-approve the audit and non-audit services performed by the independent registered public accounting firm in order to ensure that they do not impair the auditors’ independence. The Commission’s rules specify the types of non-audit services that an independent auditor may not provide to its audit client and establish the Audit Committee’s responsibility for administration of the engagement of the independent registered public accounting firm.

Consistent with the SEC’s rules, the Audit Committee Charter requires that the Audit Committee review and pre-approve all audit services and permitted non-audit services provided by the independent registered public accounting firm to us or any of our subsidiaries. The Audit Committee may delegate pre-approval authority to a member of the Audit Committee and if it does, the decisions of that member must be presented to the full Audit Committee at its next scheduled meeting. Accordingly, all audit services and non-audit services described in this Item 14 were pre-approved by the Audit Committee.

There were no hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees.

PART IV

ITEM 15 EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) 1. Financial Statements

See Index to Financial Statements in Item 8 of this Annual Report on Form 10-K, which is incorporated herein by reference.

2. Financial Statement Schedules

All other financial statement schedules have been omitted because they are either not applicable or the required information is shown in the financial statements or notes thereto.

3. Exhibits

See the Exhibit Index which follows the signature page of this Annual Report on Form 10-K, which is incorporated herein by reference.

(b) Exhibits

See Item 15(a) (3) above.

(c) Financial Statement Schedules

See Item 15(a) (2) above.

SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		VERITEC, INC., a Nevada corporation
January 21, 2016
	By:	/s/ Van Thuy Tran
		Van Thuy Tran
		Chief Executive Officer
		(Principal Executive Officer)

Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date

/s/ VAN THUY TRAN	Chief Executive Officer and Chairman of the Board of Directors	January 21, 2016
Van Thuy Tran	(Principal Executive Officer)

/s/ LAIRD POWERS	Director	January 21, 2016
Lair Powers

/s/ KEITH LANE		Director		January 21, 2016
Keith Lane

/s/ JOSEPH VALANDRA		Director		January 21, 2016
Joseph Valandra

EXHIBIT INDEX

3.1

Restated Articles of Incorporation of Veritec, Inc. dated May 3, 1997 (incorporated by reference to exhibit 3(i) to Veritec’s Quarterly Report on Form 10QSB for the quarter ended March 31, 2007, as filed on May 15, 2007).

3.2

Bylaws of Veritec, Inc. (incorporated by reference to exhibit 3(ii) to Veritec’s Quarterly Report on Form 10QSB for the quarter ended December 31, 2006, as filed on February 14, 2007).

10.1

Subscription Agreement and Letter of Investment Intent between Veritec, Inc. and various accredited investors dated March 3, 2009 (incorporated by reference to exhibit 10.1 to Form 10-Q for the quarter ended March 31, 2009, as filed on May 15, 2009).

10.2

Unsecured Term Promissory Note in favor of various lenders, dated March 3, 2009 (incorporated by reference to exhibit 10.2 to Form 10-Q for the quarter ended March 31, 2009, as filed on May 15, 2009).

10.3

Warrant to Purchase Common Stock issued to various accredited investors, dated March 3, 2009 (incorporated by reference to exhibit 10.3 to Form 10-Q for the quarter ended March 31, 2009, as filed on May 15, 2009).

10.4*

Employment Agreement by and between Veritec, Inc. and Jeffrey Hattara dated January 5, 2009 (incorporated by reference to exhibit 10.4 to Form 10-K for the year ended June 30, 2010, as filed on October 12, 2010).

10.5*

Employment Agreement by and between Veritec, Inc. and Thomas McPherson dated December 5, 2008 (incorporated by reference to exhibit 10.5 to Form 10-K for the year ended June 30, 2010, as filed on October 12, 2010).

10.6

Form of Stock Option Agreement (incorporated by reference to exhibit 10.6 to Form 10-K for the year ended June 30, 2010, as filed on October 12, 2010).

10.7

Form of Restricted Stock Agreement (incorporated by reference to exhibit 10.7 to Form 10-K for the year ended June 30, 2010, as filed on October 12, 2010).

10.8

2008 Incentive Compensation Bonus Plan (incorporated by reference to exhibit 10.8 to Form 10-K for the year ended June 30, 2011 as filed on October 13, 2011).

	10.9*	Employment Agreement by and between Veritec, Inc. and Van Thuy Tran dated December 5, 2008 (incorporated by reference to exhibit 10.9 to Form 10-K for the year ended June 30, 2011 filed on October 13, 2011).

	10.10*	Employment Agreement by and between Veritec, Inc. and John Quentin dated May 29, 2009 (incorporated by reference to exhibit 10.10 to Form 10-K for the year ended June 30,2011, as filed on October 13, 2011).

10.11

Amended and Restated Promissory Note by Veritec, Inc. in favor of Larry Konfirst dated May 18, 2012 (incorporated by reference to exhibit 10.1 to Form 10-Q for the quarter ended March 31, 2012, as filed on May 21, 2012).

10.12

Letter Agreement by and among Veritec, Inc. and Larry Konfirst, John Johanns and Mary Adams dated May 18, 2012 (incorporated by reference to exhibit 10.2 to Form 10-Q for the quarter ended March 31, 2012 as filed on May 21, 2012).

10.13

Asset Purchase Agreement by and among Veritec, Inc. and Tangible Payments, LLC dated September 30, 2014, filed herewith..

14.

Code of Ethics of Veritec, Inc. (incorporated by reference to exhibit 14 to Veritec, Inc.’s Annual Report on Form 10KSB for the year ended June 30, 2007, as filed).

21.1

Subsidiaries of Veritec, Inc. (incorporated by reference to exhibit 21.1 to Form 10-K for the year ended June 30, 2010, as filed on October 12, 2010).

31.1

Certification by Chief Executive Officer required by Rule 13a/14(a)/15d14(a) under the Securities Exchange Act of 1934, filed herewith.

32.1**

Veritec, Inc. Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. §1350), filed herewith.

101.1⁺

The following financial information from Veritec, Inc.’s Annual Report on Form 10-K for the year ended June 30, 2015 formatted in XBRL. (i) Consolidated Balance Sheets a June 30, 2015 and June 30, 2014; (ii) Consolidated Statement of Operations for the year ended June 30, 2015 and 2014; (iii) Consolidated Statement of Stockholders’ Deficit as at June 30, 2015; (v) Consolidated Statement of Cash Flows for the year ended June 30, 2015 and 2014; Notes to the Consolidated Financial Statements.

*	Management compensatory plan or arrangement.
**	The certifications attached as Exhibits 32.1 and 32.2 accompany the Annual Report on Form 10-K pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed “filed” by Veritec, Inc. for purposes of Section 18 of the Securities Exchange Act.
⁺	Furnished herewith. XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this “Agreement”), is made and entered into as of September 30, 2014 (the “Closing Date”) by and among Veritec, Inc., a Nevada corporation (“Purchaser”), on the one hand, and Tangible Payments, LLC, a Maryland limited liability company (“Seller”), Falcon Financial Industries, LLC a Maryland limited liability company (“Falcon”), the holder of all the issued and outstanding membership interests in Seller, and Timothy M. Spear, an individual and sole member and manager of Falcon (“Spear”), on the other hand. Capitalized terms not otherwise defined herein have the meanings set forth in Section 9.1.

RECITALS

WHEREAS, Seller is engaged in the business of developing online payment technology (the “Business”); and

WHEREAS, Seller desires to sell, transfer and assign to Purchaser, and Purchaser desires to purchase and acquire from Seller, substantially all of the assets of Seller relating to the operation of the Business, and in connection therewith, Purchaser has agreed to assume certain of the liabilities of Seller relating to the Business, all on the terms set forth herein.

NOW, THEREFORE, in consideration of the premises and the mutual covenants, conditions and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

PURCHASE AND SALE OF ASSETS AND CLOSING

1.1. Purchase of Assets.

(a) Purchased Assets. Subject to the terms and conditions set forth in this Agreement, Seller will sell, transfer, convey, assign and deliver to Purchaser, and Purchaser will purchase at the Closing, free and clear of all Liens other than Permitted Liens, all of Seller’s right, title and interest in, to and under the following Assets and Properties of Seller as the same shall exist on the Closing Date (collectively, the “Purchased Assets”):

(i) Intellectual Property. All of the Company Owned Intellectual Property identified on Exhibit A (including Seller’s goodwill therein) and all rights, privileges, claims, causes of action and options relating or pertaining to such Company Owned Intellectual Property; and

(ii) Contracts. The Contracts listed on Exhibit B (the “Purchased Contracts”).

(b) Excluded Assets. Notwithstanding anything in this Agreement to the contrary, the Purchased Assets shall exclude any assets of Seller not listed in Section 1.1 (the “Excluded Assets.”)

1.2. Liabilities.

(a) Assumed Liabilities. In connection with the sale, transfer, conveyance, assignment and delivery of the Purchased Assets pursuant to this Agreement, on the terms and subject to the conditions set forth in this Agreement, at the Closing, Purchaser will assume and agree to pay, perform and discharge when due the following obligations of Seller, as the same shall exist on the Closing Date (the “Assumed Liabilities”), and no others:

(i) Obligations under Contracts. All obligations of Seller under the Purchased Contracts arising and to be performed on or after the Closing Date, and excluding any such obligations arising or to be performed prior to the Closing Date; and

(iii) Obligations for Transfer Taxes. All obligations of Seller for Transfer Taxes.

(b) Excluded Liabilities. Except as specifically provided in Section 1.2(a), the Purchaser shall not assume by virtue of this Agreement or the transactions contemplated hereby, and shall have no liability for, any Liabilities of Seller (including, without limitation, Liabilities related to the Business) of any kind, character or description whatsoever (the “Excluded Liabilities”).

1.3. Purchase Price. As consideration for the Purchased Assets and for the covenant of Seller contained in Section 5.1, Purchaser agrees to issue to Seller or its designee(s) (i) 250,000 shares of restricted common stock of Purchaser (“Shares”) and to pay to Seller (ii) the Earnout Payment. For purposes of this Agreement, “Earnout Payment” means the sum of $155,000 which is payable on a monthly basis from the Net Profits commencing three (3) months after the Closing Date; provided however the balance of the Earnout Payment shall be payable in full at such time as Purchaser receives Equity Investments (in one or more tranches) aggregating $1.3 million.

1.4. Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) will take place contemporaneously and simultaneously upon the full execution and delivery of this Agreement as facilitated via a conference call among the parties hereto immediately followed by the electronic (i.e., email/PDF) or facsimile exchange of signatures to this Agreement and the other closing deliveries. To the extent permitted by Law and GAAP, for tax and accounting purposes, the parties will treat the Closing as being effective as of 11:59 p.m. E.S.T. on the Closing Date. At the Closing:

(a) Seller will deliver to Purchaser (i) the executed Bill of Sale substantially in the form of Exhibit C hereto, (ii) the executed Assignment and Assumption Agreement substantially in the form of Exhibit D hereto, (iii) a written consent of the sole Member of Seller approving the transactions contemplated by this Agreement, and (iv) such other good and sufficient instruments of conveyance, assignment and transfer, in form and substance reasonably acceptable to Purchaser’s counsel, as shall be effective to vest in Purchaser good title to the Assets, and

(b) Purchaser will deliver to Seller (i) the executed Bill of Sale substantially in the form of Exhibit C hereto, (ii) the executed Assignment and Assumption Agreement substantially in the form of Exhibit D hereto, (iii) resolutions of the Board of Directors of Purchaser approving to the transactions contemplated by this Agreement, (iv) such other good and sufficient instruments of assumption, in form and substance reasonably acceptable to Seller’s counsel, as shall be effective to cause Purchaser to assume the Assumed Liabilities as, and to the extent provided in, Section 1.2(a); and (v) a stock certificate for the Shares issued in the name of Falcon Financial Industries, LLC.

At the Closing, there shall also be delivered to Seller and Purchaser the certificates and other contracts, documents and instruments required to be delivered under Article VI.

