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     December 31, 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 February 7,
2005 the Company had:

           Number of Shares of Common Stock
-------------------------------------------------------
                      15,078,598
-------------------------------------------------------

        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                  16
Item 3.  Controls and Procedures                                        19

PART II. OTHER INFORMATION                                              20

Item 1.  Legal Proceedings                                              20
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds    21
Item 3.  Defaults Upon Senior Securities                                21
Item 4.  Submission of Matters to a Vote of Security Holders            21
Item 5.  Other Information                                              21
Item 6.  Exhibits                                                       22

SIGNATURES                                                              22


























                                       3

<PAGE>
                          PART I. FINANCIAL INFORMATION
                          -----------------------------
                          Item 1. Financial Statements
                          ----------------------------
                                  VERITEC, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                                    December 31,     June 30,
                                                       2004            2004
                                                   -------------- --------------
                                                     (Unaudited)    (Audited)
ASSETS
------
Current Assets:
  Cash                                             $     881,316  $     394,067
  Certificates of deposit                                 91,393        120,257
    Accounts and notes receivable, net                   354,814        949,802
  Inventories                                             18,165         20,730
    Prepaid expense - legal retainer                     100,000        100,000
    Prepaid expenses - other                              12,226         10,291
                                                   -------------  -------------
      Total Current Assets                             1,457,914      1,595,147
                                                   -------------  -------------
Property and Equipment:
   Furniture and equipment                                67,167         66,032
   Vehicles                                               69,557         41,481
                                                   -------------  -------------
                                                         136,724        107,513

   Less accumulated depreciation                         102,866         94,662
                                                   -------------  -------------
                                                          33,858         12,851
                                                   -------------  -------------
Other Assets:
   Note receivable                                        10,005         19,622
   Security deposits and other assets                     29,889         14,270
   Software costs, net                                        --         13,334
   Technology rights, net                                 28,225         41,527
                                                   -------------  -------------
                                                          68,119         88,753
                                                   -------------  -------------
      Total Assets                                 $   1,559,891  $   1,696,751
                                                   =============  =============












            See Notes to Condensed Consolidated Financial Statements.

                                       4

<PAGE>
                                  VERITEC, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                                    December 31,     June 30,
                                                       2004            2004
                                                   -------------- --------------
                                                     (Unaudited)    (Audited)
LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
  Notes payable - related parties                  $     340,000  $     390,000
  Convertible notes - related party                       91,368        747,374
  Current maturities of long-term debt                    95,803        114,681
  Accounts payable                                     1,623,440      1,485,851
  Accrued expenses:
    Arbitration award                                  8,174,518             --
    Payroll and related                                  104,393        129,915
    Interest                                              67,366        231,747
    Other                                                  3,049         10,863
                                                   -------------  -------------
      Total Current Liabilities                       10,499,937      3,110,431

Long-Term Debt, less current maturities                   14,527        169,298


Prepayment on Stock and Subscription Receivable               --         19,811
                                                   -------------  -------------
           Total Liabilities                          10,514,464      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, 1,000 and 76,000 shares issued            7,273        366,007
   Common stock, par value $.01;
     authorized 20,000,000 shares, 15,039,598
         and 7,071,849 shares issued                     150,396         70,718
   Subscription receivable                              (640,907)      (717,717)
   Additional paid-in capital                         13,269,445     11,990,954
   Accumulated deficit                               (21,755,837)   (13,323,448)
   Cumulative translation adjustment                      15,057         10,697
                                                   -------------  -------------
           Total Stockholders' Deficit                (8,954,573)    (1,602,789)
                                                   -------------  -------------
           Total Liabilities and
             Stockholders' Deficit                 $   1,559,891  $   1,696,751
                                                   =============  =============






            See Notes to Condensed Consolidated Financial Statements.

                                       5

<PAGE>
                                  VERITEC, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

                                             Three months ended December 31,
                                                   2004          2003
                                              -------------- -------------
Revenues:
   Software                                   $     412,535  $    230,787
   Hardware                                          12,198       124,270
                                              -------------  ------------
        Total revenues                              424,733       355,057

Cost of Sales                                        14,897        52,924
                                              -------------  ------------
Gross Profit                                        409,836       302,133
                                              -------------  ------------
Operating Expenses:
  Selling, general and administrative               418,518       316,446
  Arbitration award                               8,174,518            --
  Legal                                              60,094       285,984
  Research and development                           17,332        53,022
                                              -------------  ------------
Total Operating Expenses                          8,670,462       655,452
                                              -------------  ------------
Loss from Operations                             (8,260,626)     (353,319)
                                              -------------  ------------
Other Income (Expense):
  Interest income                                     2,020            --
  Interest expense                                  (24,445)      (29,967)
  Other                                               2,304        46,509
                                              -------------  ------------
Total Other Income (Expense)                        (20,121)       16,542
                                              -------------  ------------
Loss Before Income Taxes                         (8,280,747)     (336,777)

