SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K/A
AMENDMENT TO
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) February 13, 2002
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Veritec Inc.
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(Exact Name of Registrant as Specified in Charter)
Nevada 000-15113 95-3954373
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(State or Other Jurisdiction of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
9400 Golden Valley Road, Golden Valley, MN 55427
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code 763.253.2670
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(Former Name or Former Address, if Changed Since Last Report)
1
Item 5. Other Events.
On April 16, 2002, Veritec, Inc. (the "Company") filed a Form 8-K
disclosing that on January 30, 2002, the Company and The Matthews Group LLC
formed Veritec Iconix Ventures, Inc. ("VIVI"), and that on February 13, 2002,
VIVI subsequently purchased 100% of the outstanding equity securities of Iconix,
Inc., a Japanese corporation. This Form 8-K/A amends and supplements such
original filing to include financial information required by Items 7(a) and (b)
of Form 8-K. Accordingly, Item 7 of such Form 8-K is amended as set forth
herein.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of VIVI
The financial statements for VIVI were prepared by a Japanese
accounting firm in accordance with generally accepted accounting principles used
in Japan. The Company has reviewed the VIVI financial statements and determined
that, with respect to such financial statements, there are no material
variations between the accounting principles, practices and methods used in
Japan and those used in the United States of America that would require any
reconciling items necessary to bring such financial statements into compliance
with accounting principles generally accepted in the United States of America.
2
Independent Auditor's Report
To the Board of Directors and Stockholders of Veritec Iconix Ventures Inc.
We have examined the accompanying balance sheets of Veritec Iconix Ventures Inc.
as of June 30, 2002 and 2001, and the related statements of income, cash flows,
and stockholders' equity for the years then ended, all expressed in Japanese
yen. Our examinations were made in accordance with generally accepted auditing
standards in Japan and, accordingly, included such tests of the accounting
records and such other auditing procedures, as we considered necessary in the
circumstances.
In our opinion, the financial statements, referred to above, present fairly the
financial position of Veritec Iconix Ventures Inc. as of June 30, 2002 and 2001,
and the results of its operations and its cash flows for the years then ended,
in conformity with generally accepted accounting principles in Japan applied on
a consistent basis.
The amounts expressed in U.S. dollars have been translated on the basis set out
in Note ACCOUNTING PRINCIPLE of the Notes to the financial statements.
Tokai & Co.
Nagoya, Japan
February 25, 2003
3
VERITEC ICONIX VENTURES INC.
BALANCE SHEET
June 30, 2002
ASSETS
(Y)/$119.50 (Y)/$119.50
I. Current assets 2001.06.30 2002.06.30
-------- --------
Cash and cash equivalents 163,048 157,092
Notes receivables, net 201,728 105,314
Receivables, net 267,918 129,892
Inventories 41,161 24,439
Work in process 70,467 110,869
Prepaid expenses 17,760 18,463
Other current assets 18,937 4,423
Less - Allowance for doubtful receivables (4,247) (3,885)
-------- --------
Total current assets 776,772 546,607
-------- --------
II. Fixed Assets
Tangible fixed assets
Autos and trucks 29,555 29,555
Less - accumulated depreciation (23,024) (25,106)
Tools, dies, furniture and fixtures 10,149 10,149
Less - accumulated depreciation (8,111) (8,627)
-------- --------
Total tangible fixed assets 8,569 5,971
-------- --------
Intangible fixed assets
Software 6,492 2,383
Telephone rights 77 237
-------- --------
Total intangible fixed assets 6,569 2,620
-------- --------
Investments and other assets
Investment in securities 12,552 12,552
Securities deposit 63,347 63,347
Other investments 38,499 48,020
Long-term prepaid expenses 16,936 20,501
Deferred development expenses -- --
-------- --------
Total investment and other assets 131,334 144,420
-------- --------
Total fixed assets 146,472 153,011
-------- --------
Total assets 923,244 699,618
======== ========
4
VERITEC ICONIX VENTURES INC.
