Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Sep. 30, 2020 | Oct. 31, 2020 | |
Document And Entity Information | ||
Entity Registrant Name | VERITEC INC | |
Entity Central Index Key | 0000773318 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --06-30 | |
Is Entity's Reporting Status Current? | No | |
Entity Filer Category | Non-accelerated Filer | |
Is Entity Small Business? | true | |
Is Entity Emerging Growth Company? | false | |
Is Entity Shell Company? | false | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | NV | |
Entity File Number | 000-15113 | |
Entity Common Stock, Shares Outstanding | 39,738,007 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2021 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Sep. 30, 2020 | Jun. 30, 2020 |
Current Assets: | ||
Cash | $ 105,000 | $ 228,000 |
Accounts receivable | 8,000 | 10,000 |
Prepaid expenses | 4,000 | 6,000 |
Total Assets | 117,000 | 244,000 |
Current Liabilities: | ||
Accounts payable | 688,000 | 689,000 |
Accounts payable, related party | 96,000 | 96,000 |
Accrued expenses | 62,000 | 70,000 |
Customer deposits | 67,000 | 91,000 |
Convertible notes and notes payable ($472,000 and $467,000 in default) | 513,000 | 508,000 |
Convertible notes and notes payable, related parties ($217,000 and $215,000 in default) | 4,710,000 | 4,484,000 |
Total Current Liabilities | 6,136,000 | 5,938,000 |
Contingent earnout liability | 155,000 | 155,000 |
Total Liabilities | 6,291,000 | 6,093,000 |
Stockholders' Deficiency: | ||
Convertible preferred stock, par value $1.00; authorized 10,000,000 shares, 276,000 shares of Series H authorized, 1,000 shares issued and outstanding | 1,000 | 1,000 |
Common stock, par value $.01; authorized 150,000,000 shares; 39,738,007 and 39,738,007 shares issued and outstanding at September 30, 2020 and June 30, 2020 | 397,000 | 397,000 |
Common stock to be issued, 145,000 shares to be issued | 12,000 | 12,000 |
Additional paid-in capital | 18,136,000 | 18,136,000 |
Accumulated deficit | (24,720,000) | (24,395,000) |
Total Stockholders' Deficiency | (6,174,000) | (5,849,000) |
Total Liabilities and Stockholders' Deficiency | $ 117,000 | $ 244,000 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) | Sep. 30, 2020 | Jun. 30, 2020 |
Convertible preferred stock, par value | $ 1 | $ 1 |
Convertible preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Convertible preferred stock, shares issued | 1,000 | 1,000 |
Convertible preferred stock, shares outstanding | 1,000 | 1,000 |
Common stock, par value | $ .01 | $ 0.01 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 39,738,007 | 39,738,007 |
Common stock, shares outstanding | 39,738,007 | 39,738,007 |
Common stock, shares to be issued | 145,000 | 145,000 |
Convertible notes and notes payable, in default | $ 467,000 | $ 472,000 |
Convertible notes and notes payable, related party, in default | $ 215,000 | $ 217,000 |
Series H Convertible | ||
Convertible preferred stock, shares authorized | 276,000 | 276,000 |
Convertible preferred stock, shares issued | 1,000 | 1,000 |
Convertible preferred stock, shares outstanding | 1,000 | 1,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Revenue: | ||
Mobile banking technology revenue | $ 24,000 | $ 25,000 |
Other revenue, management fee related party | 56,000 | 129,000 |
Total revenue | 80,000 | 154,000 |
Cost of Sales | 56,000 | 55,000 |
Gross Profit | 24,000 | 99,000 |
Operating Expenses: | ||
General and administrative (including $80,000 and $13,000, respectively, to related party) | 256,000 | 156,000 |
Loss from Operations | (232,000) | (57,000) |
Other Income (Expense): | ||
Gain on extinguishment of convertible note payable | 0 | (167,000) |
Interest expense (including $88,000 and $75,000, respectively, to related parties) | (93,000) | (80,000) |
Total other income (expense) | (93,000) | 87,000 |
Net Income (Loss) | $ (325,000) | $ 30,000 |
Net Income (Loss) Per Common Share - Basic and Diluted | $ (0.01) | $ 0 |
Weighted Average Number of Shares Outstanding - | ||
Basic | 39,738,007 | 39,538,007 |
Diluted | 39,738,007 | 40,668,007 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (Parenthetical) - USD ($) | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | ||
General and administrative to related party | $ 80,000 | $ 13,000 |
Interest expense to related parties | $ 88,000 | $ 75,000 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (EQUITY) (UNAUDITED) - USD ($) | Preferred Stock | Common Stock | Common Stock to be Issued | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance, Shares at Jun. 30, 2019 | 1,000 | 39,538,007 | ||||
Beginning balance, Amount at Jun. 30, 2019 | $ 1,000 | $ 395,000 | $ 12,000 | $ 18,111,000 | $ (23,819,000) | $ (5,299,000) |
Stock-Based Compensation | 5,000 | |||||
Net Loss | 30,000 | 30,000 | ||||
Ending balance, Shares at Sep. 30, 2019 | 1,000 | 39,538,007 | ||||
Ending balance, Amount at Sep. 30, 2019 | $ 1,000 | $ 395,000 | 12,000 | 18,116,000 | (23,789,000) | (5,264,000) |
Beginning balance, Shares at Jun. 30, 2020 | 1,000 | 39,738,007 | ||||
Beginning balance, Amount at Jun. 30, 2020 | $ 1,000 | $ 397,000 | 12,000 | 18,136,000 | (24,395,000) | (5,849,000) |
Net Loss | (325,000) | (325,000) | ||||
Ending balance, Shares at Sep. 30, 2020 | 1,000 | 39,738,007 | ||||
Ending balance, Amount at Sep. 30, 2020 | $ 1,000 | $ 397,000 | $ 12,000 | $ 18,136,000 | $ (24,720,000) | $ (6,174,000) |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net Income (Loss) | $ (325,000) | $ 30,000 |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Interest accrued on notes payable | 92,000 | 80,000 |
Stock-based compensation | 0 | 5,000 |
Gain on extinguishment of convertible note payable | 0 | (167,000) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 2,000 | (1,000) |
Prepaid expenses | 2,000 | 1,000 |
Customer deposits | (24,000) | 23,000 |
Accounts payable | (1,000) | (2,000) |
Accounts payable, related party | 0 | 21,000 |
Accrued expenses | (8,000) | (5,000) |
Net cash used in operating activities | (262,000) | (15,000) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from convertible notes payable-related party | 67,000 | 0 |
Proceeds from notes payable - related party | 72,000 | 104,000 |
Net cash provided by financing activities | 139,000 | 104,000 |
NET INCREASE (DECREASE) IN CASH | (123,000) | 89,000 |
CASH AT BEGINNING OF PERIOD | 228,000 | 91,000 |
CASH AT END OF PERIOD | 105,000 | 180,000 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Cash paid for interest | 0 | 0 |
Cash paid for taxes | $ 0 | $ 0 |
Nature of Business and Summary