1.5. Further Assurances; Post-Closing Cooperation.

(a) At any time or from time to time after the Closing, at Purchaser request and without further consideration, Seller shall execute and deliver to Purchaser such other instruments of sale, transfer, conveyance, assignment and confirmation, provide such materials and information and take such other actions as Purchaser may reasonably deem necessary or desirable in order more effectively to transfer, convey and assign to Purchaser, and to confirm Purchaser’s title to, all of the Assets, and, to the full extent permitted by Law, to put Purchaser in actual possession and operating control of the Assets and to assist Purchaser in exercising all rights with respect thereto, and otherwise to cause Seller to fulfill its obligations under this Agreement and the Transaction Documents.

(b) Effective on the Closing Date, Seller hereby constitutes and appoints Purchaser the true and lawful attorney of Seller, with full power of substitution, in the name of Seller or Purchaser, but on behalf of and for the benefit of Purchaser: (i) to demand and receive from time to time any and all the Purchased Assets and to make endorsements and give receipts and releases for and in respect of the same and any part thereof; and (ii) to institute, prosecute, compromise and settle any and all Actions or Proceedings that Purchaser may deem proper in order to assert or enforce any claim of Purchaser in or to the Purchased Assets;. Seller hereby acknowledges that the appointment hereby made and the powers hereby granted are coupled with an interest and are not and shall not be revocable by it in any manner or for any reason.

(c) Following the Closing, each party will afford the other party, its counsel and its accountants, during normal business hours, reasonable access to the books, records and other data relating to the Purchased Assets in its possession with respect to periods prior to the Closing and the right to make copies and extracts therefrom, to the extent that such access may be reasonably required by the requesting party in connection with (i) the preparation of Tax Returns, (ii) the determination or enforcement of rights and obligations under this Agreement, (iii) compliance with the requirements of any Governmental or Regulatory Authority, (iv) the determination or enforcement of the rights and obligations of any Indemnified Party or (v) in connection with any actual or threatened Action or Proceeding involving the party seeking access or the Purchased Assets. Further each party agrees for a period extending six (6) years after the Closing Date not to destroy or otherwise dispose of any such books, records and other data unless such party shall first offer in writing to surrender such books, records and other data to the other party and such other party has not agreed in writing to take possession thereof during the ten (10) Business Day period after such offer is made.

(d) If, in order properly to prepare its Tax Returns, other documents or reports required to be filed with Governmental or Regulatory Authorities or its financial statements or to fulfill its obligations hereunder, it is necessary that a party be furnished with additional information, documents or records relating to the Purchased Assets not referred to in paragraph (c) above, and such information, documents or records are in the possession or control of the other party, such other party shall use its best efforts to furnish or make available such information, documents or records (or copies thereof) at the recipient’s request, cost and expense.

1.6. Third-Party Consents. To the extent that any Purchased Contract is not assignable without the consent of another party, this Agreement shall not constitute an assignment or an attempted assignment thereof if such assignment or attempted assignment would constitute a breach thereof. Seller and Purchaser shall use their best efforts to obtain the consent of such other party to the assignment of any such Purchased Contract to Purchaser in all cases in which such consent is or may be required for such assignment. If any such consent shall not be obtained, Seller shall cooperate with Purchaser in any reasonable arrangement designed to provide for Purchaser the benefits intended to be assigned to Purchaser under the relevant Purchased Contract.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF SELLER, FALCON AND SPEAR

In order to induce Purchaser to enter into this Agreement, Seller, Falcon and Spear jointly and severally represent and warrant to Purchaser that the statements contained in this Article II are true, correct and complete as of the date hereof. Such representations and warranties are subject to the qualifications and exceptions set forth in the Disclosure Schedules delivered concurrently herewith.

2.1. Organization of Seller; No Subsidiaries. Seller is a limited liability company duly organized and validly existing under the Laws of the State of Maryland, and has full corporate power and authority to conduct the Business as to the extent now conducted and to own and use the Purchased Assets. The Company is not currently reflected as being in good standing with the State of Maryland due to the failure to timely file its Annual Report/Personal Property Return with the State of Maryland. Seller does not own any equity interest, directly or indirectly, in any corporation, partnership, limited liability company, joint venture, business trust or other entity, whether incorporated or not, that is engaged in any aspect of the Business or owns or has rights with respect to the Purchased Assets.

2.2. Authority. Seller has full power and authority to execute and deliver this Agreement and the Transaction Documents to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby, including without limitation to sell and transfer (pursuant to this Agreement) the Purchased Assets. The execution, delivery and performance by Seller of this Agreement and the Transaction Documents to which it is a party have been duly and validly authorized by the sole member and manager of Seller. This Agreement constitutes, and each of the Transaction Documents to which Seller is a party, when executed, will constitute, the valid and legally binding obligation of Seller, enforceable against Seller in accordance with their respective terms and conditions except to the extent that enforcement may be limited by applicable bankruptcy, insolvency, reorganization, or moratorium laws, or other laws affecting the enforcement of creditors’ rights or by the principles governing the availability of equitable remedies.

2.3. No Conflicts. The execution and delivery by Seller of this Agreement does not, and the execution and delivery by Seller of the Transaction Documents to which it is a party, the performance by Seller of its obligations hereby and thereby will not: (a) conflict with or result in a violation or breach of any of the terms, conditions or provisions of the certificate of formation or limited liability company operating agreement (if any) of Seller; (b) conflict with or result in a violation or breach of any term or provision of any Law or Order applicable to Seller or any of the Purchased Assets; or (c) except as disclosed in Section 2.3 of the Disclosure Schedule, (i) conflict with or result in a violation or breach of, (ii) constitute (with or without notice or lapse of time or both) a default under, (iii) require Seller to obtain any consent, approval or action of, make any filing with or give any notice to any Person as a result or under the terms of, or (iv) result in the creation or imposition of any Lien upon Seller or any of the Purchased Assets under, any Contract or License to which Seller is a party or by which any of the Purchased Assets are bound.

2.4. Governmental Approvals and Filings. No consent, approval or action of, filing with or notice to any Governmental or Regulatory Authority on the part of Seller is required in connection with the execution, delivery and performance of this Agreement or any of the Transaction Documents to which it is a party or the consummation of the transactions contemplated hereby or thereby.

2.5. Title to Purchased Assets. Seller has good and marketable title to all of the Purchased Assets, free and clear of all Liens, except Permitted Liens.

2.6. Taxes.

(a) Tax Returns. Except as disclosed in Section 2.6(a) to the Disclosure Schedule, all Tax Returns relating to the Business or the Assets required to be filed by Seller have been duly filed on a timely basis and such Tax Returns are true, correct and complete in all respects. All Taxes relating to the Business and the Purchased Assets owed by Seller (whether or not shown on any Tax Return) have been paid. No claim has ever been made by any Governmental or Regulatory Authority in a jurisdiction where Seller does not file Tax Returns that Seller is or may be subject to taxation by that jurisdiction. There are no liens or security interests on any of the Assets with respect to Taxes, other than liens for Taxes not yet due and payable.

(b) No Other Tax Audits and No Tax Deficiencies. Except as set forth in Section 2.6(b) of the Disclosure Schedule, Seller’s Tax Returns relating to the Business or the Assets have never been audited by any Governmental or Regulatory Authority, nor is any such audit in process, pending, or, to Seller’s Knowledge, threatened (either in writing or verbally, formally or informally). No deficiencies exist (whether or not asserted by any Governmental or Regulatory Authority) or have been asserted (either in writing or verbally, formally or informally), or are expected to be asserted, with respect to Taxes of Seller relating to the Business and the Purchased Assets. Seller has not received notice (either in writing or verbally, formally or informally) and does not expect to receive notice that it has not filed a Tax Return or paid Taxes required to be filed or paid by it with respect to and including its taxable income or activities relating to the Business or the Purchased Assets. Seller is not a party to any action or proceeding for assessment or collection of Taxes, nor has such an action or proceeding been asserted or, to Seller’s Knowledge, threatened (either in writing or verbally, formally or informally) against Seller or the Purchased Assets.

2.7. Legal Proceedings. Except as disclosed in Section 2.7 of the Disclosure Schedule:

(a) there are no Actions or Proceedings pending or, to the Knowledge of Seller, threatened that relate to or affect the Business, the Purchased Assets or the Assumed Liabilities, including but not limited to Actions or Proceedings that could reasonably be expected to result in the issuance of an Order restraining, enjoining or

otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement or any of the Transaction Documents or otherwise result in a material diminution of the benefits contemplated by this Agreement or any of theTransaction Documents;

(b) there are no facts or circumstances Known to Seller that could reasonably be expected to give rise to any Action or Proceeding that would be required to be disclosed pursuant to clause (a) above; and

(c) there are no Orders outstanding against Seller with respect to the Business, the Purchased Assets or the Assumed Liabilities.

2.8. Compliance With Laws and Orders. Seller is not, nor has it at any time within the last five (5) years been, nor has it received any notice that it is or has at any time within the last five (5) years been, in violation of or in default under, in any material respect, any Law or Order applicable to the Business or the Purchased Assets.

2.9. Intellectual Property Rights.

(a) Seller owns all right, title and interest in and to all of Company Owned Intellectual Property, free and clear of all claims and Liens (including without limitation distribution rights).

(b) Section 2.9(b) of the Disclosure Schedule contains a list of all: (i) software which the Company has licensed from third parties (other than standard off the shelf software) (the “Third Party Licenses”) that Seller is licensed or otherwise authorized by such third parties to incorporate into the Intellectual Property; and (ii) all “freeware” and “shareware” incorporated into the Intellectual Property. Each of the Third Party Licenses constitutes a legal, valid and binding agreement, enforceable in accordance with its terms, of Seller and, to Seller’s Knowledge, of each other party thereto, except to the extent that enforcement may be limited by applicable bankruptcy, insolvency, reorganization, or moratorium laws, or other laws affecting the enforcement of creditors’ rights or by the principles governing the availability of equitable remedies.

(c) No claims have been asserted against Seller (and Seller is not aware of any claims that are likely to be asserted against Seller or which have been asserted against others) by any person challenging Seller’s use or distribution of any patents, trademarks, trade names, copyrights, trade secrets, software, technology, know-how or processes related to the Purchased Assets or challenging or questioning the validity or effectiveness of any license or agreement relating thereto (including, without limitation, the Third Party Licenses). To the Knowledge of Seller, there is no valid basis for any claim of the type specified in the immediately preceding sentence that could in any material way relate to or interfere with the continued enhancement and exploitation by Purchaser of any of the Company Owned Intellectual Property.

(d) To the Knowledge of Seller, none of the Purchased Assets or the use of the Intellectual Property by Seller in the conduct of the Business as currently conducted infringes on the rights of, constitutes misappropriation of, or involves unfair competition with respect to, any proprietary information or intangible property right of any third person or entity, including without limitation any patent, trade secret, copyright, trademark or trade name.

(e) Except as disclosed in Section 2.9(e) of the Disclosure Schedule, Seller has not granted any third party any right or license to reproduce, distribute, market or exploit any of the Intellectual Property or any adaptations, translations, or derivative works based on the Intellectual Property or any portion thereof.

(f) All designs, drawings, specifications, source code, object code, documentation, flow charts and diagrams incorporating, embodying or reflecting any of the Company Owned Intellectual Property at any stage of their development were written, developed and created solely and exclusively by employees of Tangible Software, Inc. (who assigned such Intellectual Property to Seller) without the assistance of any third party, or were created by third parties who assigned ownership of their rights to Tangible Software, Inc. or Seller in valid and enforceable agreements.

(g) To the Knowledge of Seller, each person currently or formerly engaged by Seller (including independent contractors, if any) that has or had access to confidential information of Seller relating to the Company Owned Intellectual Property has executed a confidentiality and non-disclosure agreement in the form previously provided to counsel for Purchaser. Such confidentiality and non-disclosure agreements constitute valid and binding obligations of Seller and, to Seller’s Knowledge, such person, enforceable in accordance with their respective terms, except as enforceability may be limited by general equitable principles or the exercise of judicial discretion in accordance with such principles.

(h) No product liability or warranty claim with respect to any products related to the Business has been communicated to or overtly threatened against Seller nor, to the Knowledge of Seller, is there any specific situation, set of facts or occurrence that provides a basis for any such claim.