BALANCE SHEET
June 30, 2002
LIABILITIES AND SHAREHOLDERS' EQUITY
(Y)/$119.50 (Y)/$119.50
LIABILITIES 2001.06.30 2002.06.30
-------- --------
I. Current Liabilities
Accounts payable 48,064 23,612
Current portion of long-term debt 80,033 80,033
Accrued liabilities 47,957 111,666
Advances received 8,368 653
Deposits received 10,062 10,802
Accrued consumption taxes 6,017 3,462
Accrued income taxes 1,507 572
Other current liabilities 869 21
-------- --------
Total current liabilities 202,877 230,821
-------- --------
II. Fixed liabilities
Long-term bank loans payable 285,917 205,883
Estimated retirement allowances 24,898 30,806
-------- --------
Total fixed liabilities 310,815 236,689
-------- --------
Total liabilities 513,692 467,510
-------- --------
SHAREHOLDERS' EQUITY
I. Common stock 170,711 170,711
II. Retained earnings
Voluntary earned surplus
General reserve 167,364 83,682
Unappropriated retained earnings 71,477 (22,285)
-------- --------
Total retained earnings 238,841 61,397
-------- --------
Total shareholders' equity 409,552 232,108
-------- --------
Total liabilities and shareholders' equity 923,244 699,618
======== ========
5
VERITEC ICONIX VENTURES INC.
STATEMENT OF INCOME
FOR THE YEAR ENDED JUNE 30, 2002
(Y)/$119.50 (Y)/$119.50
2001.06.30 2002.06.30
I. Net Sales 1,596,742 1,324,651
II. Cost of Sales 1,055,967 849,106
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Gross Profit 540,775 475,545
III. Selling, general and administrative expenses 675,085 661,382
---------- ----------
Operating loss 134,310 185,837
IV. Non-operating income 133,429 27,883
V. Non-operating expenses 11,551 14,028
---------- ----------
Ordinary loss 12,432 171,982
VI. Extraordinary profit 2,351 --
VII. Extraordinary loss -- --
---------- ----------
Net loss before income taxes 10,081 171,982
Provision for income taxes 1,507 571
---------- ----------
Net loss 11,588 172,553
Earnings brought forward from the previous term 83,065 66,585
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Unappropriated retained earnings 71,477 (105,968)
========== ==========
Transferred appropriations to retained earnings -- 83,683
Balance 71,477 (22,285)
========== ==========
6
NOTE TO FINANCIAL STATEMENTS
ACCOUNTING PRINCIPLES
The financial statements and accompanying notes are prepared in accordance with
generally accepted accounting principles in Japan. Such financial statements are
expressed in Japanese yen, and solely for the convenience of the reader, have
been translated into United States dollars at the rate of Yen 119.50 = U.S. $ 1,
the exchange rate prevailing on June 30, 2002. This translation should not be
construed as a representation that all the amounts shown could be converted into
U.S. dollars.
FOREIGN CURRENCIES
Assets and liabilities recorded in foreign currencies are translated at the
exchange rate on date. Translation adjustments resulting from this process are
charged or credited to other income. Revenue and expenses are translated at
average rates of exchange prevailing during the three months.
REVENUE RECOGNITION
Revenue from software and products is recorded when the software and products
has been inspected. Revenue from other products is recorded when the company
ship products.
ADVERTISING
Advertising costs are expensed as incurred. Advertising expense was $ 8,990 in
2002.
RESEARCH AND DEVELOPMENT
Research and development costs are expensed as incurred.
INVENTORY
Inventory are stated at cost determined on a specific project basis. Selling,
general and administrative expenses are excluded from such costs.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Notes and accounts receivable are valued by providing the maximum amount for
possible losses in respect of doubtful accounts, which could be charged to
income under the corporate income tax law in Japan.
MARKETABLE SECURITIES AND INVESTMENTS IN SECURITIES
Securities that have quoted market prices are valued at their cost or at their
listed stock exchange price at the end of fiscal year, whichever is the lower.
Shares that are not listed or quoted in any market are carried at cost, adjusted
for any substantial and non-recoverable diminution in value.
7
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost and depreciated using the declining
balance method over the estimated useful lives of the assets. Computer software
developed or obtained for internal use is depreciated using the straight-line
method over the estimated life.
INCOME TAXES
The provision for income taxes is based on income for financial statement
purposes. No tax effect is recorded for timing differences in the recognition of
certain revenue and expenses between tax and financial reporting.