Nature of Business and Summary of Significant Accounting Policies | 3 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company Veritec, Inc. (Veritec) formed in the State of Nevada on September 8, 1982. Veritec’s wholly-owned subsidiaries include Veritec Financial Systems, Inc., Tangible Payment Systems, Inc., and Public Bell, Inc. (collectively the “Company”). Nature of Business Veritec is primarily engaged in the development, sales, and licensing of products and providing services related to its mobile banking solutions. As a Cardholder Independent Sales Organization, Veritec is able to promote and sell Visa-branded card programs. As a Third-Party Servicer, Veritec provides back-end cardholder transaction processing services for Visa-branded card programs on behalf of its sponsoring bank. Veritec 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. Veritec has had agreements with various banks in the past and is currently seeking a bank to sponsor its Prepaid Card programs. COVID-19 Considerations The Company is subject to risks and uncertainties as a result of the COVID-19 pandemic. The extent of the impact of the COVID-19 pandemic on the Company’s business is highly uncertain and difficult to predict, as the responses that the Company, other businesses and governments are taking continue to evolve. Furthermore, capital markets and economies worldwide have also been negatively impacted by the COVID-19 pandemic, and it is possible that the COVID-19 pandemic could cause a local, national and/or global economic recession. Policymakers around the globe have responded with fiscal policy actions to support the economy as a whole, but it is presently unknown whether and to what extent further fiscal actions will continue. The magnitude and overall effectiveness of these actions remain uncertain. The Company believes that its Mobile Banking revenues have been negatively affected due to the reduction in customer spending, which negatively impacts the amount of fees earned by the Company from its customers. The Company is also currently experiencing a decline in revenues earned under the management services agreement with The Matthews Group, as The Matthews Group’s customer orders have been negatively impacted by the effects of COVID-19. The severity of the impact of the COVID-19 pandemic on the Company’s business will continue to depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on the Company’s customers, service providers and suppliers, all of which are uncertain and cannot be predicted. As of the date of issuance of the Company’s financial statements, the extent to which the COVID-19 pandemic may in the future materially impact the Company’s financial condition, liquidity or results of operations is uncertain. Basis of Presentation The accompanying unaudited Condensed 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 period ended September 30, 2020, are not necessarily indicative of the results that may be expected for the year ending June 30, 2021. The Condensed Consolidated balance Sheet information as of June 30, 2020, was derived from the Company’s audited Consolidated Financial Statements as of and for the year ended June 30, 2020, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on September 15, 2020. These financial statements should be read in conjunction with that report. The accompanying Condensed Consolidated Financial Statements include the accounts of Veritec and its wholly-owned subsidiaries, Veritec Financial Systems, Inc., Tangible Payment Systems, Inc., and Public Bell, Inc. Inter-company transactions and balances were eliminated in consolidation. Going Concern The accompanying Condensed Consolidated Financial Statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. During the period ended September 30, 2020, the Company incurred a net loss of $325,000 and used cash in operating activities of $262,000, and on September 30, 2020, the Company had a working capital deficit of $6,174,000. In addition, as of September 30, 2020, the Company is delinquent in payment of $689,000 of its notes payable. These factors, among others, raise substantial doubt about our ability to continue as a going concern within one year of the date that the financial statements are issued. In addition, the Company’s independent registered public accounting firm, in its report on our June 30, 2020 financial statements, has raised substantial doubt about the Company’s ability to continue as a going concern. The Company’s financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. The Company believes it will require additional funds to continue its operations through fiscal 2021 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. Use of Estimates The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Those estimates and assumptions include estimates for reserves of uncollectible accounts, analysis of impairments of long-lived assets, accruals for potential liabilities, assumptions made in valuing stock instruments issued for services, and valuation of deferred tax assets. Actual results could differ from those estimates. Revenue Recognition Revenues for the Company are classified into management fee revenue and mobile banking technology. The Company recognizes revenue in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers Mobile Banking Technology Revenue The Company, as a merchant payment processor and a distributor, recognizes revenue from transaction fees charged to 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. The Company has entered into certain long term agreements to provide application development and support. Some customers paid the agreement in full at signing and the Company recorded the receipt of payment as deferred revenue. The Company records revenue relating to these agreements on a pro-rata basis over the term of the agreement and reduces its deferred revenue balance accordingly. Other Revenue, Management Fee - Related Party On September 30, 2015, the Company sold all of its assets of its Barcode Technology, which was comprised solely of its intellectual property, to The Matthews Group (a related party, see Note 6). The Company subsequently entered into a management services agreement with The Matthews Group to manage all facets of the barcode technology operations through June 30, 2021. The Company earned a fee of 35% of all revenues billed up to September 30, 2020. The Company recognizes management fee revenue as services are performed. Disaggregation of Net Sales The following table shows the Company’s disaggregated net sales by product type: Period ended September 30, 2020 2019 Mobile banking technology revenue $ 24,000 $ 25,000 Other revenue, management fee - related party 56,000 129,000 Total revenue $ 80,000 $ 154,000 The following table shows the Company’s disaggregated net sales by customer type for our Mobile banking technology: Period ended September 30, 2020 2019 Medical $ 15,000 $ 15,000 Associations 3,000 3,000 Education 3,000 3,000 Other 3,000 4,000 Total revenue $ 24,000 $ 25,000 During the periods ended September 30, 2020 and 2019, all of the Company’s Mobile banking technology revenues were earned in the United States of America. Other revenue, management fee - related party revenue was $56,000 and $129,000 for the periods ended September 30, 2020 and 