Know Labs (KNW) 10-Q 13 Feb 14 2014 Q1 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	3 Months Ended
	Dec. 31, 2013	Feb. 13, 2014
Document And Entity Information	'	'
Entity Registrant Name	'VISUALANT INC	'
Entity Central Index Key	'0001074828	'
Document Type	'10-Q	'
Document Period End Date	31-Dec-13	'
Amendment Flag	'false	'
Current Fiscal Year End Date	'--09-30	'
Is Entity a Well-known Seasoned Issuer?	'No	'
Is Entity a Voluntary Filer?	'No	'
Is Entity's Reporting Status Current?	'Yes	'
Entity Filer Category	'Smaller Reporting Company	'
Entity Common Stock, Shares Outstanding	'	165,263,674
Document Fiscal Period Focus	'Q1	'
Document Fiscal Year Focus	'2014	'

CONSOLIDATED_BALANCE_SHEETS

CONSOLIDATED BALANCE SHEETS (USD $)	Dec. 31, 2013	Sep. 30, 2013
ASSETS	'	'
Cash and cash equivalents	$51,553	$747,129
Accounts receivable, net of allowance of $40,750 and $40,750, respectively	602,965	1,007,074
Prepaid expenses	42,605	56,531
Inventories	510,069	600,790
Refundable tax assets	30,950	29,773
Total current assets	1,238,142	2,441,297
EQUIPMENT, NET	413,846	427,215
Intangible assets, net	686,074	770,882
Goodwill	983,645	983,645
Other assets	6,161	6,161
TOTAL ASSETS	3,327,868	4,629,200
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	'	'
Accounts payable - trade	2,120,691	2,301,149
Accounts payable - related parties	40,783	66,025
Accrued expenses	59,369	80,926
Accrued expenses - related parties	68,538	0
Deferred revenue	201,130	0
Derivative liability - warrants	4,171,135	4,184,000
Note payable - current portion of long term debt	244,965	753,129
Total current liabilities	6,906,611	7,385,229
Long term debt	1,276	1,894
COMMITMENTS AND CONTINGENCIES	'	'
STOCKHOLDERS' (DEFICIT) EQUITY:	'	'
Preferred stock - $0.001 par value, 50,000,000 shares authorized, no shares issued and outstanding	0	0
Common stock - $0.001 par value, 500,000,000 shares authorized, 165,263,674 and 165,263,674 shares issued and outstanding at 12/31/13 and 9/30/13, respectively	165,264	165,264
Additional paid in capital	17,589,071	17,565,568
Accumulated deficit	-21,399,592	-20,537,825
Total stockholders' deficit	-3,645,257	-2,806,993
Noncontrolling interest	65,238	49,070
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$3,327,868	$4,629,200

CONSOLIDATED_BALANCE_SHEETS_Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Dec. 31, 2013	Sep. 30, 2013	Sep. 30, 2012
CURRENT ASSETS:	'	'	'
Allowance for Accounts receivable	$40,750	$40,750	'
EQUITY (DEFICIT)	'	'	'
Preferred stock par value	$0.00	'	$0.00
Preferred stock shares authorized	50,000,000	'	50,000,000
Preferred stock shares issued	0	'	0
Preferred stock shares outstanding	0	'	0
Common stock par value	$0.00	'	$0.00
Common stock shares authorized	500,000,000	'	500,000,000
Common stock shares issued	165,263,674	165,263,674	90,992,954
Common stock shares outstanding	165,263,674	165,263,674	90,992,954

CONSOLIDATED_STATEMENTS_OF_OPE

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	3 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Income Statement [Abstract]	'	'
REVENUE	$1,877,089	$2,055,363
COST OF SALES	1,571,021	1,521,968
GROSS PROFIT	306,068	533,395
RESEARCH AND DEVELOPMENT EXPENSES	312,987	166,379
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	842,496	1,050,444
OPERATING LOSS	-849,415	-683,428
OTHER INCOME (EXPENSE)	'	'
Interest expense	-17,948	-40,265
Other income	7,722	12,870
Gain on change - derivative liability warrants	12,865	0
Total other income (expense)	2,639	-27,395
LOSS BEFORE INCOME TAXES	-846,776	-710,823
Income taxes - current benefit	-1,177	-9,887
NET LOSS	-845,599	-700,936
NONCONTROLLING INTEREST	16,168	6,683
NET LOSS ATTRIBUTABLE TO VISUALANT, INC. AND SUBSIDIARIES COMMON SHAREHOLDERS	($861,767)	($707,619)
Basic and diluted income (loss) per common share attributable to Visualant, Inc. and subsidiaries common shareholders-	'	'
Basic and diluted income (loss) per share	($0.01)	($0.01)
Weighted average shares of common stock outstanding- basic and diluted	165,263,674	93,401,103

CONSOLIDATED_STATEMENTS_OF_CAS

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	3 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
CASH FLOWS FROM OPERATING ACTIVITIES	'	'
Net loss	($845,599)	($700,936)
Depreciation and amortization	97,688	102,080
Issuance of capital stock for services and expenses	0	19,500
Issuance of capital stock for accrued liabilities	0	14,602
Stock based compensation	23,503	16,014
Gain on sale of assets	-1,111	-7,056
Gain on change - derivative liability warrants	-12,865	0
Provision for losses on accounts receivable	0	310
Changes in operating assets and liabilities	'	'
Accounts receivable	404,109	265,599
Prepaid expenses	13,926	71,784
Inventory	90,721	-366,116
Accounts payable - trade and accrued expenses	-158,719	255,653
Deferred revenue	201,130	-250,000
Income tax receivable	-1,177	19,429
CASH (USED IN) OPERATING ACTIVITIES	-188,394	-559,137
CASH FLOWS FROM INVESTING ACTIVITIES	'	'
Capital expenditures	0	-10,469
Proceeds from sale of equipment	1,600	7,849
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES:	1,600	-2,620
CASH FLOWS FROM FINANCING ACTIVITIES:	'	'
Payments on line of credit	-507,670	-50,694
Repayment of debt	0	-30,000
Proceeds from the issuance of common stock	0	99,972
Repayments of capital leases	-1,112	-3,292
Change in noncontrolling interest	0	6,683
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES	-508,782	22,669
NET INCREASE IN CASH AND CASH EQUIVALENTS	-695,576	-539,088
CASH AND CASH EQUIVALENTS, beginning of period	747,129	1,141,165
CASH AND CASH EQUIVALENTS, end of period	51,553	602,077
Supplemental disclosures of cash flow information:	'	'
Interest paid	12,525	14,470
Taxes paid	0	0
Non-cash investing and financing activities:	'	'
Debenture converted to common stock	$0	$100,000