CONSUMPTION TAX
The consumption tax rate, with minor exceptions, for all taxable goods and
services is 5 percent. Consumption tax payable or receivable is determined based
on consumption taxes levied on operating revenues offset by consumption taxes
directly incurred by the company when purchasing goods and services.
LIABILITY FOR SEVERANCE PAYMENTS
The provision for severance payments is calculated to state the liability which
would be required if all employees were to retire voluntarily at the balance
sheet date.
LEASES
The company leases one equipment under five years non-cancelable lease
arrangement. At the end of the aforementioned lease terms, the Company has an
option to renew such lease agreement at far reduced lease charges. The leases
are accounted for as operating leases.
STATEMENTS OF CASH FLOWS
For the purpose of the Statements of Cash Flows, cash and cash equivalents
include highly liquid investments with an original maturity of three months or
less to be cash equivalents
RELATED PARTY TRANSACTIONS
The account balance and transactions with parent company are as follows
Yen Dollars
Account balance at June 30:
Other liability Yen 2,484 $ 20.00
The company received $ 8,000.00 from parent company and made remittance $
7,980.00 to Taiwan company as a downpayment of development cost.
8
Yen Dollars
Transactions for the three months
in the period ended June 30, 2002.
Non operating income Yen 1,440,720 $ 11,600.00
CONTINGENT LIABILITIES
Contingent liabilities at June 30, 2002 were as follows:
Yen Dollars
Notes receivable discounted Yen 24,430,500 $204,439.33
PLEDGED ASSETS
At June 30, 2002 Time deposit were pledged as collateral for guarantees of
contract.
Yen Dollars
Time Deposit Yen 1,000,000 $ 8,368.20
9
Independent Auditor's Report
To the Board of Directors and Stockholders of Veritec Iconix Ventures Inc.
We have examined the accompanying balance sheets of Veritec Iconix Ventures Inc.
as of June 30, 2001 and 2000, and the related statement of income, cash flows,
and stockholders' equity for the year ended June 30, 2001, all expressed in
Japanese yen. Our examinations were made in accordance with generally accepted
auditing standards in Japan and, accordingly, included such tests of the
accounting records and such other auditing procedures, as we considered
necessary in the circumstances.
In our opinion, the financial statements, referred to above, present fairly the
financial position of Veritec Iconix Ventures Inc. as of June 30, 2001 and 2000,
and the results of its operations and its cash flows for the year ended June 30,
2001, in conformity with generally accepted accounting principles in Japan
applied on a consistent basis.
The amounts expressed in U.S. dollars have been translated on the basis set out
in Note ACCOUNTING PRINCIPLE of the Notes to the financial statements.
Tokai & Co.
Nagoya, Japan
February 25, 2003
10
VERITEC ICONIX VENTURES INC.
BALANCE SHEET
June 30. 2001
ASSETS
(Y)/$124.60 (Y)/$124.60
I. Current assets 2000.06.30 2001.06.30
Cash and cash equivalents 116,903 156,374
Notes receivables, net 107,825 193,472
Receivables, net 187,794 256,952
Inventories 53,046 39,476
Work in process 43,507 67,583
Prepaid expenses 14,004 17,033
Other current assets 15,525 18,161
Less - Allowance for doubtful receivables (2,850) (4,073)
-------- --------
Total current assets 535,754 744,978
-------- --------
II. Fixed Assets
Tangible fixed assets
Autos and trucks 28,345 28,345
Less - accumulated depreciation (19,147) (22,081)
Tools, dies, furniture and fixtures 7,994 9,734
Less - accumulated depreciation (7,594) (7,779)
-------- --------
Total tangible fixed assets 9,598 8,219
-------- --------
Intangible fixed assets
Software 10,423 6,226
Telephone rights 74 74
-------- --------
Total intangible fixed assets 10,497 6,300
-------- --------
Investments and other assets
Investment in securities 12,039 12,039
Securities deposit 60,273 60,754
Other investments 31,403 36,923
Long-term prepaid expenses 12,823 16,242
Deferred development expenses -- --
-------- --------
Total investment and other assets 116,538 125,958
-------- --------
Total fixed assets 136,633 140,477
-------- --------
Total assets 672,387 885,455
======== ========
11
VERITEC ICONIX VENTURES INC.