2.10 Purchased Contracts.

(a) Each of the Purchased Contracts is in full force and effect and constitutes a legal, valid and binding agreement, enforceable in accordance with its terms, of Seller and, to Seller’s Knowledge, of each other party thereto, except to the extent that enforcement may be limited by applicable bankruptcy, insolvency, reorganization, or moratorium laws, or other laws affecting the enforcement of creditors’ rights or by the principles governing the availability of equitable remedies. Neither Seller nor, to the Knowledge of Seller, any other party to such Purchased Contract is, or has received notice that it is, in violation or breach of or default under any such Purchased Contract (or with notice or lapse of time or both, would be in violation or breach of or default under any such Purchased Contract) in any material respect.

(b) Except as disclosed in Section 2.3 of the Disclosure Schedule, the execution, delivery and performance by Seller of this Agreement and the Transaction Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, will not (i) result in or give to any Person any right of termination, cancellation, acceleration or modification in or with respect to, (ii) result in or give to any Person any additional rights or entitlement to increased, additional, accelerated or guaranteed payments under, or (iii) result in the creation or imposition of any Lien upon Seller or any of the Purchased Assets under, any Purchased Contract.

2.11. Brokers. All negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by Seller directly with Purchaser without the intervention of any Person on behalf of Seller in such manner as to give rise to any valid claim by any Person for a finder’s fee, brokerage commission or similar payment.

2.13 Tax Advisors. Seller is relying solely on its own tax advisors with respect to the federal, state and local tax consequences of the transactions contemplated by this Agreement and not on any statements or representations of Purchaser or any of its agents and understands that it shall be responsible for its own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement.

2.14. Disclosure. No representation or warranty contained in this Agreement, and no statement contained in the Disclosure Schedule or in any certificate, list or other writing furnished to Purchaser pursuant to any provision of this Agreement, in each case relating to the Purchased Assets, Assumed Liabilities or the Business, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements herein or therein, in the light of the circumstances under which they were made, not misleading.

ARTICLE III

REPRESENTATIONS OF FALCON AND SPEAR

Falcon and Spear jointly and severally represent and warrant to Purchaser as follows:

3.1 Investment Intent. Falcon is acquiring the Shares of Purchaser for investment for its own account, not as a nominee or agent, and not with a view to, or for resale in connection with, any distribution thereof in violation of the Securities Act.

3.2 Disclosure of Information. Falcon believes it has received all the information it considers necessary or appropriate for deciding whether to purchase the Shares. Falcon further represents that it has had an opportunity to ask questions and receive answers from Purchaser regarding the Shares and the business, properties, prospects and financial condition of Purchaser. Falcon understands that Purchaser is NOT current in its reporting requirements under the Securities Act and this will affect transferability of the Shares. Furthermore, Purchaser’s common stock may be subject to deregistration and Purchaser may be subject to penalties associated with its delinquency, thereby affecting the value of Falcon’s Shares

3.3 Investment Experience. Falcon is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, can bear the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Shares.

3.4 Accredited Investor. Falcon is an “accredited investor” within the meaning of the Rule 501 of Regulation D, as promulgated under the Securities Act, as presently in effect.

3.5 Restricted Securities. Falcon understands that the Shares are characterized as “restricted securities” under the federal securities laws inasmuch as they are being acquired from Purchaser in a transaction not involving a public offering and that under such laws and applicable regulations such shares may be resold without registration under the Act only in certain limited circumstances. In the absence of an effective registration statement covering the Shares or an available exemption from registration under the Act, the shares must be held indefinitely. In this connection, Falcon represents that it is familiar with Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Act, including without limitation, the Rule 144 condition that current information about Purchaser be available to the public. Such information is NOT now available.

3.6 Further Limitations on Disposition. Without in any way limiting the representations set forth above, Falcon further agrees not to make any disposition of all or any portion of the Shares for a term of one year from the Closing Date.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser hereby represents and warrants to Seller as follows:

4.1. Organization. Purchaser is a corporation duly organized, validly existing and in good standing under the Laws of the State of Nevada. Purchaser has full corporate power and authority to enter into this Agreement and the Transaction Documents to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.

4.2. Authority. The execution and delivery by Purchaser of this Agreement and the Transaction Documents to which it is a party, and the performance by Purchaser of its obligations hereunder and thereunder, have been duly and validly authorized by the Board of Directors of Purchaser, no other corporate action on the part of

Purchaser or its stockholders being necessary. This Agreement has been duly and validly executed and delivered by Purchaser and constitutes, and upon the execution and delivery by Purchaser of the Transaction Documents to which it is a party, such Transaction Documents will constitute, legal, valid and binding obligations of Purchaser enforceable against Purchaser in accordance with their terms.

4.3. No Conflicts. The execution and delivery by Purchaser of this Agreement do not, and the execution and delivery by Purchaser of the Transaction Documents to which it is a party, the performance by Purchaser of its obligations under this Agreement and such Transaction Documents and the consummation of the transactions contemplated hereby and thereby will not: (a) conflict with or result in a violation or breach of any of the terms, conditions or provisions of the certificate of incorporation or by-laws of Purchaser; (b) conflict with or result in a violation or breach of any term or provision of any Law or Order applicable to Purchaser or any of its Assets and Properties; or (c) (i) conflict with or result in a violation or breach of, (ii) constitute (with or without notice or lapse of time or both) a default under, (iii) require Purchaser to obtain any consent, approval or action of, make any filing with or give any notice to any Person as a result or under the terms of, or (iv) result in the creation or imposition of any Lien upon Purchaser or any of its Assets or Properties under, any Contract or License to which Purchaser is a party or by which any of its Assets and Properties is bound.

4.4. Governmental Approvals and Filings. No consent, approval or action of, filing with or notice to any Governmental or Regulatory Authority on the part of Purchaser is required in connection with the execution, delivery and performance of this Agreement or the Transaction Documents to which it is a party or the consummation of the transactions contemplated hereby or thereby.

4.5. Legal Proceedings. There are no Actions or Proceedings pending or, to the Knowledge of Purchaser, threatened against, relating to or affecting Purchaser which could reasonably be expected to result in the issuance of an Order restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement or any of the Transaction Documents.

4.6. Brokers. All negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by Purchaser directly with Seller without the intervention of any Person on behalf of Purchaser in such manner as to give rise to any valid claim by any Person for a finder’s fee, brokerage commission or similar payment.

4.7 Purchaser is Not Current in Public Reporting Obligations. Purchaser is a public company subject to the reporting obligations of the Securities Exchange Act of 1934, as amended, and is NOT current in its reporting obligations thereunder. Purchaser’s Shares may be subject to deregistration and Purchaser may be subject to penalties associated with its delinquency.

ARTICLE V

POST CLOSING COVENANTS OF SELLER

Seller covenants and agrees with Purchaser that, at all times from and after the Closing Date, for the period specified herein or, if no period is specified herein, indefinitely, Seller will comply with all covenants and provisions of this Article V, except to the extent Purchaser may otherwise consent in writing

5.1. Nonsolicitation; Noncompetition

(a) Seller will not, for a period of three (3) years from the Closing Date, directly or indirectly provide the same or substantially the same services to a Competing Business anywhere in the Restricted Area, regardless of whether these services are provided as a principle, agent, consultant, or otherwise, provided, however, that mere ownership of securities having no more than one percent of the outstanding voting power of any Competing Business listed on any national

securities exchange or traded actively in the national over-the-counter market shall not be deemed to be in violation of this Agreement. For purposes of this Agreement, “Competing Business” shall mean the business of developing, designing, publishing, marketing, maintaining or distributing software applications which are competitive with the Company Owned Intellectual Property, and “Restricted Area” shall mean each and every market in which the Tangible Payments Division operates.

(b) Seller agrees that the restrictions encompassed by the covenants contained in this Section are necessary and reasonable in order to protect Purchaser in the utilization of the Purchased Assets.

(c) The parties hereto acknowledge and agree that any remedy at Law for any breach of the provisions of this Section would be inadequate, and Seller hereby consents to the granting by any court of an injunction or other equitable relief, without the necessity of actual monetary loss being proved, in order that the breach or threatened breach of such provisions may be effectively restrained.

5.2. Confidentiality; Enforcement of Contracts. Except as expressly permitted under this Agreement, Seller agrees that it will not make use of, disseminate or in any way disclose any information relating to or included in the Purchased Assets, including but not limited to the software, know-how, trade secrets and algorithms included in the Purchased Assets. Seller will immediately give notice to Purchaser of any unauthorized use or disclosure of such information.

5.3 Name Change. Seller will, as soon as reasonably practicable after Closing, file with the Maryland State Department of Assessments and Taxation an amendment to the Articles of Organization of Seller changing the name of Seller to a new name which does not include the words “Tangible Payments” or a words similar thereto and which will not suggest, directly or indirectly, that Seller retains any interest in the Purchased Assets.

ARTICLE VI

CONDITIONS TO OBLIGATIONS OF PURCHASER AND SELLER

6.1 Obligations of Purchaser. The obligations of Purchaser hereunder to purchase the Assets and to assume and to pay, perform and discharge the Assumed Liabilities are subject to the fulfillment, at or before the Closing, of each of the following conditions (all or any of which may be waived in whole or in part by Purchaser in its sole discretion):

(a) Performance. Seller shall have performed and complied with, in all material respects, each agreement, covenant and obligation required by this Agreement to be so performed or complied with by Seller at or before the Closing.

(b) Officer’s Certificate of Seller. Seller shall have delivered to Purchaser a certificate, dated the Closing Date, executed by the sole Member of Seller in the form attached hereto as Exhibit E.

(d) Proceedings. All proceedings to be taken on the part of Seller in connection with the transactions contemplated by this Agreement and all documents incident thereto shall be reasonably satisfactory in form and substance to Purchaser, and Purchaser shall have received copies of all such documents and other evidences as Purchaser may reasonably request in order to establish the consummation of such transactions and the taking of all proceedings in connection therewith.

6.2 Obligations of Seller. The obligations of Seller hereunder to sell the Assets are subject to the fulfillment, at or before the Closing, of each of the following conditions (all or any of which may be waived in whole or in part by Seller in its sole discretion):

(a) Performance. Purchaser shall have performed and complied with, in all material respects, each agreement, covenant and obligation required by this Agreement to be so performed or complied with by Purchaser at or before the Closing.

(b) Officer’s Certificate of Purchaser. Purchaser shall have delivered to Seller a certificate, dated the Closing Date and executed by the President of Purchaser, substantially in the form and to the effect of Exhibit F hereto.

(c) Deliveries. Purchaser shall have delivered to Seller a certificate for the Shares and the Transaction Documents to which it is a party.

(d) Proceedings. All proceedings to be taken on the part of Purchaser in connection with the transactions contemplated by this Agreement and all documents incident thereto shall be reasonably satisfactory in form and substance to Seller, and Seller shall have received copies of all such documents and other evidences as Seller may reasonably request in order to establish the consummation of such transactions and the taking of all proceedings in connection therewith.

ARTICLE VII

SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS

Notwithstanding any right of Purchaser (whether or not exercised) to investigate the Business or the Assets or any right of any party (whether or not exercised) to investigate the accuracy of the representations and warranties of the other party contained in this Agreement, Seller and Purchaser have the right to rely fully upon the representations, warranties, covenants and agreements of the other contained in this Agreement. The representations, warranties, covenants and agreements of Seller and Purchaser contained in this Agreement will survive the Closing (i) with respect to the representations and warranties contained in Section 2.9, for a period of seven (7) years from the Closing Date or (ii) with respect to all other representations, warranties, covenants and agreements, for a period of eighteen (18) months from the Closing Date, except that any representation, warranty, covenant or agreement that would otherwise terminate in accordance with clause (i) or (ii) above will continue to survive if a claim for indemnity shall have been made under Article VIII on or prior to such termination date, until such claim has been satisfied or otherwise resolved.

ARTICLE VIII

INDEMNIFICATION

8.1. Indemnification.

(a) Subject to the other Sections of this Article VIII, Seller shall indemnify Purchaser Indemnified Parties in respect of, and hold each of them harmless from and against, any and all Losses suffered, incurred or sustained by any of them or to which any of them becomes subject, resulting from, arising out of or relating to (i) any misrepresentation, breach of warranty or nonfulfillment of or failure to perform any covenant or agreement on the part of Seller contained in this Agreement, (ii) any claim or action brought against Purchaser which alleges that the Company Owned Intellectual Property infringes any patent, copyright, trade secret or other intellectual property right of any other person or entity or (iii) an Excluded Liability.