2019, respectively, and realized from our management services agreement with The Matthews Group, a related party, which requires us to manage The Matthews Group’s barcode technology operations. The Matthews Group’s barcode technology customers are primarily manufacturing companies located in China. Fair Value of Financial Instruments The Company determines the fair value of its assets and liabilities based on the exchange price in U.S. dollars that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company uses a fair value hierarchy with three levels of inputs, of which the first two are considered observable and the last unobservable, to measure fair value: • Level 1 — Quoted prices in active markets for identical assets or liabilities. • Level 2 — Inputs, other than Level 1, that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The carrying amounts of financial instruments such as cash, accounts receivable, and accounts payable and accrued liabilities, approximate the related fair values due to the short-term maturities of these instruments. The carrying values of notes payable approximate their fair values due to the fact that the interest rates on these obligations are based on prevailing market interest rates. Net Income (Loss) per Common Share Basic earnings (loss) per share are computed by dividing the net income (loss) applicable to Common Stockholders by the weighted average number of shares of Common Stock outstanding during the year. Diluted earnings (loss) per share is computed by dividing the net income (loss) applicable to Common Stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are excluded from the computation as their effect is antidilutive. For the period ended September 30, 2020, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an anti-dilutive effect. For the period ending September 30, 2019, 1,130,000 shares were added to weighted average shares outstanding as they were considered dilutive. The remaining potentially dilutive shares from the Company’s Series H Preferred Stock, Convertible Notes Payable, and a portion of Options were antidilutive because their exercise prices and conversion prices were out of the money. As of September 30, 2020, and 2019, we excluded the outstanding securities summarized below, which entitle the holders thereof to acquire shares of common stock, from our calculation of earnings per share, as their effect would have been anti-dilutive. As of September 30, 2020 2019 Series H Preferred Stock 10,000 10,000 Convertible Notes Payable 22,986,104 20,683,005 Options 2,500,000 2,500,000 Total 25,496,104 23,006,700 Concentrations During the period ended September 30, 2020 and 2019, the Company had one customer, a related party, that represented 70% and 84% of our revenues, respectively. No other customer represented more than 10% of our revenues. Segments The Company operates in one segment, the mobile financial banking industry. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying condensed consolidated financial statements Recently Issued Accounting Standards In June 2016, the FASB issued ASU No. 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments (“ASC 326”). The standard significantly changes how entities will measure credit losses for most financial assets, including accounts and notes receivables. The standard will replace today’s “incurred loss” approach with an “expected loss” model, under which companies will recognize allowances based on expected rather than incurred losses. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. As a small business filer, the standard will be effective for us for interim and annual reporting periods beginning after December 15, 2022. The Company is currently assessing the impact of adopting this standard on the Company’s financial statements and related disclosures. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future financial statements. |
Contingent Earnout Liability
Contingent Earnout Liability | 3 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Contingent Earnout Liability | NOTE 2 –CONTINGENT EARNOUT LIABILITY On September 30, 2014, the Company acquired certain assets and liabilities of the Tangible Payments LLC. A portion of the purchase price for Tangible Payments LLC was an earnout payment of $155,000. The earnout payment is payable on a monthly basis from the net profits derived from the acquired assets commencing three months after the closing. The earnout payment is accelerated and the balance of the earnout payment shall be due in full at such time as Veritec receives equity investments aggregating $1,300,000. As of September 30, 2020, there was no net profit derived from the acquired assets, and the Company had not yet received the required equity investments. Accordingly, no payments were made on the earnout. |
Convertible Notes and Notes Pay
Convertible Notes and Notes Payable | 3 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTES AND NOTES PAYABLE | NOTE 3 – CONVERTIBLE NOTES AND NOTES PAYABLE Convertible notes and notes payable Notes payable includes principal and accrued interest and consists of the following at September 30, 2020 and June 30, 2020: September 30, June 30, (a) Unsecured convertible notes ($19,000 and $18,000 in default) $ 60,000 $ 59,000 (b) Notes payable (in default) 427,000 423,000 (c) Notes payable (in default) 26,000 26,000 Total notes-third parties $ 513,000 $ 508,000 (a) The notes are unsecured, convertible into common stock at amounts ranging from $0.08 to $0.30 per share, bear interest at rates ranging from 5% to 8% per annum, were due through 2011 and are in default or due on demand. At June 30, 2020, convertible notes totaled $59,000. During the period ended September 30, 2020, interest of $1,000 was added to the principal, resulting in a balance owed of $60,000 at September 30, 2020. On September 30, 2020, $19,000 of the convertible notes were in default and convertible at a conversion price of $0.30 per share into 61,952 shares of the Company’s common stock. The balance of $41,000 is due on demand and convertible at a conversion price of $0.08 per share into 516,963 shares of the Company’s common stock. (b) The notes are either secured by the Company’s intellectual property or unsecured and bear interest ranging from 6.5% to 10% per annum, were due in 2012, and are in default. At June 30, 2020, the notes totaled $423,000. During the period ended September 30, 2020, interest of $4,000 was added to principal resulting in a balance owed of $427,000 at September 30, 2020. At September 30, 2020, $369,000 of notes are secured by the Company’s intellectual property and $58,000 of notes are unsecured. (c) The notes are unsecured and bear interest of 4% per annum and were due on March 17, 2020, and are in default. At June 30, 2020, the notes totaled $26,000. During the period ended September 30, 2020, a nominal amount of interest was added to principal, resulting in a balance owed of $26,000 