UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM l0-Q



(Mark One)



[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF1934



for the quarterly period ended SEPTEMBER30, 2011



OR



[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE AC T 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                                                                 | 95-3954373                               
|---------------------------------------------------------------------- | -----------------------------------------
|(State or Other Jurisdiction of
        Incorporation or Organization) | (IRS Employer
        Identification No.)
|                                                                       |                                          
|2445 Winnetka Avenue N. Golden Valley, MN                              | 55427                                    
|(Address of principal executive offices)                               | (Zip Code)                               



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



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



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



Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions
of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule l2b-2 of
the Exchange Act. (Check one):



Large Accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [ X ]





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





As of September 30, 2011,
there were 15,920,088 shares of the issuer’s common stock outstanding.

1





VERITEC, INC.



FORM 10-Q

FOR THE FISCAL QUARTER ENDED September 30, 2011



TABLE OF CONTENTS





|Part 1 |            |                                                                                           |    |    |  |  |    |    | 4 
|------ | ---------- | ----------------------------------------------------------------------------------------- | -- | -- |  |  | -- | -- | --
|       | Item 1     | Financial Statements                                                                      |    |    |  |  | 4 
|       | Item 2     | Managment’s
    Discussion And Ananlysis Of Financial Condition And Results Of Operations | 13
|       | Item 3     | Quantitative
    And Qualitative Disclosures About Market Risk                            |    | 15
|       | Item 4     | Controls
    And Procedures                                                               |    |    |  |  | 16
|Part 2 |            |                                                                                           |    |    |  |  |    |    | 16
|       | Item 1     | Legal
    Proceedings                                                                     |    |    |  |  |    | 16
|       | Item 1A    | Risk
    Factors                                                                          |    |    |  |  |    | 17
|       | Item 2     | Unregistered
    Sale Of Equity Securities And Use Of Proceeds                            |    | 17
|       | Item 3     | Defaults
    Upon Senior Securities                                                       |    |    |  |  | 17
|       | Item 4     | (Removed
    And Reserved)                                                                |    |    |  |  | 17
|       | Item 5     | Other
    Information                                                                     |    |    |  |  |    | 17
|       | Item 6     | Exhibits                                                                                  |    |    |  |  |    |    | 17
|       | Signatures |                                                                                           |    |    |  |  |    | 18















































2









Special Note Regarding Forward-Looking Statements



This Quarterly Report on Form 10-Q, including
"Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 2 of Part I of this report
include forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may
cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels
of activity, performance, or achievements expressed or implied by forward-looking statements.



In some cases, you can identify forward-looking
statements by terminology such as "may," "should," "expects," "plans," "anticipates,"
"believes," "estimates," "predicts," "potential," "proposed," "intended,"
or "continue" or the negative of these terms or other comparable terminology. You should read statements that contain
these words carefully, because they discuss our expectations about our future operating results or our future financial condition
or state other "forward-looking" information. There may be events in the future that we are not able to accurately predict
or control. Before you invest in our securities, you should be aware that the occurrence of any of the events described in this
Quarterly Report could substantially harm our business, results of operations and financial condition, and that upon the occurrence
of any of these events, the trading price of our securities could decline and you could lose all or part of your investment. Although
we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results,
growth rates, levels of activity, performance or achievements. We are under no duty to update any of the forward-looking statements
after the date of this Quarterly Report to conform these statements to actual results.























































