UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB
(Mark One)

  X       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, 2004
                                               ------------------

          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)

                                     NEVADA
          -------------------------------------------------------------
         (State or other jurisdiction of incorporation or organization)

                                   95-3954373
                       -----------------------------------
                      (IRS Employer Identification Number)

               2445 Winnetka Avenue North, Golden Valley, MN 55427
               ---------------------------------------------------
               (Address of principal executive offices, zip code)

                                  763-253-2670
               ---------------------------------------------------
              (Registrant's telephone number, including area code)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 15 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 X No

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

         Check whether the registrant  filed all documents and reports  required
to be  filed  by  Section  12,  13 or  15(d)  of  the  Exchange  Act  after  the
distribution of securities under a plan confirmed by a court. Yes X No
                                                             -----  ----
                       [Please check appropriate response]
                       -----------------------------------

                                       1
<PAGE>
                      APPLICABLE ONLY TO CORPORATE ISSUERS

          Indicate  the  number of shares  outstanding  of each of the  issuer's
classes of common  stock as of the latest  practicable  date.  As of November 5,
2004 the Company had:

                        Number of Shares of Common Stock
            -------------------------------------------------------
                                    7,071,849
            -------------------------------------------------------

       Transition Small Business Disclosure Format (check one):  Yes     No X
       -------------------------------------------------------      ---    ---


                       [Please check appropriate response]
                       -----------------------------------








































                                       2
<PAGE>


Table of Contents
-----------------


                                   FORM 10-QSB
                                  VERITEC, INC.

                                      INDEX
                                                                      Page

PART I.  FINANCIAL INFORMATION                                           4

Item 1.  Financial Statements                                            4
Item 2.  Management's Discussion and Analysis of
         Financial Condition and Results of Operations                  15
Item 3.  Controls and Procedures                                        18

PART II. OTHER INFORMATION                                              19

Item 1.  Legal Proceedings                                              19
Item 2.  Changes in Securities and Use of Proceeds                      20
Item 3.  Defaults Upon Senior Securities                                20
Item 4.  Submission of Matters to a Vote of Security Holders            20
Item 5.  Other Information                                              20
Item 6.  Exhibits and Reports on Form 8-K                               20

SIGNATURES                                                              21




























                                       3
<PAGE>
                          PART I. FINANCIAL INFORMATION
                          Item 1. Financial Statements

                                  VERITEC, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS


                                                   September 30,     June 30,
                                                        2004           2004
                                                   -------------- --------------
                                                    (Unaudited)     (Audited)
ASSETS
------
Current Assets:
 Cash                                              $     903,829  $     394,067
 Certificates of deposit                                  93,965        120,257
 Accounts and notes receivable, net                      399,965        949,802
 Inventories                                              17,325         20,730
 Prepaid expense - legal retainer                        100,000        100,000
 Prepaid expenses - other                                 14,059         10,291
                                                   -------------  -------------
     Total Current Assets                              1,529,143      1,595,147
                                                   -------------  -------------
Property and Equipment:
 Furniture and equipment                                  66,032         66,032
 Vehicles                                                 67,611         41,481
                                                   -------------  -------------
                                                         133,643        107,513
 Less accumulated depreciation                            97,268         94,662
                                                   -------------  -------------
                                                          36,375         12,851
                                                   -------------  -------------
Other Assets:
 Note receivable                                          13,535         19,622
 Security deposits and other assets                       23,578         14,270
 Software costs, net                                       3,333         13,334
 Technology rights, net                                   33,391         41,527
                                                   -------------  -------------
                                                          73,837         88,753
                                                   -------------  -------------

     Total Assets                                  $   1,639,355  $   1,696,751
                                                   =============  =============













            See Notes to Condensed Consolidated Financial Statements.
                                       4
<PAGE>
                                  VERITEC, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                                   September 30,     June 30,
                                                        2004           2004
                                                   -------------- --------------
                                                    (Unaudited)     (Audited)
LIABILITIES AND STOCKHOLDERS'  DEFICIT

Current Liabilities:
 Notes payable - related parties                   $     340,000  $     390,000
 Convertible notes - related party                       747,374        747,374
 Current maturities of long-term debt                    111,973        114,681
 Accounts payable                                      1,600,643      1,485,851
 Accrued expenses:
   Payroll and related                                    81,135        129,915
   Interest                                              263,033        231,747
   Other                                                   2,316         10,863
                                                   -------------  -------------
     Total Current Liabilities                         3,146,474      3,110,431

Long-Term Debt, less current maturities                  137,306        169,298

Prepayment on Stock and Subscription Receivable           48,490         19,811
                                                   -------------  -------------
     Total Liabilities                                 3,332,270      3,299,540
                                                   -------------  -------------
Commitments and Contingencies

Stockholders'  Deficit:
 Preferred stock, par value $1.00; authorized
   10,000,000 shares, 275,000 shares of Series H
   authorized, 76,000 shares issued                      366,007        366,007
 Common stock, par value $.01; authorized
   20,000,000 shares, 7,071,849 and 7,126,849
   shares issued                                          70,718         70,718
 Subscription receivable                                (679,790)      (717,717)
 Additional paid-in capital                           12,008,582     11,990,954
 Accumulated deficit                                 (13,475,090)   (13,323,448)
 Cumulative translation adjustment                        16,658         10,697
                                                   -------------  -------------
     Total Stockholders' Deficit                      (1,692,915)    (1,602,789)
                                                   -------------  -------------
     Total Liabilities and
       Stockholders' Deficit                       $   1,639,355  $   1,696,751
                                                   =============  =============