1_ORGANIZATION

1. ORGANIZATION	3 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
1. ORGANIZATION	'
	Visualant, Inc. (the “Company” or “Visualant”) was incorporated under the laws of the State of Nevada on October 8, 1998 and currently has authorized common stock of 500,000,000 shares at $0.001 par value. On September 13, 2002, 50,000,000 shares of preferred stock with a par value of $0.001 were authorized by the shareholders.  There are no preferred shares issued and the terms have not been determined. The Company’s executive offices are located in Seattle, Washington.
	The Company has invented a way to shine light at a material (solid surface, liquid, or gas) and measure the amount of light that is reflected back. The pattern of this reflected light is compared to other patterns the Company has captured and this allows the Company to identify, detect, or diagnose materials that cannot be identified by the human eye. The Company refers to this pattern of reflected light as a ChromaID™. The Company designs ChromaID Scanner devices made with electronic, optical, and software parts to produce and capture the light.
	The Company’s first product, the ChromaID F12 Lab Kit, scans and identifies solid surfaces. The Company is marketing this product to customers who are considering licensing the technology. Target markets include, but are not limited to, plastic packing, semiconductors, pharmaceutical equipment manufacturers, medical waste, commercial paint manufacturers, process control companies, currency paper and ink manufacturers, security card, reader, and scanner manufacturers, food processing, and electronic gaming.
	Through our wholly owned subsidiary, TransTech Systems, Inc., based in Aurora, Oregon, the Company provides value added security and authentication solutions to corporate and government security and law enforcement markets throughout the United States.
	On November 11, 2013, the Company entered into a Services and License Agreement with Invention Development Management Company (“IDMC”), L.L.C., a Delaware limited liability company. IDMC is affiliated with Intellectual Ventures, which collaborates with inventors, partners with pioneering companies and invests both expertise and capital in the process of invention. The Company shipped twenty ChromaID F12 Lab Kits inventors in the IDMC network during December 2013.
	On June 10, 2013, the Company entered into a Purchase Agreement, Warrants, Registration Rights Agreement and Voting Agreement with Special Situations and forty other accredited investors pursuant to which we issued 52,300,000 shares of common stock at $0.10 per share for a total of $5,230,000, which amount includes the conversion of $500,000 in outstanding debt of the Company owed to one of its officers.  As part of the transaction which closed on June 14, 2013, the Company issued to the investors (i) five year Series A Warrants to purchase a total of 52,300,000 shares of common stock at $0.15 per share; and (ii) five year Series B Warrants to purchase a total of 52,300,000 shares of common stock at $0.20 per share. The transaction was entered into to strengthen our balance sheet, complete the purchase of our TransTech subsidiary, and provide working capital to support the rapid movement of our ChromaID technology into the marketplace.
	The Company’s Joint Development Agreement with Sumitomo Precision Products Co., Ltd., which focuses on the commercialization of the ChromaID™ technology expired December 31, 2013. The parties are currently defining their future commercial relationship. The Company has an License Agreement providing SPP with an exclusive license of the ChromaID™ technology in identified Asian territories. SPP is publicly traded in Japan and has operations in Japan, United States, China, United Kingdom, Canada and other parts of the world.
	To date, the Company been issued six patents by the United States Office of Patents and Trademarks.  See page 19 for more detailed information regarding the Company’s patents and business.

2_GOING_CONCERN

2. GOING CONCERN	3 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
2. GOING CONCERN	'
	The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company incurred net losses of $6,604,631 and $2,725,692 for the years ended September 30, 2013 and 2012, respectively. Our net cash used in operating activities was $3,503,580 for the year ended September 30, 2013.
	The Company anticipates that it will record losses from operations for the foreseeable future. As of December 31, 2013, our accumulated deficit was $21,399,592.  The Company has limited capital resources, and operations to date have been funded with the proceeds from private equity and debt financings and loans from Ronald P. Erickson, our Chief Executive Officer. These conditions raise substantial doubt about our ability to continue as a going concern. The audit report prepared by our independent registered public accounting firm relating to our financial statements for the year ended September 30, 2013 includes an explanatory paragraph expressing the substantial doubt about our ability to continue as a going concern.
	Continuation of the Company as a going concern is dependent upon obtaining additional working capital.  The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

