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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-QSB
  þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 (No fee required)
 For the quarterly period ended September 30, 2007
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 0-15113
 VERITEC, INC.
 (Exact name of registrant as specified in its charter)
 (State or other jurisdiction of incorporation or organization)
 (IRS Employer Identification Number)
 2445 Winnetka Avenue North, Golden Valley, MN 55427
 (Registrants telephone number, including area code)
 þ o
 o þ
 
 þ o
   Number of Shares of Common Stock15,113,088
 Transition Small Business Disclosure Format (check one): o þ




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Page(s)PART I.
    
    FINANCIAL INFORMATION
    
    
    1Item 1.
    
    Financial Statements
    
    
    1Item 2.
    
    Managements Discussion and Analysis or Plan of Operations
    
    
    8Item 3.
    
    Controls and Procedures
    
    
    11PART II.
    
    OTHER INFORMATION
    
    
    11Item 1.
    
    Legal Proceedings
    
    
    11Item 1A.
    
    Risk Factors
    
    
    13Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    15Item 3.
    
    Defaults Upon Senior Securities
    
    
    15Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    15Item 5.
    
    Other Information
    
    
    15Item 6.
    
    Exhibits
    
    
    15Signatures
    
    
    15Exhibits Index
    
    
    16Exhibit 31Exhibit 32
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PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 VERITEC, INC. AND SUBSIDIARIES  CONDENSED CONSOLIDATED BALANCE SHEETS
 September 30,
    
    
  June 30,2007
    
    
   2007(Unaudited)ASSETSCurrent Assets:Cash
    
    $
    426,251
    
    
    $
    790,089Accounts receivable, net
    
    
    15,195
    
    
    
    11,927Note receivable from RBA, net
    
    
    52,611
    
    
    
    78,516Inventories
    
    
    27,524
    
    
    
    26,213Prepaid expenses
    
    
    30,825
    
    
    
    27,325Total Current Assets
    
    
    552,406
    
    
    
    934,070Property and Equipment, net
    
    
    80,615
    
    
    
    88,005Software License, net
    
    
    75,000
    
    
    
    83,333Patent Costs
    
    
    18,756
    
    
    
    18,756Total Assets
    
    $
    726,777
    
    
    $
    1,124,164LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    54,988
    
    
    $
    56,072Accrued expenses
    
    
    362,029
    
    
    
    405,074Total Current Liabilities
    
    
    417,017
    
    
    
    461,146Commitments and ContingenciesStockholders Equity:Convertible preferred stock, par value $1.00;
authorized 10,000,000 shares, 276,000 shares of
Series H authorized, 1,000 shares issued
    
    
    1,000
    
    
    
    1,000Common stock, par value $.01; authorized
20,000,000 shares, 15,113,088 and 15,096,088
shares issued
    
    
    151,131
    
    
    
    150,961Subscription receivable
    
    
    (142,743
    )
    
    
    (193,876
    )Additional paid-in capital
    
    
    13,617,395
    
    
    
    13,575,926Accumulated deficit
    
    
    (13,317,023
    )
    
    
    (12,870,993
    )Total Stockholders Equity
    
    
    309,760
    
    
    
    663,018Total Liabilities and Stockholders Equity
    
    $
    726,777
    
    
    $
    1,124,164
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VERITEC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three months ended September 30,2007
    
    
    2006Revenues:License and other
    
    $
    70,214
    
    
    $
    99,329Infringement
    
    
    
    
    
    
    259,663Total Revenues
    
    
    70,214
    
    
    
    358,992Cost of Sales
    
    
    30,887
    
    
    
    5,110Gross Profit
    
    
    39,327
    
    
    
    353,882Operating Expenses:Selling, general and administrative
    
    
    354,936
    
    
    
    331,480Research and development
    
    
    139,963
    
    
    
    87,404Total Operating Expenses
    
    
    494,899
    
    
    
    418,884Loss from Operations
    
    
    (455,572
    )
    
    
    (65,002
    )Other Income:Interest income
    
    
    8,557
    
    
    
    8,737Gain on sale of property and equipment
    
    
    985
    
    
    
    Total Other Income
    
    
    9,542
    
    
    
    Net Loss
    
    $
    (446,030
    )
    
    $
    (56,265
    )Loss Per Common ShareBasic and Diluted
    
    $
    (0.03
    )
    
    $
    
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VERITEC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three months ended September 30,2007
    
    
    2006CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    $
    (446,030
    )
    