            See Notes to Condensed Consolidated Financial Statements.
                                       5
<PAGE>
                                  VERITEC, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

                                             Three months ended September 30,
                                             --------------------------------
                                                 2004                2003
                                             ---------------  ---------------
Revenues:
 Software                                    $    1,054,388   $      268,385
 Hardware                                            35,527          328,925
                                             --------------   --------------
    Total revenues                                1,089,915          597,310

Cost of Sales                                        27,686          118,555
                                             --------------   --------------
Gross Profit                                      1,062,229          478,755
                                             --------------   --------------
Operating Expenses
 Selling, general and administrative                356,736          279,672
 Legal                                              793,564          193,040
 Research and development                            30,865           57,916
                                             --------------   --------------
Total Operating Expenses                          1,181,165          530,628
                                             --------------   --------------
Loss from Operations                               (118,936)         (51,873)
                                             --------------   --------------
Other Income (Expense):
 Interest income                                        634              139
 Interest expense                                   (34,534)         (33,162)
 Other                                                1,194            8,139
                                             --------------   --------------
Total Other Income (Expense)                        (32,706)         (24,884)
                                             --------------   --------------
Loss Before Income Taxes                           (151,642)         (76,757)

Income Tax Expense                                       --             (436)
                                             --------------   --------------
Net Loss                                     $     (151,642)  $      (77,193)
                                             ==============   ==============
Basic and diluted net loss per common share  $        (0.02)  $        (0.01)
                                             ==============   ==============














            See Notes to Condensed Consolidated Financial Statements.
                                       6
<PAGE>
                                  VERITEC, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                               Three months ended September 30,
                                               --------------------------------
                                                   2004                2003
                                               ---------------  ---------------
Cash flows from operating activities:
 Net loss                                      $     (151,642)  $      (77,193)
  Adjustments to reconcile net loss to net
   cash provided  by operating activities:
      Depreciation and amortization                    20,328           11,856
  (Increase) decrease in operating assets:
      Accounts and notes receivable                   553,428           78,970
      Inventories                                       5,088          (22,279)
      Prepaid expenses                                 (1,717)         (19,145)
  Increase (decrease) in operating liabilities:
     Accounts payable and accrued expenses            157,771          120,474
      Deferred revenue                                     --              273
                                               --------------   --------------
Net cash provided by operating activities             583,256           92,956
                                               --------------   --------------
Cash flows from investing activities:
 Purchase of equipment                                (23,301)              --
 Proceeds from certificates of deposit                 26,292               --
                                               --------------   --------------
Net cash provided by investing activities               2,991               --
                                               --------------   --------------
Cash flows from financing activities:
 Payments on notes payable - related parties         (50,000)              --
 Payments on long-term debt                          (34,701)          (4,254)
 Exercise of stock option
                                                          --            3,451
                                               -------------    -------------
Net cash used by financing activities                (84,701)            (803)
                                               -------------    -------------
Effect of exchange rate changes on cash                8,216            4,076
                                               -------------    -------------
Increase in cash                                     509,762           96,229

Cash at beginning of period                          394,067          325,193
                                               -------------    -------------
Cash at end of period                          $     903,829    $     421,422
                                               =============    =============











            See Notes to Condensed Consolidated Financial Statements.
                                       7
<PAGE>
NOTES TO FINANCIAL STATEMENTS

A.  BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared  in  accordance  with  United  States  of  America  generally  accepted
accounting   principles  for  interim   financial   information   and  with  the
instructions to Form 10-QSB and Article 10 of Regulation S-X.  Accordingly,  the
financial  statements  do  not  include  all of the  information  and  footnotes
required by United States of America generally  accepted  accounting  principles
for complete financial statements. In the opinion of management, all adjustments
(consisting  of  normal  recurring  accruals)  considered  necessary  for a fair
presentation have been included.  Operating  results for the three-month  period
ended September 30, 2004 are not necessarily  indicative of the results that may
be expected for the year ended June 30, 2005. For further information,  refer to
the financial  statements and footnotes  thereto included in our Form 10-KSB for
the year ended June 30, 2004.

Certain  amounts  presented  in  the  2003  condensed   consolidated   financial
statements,  as previously  reported,  have been  reclassified to conform to the
2004 presentation. These reclassifications had no effect on net loss or net cash
flows for the period.

Nature of Business
------------------
Veritec, Inc. is primarily engaged in development, marketing and sales of a line
of  microprocessor-based  encoding and decoding system products that utilize our
patented  Vericode(R)  Symbol technology.  Veritec,  Inc.'s readers and scanners
enable a  manufacturer  or  distributor  to attach unique  identifiers  or coded
symbols  containing  binary  encoded data to a product  that  enables  automatic
identification  and  collection of data.  Veritec,  Inc. has also  developed its
Secured  Identification  System with its VSCode(TM)  that enables the storage of
biometric   information  of  the   two-dimensional   VSCode(TM)  for  subsequent
verification  of  its  authenticity.  Veritec  is a  world  leader  in  creating
two-dimensional  barcode  technology  and holds key  patents  in Europe  and the
United States. VIVI-Japan is a wholly-owned subsidiary located in Osaka, Japan.