3





PART I

ITEM 1 	FINANCIAL STATEMENTS



VERITEC, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS



|                                                                                                                                                       |  | September 30, |             | June 30,
|------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------- | ----------- | --------
|                                                                                                                                                       |  | 2011          |             | 2011    
|ASSETS                                                                                                                                                 |  |               | (Unaudited) |         
|                                                                                                                                                       |  |               |             |         
|Current Assets:                                                                                                                                        |  |               |             |         
|Cash                                                                                                                                                   |  | $             | 81,837      |         
|Accounts receivable, net of allowance of $8,650                                                                                                        |  |               | 72,217      |         
|Inventories                                                                                                                                            |  |               | 5,577       |         
|Prepaid expenses                                                                                                                                       |  |               | 16,656      |         
|Employee advances                                                                                                                                      |  |               | 2,637       |         
|Total Current Assets                                                                                                                                   |  |               | 178,924     |         
|                                                                                                                                                       |  |               |             |         
|Property and Equipment, net of accumulated depreciation of $222,872 and $218,916, respectively                                                         |  |               | 12,511      |         
|Total Assets                                                                                                                                           |  | $             | 191,435     |         
|                                                                                                                                                       |  |               |             |         
|LIABILITIES AND STOCKHOLDERS’ DEFICIT                                                                                                                  |  |               |             |         
|                                                                                                                                                       |  |               |             |         
|Current Liabilities:                                                                                                                                   |  |               |             |         
|Notes payable                                                                                                                                          |  | $             | 155,489     |         
|Notes payable, related party                                                                                                                           |  |               | 2,144,893   |         
|Accounts payable                                                                                                                                       |  |               | 827,008     |         
|Deferred revenue                                                                                                                                       |  |               | 219,690     |         
|Payroll tax liabilities                                                                                                                                |  |               | 390,052     |         
|Accrued expenses                                                                                                                                       |  |               | 149,842     |         
|Total Current Liabilities                                                                                                                              |  |               | 3,886,974   |         
|                                                                                                                                                       |  |               |             |         
|Commitments and Contingencies                                                                                                                          |  |               |             |         
|                                                                                                                                                       |  |               |             |         
|Stockholders’ Deficit:                                                                                                                                 |  |               |             |         
|Convertible preferred stock, par value $1.00; authorized 10,000,000 shares, 276,000 shares of Series H authorized, 1,000 shares issued and outstanding |  |               | 1,000       |         
|Common stock, par value $.01; authorized 50,000,000 shares, 15,920,088 shares issued and outstanding                                                   |  |               | 159,201     |         
|Additional paid-in capital                                                                                                                             |  |               | 14,283,079  |         
|Accumulated deficit                                                                                                                                    |  |               | (18,138,819 | )       
|Total Stockholders’ Deficit                                                                                                                            |  |               | ( 3,695,539 | )       
|                                                                                                                                                       |  |               |             |         
|Total Liabilities and Stockholders’ Deficit                                                                                                            |  | $             | 191,435     |         
|                                                                                                                                                       |  |               |             |         



See
notes to condensed consolidated financial statements

4







VERITEC, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)







|                                                                                  |  | Three months ended September 30,
|--------------------------------------------------------------------------------- |  | --------------------------------
|                                                                                  |  | 2011                            
|                                                                                  |  |                                 
|License and other revenue                                                         |  | $                               
|Cost of Sales                                                                     |  |                                 
|Gross Profit                                                                      |  |                                 
|                                                                                  |  |                                 
|Operating Expenses:                                                               |  |                                 
|Selling, general and administrative                                               |  |                                 
|Research and development                                                          |  |                                 
|Total Operating Expenses                                                          |  |                                 
|                                                                                  |  |                                 
|Loss from Operations                                                              |  |                                 
|                                                                                  |  |                                 
|Interest expense, including $37,499 and $35,357, respectively, to related parties |  |                                 
|                                                                                  |  |                                 
|Net Loss                                                                          |  | $                               
|                                                                                  |  |                                 
|Loss Per Common Share,                                                            |  |                                 
|Basic and Diluted                                                                 |  | $                               



|Weighted Average Number of Shares Outstanding, |  |  |            |  |  |  |            | 
|---------------------------------------------- |  |  | ---------- |  |  |  | ---------- | 
|Basic and Diluted                              |  |  | 15,920,088 |  |  |  | 15,920,088 | 































See notes to
condensed consolidated financial statements

5









VERITEC, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’
DEFICIT

For the Three Months Ended September 30,
2011

(Unaudited)







|`                           |                 |  |              |  |            |  |             |  | Additional  |  |               |  |             
|--------------------------- | --------------- |  | ------------ |  | ---------- |  | ----------- |  | ----------- |  | ------------- |  | ------------
|                            | Preferred Stock |  | Common Stock |  | Paid-in    |  | Accumulated |  |            
|                            | Shares          |  | Amount       |  | Shares     |  | Amount      |  | Capital     |  | Deficit       |  | Total       
|Balance, July 1, 2011       | 1,000           |  | $ 1,000      |  | 15,920,088 |  | $159,201    |  | $14,283,077 |  | $(18,010,087) |  | $(3,566,809)
|Stock Based Compensation    | -               |  | -            |  | -          |  | -           |  | 2           |  | -             |  | 2           
|Net Loss for the Period     | -               |  | -            |  | -          |  | -           |  | -           |  | (128,732)     |  | (128,732)   
|Balance, September 30, 2011 | 1,000           |  | $ 1,000      |  | 15,920,088 |  | $159,201    |  | $14,283,079 |  | $(18,138,819) |  | $(3,695,539)







































































See notes to
condensed consolidated financial statements



6





VERITEC, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS

(Unaudited)