at September 30, 2020. Convertible notes and notes payable-related parties Notes payable-related parties includes principal and accrued interest and consists of the following at September 30, 2020 and June 30, 2020: September 30, June 30, (a) Convertible notes-The Matthews Group $ 1,655,000 $ 1,560,000 (b) Notes payable-The Matthews Group 2,758,000 2,630,000 (c) Convertible notes-other related parties ($217,000 and $215,000 in default) 297,000 294,000 Total notes-related parties $ 4,710,000 $ 4,484,000 (a) The notes are unsecured, convertible into common stock at $0.08 per share, bear interest at rates ranging from 8% to 10% per annum, and are due on demand. The Matthews Group is a related party (see Note 6) and is owned 50% by Ms. Van Tran, the Company’s CEO/Executive Chair and a director, and 50% by Larry Johanns, a significant shareholder of the Company. At June 30, 2020, convertible notes due to The Matthews Group totaled $1,560,000. During the year ended September 30, 2020, $67,000 of notes payable were issued and interest of $28,000 was added to principal, resulting in a balance owed of $1,655,000 at September 30, 2020. At June 30, 2020, the notes are convertible at a conversion price of $0.08 per share into 20,684,433 shares of the Company’s common stock. (b) The notes are unsecured, accrue interest at 10% per annum, and are due on demand. The notes were issued relating to a management services agreement with The Matthews Group (see Note 6) dated September 30, 2015. At June 30, 2020, notes due to The Matthews Group totaled $2,630,000. During the period ended September 30, 2020, $72,000 of notes payable were issued and interest of $56,000 was added to principal, resulting in a balance owed of $2,758,000 at September 30, 2020. (c) The notes are due to a current and a former director, are unsecured, convertible into common stock at per share amounts ranging from $0.08 to $0.30, and bear interest at rates ranging from 8% to 10% per annum. At June 30, 2020, convertible notes due to other related parties totaled $294,000. During the period ended September 30, 2020, interest of $3,000 was added to principal resulting in a balance owed of $297,000 at September 30, 2020. At September 30, 2020, $217,000 of the notes were due in 2010 and are in default, and the balance of $80,000 is due on demand. At September 30, 2020, $217,000 of the notes are convertible at a conversion price of $0.30 per share into 724,581 shares of the Company’s common stock, and $80,000 of the notes are convertible at a conversion price of $0.08 per share into 998,175 shares of the Company’s common stock. |
Stockholders' Deficiency
Stockholders' Deficiency | 3 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Stockholders' Deficiency | NOTE 4 - STOCKHOLDERS’ DEFICIENCY Common Stock to be Issued At September 30, 2020 and June 30, 2020, 145,000 shares of common stock to be issued with an aggregate value of $12,000 have not been issued and are reflected as common stock to be issued in the accompanying condensed consolidated financial statements. |
Stock Options
Stock Options | 3 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock Options | NOTE 5 – STOCK OPTIONS A summary of stock options as of September 30, 2020 is as follows: Number of Shares Weighted Average Exercise Price Outstanding at June 30, 2020 3,650,000 $ 0.06 Granted — — Forfeited — $ — Outstanding at September 30, 2020 3,650,000 $ 0.06 Exercisable at September 30, 2020 3,650,000 $ 0.06 As of September 30, 2020, the Company had no outstanding unvested options with future compensation costs. At September 30, 2020 and June 30, 2020, the outstanding and exercisable stock options had an intrinsic value of $12,000 and $12,000, respectively. Additional information regarding options outstanding as of September 30, 2020, is as follows: Options Outstanding at September 30, 2020 Options Exercisable at September 30, 2020 Range of Exercise Price Number of Shares Outstanding Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Number of Shares Exercisable Weighted Average Exercise Price $ 0.03 1,150,000 4.23 $ 0.03 1,150,000 $ 0.03 $ 0.08 2,500,000 1.36 $ 0.08 2,500,000 $ 0.08 3,650,000 3,650,000 |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 6 – RELATED PARTY TRANSACTIONS The Matthews Group is owned 50% by Ms. Tran, the Company’s CEO/Executive Chair and a director, and 50% by Larry Johanns, a significant stockholder of the Company. The Company has relied on The Matthews Group for funding (see Note 3). Management Services Agreement and Related Notes Payable with Related Party The Company’s Barcode Technology was invented by the founders of Veritec as a product identification system for identification and tracking of parts, components and products mostly in the liquid crystal display (LCD) markets and for secure identification documents, financial cards, medical records, and other high-security applications. On September 30, 2015, the Company sold all of its assets of its Barcode Technology comprised solely of its intellectual property to The Matthews Group. The Company then entered into a management services agreement with The Matthews Group to manage all facets of the barcode technology operations, on behalf of The Matthews Group, through June 30, 2021. The Company does anticipate the management services agreement will be extended prior to the June 30, 2021 exipiration date. The Matthews Group bears the risk of loss from the barcode operations and has the right to the residual benefits of the barcode operations. In consideration of the services provided by the Company to The Matthews Group, the Company earned a fee of 20% of barcode technology operations revenues through May 31, 2017. Subsequent to May 31, 2017 and up to June 30, 2021, The Matthews Group earns a fee of 35% from the barcode technology operations. During the periods ended September 30, 2020 and 2019, the Company recorded management fee revenue related to this agreement of $56,000 and $129,000, respectively. Additionally, pursuant to the management services agreement, all cash flow (all revenues collected less direct costs paid) of the barcode technology operations is retained by the Company as proceeds from unsecured notes payable due The Matthews Group. During the periods ended September 30, 2020 and 2019, cash flow loans of $72,000 and $104,000, respectively, were made to the Company at 10% interest per annum and due on demand. At September 30, 2020, cash flow loans of $2,758,000 are due to The Matthews Group (see Note 4). Advances from Related Parties From time to time, Ms. Tran, the Company’s CEO/Executive Chair, provides advances to finance the Company’s working capital requirements. As of September 30, 2020 and June 30, 2020, total advances to Ms. Tran amounted to $96,000 and $96,000, respectively, and have been presented as accounts payable, related party on the accompanying Condensed Consolidated Balance Sheets. The advances are unsecured, non-interest bearing, and due on demand. Other Transactions with Related Parties The Company leases its office facilities from Ms. Tran, the Company’s CEO/Executive Chair. For both the years ended September 30, 2020 and 2019, lease and property tax payment to Ms. Tran totaled $80,000 and $13,000, respectively. |