In  November  2003,  Veritec,  Inc.  formed a  wholly  owned  subsidiary,  Vcode
Holdings,  Inc., a Minnesota  corporation,  to which it assigned  three patents:
U.S. Patent Nos. 4,924,078;  5,612,524 and 5,331,176.  Vcode Holdings,  in turn,
entered into an exclusive license agreement with Vdata, LLC, an Illinois limited
liability company, for the purpose of enforcement and licensing the patents. The
license  agreement  provides that all expenses  related to the  enforcement  and
licensing of the patents will be the  responsibility  of Vdata, LLC. The parties
to  the  licensing  agreement  will  share  in net  proceeds  arising  from  the
enforcement or sublicensing of the patents.  As of September 30, 2004 there have
been no such proceeds.

Principles of Consolidation
---------------------------
The  accompanying   condensed  consolidated  financial  statements  include  the
accounts of Veritec,  Inc. and its  wholly-owned  subsidiaries,  VIVI-Japan  and
Vcode Holdings, Inc. (collectively referred to as the Company). All intercompany
transactions and balances were eliminated in consolidation.



                                       8
<PAGE>
Use of Estimates
----------------
The  preparation of condensed  consolidated  financial  statements in conformity
with  accounting  principles  generally  accepted in the United States  requires
management to make estimates and assumptions that 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.

Cash Concentrations
-------------------
The Company  maintains  its United  States based bank  balance at one  financial
institution.  At times,  this  balance may exceed  federally  insured  limits of
$100,000.  The  Company  has not  experienced  any losses in such  accounts  and
believes it is not exposed to any significant  credit risk on its cash balances.
Bank  balances in Japan are at four banks.  These  balances  are  governmentally
insured up to 10,000,000 Yen per bank ($90,155 at September 30, 2004). At times,
these balances may exceed the governmentally insured limits. The Company has not
experienced  any losses in such  accounts  and believes it is not exposed to any
significant credit risk on its cash balances.

Accounts and Notes Receivable
-----------------------------
The Company sells to domestic and foreign companies and extends uncollateralized
credit  to  customers,   but  generally  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  Companies'  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.

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







                                       9
<PAGE>
Financial Instruments
---------------------
The fair value of cash, certificates of deposit,  accounts and notes receivable,
accounts  payable,  accrued  expenses,  and short-term  debt  approximate  their
carrying values due to the short-term nature of these financial instruments.

The carrying  value of the  subscription  receivable is estimated to approximate
its fair value as a result of the 10% interest rate used for imputing  interest.
No quoted market value is available for this instrument.

Intangible Assets
-----------------
Software costs are being amortized on a straight-line basis over their estimated
useful  life  of  five  years.  Technology  rights  are  being  amortized  on  a
straight-line basis over their estimated useful life of three years.

Computer Software Costs
-----------------------
The Company capitalizes  certain software  development and production costs once
technological feasibility has been achieved. Software development costs incurred
prior  to  achieving   technological   feasibility  are  expensed  as  incurred.
Management  determined that technological  feasibility  occurred at the time the
Company's software was available for general release to customers.  Accordingly,
no computer software development costs have been capitalized in the accompanying
condensed consolidated financial statements.

Long-Lived Assets
-----------------
The Company reviews its long-lived and intangibles assets to determine potential
impairment by comparing the carrying value of the long-lived assets  outstanding
with estimated  future cash flows expected to result from the use of the assets,
including  cash flows from  disposition.  Should the sum of the expected  future
cash flows be less than the  carrying  value,  the Company  would  recognize  an
impairment  loss.  Management  determined  that no  impairment  of long-lived or
intangible assets existed at September 30, 2004 or 2003.

Revenue Recognition
-------------------
The Company accounts for revenue recognition in accordance with Staff Accounting
Bulletin  (SAB) 101 "Revenue  Recognition in Financial  Statements"  and related
amendments.  Revenues from software  sales,  product sales and  engineering  are
recognized  when  products are shipped or services  performed.  License fees are
recognized  upon  completion  of all  required  terms under the  agreement.  The
process  typically begins with a customer  purchase order detailing its hardware
specifications  so the  Company can  customize  its  software to the  customer's
hardware.  Once  customization is completed the Company typically  transmits the
software to the customer via the Internet.  Revenue is recognized at that point.
Once the software is transmitted the customers do not have a right of refusal or
return.  Under some  agreements the customers remit payment prior to the Company
having completed  customization or completion of any other required services. In
these  instances  the  Company  delays  revenue  recognition  and  reflects  the
prepayments as deferred revenue.





                                       10
<PAGE>
Shipping and Handling Fees and Costs
------------------------------------
Shipping  and  handling  fees billed to  customers  are included in revenues and
shipping and handling costs are included as cost of sales.

Advertising
-----------
Advertising costs are expensed as incurred.

Research and Development
------------------------
Research and development costs are expensed as incurred.