Income Tax Expense                                       --          (470)
                                              -------------  ------------
Net Loss                                      $  (8,280,747) $   (337,247)
                                              -------------  ------------
Basic and Diluted Net Loss Per Common Share   $       (1.17) $      (0.05)
                                              =============  ============
Weighted Average Common Shares Outstanding -
    Basic and Diluted                             7,071,849     7,126,849
                                              =============  ============










            See Notes to Condensed Consolidated Financial Statements.

                                       6

<PAGE>
                                  VERITEC, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

                                             Six months ended December 31,
                                                  2004           2003
                                             -------------- --------------
Revenues:
   Software                                  $   1,469,163  $     657,027
   Hardware                                         45,484        295,340
                                             -------------  -------------
        Total revenues                           1,514,647        952,367

Cost of Sales                                       42,583        171,479
                                             -------------  -------------
Gross Profit                                     1,472,064        780,888
                                             -------------  -------------
Operating Expenses:
  Selling, general and administrative              775,255        595,138
  Arbitration award                              8,174,518             --
  Legal                                            853,656        480,004

  Research and development                          48,197        110,938
                                             -------------  -------------
Total Operating Expenses                         9,851,626      1,186,080
                                             -------------  -------------
Loss from Operations                            (8,379,562)      (405,192)
                                             -------------  -------------
Other Income (Expense):
  Interest income                                    2,654             60
  Interest expense                                 (58,979)       (63,050)
  Other                                              3,498         54,648
                                             -------------  -------------
Total Other Income (Expense)                       (52,827)        (8,342)
                                             -------------  -------------
Loss Before Income Taxes                        (8,432,389)      (413,534)

Income Tax Expense                                      --           (906)
                                             -------------  -------------
Net Loss                                     $  (8,432,389) $    (414,440)
                                             =============  =============
Basic and Diluted Net Loss Per Common Share  $       (1.19) $       (0.06)
                                             =============  =============
Weighted Average Common Shares Outstanding -
    Basic and Diluted                            7,071,849      7,126,849
                                             =============  =============









            See Notes to Condensed Consolidated Financial Statements.

                                       7

<PAGE>
                                  VERITEC, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                                  Six months ended December 31,
                                                       2004           2003
                                                  -------------- --------------
Cash flows from operating activities:
  Net loss                                        $  (8,432,389) $    (414,440)
    Adjustments to reconcile net loss to
      net cash provided (used) by
      operating activities:
       Depreciation and amortization                     23,259         23,712
       Amortization of intangibles                        6,309            ---
       Loss on disposal of equipment                        145            ---
    (Increase) decrease in operating assets:
       Accounts and notes receivable                    606,381        159,242
       Inventories                                        4,306        (38,052)
       Prepaid expenses                                     758        (51,571)
    Increase (decrease) in operating liabilities:
       Accounts payable and accrued expenses            226,278        110,660
       Accrued expense - arbitration award            8,174,518             --
       Deferred revenue                                      --         17,856
                                                  -------------  -------------
Net cash provided (used) by operating activities        609,565       (192,593)
                                                  -------------  -------------
Cash flows from investing activities:
  Purchase of equipment                                 (23,301)            --
  Proceeds from certificates of deposit                  35,745             --
                                                  -------------  -------------
Net cash provided by investing activities                12,444             --
                                                  -------------  -------------
Cash flows from financing activities:
  Proceeds from (payments on) notes payable -
     related parties                                    (50,000)       300,000
  Payments on long-term debt                            (99,499)       (21,355)
  Proceeds from stock issuance
                                                            - -          3,451
                                                  -------------  -------------
Net cash provided (used) by financing activities       (149,499)       282,096
                                                  -------------  -------------
Effect of exchange rate changes on cash                  14,739          8,087
                                                  -------------  -------------
Increase in cash                                        487,249         97,590

Cash at beginning of period                             394,067        325,193
                                                  -------------  -------------
Cash at end of period                             $     881,316  $     422,783
                                                  =============  =============







            See Notes to Condensed Consolidated Financial Statements.

                                       8

<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
condensed   consolidated   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  and six-month  periods ended December 31, 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 periods.

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 December 31, 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.