|                                                                                          |  | Three months ended September 30,
|----------------------------------------------------------------------------------------- |  | --------------------------------
|                                                                                          |  | 2011                            
|CASH FLOWS FROM OPERATING ACTIVITIES                                                      |  |                                 
|Net loss                                                                                  |  | $                               
|Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |  |                                 
|Depreciation                                                                              |  |                                 
|Amortization of discount on notes payable                                                 |  |                                 
|Fair value of stock options issued to employees                                           |  |                                 
|                                                                                          |  |                                 
|Changes in operating assets and liabilities:                                              |  |                                 
|Accounts receivable                                                                       |  |                                 
|Inventories                                                                               |  |                                 
|Employee advances                                                                         |  |                                 
|Prepaid expenses                                                                          |  |                                 
|Deferred revenue                                                                          |  |                                 
|Payroll tax liabilities                                                                   |  |                                 
|Accounts payables and accrued expenses                                                    |  |                                 
|Interest accrued on notes payable                                                         |  |                                 
|                                                                                          |  |                                 
|Net cash provided (used) by operating activities                                          |  |                                 
|                                                                                          |  |                                 
|CASH FLOWS FROM INVESTING ACTIVITIES                                                      |  |                                 
|Issuance of note receivable                                                               |  |                                 
|Net cash used by investing activities                                                     |  |                                 
|                                                                                          |  |                                 
|CASH FLOWS FROM FINANCING ACTIVITIES                                                      |  |                                 
|Proceeds from notes payable                                                               |  |                                 
|Net cash provided by financing activities                                                 |  |                                 
|                                                                                          |  |                                 
|NET INCREASE IN CASH                                                                      |  |                                 
|CASH AT BEGINNING OF PERIOD                                                               |  |                                 
|CASH AT END OF PERIOD                                                                     |  | $                               
|                                                                                          |  |                                 
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                                          |  |                                 
|Cash paid for interest                                                                    |  | $                               
|                                                                                          |  |                                 
|                                                                                          |  |                                 
|                                                                                          |  |                                 

See notes
to condensed consolidated financial statements

7





VERITEC,
INC.

NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three
Months Ended September 30, 2011 and 2010 (Unaudited)



A. NATURE OF BUSINESS



References to the “Company” in
this Form 10-Q refer to Veritec, Inc. (“Veritec”) and its wholly owned subsidiaries VCode Holdings, Inc. (“VCode”)
and Veritec Financial Systems, Inc. (“VTFS”).



The Company is primarily engaged in the development,
marketing, sales and licensing of products and rendering of professional services related thereto in the following two fields of
technology: (1) proprietary two-dimensional matrix symbology (also commonly referred to as “two-dimensional barcodes”
or “2D barcodes”) and (2) mobile banking solutions.



The Company’s two-dimensional matrix symbology technology
will hereafter be referred to as the Company’s “Barcode Technology”, and the Company’s mobile banking technology
will hereafter be referred to as its “Mobile Banking Technology”.



The Company’s Barcode Technology was
originally invented by the founders of Veritec under United States patents 4,924,078, 5,331,176, 5,612,524 and 7,159,780. Our principal
licensed product to date that contains our VeriCode® Barcode Technology has been a product identification system
for identification and tracking of manufactured parts, components and products. The VeriCode® symbol is a two-dimensional high
data density machine-readable symbol that can contain up to approximately 500 bytes of data.



The Company’s VSCode®
Barcode Technology is a derivative of the VeriCode® symbol with the ability to encrypt a greater amount of data
by increasing data density. The VSCode® is a data storage “container” that offers a high degree of security
and which can also be tailored to the application requirements of the user. The VSCode® symbol can hold any form
of binary information that can be digitized, including numbers, letters, images, photos, graphics, and the minutia for biometric
information, including fingerprints and facial image data, to the extent of its data storage capacity, that are likewise limited
by the resolution of the marking and reading devices employed by the user. VSCode® is ideal for secure identification
documents (such as national identification cards, driver’s licenses, and voter registration cards), financial cards, medical
records and other high security applications.



In its PhoneCodesTM
product platform, Veritec developed software to send, store, display, and read a VeriCode® Barcode Technology symbol
on the LCD screen of a mobile phone. With the electronic media that provide the ease of transferring information over the web,
Veritec’s PhoneCodesTM technology enablesindividuals and companies to receive or distribute gift certificates,
tickets, coupons, receipts, or engage in banking transactions using the VeriCode® technology via wireless phone
or PDA.



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



Our VeriSuiteTM card enrollment system
was released in July 2009. The VeriSuiteTM systemis a user friendly and cost effective solution that gives governments
and businesses the ability to provide cardholders with an identity card containing Veritec’s VSCode® Barcode Technology.
The VeriSuiteTM system provides secure Bio-ID Cards such as citizen identification, employee cards, health benefit cards,
border control cards, financial cards and more.



The Company has
a portfolio of five United States and eight foreign patents. In addition, we have seven U.S. and twenty-eight foreign
pending patent applications.

8





B. BASIS OF PRESENTATION



The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with United States of America generally accepted accounting principles (“GAAP”)
for interim financial information and with the instructions to Form 10-Q. Accordingly, the condensed consolidated financial statements
do not include all of the information and footnotes required for complete financial statements.



In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for
the three month periods ended September 30, 2011 are not necessarily indicative of the results that may be expected for the year
ending June 30, 2012. The Condensed Consolidated Balance Sheet as of June 30, 2011 was derived from the audited consolidated financial
statements as of such date, but does not include all of the information and footnotes required by GAAP. For further information,
refer to the Consolidated Financial Statements and footnotes thereto included in our Form 10-K as of and for the year ended June
30, 2011.