3_SIGNIFICANT_ACCOUNTING_POLIC

3. SIGNIFICANT ACCOUNTING POLICIES: ADOPTION OF ACCOUNTING STANDARDS	3 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
3. SIGNIFICANT ACCOUNTING POLICIES: ADOPTION OF ACCOUNTING STANDARDS	'
	PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include the accounts of the Company and its wholly owned and majority-owned subsidiaries. Inter-Company items and transactions have been eliminated in consolidation.
	CASH AND CASH EQUIVALENTS - The Company classifies highly liquid temporary investments with an original maturity of three months or less when purchased as cash equivalents. The Company maintains cash balances at various financial institutions. Balances at US banks are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risk for cash on deposit.
	ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS - Accounts receivable consist primarily of amounts due to the Company from normal business activities. The Company maintains an allowance for doubtful accounts to reflect the expected non-collection of accounts receivable based on past collection history and specific risks identified within the portfolio. If the financial condition of the customers were to deteriorate resulting in an impairment of their ability to make payments, or if payments from customers are significantly delayed, additional allowances might be required.
	INVENTORIES - Inventories consist primarily of printers and consumable supplies, including ribbons and cards, badge accessories, capture devices, and access control components held for resale and are stated at the lower of cost or market on the first-in, first-out (“FIFO”) method.  Inventories are considered available for resale when drop shipped and invoiced directly to a customer from a vendor, or when physically received by TransTech at a warehouse location.  The company records a provision for excess and obsolete inventory whenever an impairment has been identified. There is a $10,000 reserve for impaired inventory as of December 31, 2013 and September 30, 2013.
	EQUIPMENT - Equipment consists of machinery, leasehold improvements, furniture and fixtures and software, which are stated at cost less accumulated depreciation and amortization. Depreciation is computed by the straight-line method over the estimated useful lives or lease period of the relevant asset, generally 2-10 years, except for leasehold improvements which are depreciated over 5-20 years.
	INTANGIBLE ASSETS / INTELLECTUAL PROPERTY – The Company amortizes the intangible assets and intellectual property acquired in connection with the acquisition of TransTech, over sixty months on a straight - line basis, which was the time frame that the management of the Company was able to project forward for future revenue, either under agreement or through expected continued business activities.  Intangible assets and intellectual property acquired from RATLab LLC and Javelin are recorded likewise. The Company performs annual assessments and has determined that no impairment is necessary.
	GOODWILL – Goodwill is the excess of cost of an acquired entity over the fair value of amounts assigned to assets acquired and liabilities assumed in a business combination. With the adoption of ASC 350, goodwill is not amortized, rather it is tested for impairment annually, and will be tested for impairment between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. Impairment testing for goodwill is done at a reporting unit level. Reporting units are one level below the business segment level, but are combined when reporting units within the same segment have similar economic characteristics. Under the criteria set forth by ASC 350, the Company has one reporting unit based on the current structure.  An impairment loss generally would be recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit.  The Company performs annual assessments and has determined that no impairment is necessary.
	LONG-LIVED ASSETS – The Company reviews its long-lived assets for impairment annually or when changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets under certain circumstances are reported at the lower of carrying amount or fair value. Assets to be disposed of and assets not expected to provide any future service potential to the Company are recorded at the lower of carrying amount or fair value (less the projected cost associated with selling the asset). To the extent carrying values exceed fair values, an impairment loss is recognized in operating results.
	FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS – ASC Topic 820, Fair Value Measurement and Disclosures, defines fair value as the exchange price 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.  This topic also establishes a fair value hierarchy, which requires classification based on observable and unobservable inputs when measuring fair value.  The fair value hierarchy distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs).  The hierarchy consists of three levels:
	Level 1 – Quoted prices in active markets for identical assets and liabilities;
	Level 2 – Inputs other than level one inputs that are either directly or indirectly observable; and
	Level 3 – Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.
	Derivative Instruments – Warrants with the June 2013 Private Placement
									Carrying
		Fair Value Measurements Using Inputs							Amount at
	Financial Instruments	Level 1			Level 2		Level 3		31-Dec-13
	Liabilities:
	Derivative Instruments - Warrants	$	-		$	3,661,000	$	-	$	3,661,000
	Total	$	-		$	3,661,000	$	-	$	3,661,000
	Liabilities measured at fair value on a recurring basis are summarized as follows:
		31-Dec-13
	Market price and estimated fair value of common stock:	$	0.09
	Exercise price	$	0.15-0.20
	Expected term (years)	3-5 years
	Divident yield		-
	Expected volatility		90	%
	Risk-free interest rate		0.7	%
	The risk-free rate of return reflects the interest rate for the United States Treasury Note with similar time-to-maturity to that of the warrants.
	The Company issued warrants to 104,600,000 shares of common stock in connection with the June 2013 Private Placement of 52,300,000 shares of common stock.  The strike price of these warrants is $0.15 to $0.20 per share.  These warrants were not issued with the intent of effectively hedging any future cash flow, fair value of any asset, liability or any net investment in a foreign operation.  These warrants were issued with a down-round provision whereby the exercise price would be adjusted downward in the event that additional shares of the Company’s common stock or securities exercisable, convertible or exchangeable for the Company’s common stock were issued at a price less than the exercise price.  Therefore, the fair value of these warrants were recorded as a liability in the consolidated balance sheet and are marked to market each reporting period until they are exercised or expire or otherwise extinguished.