Earnings (Loss) Per Common Share
--------------------------------
Basic  earnings  (loss) per common  share (EPS) is  computed by dividing  income
available to common stockholders by the weighted-average number of common shares
outstanding for the year.  Diluted earnings (loss) per common share, in addition
to the  weighted-average  determined  for basic  earnings  per  share,  includes
potential  dilution that could occur if  securities or other  contracts to issue
common  stock were  exercised  or  converted  into common  stock.  Common  stock
equivalents  issuable upon  exercise of stock  options and  warrants,  using the
treasury  stock  method,  conversion  of the  Series H  Preferred  stock and the
conversion  of  the  notes  payable  and  related  accrued  interest  using  the
"if-converted"  method are  included  in the diluted  earning  (loss) per common
share when dilutive. All such potentially dilutive instruments were antidulitive
for 2004 and 2003.

Going Concern
-------------
The accompanying  condensed consolidated financial statements have been prepared
assuming  the  Company  will  continue  as a  going  concern.  As  shown  in the
accompanying consolidated financial statements, the Company has lost $13,475,090
from  inception to September 30, 2004. At September 30, 2004,  the Company had a
$1,617,331 working capital deficiency and a stockholders' deficit of $1,692,915.
These  conditions  raise  substantial  doubt  about the  Companies'  ability  to
continue  as a going  concern.  The  consolidated  financial  statements  do not
include any adjustments that might result from the outcome of this uncertainty.

The Company is dependent on The Matthews  Group,  a related  party,  to meet its
operating  needs.  Through  September  30, 2004,  The Matthews  Group has funded
$1,233,675  under  the  subscription  receivable  and  made  prepayments  on the
subscription  receivable  to assist the  Company in meeting its cash flow needs.
The Matthews Group further made payments toward and subsequently paid off a note
to prevent the secured  noteholders  from  foreclosing.  The Matthews  Group has
indicated  it will  continue  to meet  its  obligation  under  the  subscription
receivable.  There is no assurance The Matthews  Group will continue to meet its
obligation under the subscription receivable.

The Company's  management is aggressively  pursuing new sales  opportunities for
the Company.  Management is hopeful that it will be successful in these efforts,
which will improve its ability to realize  assets and settle  liabilities in the
normal course of  operations.  However,  there is no assurance  that the Company
will  succeed in these  efforts or that the  Company  will  continue  as a going
concern.


                                       11
<PAGE>
Certificates of Deposit
-----------------------
The certificates of deposit are marketable debt securities and are classified as
held-to-maturity securities. Cost plus accrued interest approximates fair value.
These securities mature from May 2005 to June 2005.

Notes Payable - Related Parties
-------------------------------
In October  2002,  the  Company's  President,  Van Tran,  loaned  $90,000 to the
Company for working capital.  This note is unsecured,  bears 10% interest and is
due on demand.  As of September 30, 2004, this note and related accrued interest
has not been repaid.  Accrued interest on this  indebtedness  totaled $17,883 at
September 30, 2004 and $15,633 at June 30, 2004.

In fiscal  years  2003 and 2002,  The  Matthews  Group  loaned  the  Company  an
aggregate of $250,000 for working capital.  These notes are unsecured,  bear 10%
interest and were due May 25, 2003 to June 23, 2003.  As of September  30, 2004,
these notes and related accrued interest have not been repaid.  Accrued interest
on this  indebtedness  totaled $41,319 at September 30, 2004 and $35,069 at June
30, 2004.

In June 2003, Veritec entered into an agreement to purchase The Matthews Group's
50% ownership of VIVI-USA.  As part of this  agreement,  the Company  issued The
Matthews Group a promissory note of $50,000.  The promissory note to The Mathews
Group bears  interest at an annual rate of 10% and was due June 25, 2004.  As of
September 30, 2004 this note and related  accrued  interest has not been repaid.
Accrued interest on this  indebtedness  totaled $6,318 at September 30, 2004 and
$5,068 at June 30, 2004.

In November 2003, a consultant and  shareholder of the Company loaned $50,000 to
the Company for working  capital.  This note was  unsecured,  bore 10%  interest
payable  monthly  and was due  November  12,  2004.  This  note and all  accrued
interest was repaid in September 2004.

Convertible Notes - Related Parties
-----------------------------------
In April 2002,  The Matthews  Group  loaned  $100,000 to the Company for working
capital and to fund its  investment in VIVI-USA.  This note is unsecured,  bears
annual 10% interest and was due March 28, 2003. As of September  30, 2004,  this
note and related accrued interest has not been repaid.  Accrued interest on this
indebtedness totaled $24,006 at September 30, 2004 and $21,506 at June 30, 2004.
At the option of The Matthews Group,  all or a portion of this  indebtedness can
be converted into Veritec, Inc. common stock at $.25 per share.

The  Matthews  Group paid an  obligation  on behalf of the Company to holders of
secured  notes  payable  collectively  called "The Gant Group."  Payments by The
Matthews  Group  to the Gant  Group  totaled  $366,522  (principal  -  $286,453;
interest - $75,069;  and legal fees - $5,000).  These  amounts  paid to the Gant
Group plus  accrued  interest  of $30,853  owed to The  Matthews  Group on these
advances were  incorporated  into a $397,375 note on December 1, 2000. This note
is unsecured,  bears 10% annual  interest and is due on demand.  As of September
30, 2004,  this note and related accrued  interest has not been repaid.  Accrued
interest  on this  indebtedness  totaled  $151,435  at  September  30,  2004 and
$142,293 at June 30, 2004. At the option of The Matthews Group, all or a portion
of this  indebtedness  can be converted into Veritec,  Inc. common stock at $.10
per share.