The preparation of financial statements
in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates. Those estimates and assumptions include
estimates for reserves of uncollectible accounts, accruals for potential liabilities and assumptions made in valuing stock instruments
issued for services.



The accompanying
condensed consolidated financial statements include the accounts of Veritec, VCode, and VTFS. All inter-company transactions and
balances were eliminated in consolidation.

C. GOING CONCERN

The accompanying condensed consolidated
financial statements have been prepared assuming the Company will continue as a going concern. During the three months ended September
30, 2011, the Company had a net loss of $128,732. At September 30, 2011, the Company had a working capital deficit of $3,708,050
and a stockholders’ deficiency of $3,695,539. The Company is delinquent or in default of $2,179,957 of its notes payable
and is delinquent in payment of certain amounts due of $390,052 for payroll taxes and accrued interest and penalties as of September
30, 2011. The Company believes its cash and forecasted cash flow from operations will not be sufficient to continue operations
through fiscal 2012 without continued external investment. The Company will require additional funds to continue its operations
through fiscal 2011 and to continue to develop its existing projects and plans to raise such funds by finding additional investors
to purchase the Company’s securities, generating sufficient sales revenue, implementing dramatic cost reductions or any combination
thereof. There is no assurance that the Company can be successful in raising such funds, generating the necessary sales or reducing
major costs. Further, if the Company is successful in raising such funds from sales of equity securities, the terms of these sales
may cause significant dilution to existing holders of common stock. The condensed consolidated financial statements do not include
any adjustments that may result from this uncertainty.



D. SIGNIFICANT
ACCOUNTING POLICIES



Net Loss per Common Share:



Basic earnings (loss) per share
is computed by dividing the net income (loss) applicable to common stockholders by the weighted average number of shares of common
stock outstanding during the year. Diluted earnings (loss) per share is computed by dividing the net income (loss) applicable to
common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that
would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential
common shares are excluded from the computation as their effect is antidilutive.



For the three months ended September 30, 2011 and 2010
the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an anti-dilutive
effect.



There were 6,789,717 and 6,253,328 potentially dilutive
securities as of September 30, 2011 and 2010, respectively.





9







Concentrations



During the three months ended September 30,
2011 and 2010, the Company had three customers that accounted for approximately 10%, 29%, and 34% of sales in 2011, and three customers
that accounted for approximately 11%, 27% and 36% of sales in 2010, respectively.   No other customers accounted for
more than 10% of sales in either period. As of September 30, 2011 and June 30, 2011, the Company had approximately $58,550 (72%)
and $6,050 (16%), $10,963 (27%), $10,025 (27%), and $5,300 (14%), respectively, of accounts receivable from its major customers.



For the three months ended September 30, 2011
and 2010, foreign revenues accounted for 64% (53% Korea, 10% Taiwan and 1% others) and 92% (81% Korea, 9% Taiwan and 3% others)
of the Company’s total revenues respectively.



Recent Accounting Pronouncements



In May 2011, the Financial Accounting
Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 2011-04, “Amendments to
Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”. ASU No. 2011-4 does not require
additional fair value measurements and is not intended to establish valuation standards or affect valuation practices outside of
financial reporting. The ASU

is effective for interim and annual periods beginning after December 15, 2011. The Company will
adopt the ASU as required. The ASU will affect the Company’s fair value disclosures, but will not affect the Company’s
results of operations, financial condition or liquidity.



In June 2011, the FASB issued ASU No. 2011-05,
“Presentation of Comprehensive Income”. The ASU eliminates the option to present the components of other comprehensive
income as part of the statement of changes in shareholders’ equity, and instead requires consecutive presentation of the
statement of net income and other comprehensive income either in a continuous statement of comprehensive income or in two separate
but consecutive statements. ASU No. 2011-5 is effective for interim and annual periods beginning after December 15, 2011.
The Company will adopt the ASU as required. It will have no affect on the Company’s results of operations, financial condition
or liquidity.



In September 2011, the FASB issued ASU 2011-08,
“Testing Goodwill for Impairment”, an update to existing guidance on the assessment of goodwill impairment. This update
simplifies the assessment of goodwill for impairment by allowing companies to consider qualitative factors to determine whether
it is more likely than not that the fair value of a reporting unit is less than its carrying amount before performing the two step
impairment review process. It also amends the examples of events or circumstances that would be considered in a goodwill impairment
evaluation. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning
after December 15, 2011. Early adoption is permitted. The Company is currently evaluating the affects adoption of ASU 2011-08 may
have on its goodwill impairment testing.



Other recent accounting pronouncements issued
by the FASB (including its Emerging Issues Task Force), the AICPA, and the Securities Exchange Commission (the "SEC")
did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.