Legal Proceedings
Legal Proceedings | 3 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies | |
Legal Proceedings | NOTE 7 – LEGAL PROCEEDINGS On September 21, 2016, the Company entered into a settlement agreement with an individual who was a former officer of the Company. The individual in prior years was also issued 500,000 shares of common stock for services. The Company alleged that the individual used the Company's intellectual property without approval. Under the terms of the settlement agreement, the individual agreed to relinquish a convertible note payable and unpaid interest aggregating $365,000 and return 500,000 shares of common stock previously issued to him. In turn, the Company agreed to release and discharge the individual against all claims arising on or prior to the date of the settlement agreement. As of September 30, 2020, the 500,000 shares have not been relinquished. When the Company receives the shares, it will record a cancellation of shares. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | NOTE 8 – COMMITMENTS AND CONTINGENCIES On December 5, 2008, the Company adopted an incentive compensation bonus plan to provide payments to key employees in the aggregated amount of 10% of pre-tax earnings in excess of $3,000,000 after the end of each fiscal year to be distributed annually to employees. As of June 30, 2020, the Company had not achieved annual pre-tax earnings in excess of $3,000,000. On December 5, 2008, the Company entered into an employment agreement with Van Thuy Tran, its Chief Executive Officer, providing for an annual base salary of $150,000 and customary medical and other benefits. The agreement may be terminated by either party upon 30 days’ notice. In the event the Company terminates the agreement without cause, Ms. Tran will be entitled to $1,000,000 payable upon termination, and she will be entitled to severance equal to 12 months compensation and benefits. The Company has also agreed to indemnify Ms. Tran against any liability or damages incurred within the scope of her employment. During the periods ended September 30, 2020 and 2019, salaries paid to Van Thuy Tran under this agreement totated $38,000 and $38,000. |
Nature of Business and Summar_2
Nature of Business and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
The Company | The Company Veritec, Inc. (Veritec) formed in the State of Nevada on September 8, 1982. Veritec’s wholly-owned subsidiaries include Veritec Financial Systems, Inc., Tangible Payment Systems, Inc., and Public Bell, Inc. (collectively the “Company”). |
Nature of Business | Nature of Business Veritec is primarily engaged in the development, sales, and licensing of products and providing services related to its mobile banking solutions. As a Cardholder Independent Sales Organization, Veritec is able to promote and sell Visa-branded card programs. As a Third-Party Servicer, Veritec provides back-end cardholder transaction processing services for Visa-branded card programs on behalf of its sponsoring bank. Veritec 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. Veritec has had agreements with various banks in the past and is currently seeking a bank to sponsor its Prepaid Card programs. |
COVID-19 Considerations | COVID-19 Considerations The Company is subject to risks and uncertainties as a result of the COVID-19 pandemic. The extent of the impact of the COVID-19 pandemic on the Company’s business is highly uncertain and difficult to predict, as the responses that the Company, other businesses and governments are taking continue to evolve. Furthermore, capital markets and economies worldwide have also been negatively impacted by the COVID-19 pandemic, and it is possible that the COVID-19 pandemic could cause a local, national and/or global economic recession. Policymakers around the globe have responded with fiscal policy actions to support the economy as a whole, but it is presently unknown whether and to what extent further fiscal actions will continue. The magnitude and overall effectiveness of these actions remain uncertain. The Company believes that its Mobile Banking revenues have been negatively affected due to the reduction in customer spending, which negatively impacts the amount of fees earned by the Company from its customers. The Company is also currently experiencing a decline in revenues earned under the management services agreement with The Matthews Group, as The Matthews Group’s customer orders have been negatively impacted by the effects of COVID-19. The severity of the impact of the COVID-19 pandemic on the Company’s business will continue to depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on the Company’s customers, service providers and suppliers, all of which are uncertain and cannot be predicted. As of the date of issuance of the Company’s financial statements, the extent to which the COVID-19 pandemic may in the future materially impact the Company’s financial condition, liquidity or results of operations is uncertain. |
Basis of Presentation | Basis of Presentation The accompanying unaudited Condensed 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 period ended September 30, 2020, are not necessarily indicative of the results that may be expected for the year ending June 30, 2021. The Condensed Consolidated balance Sheet information as of June 30, 2020, was derived from the Company’s audited Consolidated Financial Statements as of and for the year ended June 30, 2020, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on September 15, 2020. These financial statements should be read in conjunction with that report. The accompanying Condensed Consolidated Financial Statements include the accounts of Veritec and its wholly-owned subsidiaries, Veritec Financial Systems, Inc., Tangible Payment Systems, Inc., and Public Bell, Inc. Inter-company transactions and balances were eliminated in consolidation. |