                                       12
<PAGE>
Convertible Notes - Related Parties (Continued)
-----------------------------------
In November 2003, Van Tran and Larry Johanns (a principal of The Matthews Group)
loaned $250,000 to the Company for working  capital.  These notes are unsecured,
bear 10% annual interest and are due November 14, 2004. As of September 30, 2004
these notes and related accrued interest have not been repaid.  Accrued interest
on this  indebtedness  totaled $22,072 at September 30, 2004 and $15,822 at June
30,  2004.  At the  option of these  related  parties,  all or a portion of this
indebtedness can be converted into Veritec, Inc. common stock at $.25 per share.

Long-Term Debt
--------------
Notes  payable to banks are due in  monthly  installments  of $9,557,  including
interest at 1.3% to 2.5%,  collateralized  by all corporate assets of VIVI-Japan
and the personal guarantee of VIVI-Japan's President. These notes mature between
March 2005 and December 2009.

Prepayment On Subscription Receivable
-------------------------------------
The Matthews  Group made  prepayments  against its  subscription  payable to the
Company. These prepayments are unsecured and non-interest bearing. It is assumed
the  prepayment  at September 30, 2004 will  ultimately  be applied  against the
subscription  receivable.  In August 2004,  the Company's  President,  Van Tran,
contributed  deferred  compensation  of $84,333  owed her to the  Prepayment  on
Subscription Receivable.

Subscription Receivable
-----------------------
In September 1999, the Company accepted a commitment from The Matthews Group LLC
to fund the $2,000,000  required under the  bankruptcy  plan of  reorganization.
This  funding is in the form of a  promissory  note that  requires  108  monthly
payments of $18,519.  These  payments  are  non-interest  bearing and were to be
collateralized  by a  pledge  of  properties  controlled  by  principals  of The
Matthews  Group LLC. In July 2001,  the  principals  of The  Matthews  Group LLC
granted to the Company a security  interest in certain  California and Minnesota
properties to partially collateralize the subscription.  Imputed interest on the
subscription is excluded from operating results and is instead credited directly
to additional paid-in capital.

The Matthews  Group LLC is scheduled to fund the  subscription  receivable  with
monthly payments of $18,519. As the Company has experienced cash shortfalls, The
Matthews  Group LLC made payments on the  promissory  note in advance of the due
dates.  Such  advance  payments are  reflected  as a liability in the  financial
statements in the Prepayment on Stock Subscription Receivable account. In August
2004 the Company's President,  Van Tran,  contributed  deferred  compensation of
$84,333 owed her to the Prepayment on Subscription Receivable.

At September 30, 2004, The Matthews Group LLC and Van Tran had made  prepayments
of $48,490 towards  scheduled  payments on the subscription  receivable.  At The
Matthews  Group LLC  discretion,  the  balance  in this  account  may be used to
satisfy any  scheduled  payment  due on the  subscription  receivable.  When The
Matthews  Group LLC does so, the  Company  will reduce the  Prepayment  on Stock
Subscription  Receivable  account  and credit the  subscription  receivable  and
additional  paid-in-capital.  Historically,  when the Company has  experienced a
cash  shortfall,  The  Matthews  Group  LLC has  continued  to make its  monthly


                                       13
<PAGE>
Subscription Receivable (Continued)
-----------------------
payments due on the subscription  receivable.  However,  there is no contractual
obligation for it to do so as long as prepayments exist to satisfy its scheduled
payments.  In fiscal 2005 to date and in fiscal 2004 The Matthews Group used the
Prepayment on Stock  Subscription  Receivable to make all payments scheduled due
under the  subscription  agreement.  The  Company  has no advance  knowledge  of
whether, in any given month, The Matthews Group LLC may make a scheduled payment
on the subscription receivable or utilize the balance in the Prepayment on Stock
Subscription  Receivable  account.  The  Company  also has no  assurance  of The
Matthews  Group LLC ability to continue to provide this funding.  Failure of The
Matthews  Group LLC to continue to make scheduled  payments on the  subscription
receivable could negatively  impact the Company's  ability to meet its cash flow
requirements.

Income Taxes
------------
Deferred taxes are provided on a liability  method  whereby  deferred tax assets
are recognized for deductible  temporary  differences and operating loss and tax
credit carry  forwards and deferred tax  liabilities  are recognized for taxable
temporary  differences.  Temporary  differences are the differences  between the
reported  amounts of assets and  liabilities  and their tax bases.  Deferred tax
assets are reduced by a valuation  allowance when, in the opinion of management,
it is more likely than not that some  portion or all of the  deferred tax assets
will not be realized.

The Company and Vcode  Holdings,  Inc. file  separate  U.S.  income tax returns.
VIVI-Japan files a separate income tax return in Japan.

The tax effect of net operating loss  carryforwards  gives rise to a significant
deferred  tax asset.  Deferred  tax  assets  have been  reduced  by a  valuation
allowance as it is unlikely they will be realized.

























                                       14
<PAGE>
Other Information
-----------------
         None.

         Item 2.  Management's Discussion and Analysis
         ---------------------------------------------
MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS.