10





E. NOTES PAYABLE



Notes payable consist of the following:



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | September 30, 2011 | June 30, 
2011
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------ | --------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | (Unaudited)        |               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                    |               
|Convertible notes payable (includes $118,915 and $116,899, respectively, to non-related parties), unsecured, interest at 8%, due September 2010 through November 2010. The principal and accrued interest are convertible at a conversion price of $0.30. The principal and interest is due immediately on the event of default or change of control. The holders also received warrants to purchase one share of common stock for every $2 of investment. The Company recorded a $20,981 discount on the notes payable for the value of the warrants issued. The discount was fully amortized over the term of the notes payable.  There was no unamortized discount as of September 30, 2011 and June 30, 2011, respectively.  The notes are now in default | $ 662,719          | $ 651,629     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                    |               
|Convertible notes payable to related parties, unsecured, principal and interest are convertible into common stock at $0.30 to $0.33 per share, interest at 8 % to 10%, due July to November 2010.  The notes are now in default                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 801,042            | 766,914       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                    |               
|Convertible note payable to related party, secured by the Company’s intellectual property, principal and interest are convertible into common stock at $0.25 per share subject to board of directors’ approval, interest at 8%. The note was due November 2010 and is now in default                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 230,860            | 226,828       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                    |               
|Note payable to related party, secured by the Company’s intellectual property, interest at 8% due August 2010 and is now is default                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 448,762            | 441,014       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                    |               
|Notes payable to related parties, unsecured, interest at 0% to 8%, due on demand                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 120,425            | 118,408       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                    |               
|Note payable, unsecured, interest at 10%, due January 2010 and is now in default                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 23,666             | 23,162        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                    |               
|Convertible note payable, unsecured, principal and interest are convertible into common stock at $0.30 per share subject to board of directors’ approval, interest at 8%, due January 2011 and is now in default                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 11,385             | 11,183        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                    |               
|Convertible note payable, unsecured, principal and interest are convertible into common stock at $1.00 per share subject to board of directors’ approval, interest at 8% due November 2009 and is now in default                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 1,523              | 1,523         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                    |               
|Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | $ 2,300,382        | $ 2,240,661   







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



|                             | September 30,                   |  | June 30,                       
|---------------------------- | ------------------------------- |  | -------------------------------
|                             | 2011                            |  | 2011                           
|Notes payable                | $                       155,489 |  | $                       152,767
|Notes payable, related party | 2,144,893                       |  | 2,087,894                      
|                             | $                    2,300,382  |  | $                    2,240,661 





11





F. STOCK-BASED COMPENSATION



Stock options



The Company has agreements with certain of
its employees and independent contractor consultants that provide grants of options to purchase the Company’s common stock.



A summary of stock options as of September
30, 2011 is as follows:

|                                  | Number of |   | Weighted - Average
|--------------------------------- | --------- | - | ------------------
|                                  | Shares    |   | Exercise Price    
|                                  |           |   |                   
|Outstanding at June 30, 2011      | 824,249   |   |                   
|Expired                           | (40,000   | ) |                   
|Outstanding at September 30, 2011 | 784,249   |   |                   
|Exercisable at September 30, 2011 | 784,249   |   |                   



The weighted-average remaining contractual
life of stock options outstanding and exercisable at September 30, 2011 is 2.6 years. The aggregate intrinsic value of stock options
outstanding as of September 30, 2011 was $29,800.



The weighted-average fair value of options
granted for the three months ended September 30, 2011 and 2010 was $0.00 and $0.14, respectively.



Stock-based compensation expense was $2 and
$532 during the three months ended September 30, 2011 and 2010, respectively. As of September 30, 2011, there was no unrecognized
compensation costs related to stock options.



Warrants



In connection with the issuance of certain
convertible notes payable, the Company has outstanding 275,000 fully invested warrants to acquire its common stock at an exercise
price of $2 per share. The warrants expire in 2014. The warrants have no intrinsic value at September 30, 2011.



G.	LEGAL PROCEEDINGS



On February 15, 2011, the Company filed a complaint in U.S. District
Court for the District of Minnesota against Aurora Financial Systems, Inc. (“Aurora”) for declaratory judgment, tortious
interference and other related claims concerning assertions by Aurora regarding United States Patent No. 7,229,006. The complaint
related to Aurora’s improper and unlawful assertions of patent against certain software owned by the Company which was lawfully
acquired from the software’s owner and inventor before the purported assignment of any patent rights to Aurora. Even though
Aurora was aware of the lawful acquisition yet they have made repeated claims about the Company’s purported patent infringement
relating to the Company’s use and licensing of the software to various financial institutions with which the Company has
sought business relationship. The Company is seeking a declaration of non-infringement based on legal estoppel and implied license
as well as a judgment that Aurora has committed tortious interference with prospective economic advantage, false advertising under
the Lanham Act and has violated Minnesota’s Deceptive Trade Practices Act. As of September 30, 2011 the case has been in
discovery and Aurora has not countersued. In addition to the preceding lawsuit, the Company is subject to various legal proceedings
from time to time in the ordinary course of business, none of which is required to be disclosed.