Going Concern | Going Concern The accompanying Condensed Consolidated Financial Statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. During the period ended September 30, 2020, the Company incurred a net loss of $325,000 and used cash in operating activities of $262,000, and on September 30, 2020, the Company had a working capital deficit of $6,174,000. In addition, as of September 30, 2020, the Company is delinquent in payment of $689,000 of its notes payable. These factors, among others, raise substantial doubt about our ability to continue as a going concern within one year of the date that the financial statements are issued. In addition, the Company’s independent registered public accounting firm, in its report on our June 30, 2020 financial statements, has raised substantial doubt about the Company’s ability to continue as a going concern. The Company’s financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. The Company believes it will require additional funds to continue its operations through fiscal 2021 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. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Those estimates and assumptions include estimates for reserves of uncollectible accounts, analysis of impairments of long-lived assets, accruals for potential liabilities, assumptions made in valuing stock instruments issued for services, and valuation of deferred tax assets. Actual results could differ from those estimates. |
Revenue Recognition | Revenue Recognition Revenues for the Company are classified into management fee revenue and mobile banking technology. The Company recognizes revenue in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers Mobile Banking Technology Revenue The Company, as a merchant payment processor and a distributor, recognizes revenue from transaction fees charged to 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. The Company has entered into certain long term agreements to provide application development and support. Some customers paid the agreement in full at signing and the Company recorded the receipt of payment as deferred revenue. The Company records revenue relating to these agreements on a pro-rata basis over the term of the agreement and reduces its deferred revenue balance accordingly. Other Revenue, Management Fee - Related Party On September 30, 2015, the Company sold all of its assets of its Barcode Technology, which was comprised solely of its intellectual property, to The Matthews Group (a related party, see Note 6). The Company subsequently entered into a management services agreement with The Matthews Group to manage all facets of the barcode technology operations through June 30, 2021. The Company earned a fee of 35% of all revenues billed up to September 30, 2020. The Company recognizes management fee revenue as services are performed. Disaggregation of Net Sales The following table shows the Company’s disaggregated net sales by product type: Period ended September 30, 2020 2019 Mobile banking technology revenue $ 24,000 $ 25,000 Other revenue, management fee - related party 56,000 129,000 Total revenue $ 80,000 $ 154,000 The following table shows the Company’s disaggregated net sales by customer type for our Mobile banking technology: Period ended September 30, 2020 2019 Medical $ 15,000 $ 15,000 Associations 3,000 3,000 Education 3,000 3,000 Other 3,000 4,000 Total revenue $ 24,000 $ 25,000 During the periods ended September 30, 2020 and 2019, all of the Company’s Mobile banking technology revenues were earned in the United States of America. Other revenue, management fee - related party revenue was $56,000 and $129,000 for the periods ended September 30, 2020 and 2019, respectively, and realized from our management services agreement with The Matthews Group, a related party, which requires us to manage The Matthews Group’s barcode technology operations. The Matthews Group’s barcode technology customers are primarily manufacturing companies located in China. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company determines the fair value of its assets and liabilities based on the exchange price in U.S. dollars that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company uses a fair value hierarchy with three levels of inputs, of which the first two are considered observable and the last unobservable, to measure fair value: • Level 1 — Quoted prices in active markets for identical assets or liabilities. • Level 2 — Inputs, other than Level 1, that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The carrying amounts of financial instruments such as cash, accounts receivable, and accounts payable and accrued liabilities, approximate the related fair values due to the short-term maturities of these instruments. The carrying values of notes payable approximate their fair values due to the fact that the interest rates on these obligations are based on prevailing market interest rates. |
Net Income (Loss) per Common Share | Net Income (Loss) per Common Share Basic earnings (loss) per share are computed by dividing the net income (loss) applicable to Common Stockholders by the weighted average number of shares of Common Stock outstanding during the year. Diluted earnings (loss) per share is computed by dividing the net income (loss) applicable to Common Stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are excluded from the computation as their effect is antidilutive. For the period ended September 30, 2020, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an anti-dilutive effect. For the period ending September 30, 2019, 1,130,000 shares were added to weighted average shares outstanding as they were considered dilutive. The remaining potentially dilutive shares from the Company’s Series H Preferred Stock, Convertible Notes Payable, and a portion of Options were antidilutive because their exercise prices and conversion prices were out of the money. As of September 30, 2020, and 2019, we excluded the outstanding securities summarized below, which entitle the holders thereof to acquire shares of common stock, from our calculation of earnings per share, as their effect would have been anti-dilutive. As of September 30, 2020 2019 Series H Preferred Stock 10,000 10,000 Convertible Notes Payable 22,986,104 20,683,005 Options 2,500,000 2,500,000 Total 25,496,104 23,006,700 |
Concentrations | Concentrations During the period ended September 30, 2020 and 2019, the Company had one customer, a related party, that represented 70% and 84% of our revenues, respectively. No other customer represented more than 10% of our revenues. |
Segments | Segments The Company operates in one segment, the mobile financial banking industry. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying condensed consolidated financial statements. |
Recent Accounting Pronouncements | Recently Issued Accounting Standards In June 2016, the FASB issued ASU No. 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments (“ASC 326”). The standard significantly changes how entities will measure credit losses for most financial assets, including accounts and notes receivables. The standard will replace today’s “incurred loss” approach with an “expected loss” model, under which companies will recognize allowances based on expected rather than incurred losses. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. As a small business filer, the standard will be effective for us for interim and annual reporting periods beginning after December 15, 2022. The Company is currently assessing the impact of adopting this standard on the Company’s financial statements and related disclosures. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future financial statements. |