(b) Subject to the other Sections of this Article VIII, Purchaser shall indemnify the Seller Indemnified Parties in respect of, and hold each of them harmless from and against, any and all Losses suffered, incurred or sustained by any of them or to which any of them becomes subject, resulting from, arising out of or relating to (i) any misrepresentation, breach of warranty or nonfulfillment of or failure to perform any covenant or agreement on the part of Purchaser contained in this Agreement or (ii) an Assumed Liability.

(i) any claim for indemnification hereunder with respect to an alleged infringement by Company Owned Intellectual Property must be brought on or before 11:59 p.m (Eastern Time) on the seventh anniversary of the Closing Date; and

(ii) any other claim for indemnification hereunder must be brought on or before 11:59 p.m (Eastern Time) on the eighteen (18) month anniversary of the Closing Date.

8.2. Indemnification Procedures.

(a) In the case of any claim asserted by a third party against the Indemnified Party, a Claim Notice shall be given by the Indemnified Party to the Indemnifying Party promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and the Indemnified Party shall permit the Indemnifying Party (at the expense of such Indemnifying Party) to assume the defense of any claim or any litigation resulting therefrom; provided, that (i) counsel for the Indemnifying Party who shall conduct the defense of such claim or litigation shall be reasonably satisfactory to the Indemnified Party, and the Indemnified Party may participate in such defense at such Indemnified Party’s expense, and (ii) the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its indemnification obligation under this Agreement except to the extent that such failure results in a lack of actual notice to the Indemnifying Party and such Indemnifying Party is materially prejudiced as a result of such failure to give notice.

(b) In the event that the Indemnified Party shall in good faith determine that it may have available to it one or more defenses or counterclaims that are inconsistent with one or more of those that may be available to the Indemnifying Party in respect of such claim or any litigation relating thereto, the Indemnified Party shall have the right at all times to take over and assume control over the defense, settlement, negotiations or litigation relating to any such claim at the sole cost of the Indemnifying Party.

(c) In the event that the Indemnifying Party does not accept the defense of any matter as above provided, the Indemnified Party shall have the full right to defend against any such claim or demand, and shall be entitled to settle or agree to pay in full such claim or demand.

(d) Notwithstanding anything to the contrary in this Section 8.2: (i) except with the prior written consent of the Indemnified Party, no Indemnifying Party, in the defense of any such claim or litigation, shall consent to entry of any judgment or enter into any settlement that provides for injunctive or other monetary relief affecting the Indemnified Party or that does not include as an unconditional term thereof of the giving by each claimant or plaintiff to such Indemnified Party of a release from all Liability with respect to such claim or litigation; (ii) in the event that the Indemnified Party takes over and assumes control of the defense of any claim, the Indemnified Party shall not settle such claim or litigation without the prior written consent of the Indemnifying Party, (which consent may not be unreasonably withheld, conditioned or delayed); provided, however, that notwithstanding the foregoing, the Indemnified Party will not be required to refrain from paying any claim that has matured by an Order, unless an appeal is duly taken therefrom and exercise thereof has been stayed, nor will it be required to refrain from paying any claim where the delay in paying such claim would result in the foreclosure of a Lien upon any of the property or assets then held by the Indemnified Party or where any delay in payment would cause the Indemnified Party material economic loss.

(e) In any event, Seller and Purchaser shall cooperate in the defense of any claim or litigation subject to this Article 8 and the records of each shall be available to the other with respect to such defense.

8.3 Right of Offset.

The indemnification obligations set forth in this Article VIII may be satisfied in whole, or in part, by offset against obligations of Purchaser hereunder and against any obligation of Purchaser to issue Purchaser stock to Spear under any employment agreement between Purchaser and Spear.

ARTICLE IX

DEFINITIONS

9.1. Definitions.

(a) Defined terms. The following capitalized terms, as used in this Agreement, have the respective meanings given to them in the Section of this Agreement as set forth below adjacent to such terms:

Term	Section of the Agreement Where Defined
“Agreement”	Preamble
“Assumed Liabilities”	Section 1.2(a)
“Business”	Recitals
“Closing”	Section 1.3
“Closing Date”	Preamble
“Competing Business”	Section 5.1
“Earn Out Payment”	Section 1.3
“Excluded Assets”	Section 1.1
“Excluded Liabilities”	Section 1.2(b)
“Falcon”	Preamble
“Purchased Assets”	Section 1.1
“Purchased Contracts”	Section 1.1
“Seller”	Preamble
“Shares”	Section 1.3
“Spear”	Preamble

(b) As used in this Agreement, the following defined terms have the meanings indicated below:

“Actions or Proceedings” means any action, suit, proceeding, arbitration or Governmental or Regulatory Authority investigation or audit.

“Affiliate” means any Person that directly, or indirectly through one of more intermediaries, controls or is controlled by or is under common control with the Person specified. For purposes of this definition, control of a Person means the power, direct or indirect, to direct or cause the direction of the management and policies of such Person whether by Contract or otherwise and, in any event and without limitation of the previous sentence, any Person owning ten percent (10%) or more of the voting securities of another Person shall be deemed to control that Person.

“Assets and Properties” of any Person means all assets and properties of every kind, nature, character and description (whether real, personal or mixed, whether tangible or intangible, whether absolute, accrued, contingent, fixed or otherwise and wherever situated), including the goodwill related thereto, operated, owned or leased by such Person, including without limitation cash, cash equivalents, Investment Assets, accounts and notes receivable, chattel paper, documents, instruments, general intangibles, real estate, equipment, inventory, goods and Intellectual Property.

“Associate” means, with respect to any Person, any corporation or other business organization of which such Person is an officer or partner or is the beneficial owner, directly or indirectly, of ten percent (10%) or more of any class of equity securities, any trust or estate in which such Person has a substantial beneficial interest or as to which such Person serves as a trustee or in a similar capacity and any relative or spouse of such Person, or any relative of such spouse, who has the same home as such Person.

”Business Day” means a day other than Saturday, Sunday or any day on which banks located in the location of Seller’s principal executive offices and location of Purchaser’s principal executive offices are authorized or obligated to close.

“Claim Notice” means written notification pursuant to Section 8.2 of a Third Party Claim as to which indemnity under Section 8.1 is sought by an Indemnified Party, enclosing a copy of all papers served, if any, and specifying the nature of and basis for such Third Party Claim and for the Indemnified Party’s claim against the Indemnifying Party, together with the amount or, if not then reasonably ascertainable, the estimated amount, determined in good faith, of such Third Party Claim.

“Company Owned Intellectual Property” means Intellectual Property owned by the Company.

“Contract” means any agreement, lease, license, evidence of Indebtedness, mortgage, indenture, security agreement or other contract (whether written or oral).

“Disclosure Schedule” means the disclosure schedules delivered to Purchaser by Seller herewith and dated as of the date hereof, containing all lists, descriptions, exceptions and other information and materials as are required to be included therein by Seller pursuant to this Agreement.

“Equity Investment” means the issuance by Purchaser of equity of Purchaser or a security exchangeable or convertible into equity of Purchaser issued in a financing transaction for the purpose of raising capital. For clarity, Equity Investments exclude strategic investments, securities issued for in lieu of cash for services, securities issued under any existing agreement (or upon conversion of any outstanding security or agreement), and securities issued to employees, officers, directors or consultants as incentive compensation for services.

“Governmental or Regulatory Authority” means any court, tribunal, arbitrator, authority, agency, commission, official or other instrumentality of the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision.

“Indebtedness” of any Person means all obligations of such Person (i) for borrowed money, (ii) evidenced by notes, bonds, debentures or similar instruments, (iii) for the deferred purchase price of goods or services (other than trade payables or accruals incurred in the ordinary course of business), (iv) under capital leases and (v) in the nature of guarantees of the obligations described in clauses (i) through (iv) above of any other Person.

“Indemnified Party” means any Person claiming indemnification under any provision of Article VIII, including without limitation a Person asserting a claim pursuant to Section 8.2(c).

“Indemnifying Party” means any Person against whom a claim for indemnification is being asserted under any provision of Article VIII, including without limitation a Person against whom a claim is asserted pursuant to Section 8.2(c).

“Indemnity Notice” means written notification pursuant to Section 8.2(b) of a claim for indemnity under Article VIII by an Indemnified Party, specifying the nature of and basis for such claim, together with the amount or, if not then reasonably ascertainable, the estimated amount, determined in good faith, of such claim.

“Intellectual Property” means all patents and patent rights, trademarks and trademark rights, trade names and trade name rights, service marks and service mark rights, service names and service name rights, brand names, inventions, processes, formulae, algorithms, copyrights and copyright rights, trade dress, business and product names, logos, slogans, trade secrets, industrial models, processes, designs, methodologies, computer programs (including all source codes) and related documentation, technical information, manufacturing, engineering and technical drawings, know-how, archival data, tapes, programs and documentation and all pending applications for and registrations of patents, trademarks, service marks and copyrights.

“Investment Assets” means all debentures, notes and other evidences of Indebtedness, stocks, securities (including rights to purchase and securities convertible into or exchangeable for other securities), interests in joint ventures and general and limited partnerships, mortgage loans and other investment or portfolio assets owned of record or beneficially by Seller (other than trade receivables generated in the ordinary course of business of Seller).

“Knowledge of ” or “Known to” means the knowledge of any officer or director or manager.

“Laws” means all laws, statutes, rules, regulations, ordinances and other pronouncements having the effect of law of the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision or of any Governmental or Regulatory Authority.

“Liabilities” means all Indebtedness, obligations and other liabilities of a Person (whether absolute, accrued, contingent, fixed or otherwise, or whether due or to become due).

“Liens” means any mortgage, pledge, assessment, security interest, lease, lien, adverse claim, levy, charge or other encumbrance of any kind, or any conditional sale Contract, title retention Contract or other Contract to give any of the foregoing.

“Loss” means any and all damages, fines, fees, penalties, deficiencies, losses and expenses (including without limitation interest, court costs, fees of attorneys, accountants and other experts or other expenses of litigation or other proceedings or of any claim, default or assessment), but not including any punitive damages.

“Net Profit” means the revenues of related to the Company Owned Intellectual Property minus the direct expenses related to the such revenues.

“Order” means any writ, judgment, decree, injunction or similar order of any Governmental or Regulatory Authority (in each such case whether preliminary or final).

“Permitted Lien” means (i) any Lien for Taxes not yet due or delinquent or being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising in the ordinary course of business by operation of Law with respect to a Liability that is not yet due or delinquent, and (iii) any minor imperfection of title or similar Lien which individually or in the aggregate with other such Liens does not materially impair the value of the property subject to such Lien or the use of such property in the conduct of the Business.

“Person” means any natural person, corporation, general partnership, limited partnership, proprietorship, other business organization, trust, union, association or Governmental or Regulatory Authority.

“Property” or “Properties” means Intellectual Property, Tangible Personal Property and property subject to Personal Property Leases.

“Purchaser Indemnified Parties” means Purchaser and its officers, directors, employees, agents and Affiliates.

“Registrations” means all Registrations, permits, certificates of authority, authorizations, approvals, registrations, franchises and similar consents granted or issued by any Governmental or Regulatory Authority.

“SEC” means the Securities and Exchange Commission.

”Seller Indemnified Parties” means Seller and its officers, directors, employees, managers, agents and Affiliates.

“Tangible Payments Division” means the operations of Purchaser related to the Company Owned Intellectual Property.

“Tax Returns” means shall mean any return, declaration, report, estimates, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof, covering or relating to the Assets or the Business.

“Taxes” means shall mean any federal, provincial, territorial, local, or foreign income, profits, gross receipts, capital gains taxes, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, Business Registration, occupation, value added, goods and service, alternative or add-on minimum, estimated, or other tax or governmental charge of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not, relating to the Assets or the Business.

“Transaction Documents” means, collectively, this Agreement, the exhibits and schedules to this Agreement, the Disclosure Schedules, and the documents executed and delivered by the Parties pursuant to Section 1.4.