H.	JOINT VENTURE AGREEMENTS



During the quarter ended September 30, 2011, the Company signed
a 5-year joint venture agreement with Antero Payment Solutions for the use of each others’ technologies among other things
and to promote and market each others’ prepaid debit card programs. Under the terms of the agreement the Company received
$25,000 as an up front license fee, which the Company has reflected as deferred revenue to be amortized over the term of the agreement.
The agreement has a 5-year automatic renewal clause unless terminated by a written consent of both parties.



The Company also signed a 5-year strategic agreement with National
Identity Solutions (NIS) for the promotion and marketing of the Company’s prepaid debit card program and NIS’ identity
theft solutions. The agreement requires NIS to pay an up front license fee of $250,000 of which $125,000 was paid as of September
30, 2011 and has been reflected as deferred revenue to be amortized over the term of the agreement. The agreement automatically
renews annually unless terminated by either party.



12







ITEM 2 	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS



Results of Operations – September
30, 2011 compared to September 30, 2010



We had a net loss of $128,732 for the three
months ended September 30, 2011, compared to a net loss of $248,446 for the three months ended September 30, 2010.



Revenue



License and other revenues are derived from
our product identification systems sold principally to customers in the LCD monitor industry. For the three months ended September
30, 2011, license and other revenue was $204,716 compared to $300,431 for the three months ended September 30, 2010, a decrease
of $95,715. The license and other revenue decreases are attributable to the decrease in demand for licenses during the quarter.
Revenues from the LCD market remain unpredictable as they are generated when customers open new production facilities or update
production equipment.



Cost of Goods Sold



Cost of sales for the three months ended September
30, 2011 totaled $55,257 and for the three months ended September 30, 2010, cost of sales were $100,758, a decrease of $45,501.
The decrease in cost of sales for the three months ended September 30, 2011, was the result of a reduction in the cost of maintaining
the Company’s data processing center for its mobile banking operations, which made up 78% of the total cost of sales in the
current period compared to 77% in the quarter ended September 30, 2010.



Operating Expenses





Sales and marketing expense for the three months
ended September 30, 2011 were $40,140 compared to $41,842 for the three months ended September 30, 2010, a decrease of $1,702.
For the three months ended September 30, 2011, the Company had one direct sales staff person. The Company, for the three months
ended September 30, 2011, paid out commissions of $314 compared to $706 for the three month period ended September 30, 2010.



General and administrative expenses for the
three months ended September 30, 2011 were $160,548 compared to $276,782 for the three months ended September 30, 2010, a decrease
of $116,234 over the three months ended September 30, 2010. The decrease was mainly the result of decreases in some of the expenditures
for the three months ended September 30, 2011, compared to the three months ended September 30, 2010. Legal fees decreased by $2,675
due to the waning down of the Aurora case discussed under legal proceedings. The Company also saw decreases of $7,000 in professional
fees, $21,396 in penalty and interest, $25,042 in payroll and related costs, $5,009 in travel costs, and $3,099 in bank charges.
These decreases were offset by increases in temporary/contract help of $3,161 and directors fees of $3,000 over the three months
ended September 30, 2010.



Research and development expense for the three
months ended September 30, 2011 totaled $37,109 versus $87,797 for the three months ended September 30, 2010. The decrease of $50,688
was principally the result of reduction in payroll and related costs that decreased by $53,149.



Other Income (Expense)



Interest expense for the three months ended
September 30, 2011, was $40,394 compared to $41,698 in the same period ended September 30, 2010. The decrease was due to amortization
of discount on notes payable expense in the period ended September 30, 2010 compared to none in the current period ended September
30, 2011.



Liquidity



Our increase in
cash and cash equivalent to $81,837 atSeptember 30, 2011 compared to $14,996 at June 30, 2011
was the result of $47,341 provided by operating activities and $19,500 provided by financing activities.  Net cash provided
by operations during 2011 was $47,341 compared with $32,636 used in operations during the same period in 2010.  Cash
provided by operations during 2011 was primarily due to the increase in deferred revenue offset by the net loss in the period,
increases in accounts receivable and decreases in accrued expenses.



13







There was no net cash used in or provided by investing
activities during 2011 compared with $60,000 net cash used in investing activities during 2010 which was primarily the result of
payment on note receivable.  Net cash provided by financing
activities of $19,500 during 2011 was due to proceeds from notes payable of $19,500. During the same period in
2010, the net cash provided by financing activities of $100,000 was from net proceeds from notes payable.