    $
    (56,265
    )Adjustments to reconcile net loss to net cash used by operating activities:Depreciation
    
    
    7,390
    
    
    
    1,666Amortization of software license
    
    
    8,333
    
    
    
    Stock options compensation
    
    
    9,766
    
    
    
    73,502Interest income added to note receivable from RBA
    
    
    (2,970
    )
    
    
    Services applied to reduce note receivable from RBA
    
    
    28,875
    
    
    
    Gain on sale of property and equipment
    
    
    (985
    )
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    (3,268
    )
    
    
    31,776Inventories
    
    
    (1,311
    )
    
    
    (1,015
    )Prepaid expenses
    
    
    (3,500
    )
    
    
    (12,000
    )Accounts payables and accrued expenses
    
    
    (16,679
    )
    
    
    (137,389
    )Net cash used by operating activities
    
    
    (420,379
    )
    
    
    (99,725
    )CASH FLOWS FROM INVESTING ACTIVITIESProceeds from sale of property and equipment
    
    
    985
    
    
    
    CASH FLOWS FROM FINANCING ACTIVITIESProceeds on subscription receivable (including $4,423 interest credited
to additional paid-in capital)
    
    
    55,556
    
    
    
    NET DECREASE IN CASH
    
    
    (363,838
    )
    
    
    (99,725
    )CASH AT BEGINNING OF PERIOD
    
    
    790,089
    
    
    
    898,424CASH AT END OF PERIOD
    
    $
    426,251
    
    
    $
    798,699NONCASH ACTIVITIESIssuance of common stock for accrued expenses
    
    $
    27,450
    
    
    $
    Applied prepayment on subscription receivable to subscription receivable
    
    $
    
    
    
    $
    55,556
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VERITEC, INC. AND SUBSIDIARIES
          ®
      4




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Numberof
    
    Weighted - AverageShares
    
    Exercise PriceOutstanding at June 30, 2007
    
    
    156,666
    
    
    $
    1.03Granted
    
    
    39,000
    
    
    $
    0.65Outstanding at September 30, 2007
    
    
    195,666
    
    
    $
    0.95
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Item 2. Managements Discussion and Analysis or Plan of Operation
   Critical Accounting Policies
     General
   8




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®
  Nature of Business
  ®
   Results of Operations  September 30, 2007 compared to September 30, 2006
 Revenues
  ©
  9




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Cost of Sales
  Selling General and Administrative
  Research and Development
  Liquidity and Capital Resources
    10




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Quantitative and Qualitative Disclosures About Market Risk
  
 Item 3. Controls and Procedures
 Disclosure Controls and Procedures
  Internal Control over Financial Reporting
  
 PART II OTHER INFORMATION
 
 Item 1. Legal Proceedings
   11




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Item 1A. Risk Factors
   We Have a History of Operating Losses
  Loss of the Services of Key Employees Could Harm Our Operations
  Continuing Licensing Revenues from VData and Intellectual Property
  Competition in the Asian Market
 ®
  13




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Dependence on The Matthews Group
  Ability to Obtain Access to Capital
  Effect of the Bankruptcy
  Competition
 ® 
 Effect of Bonus
   14




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General Conditions Beyond the Companies Control
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
  
 Signatures
  Veritec, Inc./s/ Van Thuy TranVan Thuy Tran, Chief Executive Officer/s/ Gerald ForsGerald Fors, Chief Financial Officer
  15




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*3(i)
    
    Restated Articles of Incorporation of Veritec, Inc. (filed as exhibit 3(i) to Veritecs
Quarterly Report on Form 10QSB for the quarter ended March 31, 2007, and incorporated herein
by reference).*3(ii)
    
    Bylaws of Veritec, Inc. (filed as exhibit 3(ii) to Veritecs Quarterly Report on Form 10QSB
for the quarter ended December 31, 2006, and incorporated herein by reference).*13(a)
    
    Form 10-KSB for the period ended June 30, 1999, filed on October
13, 1999, and is incorporated herein by this reference.*14.
    
    Code of Ethics of Veritec, Inc. (filed as exhibit 14 to Veritecs
Annual Report on Form 10KSB for the year ended June 30, 2007, and
incorporated herein by reference).31.
    
    CEO/CFO Certification required by Rule 13a14(a)/15d14(a) under the Securities Exchange Act
of 1934.32.
    
    Veritec, Inc. Certification of CEO/CFO pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (18 U.S.C. §1350).
  
 *
    
    As Previously Filed  16