“Transfer Taxes” shall mean all sales taxes, use taxes, conveyance taxes, transfer taxes, filing fees, recording fees, reporting fees and other similar duties, taxes and fees, if any, imposed upon, or resulting from, the transfer of the Assets hereunder, except for federal, state or local income or similar taxes based upon or measured by revenue, income, profit or gain from the transfer of the Assets or the operation of the Business prior to the Closing or by any increase in the value of any of the Assets through the Closing Date.

ARTICLE X

MISCELLANEOUS

10.1 Survival. Except as otherwise expressly provided herein, the provisions of any Section or Article by it terms intended to survive the execution and delivery of this Agreement and the completion of the transactions contemplated herein shall survive indefinitely.

10.2 Fees and Expenses. All costs and expenses incurred in connection with this Agreement and the consummation of the transactions contemplated by this Agreement shall be paid by the party incurring such expenses.

10.3 Waivers and Amendment. Any waiver of any term or condition, or any amendment or supplementation of this Agreement shall be effective only if in writing and signed by all of the parties. A waiver of any breach of any of the terms or conditions of this Agreement shall not in any way be construed as a waiver of any subsequent breach.

10.4 Notices. All notices and other communications which are required or permitted hereunder shall be in writing and shall be deemed given if delivered personally, sent by an overnight courier service, such as Federal Express, registered or certified mail, postage prepaid facisimile or email (in portable document format) to the parties at their principal place of business(or at such other address for a party as shall be specified by like notice). All notices and other communications given to any party hereto in accordance with the provisions of Agreement shall be deemed to have been given (i) in the case of notices and other communications delivered by hand or reputable

national overnight courier service, upon the earlier of actual receipt thereof or tender and rejection by the intended recipient, (ii) in the case of notices and other communications delivered by certified or registered mail, upon the earlier of actual delivery and the third Business Day after the date deposited in the U.S. mail with postage prepaid and properly addressed, and (iii) when delivered in person or by facsimile or electronic mail (with affirmative confirmation of receipt), provided that if a notice or other communication would be deemed to have been given in accordance with the foregoing at any time other than during the recipient’s normal business hours on a Business Day for such recipient, such notice or other communication shall be deemed given on the next succeeding Business Day for such recipient. Any Party may by notice in accordance with the terms of this Section 10.4 change the address to which notices or other communications to it are to be delivered or mailed.

10.5 Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall be binding on all the parties hereto, notwithstanding that all of the parties are not signatory to the original or the same counterpart. Further, executed copies of this Agreement delivered by facsimile or email transmission shall be deemed an original signed copy of this Agreement.

10.6 Entire Agreement; No Third Party Beneficiaries. This Agreement and the Transaction Documents, contain the entire agreement between the parties with respect to the transactions contemplated by this Agreement and supersede all prior arrangements or understandings with respect thereto.

10.7 Severability. Any term or provision of this Agreement that is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction or other authority declares that any term or provision hereof is invalid, void or unenforceable, the parties agree that the court making such determination shall have the power to reduce the scope, duration, area or applicability of the term or provision, to delete specific words or phrases, or to replace any invalid, void or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision.

10.8 Governing Law; Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota (or United States federal law, to the extent applicable) without giving effect to the principles of conflicts of law thereof. Each party agrees and submits to the exclusive jurisdiction of the state and federal courts sitting in Hennepin, County, State of Minnesota in any action or proceeding arising out of or relating to this Agreement.

10.9 Election of Remedies. Neither the exercise of nor the failure to exercise a right of set-off or to give notice of a claim under this Agreement will constitute an election of remedies or limit the parties in any manner in the enforcement of any other remedies that may be available to any of them, whether at law or in equity.

10.10 Assignment. Except as otherwise provided in this Agreement, neither this Agreement not any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written content of the other parties, except that Purchaser may assign, in its sole discretion, any or all of its rights and interests hereunder to any direct or indirect wholly owned Subsidiary of Purchaser. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns.

10.11 Headings. The headings contained in this Agreement are for purposes of convenience only and shall not affect the meaning or interpretation of this Agreement.

10.12 Ambiguity. Each party has been represented by its own attorney(ies) during the course of the transactions contemplated by this Agreement. Any ambiguity in this Agreement will not be construed against any party by reason that such party or its legal representative drafted that provision.

10.13 Construction. Unless the context of this Agreement clearly requires otherwise: (a) references to the plural include the singular, the singular the plural, and the part the whole, (b) references to one gender include all genders, (c) “or” has the inclusive meaning frequently identified with the phrase “and/or,” (d) “including” has the inclusive meaning frequently identified with the phrase “including but not limited to” or “including without limitation,” (e) references to “hereunder,” “herein” or “hereof” relate to this Agreement as a whole, (f) the term “ordinary course of business” means the ordinary course of business of Seller in connection with the Business consistent with past practice, and (g) the terms “dollars” and “$” refer to United States dollars. Article, Section, subsection, exhibit and paragraph references are to this Agreement as originally executed unless otherwise specified. Any reference herein to any statute, rule, regulation or agreement, including this Agreement, shall be deemed to include such statute, rule, regulation or agreement as it may be modified, varied, amended or supplemented from time to time. Any reference herein to any person shall be deemed to include the heirs, legal representatives, successors, executors, administrators and permitted assigns of such person. Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified.

10.14. No Third Party Beneficiary. The terms and provisions of this Agreement are intended solely for the benefit of each party hereto and their respective successors or permitted assigns, and it is not the intention of the parties to confer third-party beneficiary rights upon any other Person other than any Person entitled to indemnity under Article VIII.

10.15. Invalid Provisions. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction declares that any term or provision hereof is invalid or unenforceable, the parties hereto agree that the court making such determination shall have the power to limit the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified. In the event such court does not exercise the power granted to it in the prior sentence, the parties hereto agree to replace such invalid or unenforceable term or provision with a valid and enforceable term or provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid or unenforceable term.

10.10 Attorney’s Fees. If any legal action, arbitration or other proceeding is brought for the enforcement of this Agreement, or because of any alleged dispute, breach, default or misrepresentation in connection with this Agreement, the successful or prevailing party shall be entitled to recover reasonable attorneys’ fees and other costs it incurred in that action or proceeding, in addition to any other relief to which it may be entitled.

[signatures on next page]

IN WITNESS WHEREOF, Purchaser and Seller have caused this Asset Purchase Agreement to be executed as of the date first written above.

	VERITEC, INC.,
	a Nevada corporation


	Name: Van Tran
	Title: Chief Executive Officer


	TANGIBLE PAYMENTS, LLC
	a Maryland limited liability company

	By Falcon Financial Industries, LLC, sole member

By:
	Name: Timothy M. Spear


	FALCON FINANCIAL INDUSTRIES, LLC
	a Maryland limited liability company

By:
	Name: Timothy M. Spear
	Title: Sole Member


	Timothy M. Spear,
	an individual


	Timothy M. Spear

EXHIBITS

Exhibit A	Intellectual Property


Exhibit B	Purchased Contracts


Exhibit C	Bill of Sale


Exhibit D	Assignment and Assumption Agreement


Exhibit E	Officer’s Certificate of Seller


Exhibit F	Officer’s Certificate of Purchaser

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Van Thuy Tran, certify that:

1. I have reviewed this report on Form 10-K of Veritec, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-(f)) for the registrant and have:

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: January 21, 2016

/s/ Van Thuy Tran

Van Thuy Tran

Chairman and Chief Executive Officer

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Veritec, Inc. (the “Company”) on Form 10-K for the twelve month period ended June 30, 2015, as filed with the Securities and Exchange Commission on January 21, 2016 (the “Report”), I, Van Thuy Tran., Chairman and Chief Executive Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for the periods presented in the Report.

	/s/ Van Thuy Tran
	Van Thuy Tran
	Chairman and Chief Executive Officer
	(Principal Executive Officer)
	January 21, 2016

A signed original of this written statement required by Section 906 has been provided to the Company and will be furnished to the Securities and Exchange Commission or its staff upon request.

Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Jun. 30, 2015	Dec. 15, 2015	Dec. 31, 2014
Document And Entity Information
Entity Registrant Name	VERITEC INC
Entity Central Index Key	0000773318
Document Type	10-K
Document Period End Date	Jun. 30, 2015
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 Public Float			$ 1,273,607
Entity Common Stock, Shares Outstanding		39,538,007
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2015

Consolidated Balance Sheets (Unaudited) - USD ($)	Jun. 30, 2015	Jun. 30, 2014
Current Assets:
Cash	$ 52,762	$ 24,665
Accounts receivables, net of allowance of $0 and $13,395 respectively	38,749	70,500
Inventories	14,461	7,829
Prepaid expenses	18,234	17,143
Total Current Assets	124,206	120,137
Restricted cash	63,029	51,957
Property and Equipment, net	583	$ 994
Intangibles, net	144,375
Total Assets	332,193	$ 173,088
Current Liabilities:
Notes payable - in default	521,610	493,017
Notes payable, related party - in default	3,041,097	2,649,202
Accounts payable	630,490	540,794
Accounts payable, related party	96,110	78,753
Customer deposits	25,482	91,260
Deferred revenue	492,603	258,764
Payroll tax liabilities	453,277	539,218
Accrued expenses	22,957	104,168
Total Current Liabilities	5,283,626	$ 4,755,176
Contingent earnout liability	155,000
Total Liabilities	5,438,626	$ 4,755,176
Stockholders' Deficiency:
Convertible preferred stock, par value $1.00; authorized 10,000,000 shares, 276,000 shares of Series H authorized, 1,000 shares issued and outstanding as of June 30, 2015 and 2014	1,000	1,000
Common stock, par value $.01; authorized 50,000,000 shares, 16,530,088 and 15,920,088 shares issued and outstanding as of June 30, 2015 and 2014, respectively	165,301	159,201
Common stock to be issued, 940,000 shares and 400,000 shares, respectively	51,800	39,596
Additional paid-in capital	14,959,006	14,594,181
Accumulated deficit	(20,283,540)	(19,376,066)
Total Stockholders' Deficiency	(5,106,433)	(4,582,088)
Total Liabilities and Stockholders' Deficiency	$ 332,193	$ 173,088

Consolidated Balance Sheets (Parenthetical) - USD ($)	Jun. 30, 2015	Jun. 30, 2014
Allowance for Doubtful Accounts	$ 0	$ 13,395
Convertible preferred stock, par value	$ 1.00	$ 1.00
Convertible preferred stock, shares authorized	10,000,000	10,000,000
Convertible preferred stock, shares issued	1,000	1,000
Convertible preferred stock, shares outstanding	1,000	1,000
Common stock, par value	$ .01	$ .01
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	16,530,088	15,920,088
Common stock, shares outstanding	16,530,088	15,920,088
Common stock, shares to be issued	940,000	400,000
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

Consolidated Statements of Operations (Unaudited) - USD ($)	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Revenue:
Barcode technology revenue	$ 507,960	$ 1,623,109
Mobile banking technology revenue	437,847	12,254
Total revenue	945,807	1,635,363
Cost of Sales	329,703	345,107
Gross Profit	616,104	1,290,256
Operating Expenses:
General and administrative	841,816	578,947
Sales and marketing	83,863	31,590
Research and development	98,412	188,810
Total Operating Expenses	1,024,091	799,347
Income (Loss) from Operations	$ (407,987)	490,909
Other Expense:
Interest income		58
Interest expense, including $172,564 and $152,501, respectively to related parties	$ (499,487)	(188,914)
Total Other Expense	(499,487)	(188,856)
Net Income (Loss)	$ (907,475)	$ 302,053
Net Income (Loss) Per Common Share
Basic	$ (0.06)	$ 0.02
Diluted	$ (0.06)	$ 0.02
Weighted Average Number of Shares Outstanding
Basic	16,351,956	15,920,088
Diluted	16,351,956	18,976,588

Consolidated Statements of Operations (Parenthetical) - USD ($)	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Income Statement [Abstract]
Interest expense, related parties	$ 172,564	$ 152,501