The accompanying
condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. During
the three months ended September 30, 2011, the Company had a net loss of $128,732. At September 30, 2011, the Company had a
working capital deficit of $3,708,050 and a stockholders’ deficiency of $3,695,539. The Company is delinquent or in
default of $2,179,957 of its notes payable and is delinquent in payment of certain amounts due of $390,052 for payroll taxes
and accrued interest and penalties as of September 30, 2011. The Company’s operations are currently being supported by
borrowings from affiliated parties, and its cash and forecasted cash flow from operations will not be sufficient to continue
operations without continued external investment. The Company believes it will require additional funds in the near future to
continue its operations and to continue to develop its existing projects and plans to raise such funds by finding additional
investors to purchase the Company’s securities, generating sufficient sales revenue, implementing further dramatic cost
reductions or any combination thereof. There is no assurance that the Company can be successful in raising such funds,
generating the necessary sales or reducing major costs. Further, if the Company is successful in raising funds from sales of
equity securities, the terms of these sales may cause significant dilution to existing holders of common stock. The condensed
consolidated financial statements do not include any adjustments that may result from this uncertainty.



If the Company is not successful in raising
additional funds, generating sufficient revenues or implementing sufficient cost reductions, the Company may be forced to suspend
or discontinue its operations or seek relief from its debt obligations under the United States Bankruptcy Code. Any of these actions
is likely to result in a common stockholder’s loss of his or her complete investment in the Company’s common stock.



Recent Accounting Pronouncements



In May 2011, the Financial Accounting
Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 2011-04, “Amendments to
Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”. ASU No. 2011-4 does not require
additional fair value measurements and is not intended to establish valuation standards or affect valuation practices outside of
financial reporting. The ASU is effective for interim and annual periods beginning after December 15, 2011. The Company will
adopt the ASU as required. The ASU will affect the Company’s fair value disclosures, but will not affect the Company’s
results of operations, financial condition or liquidity.



In June 2011, the FASB issued ASU No. 2011-05,
“Presentation of Comprehensive Income”. The ASU eliminates the option to present the components of other comprehensive
income as part of the statement of changes in shareholders’ equity, and instead requires consecutive presentation of the
statement of net income and other comprehensive income either in a continuous statement of comprehensive income or in two separate
but consecutive statements. ASU No. 2011-5 is effective for interim and annual periods beginning after December 15, 2011.
The Company will adopt the ASU as required. It will have no affect on the Company’s results of operations, financial condition
or liquidity.



In September 2011, the FASB issued ASU 2011-08,
“Testing Goodwill for Impairment”, an update to existing guidance on the assessment of goodwill impairment. This update
simplifies the assessment of goodwill for impairment by allowing companies to consider qualitative factors to determine whether
it is more likely than not that the fair value of a reporting unit is less than its carrying amount before performing the two step
impairment review process. It also amends the examples of events or circumstances that would be considered in a goodwill impairment
evaluation. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning
after December 15, 2011. Early adoption is permitted. The Company is currently evaluating the affects adoption of ASU 2011-08 may
have on its goodwill impairment testing.



Other recent accounting pronouncements issued
by the FASB (including its Emerging Issues Task Force), the AICPA, and the Securities Exchange Commission (the "SEC")
did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.





14









Off-Balance Sheet Arrangements



We do not have any off-balance sheet arrangements.





Critical Accounting Policies



Stock-Based Compensation:



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



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



Revenue Recognition:



The Company accounts for revenue recognition
in accordance with SEC Staff Accounting Bulletin (SAB) No. 101 "Revenue Recognition in Financial Statements" and related
amendments. Revenues for the Company are classified into four separate products; license revenue (Veritec’s Multi-Dimensional
matrix symbology), hardware revenue, identification card revenue, and debit card revenue.  Revenues from licenses, hardware,
and identification cards are recognized when the product is shipped and collection is reasonably assured. The process typically
begins for license and hardware revenue with a customer purchase order detailing its hardware specifications so the Company can
import its software into the customer's hardware. Once importation is completed, if the customer only wishes to purchase a license,
the Company typically transmits the software to the customer via the Internet.  Revenue is recognized at that point.
If the customer requests both license and hardware products, once the software is imported into the hardware and the process is
complete, the product is shipped and revenue is recognized at time of shipment.  Once the software and/or hardware are
either shipped or transmitted, the customers do not have a right of refusal or return.  Under some conditions, the customers
remit payment prior to the Company having completed importation of the software.  In these instances, the Company delays
revenue recognition and reflects the prepayments as customer deposits.



The process for identification cards begins
when a customer requests, via the Internet, an identification card.  The card is reviewed for design and placement of
the data, printed and packaged for shipment.  At the time the identification cards are shipped and collection is reasonably
assured, revenue is recognized.



The Company, as a processor and a distributor,
recognizes revenue from transaction fees charged cardholders for the use of its issued mobile debit cards. The fees are recognized
on a monthly basis after all cardholder transactions have been summarized and reconciled with third party processors.







ITEM 3	QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK



A smaller reporting company is not required to provide the information
required by this Item 3.





ITEM 4 	CONTROLS AND PROCEDURES









15









Evaluation of Disclosure Controls and Procedures.