	The proceeds from the Private Placement were allocated between the Common Shares and the Warrants issued in connection with the Private Placement based upon their estimated fair values as of the closing date at June 14, 2013, resulting in the aggregate amount of $2,494,710 to the Stockholders’ Equity and $2,735,290 to the warrant derivative.  During 2013, the Company recognized $1,448,710 of other expense resulting from the increase in the fair value of the warrant liability at September 30, 2013. During three months ended December 31, 2013, the Company recognized $523,000 of other income resulting from the decrease in the fair value of the warrant liability at December 31, 2013.
	Derivative Instruments – Warrant with the November 2013 IDMC Services and License Agreement
									Carrying
		Fair Value Measurements Using Inputs							Amount at
	Financial Instruments	Level 1			Level 2		Level 3		31-Dec-13
	Liabilities:
	Derivative Instruments - Warrants	$	-		$	510,135	$	-	$	510,135
	Total	$	-		$	510,135	$	-	$	510,135
	Liabilities measured at fair value on a recurring basis are summarized as follows:
		31-Dec-13
	Market price and estimated fair value of common stock:		0.07
	Exercise price		0.2
	Expected term (years)		5
	Divident yield		-
	Expected volatility		166	%
	Risk-free interest rate		0.7	%
	The risk-free rate of return reflects the interest rate for the United States Treasury Note with similar time-to-maturity to that of the warrants.
	The Company issued a warrant to purchase 14,575,286 shares of common stock as consideration for the exclusive IP license and application development services to IDMC signed on November 11, 2013. The warrant price of twenty cents ($0.20) per share expires November 10, 2018 and the per share price is subject to adjustment.  This warrant was not issued with the intent of effectively hedging any future cash flow, fair value of any asset, liability or any net investment in a foreign operation.  This warrant was issued with a down-round provision whereby the exercise price would be adjusted downward in the event that additional shares of the Company’s common stock or securities exercisable, convertible or exchangeable for the Company’s common stock were issued at a price less than the exercise price.  Therefore, the fair value of these warrants were recorded as a liability in the consolidated balance sheet and are marked to market each reporting period until they are exercised or expire or otherwise extinguished.
	During the three months ended December 31, 2013, the Company recognized $510,135 of other expense related to the IDMC warrant.
	The recorded value of other financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts receivable, other current assets, and accounts payable and accrued expenses approximate the fair value of the respective assets and liabilities at December 31, 2013 and September 30, 2013 based upon the short-term nature of the assets and liabilities.
	REVENUE RECOGNITION – TransTech revenue is derived from other products and services. Revenue is considered realized when the services have been provided to the customer, the work has been accepted by the customer and collectability is reasonably assured. Furthermore, if an actual measurement of revenue cannot be determined, we defer all revenue recognition until such time that an actual measurement can be determined. If during the course of a contract management determines that losses are expected to be incurred, such costs are charged to operations in the period such losses are determined. Revenues are deferred when cash has been received from the customer but the revenue has not been earned. The Sumitomo License fee was recorded as revenue over the life the Joint Development Agreement and was fully recorded as of May 31, 2013.
	STOCK BASED COMPENSATION - The Company has share-based compensation plans under which employees, consultants, suppliers and directors may be granted restricted stock, as well as options to purchase shares of Company common stock at the fair market value at the time of grant. Stock-based compensation cost is measured by the Company at the grant date, based on the fair value of the award, over the requisite service period. For options issued to employees, the Company recognizes stock compensation costs utilizing the fair value methodology over the related period of benefit.  Grants of stock options and stock to non-employees and other parties are accounted for in accordance with the ASC 505.
	INCOME TAXES - Income tax benefit is based on reported loss before income taxes. Deferred income taxes reflect the effect of temporary differences between asset and liability amounts that are recognized for financial reporting purposes and the amounts that are recognized for income tax purposes. These deferred taxes are measured by applying currently enacted tax laws where that company operates out of. The Company recognizes refundable and deferred assets to the extent that management has determined their realization. As of December 31, 2013 and September 30, 2013, the Company had refundable tax assets related to TransTech of $30,950 and $29,773, respectively.
	NET LOSS PER SHARE – Under the provisions of ASC 260, “Earnings Per Share,” basic loss per common share is computed by dividing net loss available to common shareholders by the weighted average number of shares of common stock outstanding for the periods presented. Diluted net loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would then share in the income of the Company, subject to anti-dilution limitations. The common stock equivalents have not been included as they are anti-dilutive. As of December 31, 2013, there were options outstanding for the purchase of 12,710,000 common shares, warrants for the purchase of 128,072,223 common shares which could potentially dilute future earnings per share As of December 31, 2012, there were options outstanding for the purchase of 5,920,000 common shares, warrants for the purchase of 3,369,050 common shares, and an undetermined number shares of common stock related to convertible debt, which could potentially dilute future earnings per share.
	DIVIDEND POLICY - The Company has never paid any cash dividends and intends, for the foreseeable future, to retain any future earnings for the development of our business. Our future dividend policy will be determined by the board of directors on the basis of various factors, including our results of operations, financial condition, capital requirements and investment opportunities.
	USE OF ESTIMATES - The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
	RECENT ACCOUNTING PRONOUNCEMENTS
	A variety of proposed or otherwise potential accounting standards are currently under study by standard setting organizations and various regulatory agencies. Due to the tentative and preliminary nature of those proposed standards, management has not determined whether implementation of such proposed standards would be material to our consolidated financial statements.