                                       9

<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 condensed 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 three banks.  These  balances are  governmentally
insured up to 10,000,000 Yen per bank ($91,393 at December 31, 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.





                                       10

<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 were  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.

Revenue Recognition

The Company accounts for revenue recognition in accordance with Staff Accounting
Bulletin  (SAB) 101 "Revenue  Recognition in Financial  Statements"  and related
amendments and  modifications.  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.





                                       11

<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 $21,755,837
from  inception to December 31,  2004.  At December 31, 2004,  the Company had a
$9,042,023 working capital deficiency and a stockholders'  deficit of $8,954,573
including the "effect" of the  arbitration  award in the  Mitsubishi  litigation
received by the Company on February 15, 2005 which is fully explained in Part II
Legal  Proceedings.  These  matters  raise a  substantial  uncertainty  that the
Company will be able to continue as a going concern. The condensed  consolidated
financial  statements do not include any  adjustments  that may result from this
uncertainty.

The Company has been dependent on The Matthews  Group, a related party,  to meet
its operating  needs.  Through  December 31, 2004, The Matthews Group has funded
$1,240,741  under  the  subscription  receivable  and  made  prepayments  on the
subscription  receivable  to assist the  Company in meeting its cash flow needs.
The Matthews Group has indicated it will continue to meet its  obligation  under
the  subscription  receivable,  although  such  obligation  may  be  met  by the
conversion of notes payable to The Matthews Group  resulting in no cash infusion
to the Company.






                                       12

<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 December 31, 2004, this note and related accrued  interest
has not been repaid.  Accrued interest on this  indebtedness  totaled $20,527 at
December 31, 2004 and $15,633 at June 30, 2004.

In fiscal  years  2003 and 2002,  The  Matthews  Group  loaned  the  Company  an
aggregate of $200,000 for working capital.  These notes are unsecured,  bear 10%
interest  and were due May 25, 2003 to June 23,  2003.  As of December 31, 2004,
these notes and related accrued interest have not been repaid.  Accrued interest
on this  indebtedness  totaled  $39,270 at December 31, 2004 and $29,270 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
December  31, 2004 this note and related  accrued  interest has not been repaid.
Accrued  interest on this  indebtedness  totaled $7,568 at December 31, 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 were 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 was convertible at the
option of the holder into common shares of the Company at a convertible  rate of
$0.25 per share.  This note was unsecured,  bore annual 10% interest and was due
March 28, 2003. On December 22, 2004, The Matthews Group  exercised its right to
convert the principal amount and all accrued,  unpaid interest into common stock
of the Company as of December 31, 2004.  The  principal of this note of $100,000
and accrued  unpaid  interest of $27,576 at December 31, 2004,  was converted to
510,302 shares of common stock.

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 its Gant  Group  totaled  $366,522  (principal  -  $286,453;
interest - $75,069;  and legal fees - $5,000). The amount 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.  The note was
convertible at the option of the holder into common shares of the Company at the
rate of $0.10 per share.  This note was unsecured,  bore 10% annual interest and


                                       13

<PAGE>
was due on demand. As of December 31, 2004, the principal amount of $397,374 and
accrued unpaid  interest of $162,162 were  converted  into  5,595,358  shares of
common stock.

In November 2003, Van Tran and Larry Johanns (a principal of The Matthews Group)
loaned $250,000 to the Company for working  capital.  The notes were convertible
at the option of the holders  into  common  shares of the Company at the rate of
$0.25 per share.  These notes were unsecured,  bore 10% annual interest and were
due November 14, 2004. As of December 31, 2004, the principal amount of $250,000
and accrued unpaid  interest of $28,022 were converted into 1,112,089  shares of
common stock.

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.

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.

From time to time, The Matthews Group made prepayments  against its subscription
payable  to the  Company.  These  prepayments  are  unsecured  and  non-interest
bearing.  At December 31, 2004,  there were no prepayments.  In August 2004, the
Company's President, Van Tran, contributed deferred compensation of $84,333 owed
her to the Prepayment on Subscription Receivable.  The balance in the Prepayment
on  Subscription  Receivable  account  was  adequate to  substantially  fund the
monthly  payments due on the  Subscription  Receivable by The Matthews Group LLC
through  the  second   quarter  ended  December  31,  2004.  The  Prepayment  on
Subscription   Receivable  funded  all  but  $7,066  of  the  payments  due  the
Subscription  Receivable through December 31, 2004 and the balance was funded by
a  contribution  by the  Company's  President  Van Tran  from  accrued  deferred
compensation.