Nature of Business and Summar_3
Nature of Business and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Disaggregated revenue | The following table shows the Company’s disaggregated net sales by product type: Period ended September 30, 2020 2019 Mobile banking technology revenue $ 24,000 $ 25,000 Other revenue, management fee - related party 56,000 129,000 Total revenue $ 80,000 $ 154,000 The following table shows the Company’s disaggregated net sales by customer type for our Mobile banking technology: Period ended September 30, 2020 2019 Medical $ 15,000 $ 15,000 Associations 3,000 3,000 Education 3,000 3,000 Other 3,000 4,000 Total revenue $ 24,000 $ 25,000 |
Summary of securities excluded from EPS calculation | As of September 30, 2020, and 2019, we excluded the outstanding securities summarized below, which entitle the holders thereof to acquire shares of common stock, from our calculation of earnings per share, as their effect would have been anti-dilutive. As of September 30, 2020 2019 Series H Preferred Stock 10,000 10,000 Convertible Notes Payable 22,986,104 20,683,005 Options 2,500,000 2,500,000 Total 25,496,104 23,006,700 |
Convertible Notes and Notes P_2
Convertible Notes and Notes Payable (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Convertible notes and notes payable - in default | Notes payable includes principal and accrued interest and consists of the following at September 30, 2020 and June 30, 2020: September 30, June 30, (a) Unsecured convertible notes ($19,000 and $18,000 in default) $ 60,000 $ 59,000 (b) Notes payable (in default) 427,000 423,000 (c) Notes payable (in default) 26,000 26,000 Total notes-third parties $ 513,000 $ 508,000 |
Convertible notes and notes payable- related party | Notes payable-related parties includes principal and accrued interest and consists of the following at September 30, 2020 and June 30, 2020: September 30, June 30, (a) Convertible notes-The Matthews Group $ 1,655,000 $ 1,560,000 (b) Notes payable-The Matthews Group 2,758,000 2,630,000 (c) Convertible notes-other related parties ($217,000 and $215,000 in default) 297,000 294,000 Total notes-related parties $ 4,710,000 $ 4,484,000 |
Stock Options (Tables)
Stock Options (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Stock Options | A summary of stock options as of September 30, 2020 is as follows: Number of Shares Weighted Average Exercise Price Outstanding at June 30, 2020 3,650,000 $ 0.06 Granted — — Forfeited — $ — Outstanding at September 30, 2020 3,650,000 $ 0.06 Exercisable at September 30, 2020 3,650,000 $ 0.06 |
Additional information regarding outstanding options | Additional information regarding options outstanding as of September 30, 2020, is as follows: Options Outstanding at September 30, 2020 Options Exercisable at September 30, 2020 Range of Exercise Price Number of Shares Outstanding Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Number of Shares Exercisable Weighted Average Exercise Price $ 0.03 1,150,000 4.23 $ 0.03 1,150,000 $ 0.03 $ 0.08 2,500,000 1.36 $ 0.08 2,500,000 $ 0.08 3,650,000 3,650,000 |
Nature of Business and Summar_4
Nature of Business and Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Revenue | $ 80,000 | $ 154,000 |
Mobile banking technology revenue | ||
Revenue | 24,000 | 25,000 |
Other revenue, management fee - related party | ||
Revenue | $ 56,000 | $ 129,000 |
Nature of Business and Summar_5
Nature of Business and Summary of Significant Accounting Policies - Disaggregated net sales by customer type (Details) - USD ($) | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Revenue | $ 24,000 | $ 25,000 |
Medical | ||
Revenue | 15,000 | 15,000 |
Associations | ||
Revenue | 3,000 | 3,000 |
Education | ||
Revenue | 3,000 | 3,000 |
Other | ||
Revenue | $ 3,000 | $ 4,000 |
Nature of Business and Summar_6
Nature of Business and Summary of Significant Accounting Policies - Summarized outstanding securities (Details) - shares | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Total | 25,496,104 | 23,006,700 |
Series H Preferred Stock [Member] | ||
Total | 10,000 | 10,000 |
Convertible Notes Payable [Member] | ||
Total | 22,986,104 | 20,683,005 |
Options [Member] | ||
Total | 2,500,000 | 2,500,000 |
Nature of Business and Summar_7
Nature of Business and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Other revenue related party | $ 56,000 | $ 129,000 |
Net loss | (325,000) | 30,000 |
Cash used in operating activities | (262,000) | $ (15,000) |
Working capital deficit | (6,174,000) | |
Notes payable in default | $ 689,000 | |
One customer [Member] | ||
Sales percentage from major customers | 70.00% | 84.00% |
Contingent Earnout Liability (D
Contingent Earnout Liability (Details Narrative) - Tangible Payments LLC | 1 Months Ended |
Sep. 30, 2014USD ($) | |
Earnout Payment | $ 155,000 |
Equity investments | $ 1,300,000 |
Convertible Notes and Notes P_3
Convertible Notes and Notes Payable - Convertible notes and notes payable in default (Details) - USD ($) | Sep. 30, 2020 | Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |||
Unsecured convertible notes - in default | [1] | $ 60,000 | $ 59,000 |
Notes payable - (in default) | [2] | 427,000 | 423,000 |
Notes payable (in default) | [3] | 26,000 | 26,000 |
Total notes - third parties | $ 513,000 | $ 508,000 | |
[1] | (a) The notes are unsecured, convertible into common stock at amounts ranging from $0.08 to $0.30 per share, bear interest at rates ranging from 5% to 8% per annum, were due through 2011 and are in default or due on demand. | ||
[2] | (b) The notes are either secured by the Companys intellectual property or unsecured and bear interest ranging from 6.5% to 10% per annum, were due in 2012, and are in default. | ||
[3] | (c) The notes are unsecured and bear interest of 4% per annum and due on March 17, 2020. |
Convertible Notes and Notes P_4
Convertible Notes and Notes Payable - Convertible notes and notes payable related party (Details) - USD ($) | Sep. 30, 2020 | Jun. 30, 2020 | |
Notes Payable Related Party | $ 4,710,000 | $ 4,484,000 | |
The Matthews Group | |||
Convertible Notes, Related Party | [1] | 1,655,000 | 1,560,000 |
Notes Payable Related Party | [2] | 2,758,000 | 2,630,000 |
Other | |||
Convertible Notes, Related Party | [3] | $ 297,000 | $ 294,000 |
[1] | (a) The notes are unsecured, convertible into common stock at $0.08 per share, bear interest at rates ranging from 8% to 10% per annum, and are due on demand. | ||
[2] | (b) The notes are unsecured, accrue interest at 10% per annum, and are due on demand. The notes were issued relating to a management services agreement with The Matthews Group (see Note 6) dated September 30, 2015. At June 30, 2020, notes due to The Matthews Group totaled $2,630,000. During the period ended September 30, 2020, $72,000 of notes payable were issued and interest of $56,000 was added to principal, resulting in a balance owed of $2,758,000 at September 30, 2020. | ||