General
-------
The Company is primarily  engaged in development,  marketing and sales of a line
of  microprocessor-based  encoding and decoding system products that utilize our
patented  Vericode(R)  Symbol  technology.  The  Company's  readers and scanners
enable a  manufacturer  or  distributor  to attach unique  identifiers  or coded
symbols  containing  binary  encoded data to a product  that  enables  automatic
identification  and  collection  of data.  The  Company has also  developed  its
Secured  Identification  System with its VSCode(TM)  that enables the storage of
biometric   information  of  the   two-dimensional   VSCode(TM)  for  subsequent
verification  of its  authenticity.  The  Company is a world  leader in creating
two-dimensional  barcode  technology  and holds key  patents  in Europe  and the
United States.

Through the Company's wholly-owned subsidiary,  VIVI-Japan, the Company provides
services to the  expanding  LCD markets in Japan and Korea,  and to the emerging
markets of Taiwan,  China and Southeast  Asia.  Veritec and  VIVI-Japan  are now
expanding the market into the Secure ID business worldwide.

In November 2003, the Company formed a wholly owned subsidiary,  Vcode Holdings,
Inc., a Minnesota  corporation,  to which it assigned three patents: U.S. Patent
Nos. 4,924,078;  5,612,524 and 5,331,176.  Vcode Holdings, in turn, entered into
an exclusive  license  agreement with Vdata,  LLC, an Illinois limited liability
company,  for the purpose of enforcement and licensing the patents.  The license
agreement provides that all expenses related to the enforcement and licensing of
the  patents  will be the  responsibility  of Vdata,  LLC.  The  parties  to the
licensing  agreement will share in net proceeds  arising from the enforcement or
sublicensing  of the patents.  As of September  30, 2004 there have been no such
proceeds.

The Company has  incurred  losses from  operations  since  inception  and has an
accumulated deficit of $13,475,090 as of September 30, 2004.

In the Company's Form 10-KSB filed with the  Securities and Exchange  Commission
for the year ended June 30,  2004 the  Company  identified  critical  accounting
policies and estimates for its business.  The Company has not amended or changed
any of its critical  accounting  policies and estimates  since the filing of its
Form 10-KSB.

Results of Operations - September 30, 2004 compared to September 30, 2003
-------------------------------------------------------------------------
Revenues
--------
Revenues of $1,089,915 for the quarter ended September 30, 2004 were $492,605 or
82% higher than the quarter  ended  September  30, 2003.  For the quarter  ended
September 30, 2004,  the Company's  revenues  consisted of $991,434 for Veritec,


                                       15
<PAGE>
Revenues (Continued)
--------
Inc. and $98,481 for  VIVI-Japan.  For the period ended  September 30, 2003, the
Company's  revenues  consist of $456,031  for  Veritec,  Inc.  and  $141,279 for
VIVI-Japan.  Veritec's  revenues have  increased  due to new major  distributors
added late in fiscal 2004. Also, sales from other customers have also increased.
The Company's  security software has gained acceptance in the Asian marketplace.
The Company is now providing both hardware and software to its customers.

The Company  continues to  concentrate  its efforts in the Asian market where it
believes it has the best opportunities to grow revenue.

Cost of Sales
-------------
Cost of sales of $27,686 for the quarter  ended  September 30, 2004 were $90,869
or 77% lower than the quarter  ended  September  30,  2003 even though  revenues
increased  for the quarter.  This lower cost of sales  primarily  relates to the
higher margin of our software products as compared to the prior period and lower
hardware sales as a component of revenues in fiscal 2005.

Operating Expense
-----------------
Operating expenses for the quarter ended September 30, 2004 versus September 30,
2003 were as follows:

                                   September 30, 2004       September 30, 2003
                                   ------------------       ------------------
  Selling, general and
     Administrative expenses         $   356,736               $    279,672
  Legal                                  793,564                    193,040
  Research and development                30,865                     57,916
                                     -----------               ------------
  Total operating expenses           $ 1,181,165               $    530,628
                                     ===========               ============

Selling, general and marketing expenses for the quarter ended September 30, 2004
were  $356,736 or 28% higher than the quarter  ended  September  30,  2003.  The
largest  increases in 2004 are  primarily  attributable  to higher  external and
internal  accounting  fees  ($18,400  increase)  and higher  marketing  expenses
($23,298 increase).

Legal  expenses for the quarter  ended  September 30, 2004 were $793,564 or 311%
higher than the quarter ended September 30, 2003. The increase is related to the
Mitsubishi arbitration hearing in September 2004.

Research and development  expenses for the quarter ended September 30, 2004 were
$30,865 or 47% lower than research and development expense for the quarter ended
September 30, 2003. The reduction in research and development  expenses  related
to  engineering  projects  in 2003  that  have  now been  completed  or are near
completion.  Thus the  expenses of staffing  and  contract  labor have that been
reduced.






                                       16
<PAGE>
Capital Expenditures and Future Commitments
-------------------------------------------
A new vehicle was purchased for $23,301 in the quarter ended September 30, 2004.
There were no capital expenditures during the quarter ended September 30, 2003.

Although the Company continues to minimize spending for capital expenditures, it
believes its need for additional  capital equipment will continue because of the
need to develop and expand its business.  The amount of such additional  capital
is uncertain and may be beyond that generated from operations.