The Company has no assurance of the Matthews  Group LLC's ability to continue to
provide funding under the subscription receivable. 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.

Preferred Stock

On December  31, 2004,  The Matthews  Group  exercised  its right and  converted
75,000 shares of preferred  stock into 750,000  shares of the  Company's  common
stock.


                                       14

<PAGE>
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.

Other Information

         None.




































                                       15

<PAGE>



         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 Liquid Crystal Display 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 December  31, 2004 there have been no such
proceeds.

The Company has  incurred  losses from  operations  since  inception  and has an
accumulated deficit of $21,755,837 as of December 31, 2004, including the effect
of the arbitration award described in part II, item I below.

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 - December 31, 2004 compared to December 31, 2003

Revenues

Revenues of  $1,514,647  for the six months  ended  December 31, 2004 were up by
$562,280 or 59% higher than for the same period ended December 31, 2003. For the
six month period ended  December 31, 2004,  91% of revenues or  $1,378,329  were


                                       16

<PAGE>

from Veritec,  Inc. and 9% or $136,318 were from VIVI-Japan.  For the six months
ended December 31, 2003,  $686,037 or 72% of the revenue for the period was from
Veritec, Inc. and 28% or $266,330 was generated by VIVI-Japan.

For the three month period ended  December 31, 2004,  revenue of $424,733 was up
$69,676 or 20% higher than for the same period ended December 31, 2003. For this
three month period ended December 31, 2004, $379,555 came from Veritec, Inc. and
$45,178 from VIVI-Japan.  For the three months ended December 31, 2003, $272,000
was generated by Veritec,  Inc. and $83,057 came from VIVI-Japan.  For the three
month period ended December 31, 2004, revenues were down $665,232 from the first
quarter as a result of strong sales in the first  quarter from new  contracts in
the Asian LCD market.

New distributors  added in late fiscal 2004 were primarily in the LCD market. As
a result,  revenue is from  larger  cycle  sales and can create  somewhat  of an
uneven  line,  due to the fact  that  additional  sales are  generated  when new
production  facilities  come on line.  Veritec,  Inc. is ready to introduce  new
products into the  marketplace,  and current plans are to have the  introduction
take place in fiscal 2005 and 2006.


The increase in revenue in 2004 over 2003 is due primarily to revenue  generated
from the addition of new distributors in late fiscal 2004. 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 $42,583 for the six month period  ended  December 31, 2004 were
down by $128,896 or 75% from the same period in 2003,  and down 14% on a percent
of sales for the period.  The  reduction  in cost of sales is due to a change in
sales mix with a  significant  shift to software  sales in 2004 which  carries a
higher  margin as  compared to  hardware  sales which were more  dominant in the
sales  mix for the  period  ended in 2003.  For the  three  month  period  ended
December 31, 2004 cost of sales were down $38,027 or 72% from the same period in
2003, and down 11% as a percent of sales for the same period. The reason for the
reduction  was also due to an increase in the higher margin  software  sales for
the three month ended December 31, 2004.

Operating Expenses

Selling,  general and  administrative  expenses for the three month period ended
December  31, 2004 were up by $102,073 or 32% higher then for the same period in
2003.  The more  significant  increases in 2004 are  primarily  attributable  to
higher accounting fees ($33,386  increase),  higher sales and marketing expenses
($25,936  increase)  and higher  general and  administrative  salaries  ($21,833
increase) due in part to the Company hiring a permanent controller.  For the six
month  period  ended  December 31,  2004,  selling,  general and  administrative
expenses  were up $180,117  or 30% higher than the same period in 2003.  Reasons
for the  increase  were  substantially  the same as for the three month  period.
Accounting fees were higher  ($56,232  increase),  sales and marketing  expenses
were up (approximately  $40,000 increase),  there was a transfer of research and
development  expense to  engineering  salaries,  and general and  administrative
salaries were up ($21,833 increase).


                                       17

<PAGE>

Legal  expenses  for the three months  ended  December  31,  2004,  were down by
$225,890  from the same  period in 2003.  The  reason for the  decrease  was the
winding  down of the  Mitsubishi  arbitration  hearing near the end of the first
quarter 2004.  Legal  expenses for the six month period ended  December 31, 2004
were up $373,652 or 78% from the same period in 2003. The increase is related to
the Mitsubishi arbitration hearing.

Research and  development  expense for the three months ended  December 31, 2004
were down by $35,690  from 2003.  For the six month  period  ended  December 31,
2004, research and development expenses were down $62,741,  from the same period
in 2003.  The  reduction  in  research  and  development  expense  is related to
engineering  projects in 2003 that were  completed or nearly  completed in 2003,
allowing for a significant  reduction in the research and development  effort in
2004.