4_DEVELOPMENT_OF_CHROMAIDTM_TE

4. DEVELOPMENT OF CHROMAID(TM) TECHNOLOGY	3 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
4. DEVELOPMENT OF CHROMAID(TM) TECHNOLOGY	'
	The Company’s ChromaID™ Technology
	The Company has invented a way to project light at a material (solid surface, liquid, or gas) and measure the amount of light that is reflected back. The pattern of this reflected light is compared to other patterns the company has captured and this allows us to identify, detect, or diagnose materials that cannot be identified by the human eye. The Company refers to this pattern of reflected light as a ChromaID™. The Company designs ChromaID scanning devices made with electronic, optical, and software parts to produce and capture the light.
	The Company’s first product, the ChromaID F12 Lab Kit, scans and identifies solid surfaces. The Company is marketing this product to customers who are considering licensing the technology. Target markets include, but are not limited to, plastic packing, semiconductors, pharmaceutical equipment manufacturers, medical waste, commercial paint manufacturers, process control companies, currency paper and ink manufacturers, security card, reader, and scanner manufacturers, food processing, and electronic gaming.
	There is no current requirement for FDA or other government approval for the current applications of the Company’s ChromaID technology. Over time, as the Company explores the application of its ChromaID technology for medical diagnostics and other applications, the Company expects that there will be requirements for FDA and other government approvals before applications using the technology in medical and other regulated fields can enter the marketplace.
	The Company’s research and development expenses are as follows:
	Three months ended December 31, 2013- $312,987
	Year ended September 30, 2013- $1,169,281
	Year ended September 30, 2012-   $176,944
	The Company employs two individuals and utilizes contractors at the RATLab LLC and other suppliers for its research and development.
	The Company’s Patents
	On August 9, 2011, the Company was issued US Patent No. 7,996,173 B2 entitled “Method, Apparatus and Article to Facilitate Distributed Evaluation of Objects Using Electromagnetic Energy,” by the United States Office of Patents and Trademarks. The patent expires August 24, 2029.
	On December 13, 2011, the Company was issued US Patent No. 8,076,630 B2 entitled “System and Method of Evaluating an Object Using Electromagnetic Energy” by the United States Office of Patents and Trademarks. The patent expires November 7, 2028.
	On December 20, 2011, the Company was issued US Patent No. 8,081,304 B2 entitled “Method, Apparatus and Article to Facilitate Evaluation of Objects Using Electromagnetic Energy” by the United States Office of Patents and Trademarks. The patent expires July 28, 2030.
	On October 9, 2012, the Company was issued US Patent No. 8,285,510 B2 entitled “Method, Apparatus, and Article to Facilitate Distributed Evaluation of Objects Using Electromagnetic Energy” by the United States Office of Patents and Trademarks. The patent expires July 31, 2027.
	On February 5, 2013, the Company was issued US Patent No. 8,368,878 B2 entitled “Method, Apparatus and Article To Facilitate Evaluation of Objects Using Electromagnetic Energy by the United States Office of Patents and Trademarks. The patent expires July 31, 2027.
	On November 12, 2013, the Company was issued US Patent No. 8,583,394 B2 entitled “Method, Apparatus and Article To Facilitate Distributed Evaluation of Objects Using Electromagnetic Energy by the United States Office of Patents and Trademarks. The patent expires July 31, 2027.
	The Company is pursuing an aggressive patent strategy to expand our unique intellectual property in the United States and Japan and other countries.
	Services and License Agreement Invention Development Management Company, L.L.C.
	On November 11, 2013, the Company entered into a Services and License Agreement with Invention Development Management Company, L.L.C. (“IDMC”), a Delaware limited liability company. IDMC is affiliated with Intellectual Ventures, which collaborates with inventors, partners with pioneering companies and invests both expertise and capital in the process of invention.
	The Agreement requires IDMC to identify and engage investors to develop new applications of the Company’s ChromaID™ development kits, present the developments to the Company for approval, and file at least ten (10) patent applications to protect the developments. IDMC is responsible for the development and patent costs. The Company is providing the development kits to IDMC at no cost and is providing ongoing technical support. In addition, to provide time for this accelerated expansion of its intellectual property he Company has agreed to delay the selling of the ChromaID development kits for 140 days except for certain select accounts. The Company will continue its business development efforts during this period and will work with IDMC and their global business development services to secure potential customers and licensees for its technology. The Company shipped twenty ChromaID F12 Lab Kits to inventors in the IDMC network during December 2013.
	The Company receives a worldwide, nontransferable, exclusive license to the licensed IP developed under this Agreement, during the term of the Agreement, and solely within the identification, authentication and diagnostics field of use, to (a) make, have made, use, import, sell and offer for sale products and services; (b) make improvements; and (c) grant sublicenses of any and all of the foregoing rights (including the right to grant further sublicenses).
	The Company receives a nonexclusive and nontransferrable option to acquire a worldwide, nontransferrable, nonexclusive license to the useful IP held by IDMC within the identification, authentication and diagnostics field of use to (a) make, have made, use, import, sell and offer to sell products and services and (b) grant sublicenses to any and all of the foregoing rights. The option to acquire this license may be exercised for up to two years from the effective date of the Agreement.
	IDMC may provide global business development services to the Company, including present Visualant IP and any licensed IP, if applicable, to potential customers, licensees, and distributors in markets or geographies not being pursued by Visualant. Also, IDMC may introduce Visualant to a potential customer, licensee, or distributor for the purpose of identifying and closing a license, sale, or distribution deal or other monetization event.
	Visualant grants to IDMC a nonexclusive, worldwide, fully paid up, nontransferable, sublicenseable, perpetual license to the Visualant IP, solely outside the identification, authentication and diagnostics field of use to (a) make, have made, use, import, sell and offer for sale products and services and (b) grant sublicenses of any and all of the foregoing rights (including the right to grant further sublicenses).
	The Company granted to IDMC a nonexclusive, worldwide, fully paid up, royalty-free, nontransferable, nonsublicenseable, perpetual license to access and use Visualant Technology solely for the purpose of marketing the aforementioned sublicenses to the Visualant IP to third parties outside the designated fields of use.
	The Company issued a warrant to purchase 14,575,286 shares of common stock as consideration for the exclusive IP license and application development services to IDMC signed on November 11, 2013. The warrant price of twenty cents ($0.20) per share expires November 10, 2018 and the per share price is subject to adjustment.
	The Company has agreed to pay IDMC a percentage of license revenue for the global development business services and a percentage of revenue received from any IDMC introduced company. The Company has also agreed to pay IDMC a royalty when Visualant receives royalty product revenue from an IDMC introduced company.
	IDMC has agreed to pay Visualant a license fee for the nonexclusive license of the Visualant IP.
	The term of the exclusive IP license and the nonexclusive IP license commences on the effective date of November 11, 2013, and terminates when all claims of the patents expire or are held in valid or unenforceable by a court of competent jurisdiction from which no appeal can be taken.
	The term of the Agreement commences on the effective date until either party terminates the Agreement at any time following the fifth anniversary of the effective date by providing at least ninety days’ prior written notice to the other party.
	The Company’s Acquisition of Visualant Related Assets of the RATLab LLC
	On June 7, 2011, the Company closed the acquisition of all Visualant related assets of the RATLab namely the rights to the medical field of use of the Chroma ID technology. The RATLab is a Seattle based research and development laboratory created by Dr. Tom Furness, founder and Director of the HITLab International, with labs at Seattle, University of Canterbury in New Zealand, and the University of Tasmania in Australia. With this acquisition, we consolidated all intellectual property relating to the ChromaID technology, except for environmental field of use which was held by Javelin LLC and which was acquired separately (see below).  The Company acquired these assets of the RATLab for (i) 1,000,000 shares of our common stock at closing valued at $0.20 per share, the price during the negotiation of this agreement; (ii) payment of $250,000; and (iii) payment of the outstanding promissory note owing to Mr. Furness in the amount of $65,000 with accrued interest of $24,675.
	On October 23, 2008, the Company and RATLab entered into definitive agreements which provide for a non-commercial non-exclusive license of the Company’s technology to RATLab for the purpose of continuing research and development with a license back to the Company for enhancements that are developed.  Further, an exclusive license was entered into between the Company and RATLab for selected fields of use.
	The Company’s Acquisition of Environmental Field of Use Rights from Javelin LLC
	On July 31, 2012, the Company closed the acquisition of all rights to the ChromaID technology in the environmental field of use from Javelin LLC. The Company acquired these assets of Javelin for (i) 1,250,000 shares of our common stock valued at $0.13 per share, the price during the negotiation of the acquisition agreement; and (ii) $100,000 in cash, with $20,000 payable at closing and $80,000 to be paid in four equal installments over a period of eight months, all of which have now been paid. In addition the Company entered into a business development agreement with Javelin LLC which will pay them a fee equal to ten percent of the gross margin revenues received from sales of ChromaID through their business development efforts. To date, Javelin has not earned any fees from business development efforts; however the business development agreement remains in effect.