Liquidity and Capital Resources
-------------------------------
A number of uncertainties  exist that may affect our future  operating  results.
These uncertainties  include general economic  conditions,  market acceptance of
our products and our ability to manage expense  growth.  In  particular,  if the
Company  receives an adverse outcome in Phase II of the  arbitration  proceeding
that  it  initiated  against  Mitsubishi,  the  Company  will  likely  not  have
sufficient  cash to fulfill any awards against it or to pay its legal fees. Such
an adverse  outcome in the  arbitration  proceeding  could lead to the Company's
insolvency and have a serious adverse effect on its operations.

The  Company  has  sustained  significant  losses and  expects  the losses  will
continue  through  fiscal year 2005 at a decreasing  rate as legal  matters wind
down.  Continued  competition  may drive down the price at which the Company can
sell our products,  and reduced  capital  expenditures by its customers may also
have a negative impact.

Our  cash on hand  may  not be  sufficient  to  fund  current  operating  needs.
Therefore,  the continued operation of our Company will continue to be dependent
on cash flows from The  Matthews  Group LLC. In August  2004,  Van Tran  applied
$84,333 in deferred  compensation owed her by the Company against the prepayment
on subscription  receivable.  This transaction  means The Matthews Group can use
the prepayment to satisfy all of its scheduled  payments under the  subscription
agreement  through November 2004. In fiscal 2005 to date The Matthews Group used
the prepayment on subscription receivable to pay all of the $55,555 in scheduled
payments due on the subscription receivable. At September 30, 2004 the remaining
prepayment  on  subscription  receivable  was $48,490.  After  November 2004 The
Matthews Group will need to resume  payments on the  subscription  receivable or
apply  other  obligations  owed  to  them  by the  Company  to the  subscription
receivable  and/or the prepayment on  subscription  receivable.  At this time it
appears The Matthews Group intends on applying other obligations owed to them by
the  Company to the  subscription  receivable.  There is no  assurance  that The
Matthews Group LLC will complete the obligations or that the payment required to
be made by The Matthews Group LLC will be adequate. The Company may need to seek
additional debt or equity  financing,  but there is no assurance that additional
financing will be obtainable,  or that any such financing will be sufficient for
our needs.

Net cash provided by operating  activities totaled $583,256 for the three months
ended  September  30, 2004 as compared to $92,956 of cash  provided by operating
activities  in the three  months ended  September  30,  2003.  Cash  provided by
operating  activities  for the three months ended  September 30, 2004  consisted
primarily  of  decreases in accounts  receivable  of $553,428  and  inventory of
$5,088,  and  increases  in accounts  payable and accrued  expenses of $157,771,



                                       17
<PAGE>
Liquidity and Capital Resources (Continued)
-------------------------------
offset by net losses of $151,642.  During the quarter the Company  also:  made a
capital  expenditure of $23,301;  repaid an outstanding note payable of $50,000;
and paid down long-term debt by $34,701.

At  September  30,  2004 the Company  had cash  balances  of  $903,829  and bank
certificates  of  deposit  of  $93,965.  Management  has taken  steps to control
expenses.  Management  is  hopeful  existing  cash,  together  with  cash  flows
generated  by product  sales and  raising  capital  will be  sufficient  to fund
operations  through  fiscal 2005,  but there is no assurance the Company will be
successful in these  efforts.  As discussed in Part II Other  Information:  Item
1.Legal Proceedings, if the Company receives an adverse ruling in the Mitsubishi
arbitration,  the Company will likely not have sufficient cash available to meet
our obligations.

The Private Securities  Litigation Reform Act of 1995 provides "safe harbor" for
forward-looking statements. Certain information included in this Form 10-QSB and
other  materials  filed or to be filed by the Company  with the  Securities  and
Exchange Commission (as well as information included in oral statements or other
written  statements made or to be made by the Company)  contain  statements that
are  forward-looking,  such as  statements  relating  to  anticipated  plans for
marketing efforts, research and development, the impact of litigation, and other
business  development  activities as well as other capital  spending,  financial
sources,  and the  effects  of  competition.  Such  forward-looking  information
involves  important  risks and  uncertainties  that could  significantly  affect
anticipated results in the future and, accordingly, such results may differ from
those  expressed in any  forward-looking  statements made by or on behalf of the
Company.  These  risks  and  uncertainties  include,  but  are not  limited  to,
dependence  on  major  customers,  potential  competition,  and the  outcome  of
litigation  which may  negatively  impact the  Company's  ability to continue in
existence.

Item 3.  Controls and Procedures
--------------------------------
Disclosure Controls and Procedures
----------------------------------
Our management,  with the  participation  of our Chief  Executive  Officer/Chief
Financial  Officer,  has 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.  Based  on  such  evaluation,   our  Chief  Executive
Officer/Chief  Financial  Officer  has  concluded  that,  as of the  end of such
period, our disclosure controls and procedures are effective.

Internal Control over Financial Reporting
-----------------------------------------
The quarterly  review  process in fiscal 2004 and the audit of our June 30, 2004
financial  statements  revealed a need for stronger  controls over our financial
reporting  system.  Improvements  needed  related to  accounting  controls  over
VIVI-Japan  and a  general  lack of  accounting  staff.  In  response  to  these
concerns,  in fiscal 2005 the Company  established  controls over the accounting
for VIVI-Japan, hired a temporary CFO/Consultant,  and now has hired a full time
CFO.