Consolidated Statement of Stockholders' Deficiency - USD ($)	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Preferred Stock
Beginning balance, Shares	1,000	1,000
Beginning balance, Amount	$ 1,000	$ 1,000
Shares issued for acquisitions, shares
Shares issued for acquisitions, amount
Shares issued for services, shares
Shares issued for services, amount
Shares issued for common stock issuable, shares
Shares issued for common stock issuable, amount
Stock based compensation
Beneficial conversion feature on issuance of convertible notes payable
Net (Loss) Income
Ending balance, Shares	1,000	1,000
Ending balance, Amount	$ 1,000	$ 1,000
Common Stock
Beginning balance, Shares	15,920,088	15,920,088
Beginning balance, Amount	$ 159,201	$ 159,201
Shares issued for acquisitions, shares	250,000
Shares issued for acquisitions, amount	$ 2,500
Shares issued for services, shares	135,000
Shares issued for services, amount	$ 1,350
Shares issued for common stock issuable, shares	225,000
Shares issued for common stock issuable, amount	$ 2,250
Stock based compensation
Beneficial conversion feature on issuance of convertible notes payable
Net (Loss) Income
Ending balance, Shares	16,530,088	15,920,088
Ending balance, Amount	$ 165,301	$ 159,201
Common Stock to be Issued
Beginning balance, Amount	$ 39,596	$ 10,477
Shares issued for acquisitions, amount
Shares issued for services, shares		3,869
Shares issued for services, amount	$ 9,300
Shares issued for common stock issuable, amount	(25,250)
Stock based compensation	$ 28,154	$ 25,250
Beneficial conversion feature on issuance of convertible notes payable
Net (Loss) Income
Ending balance, Amount	$ 51,800	$ 39,596
Additional Paid-In Capital
Beginning balance, Amount	14,594,181	$ 14,594,181
Shares issued for acquisitions, amount	35,000
Shares issued for services, shares
Shares issued for services, amount	8,950
Shares issued for common stock issuable, amount	$ 23,000
Stock based compensation
Beneficial conversion feature on issuance of convertible notes payable	$ 297,875
Net (Loss) Income
Ending balance, Amount	$ 14,959,006	$ 14,594,181
Accumulated Deficit
Beginning balance, Amount	$ (19,376,066)	$ (19,678,119)
Shares issued for acquisitions, amount
Shares issued for services, shares
Shares issued for services, amount
Shares issued for common stock issuable, amount
Stock based compensation
Beneficial conversion feature on issuance of convertible notes payable
Net (Loss) Income	$ (907,474)	$ 302,053
Ending balance, Amount	(20,283,540)	(19,376,066)
Beginning balance, Amount	(4,582,088)	$ (4,913,260)
Shares issued for acquisitions, amount	$ 37,500
Shares issued for services, shares	135,000
Shares issued for services, amount	$ 19,600
Shares issued for common stock issuable, amount
Stock based compensation	$ 28,154	$ 25,250
Beneficial conversion feature on issuance of convertible notes payable	297,875
Net (Loss) Income	(907,474)	$ 302,053
Ending balance, Amount	$ (5,106,433)	$ (4,582,088)

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ (907,475)	$ 302,053
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation	411	$ 239
Amortization	$ 48,125
Allowance on accounts receivable		$ 244
Beneficial conversion feature on convertible notes payable	$ 297,875
Shares issued for services	19,600
Stock based compensation expense	28,154	$ 25,250
Interest accrued on notes payable	199,489	170,897
Changes in operating assets and liabilities:
Accounts receivable	31,751	217,579
Restricted cash	(11,072)	447,320
Inventories	(6,632)	(3,014)
Prepaid expenses	(1,091)	15,744
Deferred revenue	233,839	(767,911)
Payroll tax liabilities	(85,941)	(141,242)
Customer deposits	(65,778)	19,973
Accounts payables and accrued expenses	25,842	759
Net cash provided by (used in) operating activities	$ (192,903)	291,760
CASH FLOWS FROM INVESTING ACTIVITIES
Advances on notes receivable		(1,234)
Net cash used in investing activities		(1,234)
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of notes payable		(300,279)
Proceeds from notes payable, related party	$ 365,000	68,500
Payments on notes payable, related party	(144,000)	(110,000)
Net cash provided by (used in) financing activities	221,000	(341,779)
NET INCREASE (DECREASE) IN CASH	28,097	(51,253)
CASH AT BEGINNING OF YEAR	24,665	75,918
CASH AT END OF YEAR	$ 52,762	24,665
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest		$ 14,423
NON CASH INVESTING AND FINANCING ACTIVITIES
Common stock issued for acquisition	$ 37,500
Contingent earnout liability from acquisitions	$ 155,000

Operations and Summary of Significant Accounting Policies

12 Months Ended

Jun. 30, 2015

Accounting Policies [Abstract]

Operations and Summary of Significant Accounting Policies

NOTE 1 - OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

Nature of Business

Barcode Technology

The Company’s Barcode Technology was originally invented by the founders of Veritec under United States patents 4,924,078, 5,331,176, 5,612,524 and 7,159,780. Our principal licensed product to date that contains our VeriCode ® Barcode Technology has been a product identification system for identification and tracking of manufactured parts, components and products mostly in the liquid crystal display (LCD) markets. The VeriCode® symbol is a two-dimensional high data density machine-readable symbol that can contain up to approximately 500 bytes of data. The Company’s VSCode® Barcode Technology is a derivative of the VeriCode® symbol with the ability to encrypt a greater amount of data by increasing data density. The VSCode ® is a data storage “container” that offers a high degree of security and which can also be tailored to the application requirements of the user. The VSCode ® symbol can hold any form of binary information that can be digitized, including numbers, letters, images, photos, graphics, and the minutia for biometric information, including fingerprints and facial image data, to the extent of its data storage capacity, that are likewise limited by the resolution of the marking and reading devices employed by the user. VSCode ® is ideal for secure identification documents (such as national identification cards, driver’s licenses, and voter registration cards), financial cards, medical records and other high security applications. In its PhoneCodes™ product platform, Veritec developed software to send, store, display, and read a VeriCode® Barcode Technology symbol on the LCD screen of a mobile phone. With the electronic media that provide the ease of transferring information over the web, Veritec’s PhoneCodes™ technology enables individuals and companies to receive or distribute gift certificates, tickets, coupons, receipts, or engage in banking transactions using the VeriCode ® technology via wireless phone or PDA.

Mobile Banking Solutions

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.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany transactions and balances were eliminated in consolidation.

Use of Estimates

Accounts Receivable

Inventories

Property and Equipment

Concentrations

Major Customers:

Customers in excess of 10% of total revenues were as follows:

	Years Ended June 30,
	2015			2014

Customer A		--%			31	%
Customer B		12	%		16	%
Customer C		11	%		8	%
		23	%		55	%

Foreign Revenues

Foreign revenues accounted for 45% (9% Korea, 19% Taiwan, and 17% others) of the Company’s total revenues in fiscal 2015 and 70% (54% Korea, 10% Taiwan, and 6% others) in fiscal 2014.

Fair Value of Financial Instruments

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 June 30, 2015 or 2014.

Revenue Recognition

Shipping and Handling Fees and Costs

Research and Development

Research and development costs were expensed as incurred.

Loss per Common Share

The following table sets forth the computation of basic and diluted income per common share.

	June 30,
	2015			2014

Net Income (Loss)	$	(907,475	)	$	302,053

Weighted average common shares – basic		16,351,956			15,920,088
Dilutive effect of outstanding stock options		—			3,056,500
Weighted average shares outstanding – diluted		16,351,956			18,976,588

	June 30,
	2015		2014

Series H Preferred Stock	$	10,000	$	10,000
Convertible Notes Payable		19,563,168		6,347,046
Options		2,520,000		—
Total		22,093,168		6,357,046

Stock-Based Compensation

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

Intangible Assets

Income Taxes

Recently Issued Accounting Standards

Going Concern

12 Months Ended

Jun. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Going Concern

NOTE 2 - GOING CONCERN

Restricted Cash

12 Months Ended

Jun. 30, 2015

Accounting Policies [Abstract]

Restricted Cash

NOTE 3 – RESTRICTED CASH

Property and Equipment

12 Months Ended

Jun. 30, 2015

Property, Plant and Equipment [Abstract]

Property and Equipment

NOTE 4 - PROPERTY AND EQUIPMENT

Property and equipment consists of the following as of:

	June 30,
	2015			2014

Furniture and equipment	$	140,316		$	140,316
Software		73,000			73,000
Vehicles		23,301			23,301
		236,617			236,617
Less accumulated depreciation		(236,034	)		(235,623	)
Total	$	583		$	944

Depreciation expense for the years ended June 30, 2015 and 2014 was $411 and $239, respectively.

Acquisition

12 Months Ended

Jun. 30, 2015

Business Combinations [Abstract]

Acquisition

NOTE 5 – ACQUISITION

Total estimated amortization expense with respect to intangible assets for 2016 through 2018 is as follows:

Years Ending June 30,		Amount
	2016	$	64,167
	2017		64,167
	2018		16,041
	Total	$	144,375

The following table presents our unaudited pro forma combined historical results of operations as if we had consummated the acquisition as of July 1, 2013.

	June 30,
	2015			2014
	(Unaudited)			(Unaudited)

Revenues	$	1,007,932		$	1,909,323
Net income (loss)	$	(919,775	)	$	190,156

Related Party Transactions

12 Months Ended

Jun. 30, 2015

Related Party Transactions

NOTES 6 – RELATED PARTY TRANSACTIONS

Notes Payable

12 Months Ended

Jun. 30, 2015

Debt Disclosure [Abstract]

Notes Payable

NOTE 7 – NOTES PAYABLE AND NOTES PAYABLE, RELATED PARTY

Notes payable includes accrued interest and consists of the following as of June 30, 2015 and 2014:

	2015		2014

Convertible Notes Payable
Convertible notes payable (includes $138,120 and $130,898, respectively, to non-related parties), unsecured, interest at 8%, due September 2010 through November 2010. The principal and accrued interest is convertible at a conversion price of $0.30. The principal and interest is due immediately on the event of default or change of control. The notes are currently in default.	$	759,763	$	720,302

Convertible notes payable to related parties, unsecured, principal and interest are convertible into common stock at $0.30 to $0.33 per share, interest at 8% to 10%, due on demand to November 2010. The notes are currently in default.		1,414,260		1,017,435

Convertible note payable to related party, secured by the Company’s intellectual property, principal and interest are convertible into common stock at $0.25 per share subject to board of directors’ approval, interest at 8%. The note was due November 2010 and is now in default.		290,871		274,871

Botes payable, secured by the Company's certificate of deposit with a financial institution and classified on the balance sheet as restricted cash, interest at 5%, convertible into common stock at $0.08 per share, due on demand		33,688		32,215

Convertible note payable, unsecured, principal and interest are convertible into common stock at $0.30 to $0.40 per share subject to board of directors’ approval, interest at 5% to 8%, due January 2011 to March 2013.		14,385		13,586

Convertible note payable, unsecured, principal and interest are convertible into common stock at $1.00 per share subject to board of directors’ approval, interest at 8%. The note was paid in full.		—		1,766
Subtotal convertible notes		2,512,967		2,150,175

Promissory Notes
Note payable to related party, secured by the Company’s intellectual property, interest at 8% due August 2010 and is now in default.		564,058		533,318

Notes payable to related parties, unsecured, interest at 0% to 8%, due on demand.		150,430		142,430

Note payable, unsecured, interest at 10%. The note was due in January 2010 and is now in default		31,783		29,167


Note payable, secured by the Company's intellectual property, interest at variable rates starting September 1, 2012, due December 2012 and is now in default.		303,469		287,129
Subtotal notes payable		1,049,740		992,044

Total	$	3,562,707	$	3,142,219

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

	June 30,
	2015		2014

Notes payable	$	521,610	$	493,017
Notes payable, related party		3,041,097		2,649,202
Total	$	3,562,707	$	3,142,219

Stockholders' Deficiency

12 Months Ended

Jun. 30, 2015

Equity [Abstract]

Stockholders' Equity (Deficit)

NOTE 8 - STOCKHOLDERS’ DEFICIENCY

Preferred Stock

Common Stock

Shares issued to consultants for services

Common Stock to be issued

Shares to be issued to consultants for services rendered

Shares to be issued to directors and employees for services

Stock Options and Warrants

12 Months Ended

Jun. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

NOTE 9 – STOCK OPTIONS AND WARRANTS

Stock Options

A summary of stock options as of June 30, 2015 and for the two years then ended is as follows:

	Number of			Weighted - Average
	Shares			Exercise Price

Outstanding at June 30, 2013	3,165,653		$	0.42
Granted	—		$	0.00
Forfeited	(109,153	)	$	0.00
Outstanding at June 30, 2014	3,056,500		$	0.42
Granted	—		$	0.00
Forfeited	(536,500	)	$	0.42
Outstanding at June 30, 2015	2,520,000		$	0.42
Exercisable at June 30, 2015	2,520,000		$	0.42

Additional information regarding options outstanding as of June 30, 2015 is as follows:

Options Outstanding at June 30, 2015						Options Exercisable at June 30, 2015
	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

	$0.13 - $1.45	2,520,000	4.64	$	0.42		2,520,000	$	4.64
		2,520,000					2,520,000

Stock Warrant

A summary of stock warrants as of June 30, 2015 and for the two years then ended is as follows:

	Number of Shares			Weighted - Average Exercise Price

Outstanding at June 30, 2013	275,000		$	2.0
Granted	—
Forfeited	(275,000	)	$	2.0
Outstanding at June 30, 2014	—
Granted	—
Forfeited	—
Outstanding at June 30, 2015	—

Income Taxes

12 Months Ended

Jun. 30, 2015

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 10 - INCOME TAXES

The Company is subject to U.S. federal, state, or local income tax examination by tax authorities for all years for which a loss carry forward is utilized in subsequent periods.