BALANCE SHEET
June 30, 2001
LIABILITIES AND SHAREHOLDERS' EQUITY
(Y)/$124.60 (Y)/$124.60
LIABILITIES 2000.06.30 2001.06.30
I. Current Liabilities
Accounts payable 21,684 46,097
Current portion of long-term debt 28,604 76,758
Accrued liabilities 39,431 45,994
Advances received -- 8,026
Deposits received 6,401 9,650
Accrued consumption taxes 6,713 5,770
Accrued income taxes -- 1,445
Other current liabilities -- 833
-------- --------
Total current liabilities 102,833 194,573
-------- --------
II. Fixed liabilities
Long-term bank loans payable 136,284 274,214
Estimated retirement allowances 17,459 23,879
-------- --------
Total fixed liabilities 153,743 298,093
-------- --------
Total liabilities 256,576 492,666
-------- --------
SHAREHOLDERS' EQUITY
I. Common stock 163,724 163,724
II. Retained earnings
Voluntary earned surplus
General reserve 160,514 160,514
Unappropriated retained earnings 91,573 68,551
-------- --------
Total retained earnings 252,087 229,065
-------- --------
Total shareholders' equity 415,811 392,789
-------- --------
Total liabilities and shareholders' equity 672,387 885,455
======== ========
12
VERITEC ICONIX VENTURES INC.
STATEMENT OF INCOME
FOR THE YEAR ENDED JUNE 30, 2001
(Y)/$124.60
2001.06.30
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I. Net Sales 1,531,386
II. Cost of Sales 1,012,746
----------
Gross Profit 518,640
III. Selling, general and administrative expenses 647,454
----------
Operating loss 128,814
IV. Non-operating income 127,967
V. Non-operating expenses 11,078
----------
Ordinary loss 11,925
VI. Extraordinary profit 2,255
VII. Extraordinary loss --
----------
Net loss before income taxes 9,670
Provision for income taxes 1,445
----------
Net loss 11,115
Earnings brought forward from the previous term 79,666
----------
Unappropriated retained earnings 68,551
==========
13
NOTE TO FINANCIAL STATEMENTS
ACCOUNTING PRINCIPLES
The financial statements and accompanying notes are prepared in accordance with
generally accepted accounting principles in Japan. Such financial statements are
expressed in Japanese yen, and solely for the convenience of the reader, have
been translated into United States dollars at the rate of Yen 124.60 = U.S. $ 1,
the exchange rate prevailing on June 30, 2001. This translation should not be
construed as a representation that all the amounts shown could be converted into
U.S. dollars.
FOREIGN CURRENCIES
Assets and liabilities recorded in foreign currencies are translated at the
exchange rate on date. Translation adjustments resulting from this process are
charged or credited to other income. Revenue and expenses are translated at
average rates of exchange prevailing during the three months.
REVENUE RECOGNITION
Revenue from software and products is recorded when the software and products
has been inspected. Revenue from other products is recorded when the company
ship products.
ADVERTISING
Advertising costs are expensed as incurred. Advertising expense was $ 6,715 in
2001.
RESEARCH AND DEVELOPMENT
Research and development costs are expensed as incurred.
INVENTORY
Inventory are stated at cost determined on a specific project basis. Selling,
general and administrative expenses are excluded from such costs.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Notes and accounts receivable are valued by providing the maximum amount for
possible losses in respect of doubtful accounts which could be charged to income
under the corporate income tax law in Japan.
MARKETABLE SECURITIES AND INVESTMENTS IN SECURITIES
Securities which have quoted market prices are valued at their cost or at their
listed stock exchange price at the end of fiscal year, whichever is the lower.
Shares which are not listed or quoted in any market are carried at cost,
adjusted for any substantial and non-recoverable diminution in value.
14
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost and depreciated using the declining
balance method over the estimated useful lives of the assets. Computer software
developed or obtained for internal use is depreciated using the straight-line
method over the estimated life.
INCOME TAXES
The provision for income taxes is based on income for financial statement
purposes. No tax effect is recorded for timing differences in the recognition of
certain revenue and expenses between tax and financial reporting.
CONSUMPTION TAX
The consumption tax rate, with minor exceptions, for all taxable goods and
services is 5 percent. Consumption tax payable or receivable is determined based
on consumption taxes levied on operating revenues offset by consumption taxes
directly incurred by the company when purchasing goods and services.