                                       18
<PAGE>
Internal Control over Financial Reporting (Continued)
-----------------------------------------
Our management,  including  our Chief Executive Officer/Chief Financial Officer,
does not expect that its  disclosure  controls and  procedures  will prevent all
error  and all  fraud.  A  control  system,  no matter  how well  conceived  and
operated,  can  provide  only  reasonable,  not  absolute,  assurance  that  the
objectives of the control system are met. Because of the inherent limitations in
all control systems,  no evaluation of controls can provide  absolute  assurance
that all control issues and instances of fraud,  if any, within our company have
been  detected.  The design of any system of controls also is based in part upon
certain  assumptions about the likelihood of future events,  and there can be no
assurance  that any design will succeed in achieving  its stated goals under all
potential future conditions; over time, control may become inadequate because of
changes  in  conditions,  or the  degree  of  compliance  with the  policies  or
procedures  may   deteriorate.   Because  of  the  inherent   limitations  in  a
cost-effective control system, misstatements due to error or fraud may occur and
not be detected.


                            PART II OTHER INFORMATION
                            -------------------------
Item 1.  Legal Proceedings.
---------------------------
On June 30,  2000,  we were served as a defendant  in the matter of Wolodymyr M.
Starosolsky vs.  Veritec,  Inc., et al., in the United States District Court for
the Central District of California (Case Number CV-00-7516DT (Wx). This suit was
brought by a  shareholder  and former  director of the  Company.  The action was
brought  against us, and various  individuals  claiming  that certain  corporate
actions were taken without proper  authority of the Company's board of directors
and/or  contrary to the plan of  reorganization  the Company filed and completed
under Chapter 11 of the U.S.  Bankruptcy  Act. In December  2000,  this case was
transferred  to the United States  District Court for the District of Minnesota.
We expect  discovery in this case to conclude by late 2004,  and any trial would
not occur until early 2005. We intend to defend this action vigorously.

On January 10, 2002, we initiated arbitration against Mitsubishi  Corporation in
Los   Angeles,   California,   alleging   breach  of   contract,   trade  secret
misappropriation and interference with business  opportunities;  seeking several
million  dollars  in  compensatory  damages,  punitive  damages,  legal fees and
accrued interest.  Mitsubishi  counterclaimed  on similar grounds,  also seeking
similar  damages and amounts.  The  arbitration  was split into two phases.  The
first phase,  completed in July 2003,  resulted in an interim  award  dismissing
most of our claims.  No decision on the second  phase,  completed  in  September
2004, has been issued by the arbitration  panel. A final  resolution is expected
prior to the end of 2004. Veritec is seeking $1.5 million in attorneys' fees and
costs if it  prevails  on the  second  phase.  Mitsubishi  has made a claim  for
compensatory damages of $11.25 million, punitive damages of $2 million and legal
fees and costs of $3.9 million in the second  phase.  No opinion can be given at
this time as to the final outcome of the arbitration.

In 2003 a former  employee  of the Company  asserted he was  entitled to a fully
vested option to purchase  100,000 shares of Company common stock at an exercise
price of $.088 per share.  The Company denies this claim.  This former  employee
has not proceeded further with this claim.  Should such a claim be pursued,  the
Company would defend this action vigorously.


                                       19
<PAGE>
Item 1.  Legal Proceedings. (Continued)
---------------------------
Vcode Holdings, Inc. and Vdata, LLC have commenced patent enforcement litigation
against Nokia  Corporation in the United States  District Court for the Northern
District of Illinois.  The  litigation is in the discovery  phase and no opinion
can be rendered with respect to its outcome.

SEC Reporting Obligations
-------------------------
We are  subject  to  the  continuing  reporting  obligations  of the  Securities
Exchange Act of 1934 (the "1934 Act"),  which, among other things,  requires the
filing of annual and quarterly  reports and proxy  materials with the Securities
and Exchange Commission (the "SEC").  Prior to September 1999, we did not comply
with several filing requirements.  To our knowledge, there is no current inquiry
or  investigation  pending or threatened by the SEC in connection with our prior
reporting  violations.  However,  there can be no assurance  that we will not be
subject  to such  inquiry or  investigation  in the  future.  As a result of any
potential or pending inquiry by the SEC or other  regulatory  agency,  we may be
subject to penalties, including among other things, suspension of trading in our
securities,  court actions,  administrative  proceedings,  preclusion from using
certain  registration  forms  under the 1933 Act,  injunctive  relief to prevent
future violations and/or criminal prosecution.

Item 2.  Changes in Securities and Use of Proceeds.
---------------------------------------------------
         None.

Item 3.  Defaults Upon Senior Securities.
-----------------------------------------
         None.

Item 4.  Submission of Matters to a Vote of Security Holders.
-------------------------------------------------------------

         No  matters  were  submitted  to  a vote of security holders during the
         period covered by this report.

Item 5.  Other Information.
---------------------------
         None.

Item 6.  Exhibits and Reports on Form 8-K.
------------------------------------------
         a.  Exhibits
             --------
             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. ss.1350).

         b.  Reports on Form 8-K.

             None.



                                       20
<PAGE>
                                   SIGNATURES

In accordance with  requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.

                             Veritec, Inc.

Date:    November 12, 2004   /s/ Van Thuy Tran
         ------------------  ---------------------------------------------------
                             Van Thuy Tran
                             Chief Executive Officer and Chief Financial Officer














































                                       21