Reconciliation between the expected federal income tax rate and the actual tax rate is as follows:

	Year Ended June 30,
	2015			2014

Federal statutory tax rate		35	%		35	%
State tax, net of federal benefit		6	%		6	%
Total tax rate		40	%		40	%
Allowance		(40)	%		(40)	%
Effective tax rate		-	%		-	%

The following is a summary of the deferred tax assets:

	June 30,
	2015			2014

Net operating loss carryforwards	$	4,224,000			4,021,600
Valuation allowance		(4,224,000	)		(4,021,600	)
Net deferred tax asset	$	—		$	—

Deferred income tax assets have been reduced by a valuation allowance as it is more likely than not that they will not be realized.

Commitments and Contingencies

12 Months Ended

Jun. 30, 2015

Commitments and Contingencies

Commitments and Contingencies

NOTE 11 – COMMITMENTS AND CONTINGENCIES

Operating Leases

Strategic Partnership Agreements

Incentive Compensation Bonus Plan

Subsequent Events

12 Months Ended

Jun. 30, 2015

Subsequent Events [Abstract]

Subsequent Events

NOTE 12 – SUBSEQUENT EVENTS

Operations and Summary of Significant Accounting Policies (Policies)

12 Months Ended

Jun. 30, 2015

Accounting Policies [Abstract]

Nature of Business

Barcode Technology

The Company’s Barcode Technology was originally invented by the founders of Veritec under United States patents 4,924,078, 5,331,176, 5,612,524 and 7,159,780. Our principal licensed product to date that contains our VeriCode ® Barcode Technology has been a product identification system for identification and tracking of manufactured parts, components and products mostly in the liquid crystal display (LCD) markets. The VeriCode® symbol is a two-dimensional high data density machine-readable symbol that can contain up to approximately 500 bytes of data. The Company’s VSCode® Barcode Technology is a derivative of the VeriCode® symbol with the ability to encrypt a greater amount of data by increasing data density. The VSCode ® is a data storage “container” that offers a high degree of security and which can also be tailored to the application requirements of the user. The VSCode ® symbol can hold any form of binary information that can be digitized, including numbers, letters, images, photos, graphics, and the minutia for biometric information, including fingerprints and facial image data, to the extent of its data storage capacity, that are likewise limited by the resolution of the marking and reading devices employed by the user. VSCode ® is ideal for secure identification documents (such as national identification cards, driver’s licenses, and voter registration cards), financial cards, medical records and other high security applications. In its PhoneCodes™ product platform, Veritec developed software to send, store, display, and read a VeriCode® Barcode Technology symbol on the LCD screen of a mobile phone. With the electronic media that provide the ease of transferring information over the web, Veritec’s PhoneCodes™ technology enables individuals and companies to receive or distribute gift certificates, tickets, coupons, receipts, or engage in banking transactions using the VeriCode ® technology via wireless phone or PDA.

Mobile Banking Solutions

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.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany transactions and balances were eliminated in consolidation.

Use of Estimates

Accounts Receivable

Inventories

Property and Equipment

Concentrations

Major Customers

Major Customers:

Customers in excess of 10% of total revenues were as follows:

	Years Ended June 30,
	2015			2014

Customer A		--%			31	%
Customer B		12	%		16	%
Customer C		11	%		8	%
		23	%		55	%

Foreign Revenues

Foreign revenues accounted for 45% (9% Korea, 19% Taiwan, and 17% others) of the Company’s total revenues in fiscal 2015 and 70% (54% Korea, 10% Taiwan, and 6% others) in fiscal 2014.

Fair Value of Financial Instruments

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 June 30, 2015 or 2014.

Revenue Recognition

Shipping and Handling Fees and Costs

Research and Development

Research and development costs were expensed as incurred.

Loss per Common Share

The following table sets forth the computation of basic and diluted income per common share.

	June 30,
	2015			2014

Net Income (Loss)	$	(907,475	)	$	302,053

Weighted average common shares – basic		16,351,956			15,920,088
Dilutive effect of outstanding stock options		—			3,056,500
Weighted average shares outstanding – diluted		16,351,956			18,976,588

	June 30,
	2015		2014

Series H Preferred Stock	$	10,000	$	10,000
Convertible Notes Payable		19,563,168		6,347,046
Options		2,520,000		—
Total		22,093,168		6,357,046

Stock-Based Compensation

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

Intangible Assets

Income Taxes

Recently Issued Accounting Standards

Operations and Summary of Significant Accounting Policies (Tables)

12 Months Ended

Jun. 30, 2015

Accounting Policies [Abstract]

Major Customers

	Years Ended June 30,
	2015			2014

Customer A		--%			31	%
Customer B		12	%		16	%
Customer C		11	%		8	%
		23	%		55	%

Basic and diltued income per share

	June 30,
	2015			2014

Net Income (Loss)	$	(907,475	)	$	302,053

Weighted average common shares – basic		16,351,956			15,920,088
Dilutive effect of outstanding stock options		—			3,056,500
Weighted average shares outstanding – diluted		16,351,956			18,976,588

Anti-dilutive earnings per share

	June 30,
	2015		2014

Series H Preferred Stock	$	10,000	$	10,000
Convertible Notes Payable		19,563,168		6,347,046
Options		2,520,000		—
Total		22,093,168		6,357,046

Property and Equipment (Tables)

12 Months Ended

Jun. 30, 2015

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and equipment consists of the following as of:

	June 30,
	2015			2014

Furniture and equipment	$	140,316		$	140,316
Software		73,000			73,000
Vehicles		23,301			23,301
		236,617			236,617
Less accumulated depreciation		(236,034	)		(235,623	)
Total	$	583		$	944

Acquisition (Tables)

12 Months Ended

Jun. 30, 2015

Business Combinations [Abstract]

Amortization expense

Years Ending June 30,		Amount
	2016	$	64,167
	2017		64,167
	2018		16,041
	Total	$	144,375

Unaudited results of operations

	June 30,
	2015			2014
	(Unaudited)			(Unaudited)

Revenues	$	1,007,932		$	1,909,323
Net income (loss)	$	(919,775	)	$	190,156

Notes Payable (Tables)

12 Months Ended

Jun. 30, 2015

Debt Disclosure [Abstract]

Notes Payable

	2015		2014

Convertible Notes Payable
Convertible notes payable (includes $138,120 and $130,898, respectively, to non-related parties), unsecured, interest at 8%, due September 2010 through November 2010. The principal and accrued interest is convertible at a conversion price of $0.30. The principal and interest is due immediately on the event of default or change of control. The notes are currently in default.	$	759,763	$	720,302

Convertible notes payable to related parties, unsecured, principal and interest are convertible into common stock at $0.30 to $0.33 per share, interest at 8% to 10%, due on demand to November 2010. The notes are currently in default.		1,414,260		1,017,435

Convertible note payable to related party, secured by the Company’s intellectual property, principal and interest are convertible into common stock at $0.25 per share subject to board of directors’ approval, interest at 8%. The note was due November 2010 and is now in default.		290,871		274,871

Botes payable, secured by the Company's certificate of deposit with a financial institution and classified on the balance sheet as restricted cash, interest at 5%, convertible into common stock at $0.08 per share, due on demand		33,688		32,215

Convertible note payable, unsecured, principal and interest are convertible into common stock at $0.30 to $0.40 per share subject to board of directors’ approval, interest at 5% to 8%, due January 2011 to March 2013.		14,385		13,586

Convertible note payable, unsecured, principal and interest are convertible into common stock at $1.00 per share subject to board of directors’ approval, interest at 8%. The note was paid in full.		—		1,766
Subtotal convertible notes		2,512,967		2,150,175

Promissory Notes
Note payable to related party, secured by the Company’s intellectual property, interest at 8% due August 2010 and is now in default.		564,058		533,318

Notes payable to related parties, unsecured, interest at 0% to 8%, due on demand.		150,430		142,430

Note payable, unsecured, interest at 10%. The note was due in January 2010 and is now in default		31,783		29,167


Note payable, secured by the Company's intellectual property, interest at variable rates starting September 1, 2012, due December 2012 and is now in default.		303,469		287,129
Subtotal notes payable		1,049,740		992,044

Total	$	3,562,707	$	3,142,219

Notes payable- Balance Sheet presentation

	June 30,
	2015		2014

Notes payable	$	521,610	$	493,017
Notes payable, related party		3,041,097		2,649,202
Total	$	3,562,707	$	3,142,219

Stock Options and Warrants (Tables)

12 Months Ended

Jun. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Stock Options

	Number of			Weighted - Average
	Shares			Exercise Price

Outstanding at June 30, 2013	3,165,653		$	0.42
Granted	—		$	0.00
Forfeited	(109,153	)	$	0.00
Outstanding at June 30, 2014	3,056,500		$	0.42
Granted	—		$	0.00
Forfeited	(536,500	)	$	0.42
Outstanding at June 30, 2015	2,520,000		$	0.42
Exercisable at June 30, 2015	2,520,000		$	0.42

Additional information regarding outstanding options

Options Outstanding at June 30, 2015						Options Exercisable at June 30, 2015
	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

	$0.13 - $1.45	2,520,000	4.64	$	0.42		2,520,000	$	4.64
		2,520,000					2,520,000

Summary of stock warrants

	Number of Shares			Weighted - Average Exercise Price

Outstanding at June 30, 2013	275,000		$	2.0
Granted	—
Forfeited	(275,000	)	$	2.0
Outstanding at June 30, 2014	—
Granted	—
Forfeited	—
Outstanding at June 30, 2015	—

Income Taxes (Tables)

12 Months Ended

Jun. 30, 2015

Income Tax Disclosure [Abstract]

Reconciliation between the federal and actual tax rate

	Year Ended June 30,
	2015			2014

Federal statutory tax rate		35	%		35	%
State tax, net of federal benefit		6	%		6	%
Total tax rate		40	%		40	%
Allowance		(40)	%		(40)	%
Effective tax rate		-	%		-	%

Deferred tax assets

	June 30,
	2015			2014

Net operating loss carryforwards	$	4,224,000			4,021,600
Valuation allowance		(4,224,000	)		(4,021,600	)
Net deferred tax asset	$	—		$	—

Operations and Summary of Significant Accounting Policies - Major Customers (Details)	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Revenue from Major Customers	23.00%	55.00%
Customer A
Revenue from Major Customers		31.00%
Customer B
Revenue from Major Customers	12.00%	16.00%
Customer C
Revenue from Major Customers	11.00%	8.00%

Operations and Summary of Significant Accounting Policies - Basic and diluted income per share (Details) - USD ($)	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Accounting Policies [Abstract]
Net income (loss)	$ (907,475)	$ 302,053
Weighted average common shares - basic	16,351,956	15,920,088
Dilutive effect of outstanding stock options		3,056,500
Weighted average shares outstanding - diluted	16,351,956	18,976,588