[3] | (c) The notes are due to a current and a former director, are unsecured, convertible into common stock at per share amounts ranging from $0.10 to $0.30, and bear interest at rates ranging from 8% to 10% per annum. |
Convertible Notes and Notes P_5
Convertible Notes and Notes Payable (Details Narrative) - USD ($) | 3 Months Ended | |
Sep. 30, 2020 | Jun. 30, 2020 | |
The Matthews Group | ||
Interest rate | 10.00% | |
Minimum [Member] | The Matthews Group | ||
Interest rate | 8.00% | |
Maximum [Member] | The Matthews Group | ||
Interest rate | 10.00% | |
Unsecured convertible notes [Member] | ||
Conversion price | $ 0.30 | |
Convertible debts | $ 600,000 | $ 59,000 |
Accrued interest | 1,000 | |
Notes in Default | 19,000 | 18,000 |
Balance due on demand | $ 41,000 | |
Shares issued upon conversion | 61,952 | |
Unsecured convertible notes [Member] | Minimum [Member] | ||
Conversion price | $ 0.08 | |
Interest rate | 5.00% | |
Unsecured convertible notes [Member] | Maximum [Member] | ||
Conversion price | $ 0.30 | |
Interest rate | 8.00% | |
Unsecured convertible note [Member] | ||
Conversion price | $ 0.08 | |
Shares issued upon conversion | 516,963 | |
Notes Payable (In Default) [Member] | ||
Notes payable | $ 427,000 | 423,000 |
Accrued interest | 4,000 | |
Notes Payable (In Default) [Member] | Minimum [Member] | ||
Interest rate | 6.50% | |
Notes Payable (In Default) [Member] | Maximum [Member] | ||
Interest rate | 10.00% | |
Secured Notes [Member] | ||
Notes payable | $ 369,000 | |
Unsecured Notes [Member] | ||
Notes payable | 58,000 | |
Notes Payable (In Default) [Member] | ||
Notes payable | $ 26,000 | 26,000 |
Convertible notes [Member] | The Matthews Group | ||
Conversion price | $ 0.08 | |
Convertible debts | $ 1,655,000 | 1,560,000 |
Accrued interest | 28,000 | |
Shares issued upon conversion | 20,684,433 | |
Notes issued | $ 67,000 | |
Convertible notes [Member] | Other | ||
Conversion price | $ 0.30 | |
Convertible debts | $ 297,000 | 294,000 |
Accrued interest | 3,000 | |
Notes in Default | 217,000 | |
Balance due on demand | $ 80,000 | |
Shares issued upon conversion | 724,581 | |
Convertible notes [Member] | Minimum [Member] | Other | ||
Conversion price | $ 0.08 | |
Interest rate | 8.00% | |
Convertible notes [Member] | Maximum [Member] | Other | ||
Conversion price | $ 0.30 | |
Interest rate | 10.00% | |
Notes Payable [Member] | The Matthews Group | ||
Interest rate | 10.00% | |
Notes payable | $ 2,758,000 | 2,630,000 |
Accrued interest | $ 56,000 | |
Notes issued | $ 72,000 | |
Convertible note [Member] | Other | ||
Conversion price | $ 0.08 | |
Balance due on demand | $ 80,000 | |
Shares issued upon conversion | 998,175 |
Stockholders Deficiency (Detail
Stockholders Deficiency (Details Narrative) - USD ($) | Sep. 30, 2020 | Jun. 30, 2020 |
Equity [Abstract] | ||
Common stock to be issued | 145,000 | 145,000 |
Common stock to be issued, value | $ 12,000 | $ 12,000 |
Stock Options - Summary of Stoc
Stock Options - Summary of Stock Options (Details) | 3 Months Ended |
Sep. 30, 2020$ / sharesshares | |
Share-based Payment Arrangement [Abstract] | |
Number of Shares outstanding at beginning | shares | 3,650,000 |
Options Granted | shares | 0 |
Options Forfeited | shares | 0 |
Number of Shares outstanding at end | shares | 3,650,000 |
Exercisable at end | shares | 3,650,000 |
Beginning weighted-average exercise price; outstanding | $ / shares | $ 0.06 |
Options granted, weighted average exercise price | $ / shares | 0 |
Options Forfeited, weighted average exercise price | $ / shares | 0 |
Ending weighted-average exercise price; outstanding | $ / shares | 0.06 |
Weighted-average exercise price; exercisable | $ / shares | $ 0.06 |
Stock Options - Additional info
Stock Options - Additional information regarding outstanding options (Details) - $ / shares | 3 Months Ended | |
Sep. 30, 2020 | Jun. 30, 2020 | |
Options outstanding, shares | 3,650,000 | 3,650,000 |
Weighted average exercise price | $ 0.06 | $ 0.06 |
Options excercisable | 3,650,000 | |
Options exercisable, weighted average exercise price | $ 0.06 | |
$0.03 per share | ||
Options outstanding, shares | 1,150,000 | |
Weighted average remaining contractual life | 4 years 2 months 23 days | |
Weighted average exercise price | $ 0.03 | |
Options excercisable | 1,150,000 | |
Options exercisable, weighted average exercise price | $ 0.03 | |
$0.08 per share | ||
Options outstanding, shares | 2,500,000 | |
Weighted average remaining contractual life | 1 year 4 months 9 days | |
Weighted average exercise price | $ 0.08 | |
Options excercisable | 2,500,000 | |
Options exercisable, weighted average exercise price | $ 0.08 |
Stock Options (Details Narrativ
Stock Options (Details Narrative) - USD ($) | Sep. 30, 2020 | Jun. 30, 2020 |
Share-based Payment Arrangement [Abstract] | ||
Outstanding unvested options | $ 0 | |
Options outstanding intrinsic value | 12,000 | $ 12,000 |
Options exercisable intrinsic value | $ 12,000 | $ 12,000 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) | 3 Months Ended | 8 Months Ended | 49 Months Ended | |||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | May 31, 2017 | Jun. 30, 2021 | Jun. 30, 2020USD ($) | ||
Managament fee, percent of revenue | 0.20 | 0.35 | ||||
Other revenue, related party | $ 56,000 | $ 129,000 | ||||
Notes Payable Related Party | 4,710,000 | $ 4,484,000 | ||||
Proceeds from notes payable - related party | 72,000 | 104,000 | ||||
The Matthews Group | ||||||
Notes Payable Related Party | [1] | $ 2,758,000 | 2,630,000 | |||
Unsecured related party note, interest | 10.00% | |||||
Tran [Member] | ||||||
Ownership of TMG | 50.00% | |||||
Larry Johanns | ||||||
Ownership of TMG | 50.00% | |||||
Chief Executive Officer [Member] | ||||||
Advances due to related party | $ 96,000 | $ 96,000 | ||||
Rental Payments | $ 80,000 | $ 13,000 | ||||
[1] | (b) The notes are unsecured, accrue interest at 10% per annum, and are due on demand. The notes were issued relating to a management services agreement with The Matthews Group (see Note 6) dated September 30, 2015. At June 30, 2020, notes due to The Matthews Group totaled $2,630,000. During the period ended September 30, 2020, $72,000 of notes payable were issued and interest of $56,000 was added to principal, resulting in a balance owed of $2,758,000 at September 30, 2020. |
Legal Proceedings (Details Narr
Legal Proceedings (Details Narrative) | Sep. 21, 2016USD ($)shares |
Commitments and Contingencies | |
Convertible note payable relinquished | $ | $ 365,000 |
Shares to be returned | shares | 500,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | 3 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 05, 2008 | |
Incentive compensation plan percentage | 10.00% | ||
Incentive Compensation Bonus, Minimum Threshold | $ 3,000,000 | ||
Salaries paid | $ 38,000 | $ 38,000 | |
Chief Executive Officer [Member] | |||
Annual base salary | $ 150,000 |