LIABILITY FOR SEVERANCE PAYMENTS
The provision for severance payments is calculated to state the liability which
would be required if all employees were to retire voluntarily at the balance
sheet date.
LEASES
The company leases one equipment under five years non-cancelable lease
arrangement. At the end of the aforementioned lease terms, the Company has an
option to renew such lease agreement at far reduced lease charges. The leases
are accounted for as operating leases.
STATEMENTS OF CASH FLOWS
For the purpose of the Statements of Cash Flows, cash and cash equivalents
include highly liquid investments with an original maturity of three months or
less to be cash equivalents.
CONTINGENT LIABILITIES
Contingent liabilities at June 30, 2002 were as follows:
Yen Dollars
Notes receivable discounted Yen 28,461,415 $ 228,422.27
PLEDGED ASSETS
At June 30, 2002 Time deposit were pledged as collateral for guarantees of
contract.
Yen Dollars
Time Deposit Yen 1,000,000 $ 8,025.68
15
(b) Pro Forma Financial Statements
The pro forma financial statements below include financial information
derived from financial statements for VIVI that were prepared by a Japanese
accounting firm in accordance with generally accepted accounting principles used
in Japan. The Company has reviewed the VIVI financial statements and determined
that, with respect to such financial statements, there are no material
variations between the accounting principles, practices and methods used in
Japan and those used in the United States of America that would require any
reconciling items necessary to bring such financial statements into compliance
with accounting principles generally accepted in the United States of America.
VERITEC, INC.
PROFORMA BALANCE SHEET
JUNE 30, 2002
ASSETS
Current Assets:
Cash $ 158,352
Trade receivables, net of allowance for doubtful accounts 306,476
Inventories 121,777
Prepaid expenses 23,114
---------
Total current assets 609,719
---------
Fixed assets: 95,098
Less accumulated depreciation 77,893
---------
Fixed assets, at book value 17,205
---------
Other assets:
Software costs, net of accumulated amortization 93,333
Security deposits and long-term prepaid expenses 67,268
Other investments 39,792
---------
Total other assets 200,393
---------
Total assets $ 827,317
=========
16
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Notes payable - related parties $ 100,000
Convertible note - related party 397,374
Current maturities of long-term debt 103,566
Bank overdraft 35,523
Accounts payable 79,011
Accrued expenses 267,514
Customer deposits 11,455
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Total current liabilities 994,443
------------
Long-term obligations 244,852
------------
Total liabilities 1,239,295
------------
Prepayment on stock and subscription
receivable - related party 381,956
------------
Minority interest on investment in Iconix 76,588
------------
Stockholders' equity (deficit):
Preferred stock 366,007
Common stock, par value $.01, 69,469
Subscription receivable - related party (989,417)
Additional paid in capital 11,795,109
Accumulated deficit (12,111,690)
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Stockholders' equity (deficit) (870,522)
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Total liabilities and
stockholders' equity (deficit) $ 827,317
============
17
VERITEC, INC.
PROFORMA STATEMENTS OF OPERATIONS
YEARS ENDED JUNE 30, 2002 AND 2001
June 30,
---------------------------
2002 2001
----------- -----------
Total revenue $ 1,889,419 $ 1,696,464
Cost of sales 849,106 1,031,678
----------- -----------
Gross profit 1,040,313 664,786
Selling, general, administrative
and amortization expenses 1,546,582 1,485,132
----------- -----------
Income (loss) from operations (506,269) (820,346)
Other income (expense) 151,941 76,899
----------- -----------
Net income before income taxes (354,328) (743,447)
Income tax expense 871 1,507
----------- -----------
Net income (loss) $ (355,199) $ (744,954)
=========== ===========
Earnings (loss) per common share $ (0.05) $ (0.11)
=========== ===========
STATEMENT OF COMPREHENSIVE INCOME
Net income (loss) $ (355,199) $ (744,954)
Foreign currency translation adjustment -- --
----------- -----------
Comprehensive income (loss) $ (355,199) $ (744,954)
=========== ===========
18
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 hereunto duly authorized.
VERITEC INC.
Date: June 25, 2003 By /s/ Van Thuy Tran
---------------------------
Van Thuy Tran
Its Chief Executive Officer
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2358639v2
EXHIBIT INDEX
23.1 Consent of Tokai & Co.
20