Operations and Summary of Significant Accounting Policies - Anti-dilutive earnings per share (Details) - USD ($)	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Dilutive securities	$ 22,093,168	$ 6,357,046
Preferred Stock
Dilutive securities	10,000	10,000
Convertible Notes Payable
Dilutive securities	19,563,168	$ 6,347,046
Options
Dilutive securities	$ 2,520,000

Property and Equipment - Property and Equipment (Details) - USD ($)	Jun. 30, 2015	Jun. 30, 2014
Property and Equipment	$ 583	$ 994
Less accumulated depreciation	(236,034)	(235,623)
Furniture and equipment
Property and Equipment	140,316	140,316
Software
Property and Equipment	73,000	73,000
Vehicles
Property and Equipment	$ 23,301	$ 23,301

Acquisition - Amortization expense (Details)	12 Months Ended
Acquisition - Amortization expense (Details)	Jun. 30, 2015 USD ($)
Business Combinations [Abstract]
2016	$ 64,167
2017	64,167
2018	16,041
Amortization Expense	$ 144,375

Acquisition - Unaudited results of operations (Details) - USD ($)	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Business Combinations [Abstract]
Revenues	$ 1,007,932	$ 1,909,323
Net income (loss)	$ (919,775)	$ 190,156

Notes Payable - Notes Payable (Details) - USD ($)	Jun. 30, 2015	Jun. 30, 2014
Notes payable	$ 2,512,967	$ 2,150,175
Notes Payable	3,562,707	3,142,219
Unsecured, due Sept 2010 to Nov 2010
Convertible notes payable	759,763	720,302
Convertible notes payable, non-related paries	$ 138,120	$ 130,898
Interest rate	8.00%	8.00%
Conversion price	$ .30	$ .30
Warrant to purchase common stock for every dollar of investment	$ 2	$ 2
Unsecured, due Nov 2010
Convertible notes payable	$ 414,260	$ 1,017,435
Interest rate	8.00%	8.00%
Interest rate, maximum	10.00%	10.00%
Conversion price	$ 0.30	$ 0.30
Conversion price, maximum	$ 0.33	$ 0.33
Secured, due Nov 2010
Convertible notes payable	$ 290,871	$ 274,871
Interest rate	8.00%	8.00%
Conversion price	$ .25	$ .25
Notes Payable to Banks
Convertible notes payable	$ 33,688	$ 32,215
Interest rate	5.00%	5.00%
Conversion price	$ .08	$ 0.08
Unsecured, due Jan 2011 to March 2013
Convertible notes payable	$ 14,385	$ 13,586
Interest rate	5.00%	5.00%
Interest rate, maximum	8.00%	8.00%
Conversion price	$ .30	$ 0.30
Conversion price, maximum	$ .40	$ 0.40
Paid In Full
Convertible notes payable		$ 1,766
Interest rate	8.00%	8.00%
Conversion price	$ 1.00	$ 1.00
Secured, due Aug 2010
Interest rate	8.00%	8.00%
Notes payable	$ 564,058	$ 533,318
Unsecured, due on demand
Interest rate	0.00%	0.00%
Interest rate, maximum	8.00%	8.00%
Notes payable	$ 150,430	$ 142,460
Unsecured, due Jan 2010
Interest rate	10.00%	10.00%
Notes payable	$ 31,783	$ 29,167
Secured, due Dec 2012
Notes payable	$ 303,469	$ 287,129

Notes Payable - Notes payable - Balance Sheet presentation (Details) - USD ($)	Jun. 30, 2015	Jun. 30, 2014
Debt Disclosure [Abstract]
Notes payable	$ 521,610	$ 493,017
Notes payable, related party	3,041,097	2,649,202
Total	$ 3,562,707	$ 3,142,219

Stock Options and Warrants - Summary of Stock Options (Details) - $ / shares	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Beginning number of shares; outstanding	3,056,500	3,165,653
Beginning weighted-average exercise price; outstanding	$ .42	$ 0.42
Options Granted
Options granted, weighted average exercise price	$ 0.00	$ 0.00
Options Forfeited	(536,500)	(109,153)
Options Forfeited, weighted average exercise price	$ 0.42	$ 0.00
Ending number of shares; outstanding	2,520,000	3,056,500
Ending weighted-average exercise price; outstanding	$ .42	$ .42
Number of Shares; exercisable	2,520,000
Weighted-average exercise price; exercisable	$ .42

Stock Options and Warrants - Additional information regarding outstanding options (Details)	12 Months Ended
	Jun. 30, 2015 $ / shares shares
Options outstanding, shares \| shares	2,520,000
Weighted average remaining contractual life	4 years 7 months
Options excercisable \| shares	2,520,000
Options exercisable, weighted average exercise price	$ .42
Min
Weighted average exercise price	0.13
Max
Weighted average exercise price	$ 1.5

Stock Options and Warrants - Summary of stock warrants (Details) - $ / shares	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Warrants Outstanding, Shares		(275,000)	275,000
Warrants Outstanding, Weighted Average Exercise Price	$ 2.00	$ 2.0	$ 2.0
Warrants Granted
Warrants Forfeited

Income Taxes - Reconciliation between the federal and actual tax rate (Details)	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Income Tax Disclosure [Abstract]
Federal Statutory tax rate	35.00%	35.00%
State tax, net of federal benefit	6.00%	6.00%
Change in valuation	40.00%	40.00%
Allowance	(40.00%)	(40.00%)
Effective tax rate

Income Taxes - Deferred tax assets (Details) - USD ($)	Jun. 30, 2015	Jun. 30, 2014
Income Tax Disclosure [Abstract]
Net operating loss carryforwards	$ 4,224,000	$ 4,021,600
Valuation allowance	$ (4,224,000)	$ (4,021,600)
Net deferred tax asset

Operations and Summary of Significant Accounting Policies (Details Narrative) - USD ($)	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Inventory	$ 23,900	$ 23,900
FDIC guarantee	$ 250,000
Foreign revenues	45.00%	70.00%
Shiping and handling fees billed to customers	$ 997	$ 2,125
Shipping and handling costs	$ 997	$ 2,032
Korea
Foreign revenues	9.00%	54.00%
Taiwan
Foreign revenues	19.00%	10.00%
Other
Foreign revenues	17.00%	6.00%
Max
Equipment Useful life	7 years
Min
Equipment Useful life	3 years
16%
Accounts receivable	$ 6,025
15%
Accounts receivable	5,650
12%
Accounts receivable	$ 4,575
69%
Accounts receivable		$ 86,361
19%
Accounts receivable		$ 23,250

Going Concern (Details Narrative) - USD ($)	12 Months Ended
Going Concern (Details Narrative) - USD ($)	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2013
Net Income (Loss)	$ (907,475)	$ 302,053
Working capital deficit	5,159,420
Stockholders' deficiency	(5,106,433)	(4,582,088)	$ (4,913,260)
Note payable obligations - in default	3,562,707
Payroll taxes and accrued interest and penalties	$ 453,277	$ 539,218
Van Tran
Ownership of TMG	50.00%
Larry Johanns
Ownership of TMG	50.00%

Restricted Cash (Details Narrative) - USD ($)	Jun. 30, 2015	Jun. 30, 2014
Accounting Policies [Abstract]
Restricted Cash	$ 63,029	$ 51,957

Property and Equipment (Details Narrative) - USD ($)	12 Months Ended
Property and Equipment (Details Narrative) - USD ($)	Jun. 30, 2015	Jun. 30, 2014
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 411	$ 239

Acquisition (Details Narrative)	12 Months Ended
Acquisition (Details Narrative)	Jun. 30, 2015 USD ($) shares
Business Combinations [Abstract]
Shares issued \| shares	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
Amortization expense	$ 48,125

Related Party Transactions (Details Narrative) - USD ($)	Jun. 30, 2015	Jun. 30, 2014
Accounts payable, related party	$ 96,110	$ 78,753
Larry Johanns
Ownership of TMG	50.00%
Van Tran
Ownership of TMG	50.00%

Notes Payable (Details)	12 Months Ended
Notes Payable (Details)	Jun. 30, 2015 USD ($) $ / shares
Debt Disclosure [Abstract]
Convertible notes payable issued	$ 365,000
Convertible notes payable, per share \| $ / shares	$ 0.08
Interest expense	$ 297,875

Stockholders' Deficiency (Details Narrative) - USD ($)	1 Months Ended		11 Months Ended	12 Months Ended
Stockholders' Deficiency (Details Narrative) - USD ($)	Dec. 31, 2015	Dec. 31, 2014	Jun. 07, 2013	Jun. 30, 2015	Jun. 30, 2014	Jun. 23, 2014	Jun. 15, 2014	Jun. 30, 2013	Mar. 31, 2014	Dec. 30, 2013
Convertible preferred stock, par value				$ 1.00	$ 1.00
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
Series H convertible preferred stock to common stock				10	10
Common stock, par value				$ .01	$ .01
Common stock, shares authorized				50,000,000	50,000,000
Common stock, shares issued				16,530,088	15,920,088
Common stock, shares outstanding				16,530,088	15,920,088
Shares issued for services, shares	815,000			135,000
Shares issued for services, fair value				$ 19,600
Consulting Agreement
Stock issued		5,000					5,000
Obligation to issue stock, Shares				55,000
Stock issued, aggregate fair value				$ 8,150
Shares authorized but unissued				50,000
Shares authorized but unissued, value				$ 7,400
Advisory Agreement
Stock issued		20,000		35,000		5,000
Stock issued, aggregate fair value				$ 4,050
Shares authorized but unissued				15,000
Shares authorized but unissued, value				$ 1,900
Business Development Agreement
Obligation to issue stock, Shares			50,000	50,000
Stock issued, aggregate fair value				$ 7,000				$ 7,000
Shares authorized but unissued									50,000	50,000
Shares authorized but unissued, value									$ 3,869	$ 3,869
Company's Directors
Stock issued				750,000	225,000
Stock issued, aggregate fair value				$ 28,154	$ 25,250
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

Stock Options and Warrants (Details Narrative) - $ / shares	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Warrants issued	275,000
Warrant exercise price	$ 2.00	$ 2.0	$ 2.0
Warrant, contractual life	5 years
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.

Income Taxes (Details Narrative) - USD ($)	12 Months Ended
Income Taxes (Details Narrative) - USD ($)	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2034
Income Tax Disclosure [Abstract]
Net loss	$ (907,475)	$ 302,053
Net operating loss carryforwards			$ 10,000,000

Commitments and Contingencies (Details Narrative) - USD ($)	11 Months Ended	12 Months Ended
	Sep. 28, 2013	Jun. 30, 2015	Jun. 30, 2017	Jun. 30, 2014	Dec. 05, 2010
Monthly lease payments		$ 4,200
Future annual minimum lease payments		50,400
Total minimum lease payments			$ 100,800
Deferred revenue		492,603		$ 258,764
Received from major customer		552,600
Incentive compensation plan percentage					10.00%
Incentive Compensation Bonus, Minimum Threshold					$ 3,000,000
NIS
Term of license	5 years
Total fee	$ 250,000
Deferred revenue		115,347
Revenue		50,000
Remaining revenue recognized		$ 65,347
AAA
Term of license		5 years
Total fee		$ 100,000
Deferred revenue				$ 72,500
Revenue		20,000
Remaining revenue recognized		$ 52,500
Strategic Product License Agreement
Term of license		5 years
Total fee		$ 150,000
Revenue		30,000
Remaining revenue recognized		120,000
Pilot Program Agreement
Total fee		175,000
Revenue		86,361
Remaining revenue recognized		88,639
Continuing Services Agreement
Total fee		142,500
Remaining revenue recognized		$ 142,500

Subsequent Events (Details Narrative) - USD ($)	1 Months Ended		12 Months Ended
Subsequent Events (Details Narrative) - USD ($)	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Jun. 30, 2014	Jan. 17, 2016
Convertible notes			$ 365,000
Common stock issued upon conversion			16,530,088	15,920,088
Barcode technology revenues			$ 507,960	$ 1,623,109
Common stock issued for services	815,000		135,000
Vietnam Alliance Capital
Ownership in joint venture					70.00%
Veritec Inc.
Ownership in joint venture					30.00%
The Matthews Group
Convertible notes		$ 1,800,000
Conversion Price		$ 0.08
Common stock issued upon conversion		22,200,000
Proceeds from sale of Barcode Technology assets		$ 670,000