Our management, with the participation of
our chief executive officer and our chief financial officer, carried out an evaluation of the effectiveness of our “disclosure
controls and procedures” (as defined in the Securities Exchange Act of 1934 (the “Exchange Act”) Rules 13a-15(e)
and 15-d-15(e)) as of the end of the period covered by this report (the “Evaluation Date”).  Based upon
that evaluation, our chief executive officer and our chief financial officer concluded that, as of the Evaluation Date, our disclosure
controls and procedures were not effective to ensure that information required to be disclosed by us in the reports that we file
or submit under the Exchange Act (i) is recorded, processed, summarized and reported, within the time periods specified in the
SEC’s rules and forms and (ii) is accumulated and communicated to our management, including our chief executive officer
and our chief financial officer, as appropriate to allow timely decisions regarding required disclosure. As of September
30, 2011, our disclosure controls and procedures were not effective at the reaonable assurance level due to the material weaknesses
in our internal control over financial reporting described in our Form 10-K at June 30, 2011.



Changes in Internal Control over Financial
Reporting.



In our Form 10-K at June 30, 2011, we identified
certain matters that constitute material weaknesses (as defined under the Public Company Accounting Oversight Board Auditing Standard
No. 2) in our internal control over financial reporting as discussed on Management’s Report on Internal Control Over Financial
Reporting.  We are undergoing ongoing evaluation and improvements in our internal control over financial reporting.  Regarding
our identified weaknesses, we have performed the following remediation efforts:



§We have assigned our audit committee with oversight responsibilities.

§Our financial statements, periodic reports filed pursuant to the Securities Exchange Act of
1934, as amended, our monthly bank statements and imaged checks are now continuously reviewed by our chief financial officer and
chief executive officer.

§All significant contracts are now being reviewed and approved by our board of directors in
conjunction with the chief executive officer.



There was no other change in our internal control
over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.







PART II



ITEM 1 	LEGAL PROCEEDINGS



On February 15, 2011, the Company
filed a complaint in U.S. District Court for the District of Minnesota against Aurora Financial Systems, Inc. (“Aurora”)
for declaratory judgment, tortious interference and other related claims concerning assertions by Aurora regarding United States
Patent No. 7,229,006. The complaint related to Aurora’s improper and unlawful assertions of patent against certain software
owned by the Company which was lawfully acquired from the software’s owner and inventor before the purported assignment of
any patent rights to Aurora. Even though Aurora was aware of the lawful acquisition yet they have made repeated claims about the
Company’s purported patent infringement relating to the Company’s use and licensing of the software to various financial
institutions with which the Company has sought business relationship. The Company is seeking a declaration of non-infringement
based on legal estoppel and implied license as well as a judgment that Aurora has committed tortious interference with prospective
economic advantage, false advertising under the Lanham Act and has violated Minnesota’s Deceptive Trade Practices Act. As
of September 30, 2011 the case has been in discovery and Aurora has not countersued. In addition to the preceding lawsuit, the
Company is subject to various legal proceedings from time to time in the ordinary course of business, none of which is required
to be disclosed under this Item 1.











16







ITEM 1A 	RISK
FACTORS



A smaller reporting company is not required to provide the information
required by this Item.





ITEM 2. 	UNREGISTERED SALE OF EQUITY SECURITIES AND
USE OF PROCEEDS



None.





ITEM 3	DEFAULTS UPON SENIOR SECURITIES



The Company is in default on its various notes
payable totaling $2,179,957 representing principal and accrued interest as of the date of filing this report.





ITEM 4	(REMOVED AND RESERVED)





ITEM 5	OTHER INFORMATION



The Company is delinquent
in payment of $390,052 for payroll taxes and accrued interest and penalties as ofSeptember30,
2011.



ITEM 6	EXHIBITS



|31.1   | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.2   | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|32.1** | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|32.2** | Certification of Chief Financial Officer pursuant to 18 U.S.C.
        Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                          
|101.1  | The following financial information from Veritec,
        Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 formatted in XBRL: (i) Consolidated Balance
        Sheets at September 30, 2011 and June 30, 2011; (ii) Consolidated Statement of Operations for the three months ended September
        30, 2011 and 2010; (iii) Consolidated Statement of Stockholders’ Deficit as at September 30, 2011; (iv) Consolidated Statements
        of Cash Flows for the three months ended September 30, 2011 and 2010; (v) Notes to the Consolidated Financial Statements.











|** | The certifications attached as Exhibits 32.1 and 32.2 accompany the Quarterly on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed “filed” by Veritec, Inc. for purposes of Section 18 of the Securities Exchange Act.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



17







SIGNATURES



Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.





VERITEC, INC.



By /s/ Van Tran	                                                                                                                                      November 9, 2011

Van Tran

Chief Executive Officer

(Principal Executive Officer)





By /s/ John Quentin	                                                                                                                               November 9, 2011

John Quentin

Chief Financial Officer (Principal Financial
Officer)









































































18