Capital Expenditures and Future Commitments

The only capital  expenditures  during  either of the six month  periods was the
purchase of a vehicle for $23,301 in the six month  period  ended  December  31,
2004.

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,  these
uncertainties  include our  ability to reach an  accommodation  with  Mitsubishi
regarding the $8.2 million  arbitration award. We do not have sufficient cash to
pay the award, and if we are unable to reach an  accommodation  with Mitsubishi,
enforcement  of the  arbitration  award,  which is  expected  to be  reduced  to
judgment in March 2005 after which  Mitsubishi can proceed to enforce the award,
will have a significant  adverse effect on the Company,  including the potential
of seeking protection through bankruptcy proceedings.

The Company has been dependent on The Matthews  Group, a related party,  to meet
its operating  needs.  Through  December 31, 2004, The Matthews Group has funded
$1,240,741  under  the  subscription  receivable  and  made  prepayments  on the
subscription  receivable  to assist the  Company in meeting its cash flow needs.
The Matthews Group has indicated it will continue to meet its  obligation  under
the  subscription  receivable,  although  such  obligation  may  be  met  by the
conversion of notes payable to The Matthews Group  resulting in no cash infusion
to the Company.  There is no assurance that The Matthews Group will complete the
obligations  or that cash  payments,  if any, 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  $609,565 for the six months
ended  December  31, 2004 as  compared  to  $192,593  of cash used by  operating


                                       18

<PAGE>

activities in the six months ended December 31, 2003. Cash provided by operating
activities for the three months ended  December 31, 2004 consisted  primarily of
decreases  in accounts  receivable  of $606,381  and  inventory  of $4,306,  and
increases in accounts  payable and accrued  expenses of $226,278,  offset by net
losses of  $257,871.  During  the six  months  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 $99,499.

At December 31, 2004,  the Company had cash  balances and bank  certificates  of
deposits  of  $972,709,  a  working  capital  deficiency  of  $9,042,023  and  a
stockholders' deficit of $8,954,573 (including the arbitration award received by
the  Company on  February  15,  2005 which is fully  explained  in Part II Legal
Proceedings).

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
controller.

Our management,  including  our Chief Executive Officer/Chief Financial Officer,
does not expect that its  disclosure  controls and  procedures  will prevent all


                                       19

<PAGE>

errors  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 February 15, 2005, the Company received notice from the  International  Court
of  Arbitration  of  an  award  in  its  arbitration   dispute  with  Mitsubishi
Corporation.  The arbitration  panel  dismissed all of Veritec's  claims against
Mitsubishi  arising out of a series of agreements  dating back to the early 90's
and awarded  Mitsubishi a total of  approximately  $8.2 million in  compensatory
damages,  attorneys fees and costs based on findings that Veritec had breached a
1996 agreement  between the parties and infringed a Mitsubishi  copyright on its
error detection and correction  functionality software ("EDAC"). EDAC is used in
the  Veritec's  software  that  writes  and reads  the  Vericode(R)  symbol.  In
addition,  the arbitration panel enjoined Veritec from further violations of the
Mitsubishi EDAC copyright.

Over the last several  months,  Veritec  developed a new,  improved EDAC that is
unique,  more  efficient,   modern  and  entirely  independent  of  the  current
Mitsubishi  copyrighted  EDAC software.  All of Veritec  software sold from this
point forward for use to write and to read the  Vericode(R)  symbol will contain
the new EDAC, and we expect to replace the EDAC in existing  software as soon as
possible.

At this point,  Veritec  does not have the  resources  available to pay the cash
portion of the  award,  and will be  considering  all of its  alternatives.  The
Company's   operations  had  been  improving  with  new  alliance  partners  and
additional  distributors to open new markets worldwide but this award is a major
setback.  The  Company  remains  hopeful  that it will be able to reach a viable
solution,  however  at this  point,  we  have no  assurance  that  this  will be
possible,  and could lead to the  Company  not being able to continue as a going
concern, including seeking protection through bankruptcy 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


                                       20

<PAGE>

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. A
trial date has been  scheduled  for mid 2005.  We intend to defend  this  action
vigorously.

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.

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.  Unregistered Sales of Equity 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.





                                       21

<PAGE>

Item 6.  Exhibits.


         b.       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).













                                   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:  February 21, 2005     /s/ Van Thuy Tran
       ------------------    --------------------------------------------
                             Van Thuy Tran
                             Chief Executive Officer and Chief Financial Officer
























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