5_AGREEMENT_WITH_SUMITOMO_PREC

5. AGREEMENT WITH SUMITOMO PRECISION PRODUCTS CO., LTD.	3 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
5. AGREEMENT WITH SUMITOMO PRECISION PRODUCTS CO., LTD.	'
	On May 31, 2012, the Company entered into a Joint Research and Product Development Agreement with Sumitomo, a publicly-traded Japanese corporation, for the commercialization of our ChromaID™ technology.   On March 29, 2013, the Company entered into an Amendment to Joint Research and Product Development Agreement or Amended Agreement with Sumitomo. The Amended Agreement extended the Joint Development Agreement from March 31, 2013 to December 31, 2013.   The extension provided for continuing work between Sumitomo and Visualant focused upon advancing the ChromaID technology and market research aimed at identifying the most significant markets for the ChromaID technology. The parties have identified a commercial version of the ChromaID scanner as Version 7.  The market research assisted in refining the qualities of Version 7 for the marketplace.  Meanwhile, the current version of the technology, identified as Version 6D, was introduced to the marketplace as a part of our ChromaID F12 Lab Kit during the three months ended December 31, 2013. The Amended Agreement expired December 31, 2013 and the parties are currently defining their future commercial relationship.
	Sumitomo invested $2,250,000 in exchange for 17,307,693 shares of restricted common shares priced at $0.13 per share that was funded on June 21, 2012.  Sumitomo also paid the Company an initial payment of $1 million in accordance for an exclusive License Agreement which covers Japan, China, Taiwan, Korea and the entirety of Southeast Asia (Burma, Indonesia, Thailand, Cambodia, Laos, Vietnam, Singapore and the Philippines). A running royalty for the license granted under the License Agreement will be negotiated at the completion of the Joint Development Agreement. The Sumitomo License fee was recorded as revenue over the life the Joint Development Agreement and was fully recorded as of May 31, 2013.
	Sumitomo is publicly traded in Japan and has operations in Japan, United States, China, United Kingdom, Canada and other parts of the world.

6_ACQUISITION_OF_TRANSTECH_SYS

6. ACQUISITION OF TRANSTECH SYSTEMS, INC.	3 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
ACQUISITION OF TRANSTECH SYSTEMS, INC.	'
	The Company’s wholly owned subsidiary, TransTech Systems, Inc., based in Aurora, Oregon, is a distributor of products, including systems solutions, components and consumables, for employee and government identification, document authentication, access control, and radio frequency identification.  TransTech provides these products and services, along with marketing and business development assistance to a growing channel of value-added resellers and system integrators throughout North America.
	TransTech provides its channel partners pre-and post-sales support in the industry.  Technical Services covers training and installation support, in-warranty repair, out of warranty repair, and spares programs.  Our customer service team provides full sales, configuration, and logistics services.  An increasing number of manufacturers are turning to TransTech Systems for channel development and introduction of their products to our market space.
	The Company closed the acquisition of TransTech on June 8, 2010. The Company acquired our 100% interest in TransTech by issuing a Promissory Note to James Gingo, the President and sole shareholder of TransTech, in the amount of $2,300,000, plus interest at the rate of three and one-half percent per annum from the date of the Note. The Note was secured by a security interest in the stock and assets of TransTech, and was payable over a period of three years. The final balance of $1,000,000 on the Note and accrued interest of $30,397 were paid to Mr. Gingo on June 12, 2013, to complete payment of the purchase price for the TransTech stock.
	On June 8, 2010 in connection with the acquisition of TransTech, the Company issued a total of 3,800,000 shares of restricted common stock of the Company to James Gingo, Jeff Kruse and Steve Waddle, executives of TransTech, and Paul Bonderson, a TransTech investor.  The parties valued the shares in this transaction at $76,000 or $0.02 per share, the closing bid price during negotiations.
	This acquisition is expected to accelerate market entry and penetration through well-operated and positioned dealers of security and authentication systems, thus creating a natural distribution channel for products featuring the company’s proprietary ChromaID technology.

7_ACCOUNTS_RECEIVABLECUSTOMER_

7. ACCOUNTS RECEIVABLE/CUSTOMER CONCENTRATION	3 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
7. ACCOUNTS RECEIVABLE/CUSTOMER CONCENTRATION	'
	Accounts receivable were $602,965 and $1,007,074, net of allowance, as of December 31, 2013 and September 30, 2013, respectively. The Company had one customer (13.6%) in excess of 10% of our consolidated revenues for the three months ended December 31, 2013. The Company did not have a customer with accounts receivable in excess of 10% as of December 31, 2013. The Company does expect to have customers with consolidated revenues or accounts receivable balances of 10% of total accounts receivable in the foreseeable future.

8_INVENTORIES

8. INVENTORIES	3 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
8. INVENTORIES	'
	Inventories were $510,069 and $600,790 as of December 31, 2013 and September 30, 2013, respectively. Inventories consist primarily of printers and consumable supplies, including ribbons and cards, badge accessories, capture devices, and access control components held for resale. There is a $10,000 reserve for impaired inventory as of December 31, 2013 and September 30, 2013.

9_FIXED_ASSETS

9. FIXED ASSETS	3 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
9. FIXED ASSETS	'
	Property and equipment as of December 31, 2013 consisted of the following:
		Estimated	31-Dec-13
		Useful Lives	Purchased			Capital Leases			Total
	Machinery and equipment	2-10 years	$	115,772		$	87,038		$	202,810
	Leasehold improvements	5-20 years		603,612			-			603,612
	Furniture and fixtures	3-10 years		73,539			101,260			174,799
	Software and websites	3- 7 years		63,783			44,849			108,632
	Less: accumulated depreciation			(455,618	)		(220,389	)		(676,007	)
			$	401,088		$	12,758		$	413,846
	Fixed assets, net of accumulated depreciation, were $413,846 and $427,215 as of December 31, 2013 and September 30, 2013, respectively. Accumulated depreciation was $676,007 and $663,213 as of December 31, 2013 and September 30, 2013, respectively. Total depreciation expense was $12,794 and $17,273 for the three months ended December 31, 2013 and 2012, respectively. All equipment is used for selling, general and administrative purposes and accordingly all depreciation is classified in selling, general and administrative expenses.

10_INTANGIBLE_ASSETS

10. INTANGIBLE ASSETS	3 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
10. INTANGIBLE ASSETS	'
	Intangible assets as of December 31, 2013 and September 30, 2013 consisted of the following:
		Estimated	December 31,			September 30,
		Useful Lives	2013			2013
	Customer contracts	5 years	$	983,645		$	983,645
	Technology	5 years		712,500		$	712,500
	Less: accumulated amortization			(1,010,071	)		(925,263	)
	Intangible assets, net		$	686,074		$	770,882
	Total amortization expense was $84,808 and 84,807 for the three months ended December 31, 2013 and 2012, respectively.
	The fair value of the TransTech intellectual property acquired was $983,645, estimated by using a discounted cash flow approach based on future economic benefits associated with agreements with customers, or through expected continued business activities with its customers. In summary, the estimate was based on a projected income approach and related discounted cash flows over five years, with applicable risk factors assigned to assumptions in the forecasted results.
	The fair value of the RATLab intellectual property associated with the assets acquired was $450,000 estimated by using a discounted cash flow approach based on future economic benefits. In summary, the estimate was based on a projected income approach and related discounted cash flows over five years, with applicable risk factors assigned to assumptions in the forecasted results.
	The fair value of the Javelin intellectual property acquired was $262,500 estimated by using a discounted cash flow approach based on future economic benefits associated with the assests acquired. In summary, the estimate was based on a projected income approach and related discounted cash flows over five years, with applicable risk factors assigned to assumptions in the forecasted results.

11_ACCOUNTS_PAYABLE

11. ACCOUNTS PAYABLE	3 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
11. ACCOUNTS PAYABLE	'
	Accounts payable were $2,120,691 and $2,301,149 as of December 31, 2013 and September 30, 2013, respectively. Such liabilities consisted of amounts due to vendors for inventory purchases and technology development, external audit, legal and other expenses incurred by the Company.  The Company had 3 vendors (21.5%, 11.9%, and 11.5%) with accounts payable in excess of 10% of its accounts payable as of December 31, 2013. The Company does expect to have vendors with accounts payable balances of 10% of total accounts payable in the foreseeable future.

12_NOTES_PAYABLE_CAPITALIZED_L

12. NOTES PAYABLE, CAPITALIZED LEASES AND LONG TERM DEBT	3 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
12. NOTES PAYABLE, CAPITALIZED LEASES AND LONG TERM DEBT	'
	Notes payable, capitalized leases and long term debt as of December 31, 2013 and September 30, 2013 consisted of the following:
		December 31,			September 30,
		2013			2013
	BFI Business Finance Secured Credit Facility	$	241,653		$	749,323
	TransTech capitalized leases, net of capitalized interest		4,588			5,700
	Total debt		246,241			755,023
	Less current portion of long term debt		(244,965	)		(753,129	)
	Long term debt	$	1,276		$	1,894
	BFI Finance Corp Secured Credit Facility
	The Company finances its TransTech operations from operations and a Secured Credit Facility with BFI Finance Corp. On December 9, 2008 TransTech entered into a $1,000,000 secured credit facility with BFI Business Finance to fund its operations.   On December 12, 2013, the secured credit facility was renewed for an additional six months, with a floor for prime interest of 4.5% (currently 4.5%), plus 2.5%. The credit facility includes accounts receivable borrowing based on 80% of eligible trade accounts receivable, not to exceed $1,000,000. The secured credit facility is collateralized by the assets of TransTech, with a guarantee by Visualant, including all assets of Visualant. Visualant believes any default would be satisfied by the assets of TransTech. Availability under this Secured Credit ranges from $0 to $125,000 ($114,000 as of December 31, 2013) on a daily basis. The remaining balance on the accounts receivable line ($241,653) as of December 31, 2013 must be repaid by the time the secured credit facility expires on June 11, 2014, or the Company renews by automatic extension for the next successive 6 month term.
	Capitalized Leases
	TransTech has capitalized leases for equipment. The leases have a remaining lease term of 0-19 months. The aggregate future minimum lease payments under capital leases, to the extent the leases have early cancellation options and excluding escalation charges, are as follows:
	Years Ended December 31,	Total
	2014	$	3,312
	2015		1,276
	2016		-
	2017		-
	2018		-
	Total		4,588
	Less current portion of capitalized leases		(3,312	)
	Long term capital leases	$	1,276
	The imputed interest rate in the capitalized leases is approximately 10.5%.
	Aggregate maturities for notes payable, capitalized leases and long term debt by year are as follows:
	Years Ended  December 31,	Total
	2014	$	244,965
	2015		1,276
	2016		-
	2017		-
	2018		-
	Total	$	246,241
	Note Payable to Umpqua Bank
	On December 19, 2013, the Company entered into a $200,000 Note Payable with Umpqua Bank.  The Note Payable has a maturity date of December 31, 2014 and provides for interest of 2.79%, subject to adjustment annually. The cash from the Note Payable was received on January 14, 2014.

13_EQUITY

13. EQUITY	3 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
13. EQUITY	'
	Unless otherwise indicated, all of the following sales or issuances of Company securities were conducted under the exemption from registration as provided under Section 4(2) of the Securities Act of 1933 (and also qualified for exemption under 4(5), formerly 4(6) of the Securities Act of 1933, except as noted below). All of the shares issued were issued in transactions not involving a public offering, are considered to be restricted stock as defined in Rule 144 promulgated under the Securities Act of 1933 and stock certificates issued with respect thereto bear legends to that effect.
	The Company has compensated consultants and service providers with restricted common stock during the development of our technology and when our capital resources were not adequate to provide payment in cash.
	All of the following transactions were to accredited investors.
	The following equity issuances occurred during the three months ended December 31, 2013:
	On November 11, 2013, the Company issued to IDMC a warrant to purchase up to 14,575,286 shares of common stock at twenty cents ($0.20) per share pursuant to the Warrant to Purchase Common Stock. The Warrant expires November 10, 2018 and the per share price is subject to adjustment. During the three months ended December 31, 2013, the Company recognized $510,135 of other expense related to the IDMC warrant.
	During the three months ended December 31, 2013, warrants totaling 10,113 shares of common shares issued to John O’Brien and John Lane at the average purchase price of $0.302 per share expired.
	A summary of the warrants issued as of December 31, 2013 were as follows:
			31-Dec-13
							Weighted
							Average
							Exercise
			Shares				Price
	Outstanding at beginning of period			113,507,050			$	0.307
	Issued			14,575,286				0.2
	Exercised			-				-
	Forfeited			-				-
	Expired			(10,113	)			(0.214	)
	Outstanding at end of period			128,072,223			$	0.176
	Exerciseable at end of period			128,072,223
	A summary of the status of the warrants outstanding as of December 31, 2013 is presented below:
					31-Dec-13
					Weighted				Weighted				Weighted
					Average				Average				Average
	Number of				Remaining				Exercise		Shares		Exercise
	Warrants				Life				Price		Exerciseable		Price
		6,330,000				3.89			$	0.10-013		6,330,000	$	0.10-013
		52,300,000				4.38				0.15		52,300,000		0.15
		67,775,286				4.46				0.2		67,775,286		0.2
		1,048,960				0.12				0.20-0.29		1,048,960		0.20-0.29
		117,977				0.3				0.30-0.39		117,977		0.30-0.39
		500,000				0.13				0.40-0.49		500,000		0.40-0.49
		128,072,223				4.32			$	0.176		128,072,223	$	0.176
	The significant weighted average assumptions relating to the valuation of the Company’s warrants for the period ended December 31, 2013 were as follows:
	Dividend yield	0%
	Expected life	3
	Expected volatility	90%
	Risk free interest rate	0.70%
	At December 31, 2013, vested warrants of 128,072,223 had an aggregate intrinsic value of $0.

14_STOCK_OPTIONS

14. STOCK OPTIONS	3 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
14. STOCK OPTIONS	'
	Description of Stock Option Plan
	On April 29, 2011, the 2011 Stock Incentive Plan was approved at the Annual Stockholder Meeting. The Company was authorized to issue options for, and has reserved for issuance, up to 7,000,000 shares of common stock under the 2011 Stock Incentive Plan. On March 21, 2013, an amendment to the Stock Option Plan was approved by the stockholders of the Company, increasing the number of shares reserved for issuance under the Plan to 14,000,000 shares.
	Determining Fair Value Under ASC 505
	The Company records compensation expense associated with stock options and other equity-based compensation using the Black-Scholes-Merton option valuation model for estimating fair value of stock options granted under our plan. The Company amortizes the fair value of stock options on a ratable basis over the requisite service periods, which are generally the vesting periods. The expected life of awards granted represents the period of time that they are expected to be outstanding.  The Company estimates the volatility of our common stock based on the historical volatility of its own common stock over the most recent period corresponding with the estimated expected life of the award. The Company bases the risk-free interest rate used in the Black Scholes-Merton option valuation model on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award. The Company has not paid any cash dividends on our common stock and does not anticipate paying any cash dividends in the foreseeable future. Consequently, the Company uses an expected dividend yield of zero in the Black-Scholes-Merton option valuation model and adjusts share-based compensation for changes to the estimate of expected equity award forfeitures based on actual forfeiture experience. The effect of adjusting the forfeiture rate is recognized in the period the forfeiture estimate is changed.
	Stock Option Activity
	During the three months ended December 31, 2013, Patricia Gingo, an employee of TransTech, forfeited a stock option grant for 25,000 shares of common stock at $0.24 per share.
	There are currently 12,710,000 options to purchase common stock at an average exercise price of $0.126 per share outstanding at December 31, 2013 under the 2011 Stock Incentive Plan. The Company recorded $23,503 and $16,014 of compensation expense, net of related tax effects, relative to stock options for the three months ended December 31, 2013 and 2012 in accordance with ASC 505. Net loss per share (basic and diluted) associated with this expense was approximately ($0.00).
	Stock option activity for the three months ended December 31, 2013 and the year ended September 30, 2013 and 2012:
							Weighted Average
			Options				Exercise Price			$
	Outstanding as of September 30, 2011			6,920,000			$	0.296		$	2,050,800
	Granted			2,200,000				0.104			229,000
	Exercised			-				-			-
	Forfeitures			(3,200,000	)			0.47			(1,503,000	)
	Outstanding as of September 30, 2012			5,920,000				0.131			776,800
	Granted			6,830,000				0.122			836,000
	Exercised			-				-			-
	Forfeitures			(15,000	)			0.24			(3,600	)
	Outstanding as of September 30, 2013			12,735,000				0.126			1,609,200
	Granted			-				-			-
	Exercised			-				-			-
	Forfeitures			(25,000	)			0.24			(6,000	)
	Outstanding as of December 31, 2013			12,710,000			$	0.126		$	1,603,200
	The following table summarizes information about stock options outstanding and exercisable at December 31, 2013:
								Average	Average						Average
	Range of				Number			Remaining Life	Exercise Price				Number		Exercise Price
	Exercise Prices				Outstanding			In Years	Exerciseable				Exerciseable		Exerciseable
		0.09				500,000		6.00 years		0.09				500,000		0.09
		0.1				3,630,000		6.28 years		0.1				2,092,223		0.1
		0.12				200,000		.50 years		0.12				133,334		0.12
		0.13				5,100,000		5.93 years		0.13				4,177,777		0.13
		0.15				3,100,000		6.03 years		0.15				3,100,000		0.15
		0.24				180,000		1.50 years		0.24				180,000		0.24
						12,710,000		6.10 years	$	0.126				10,183,334	$	0.134
	There is no aggregate intrinsic value of the exercisable options as of December 31, 2013.

15_OTHER_SIGNIFICANT_TRANSACTI

15. OTHER SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES	3 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
15. OTHER SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES	'
	On January 10, 2014, the Company entered into a Demand Promissory Note with Mr. Erickson and/or entities in which Mr. Erickson has a beneficial interest in the total principal amount of $200,000 at an average annual interest rate of 3.0%. The Note is due March 31, 2014.

16_COMMITMENTS_CONTINGENCIES_A

16. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS	3 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
16. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS	'
	LEGAL PROCEEDINGS
	There are no pending legal proceedings against the Company that are expected to have a material adverse effect on its cash flows, financial condition or results of operations.
	The Company entered into an Option Agreement with Ascendiant dated April 26, 2013, pursuant to which we had the option to purchase from Ascendiant 4,000,000 shares of our common stock (the “Option Shares”) for an aggregate purchase price of $300,000.  On May 31, 2013, the Company exercised its option to purchase the 4,000,000 Option Shares from Ascendiant and paid to Ascendiant the $300,000 purchase price.  The option was required to be exercised and payment for the shares made on or before May 31, 2013.  On May 31, 2013, the Company exercised our option to purchase 4,000,000 Option Shares from Ascendiant and paid to Ascendiant the $300,000 purchase price.   Ascendiant delivered only 2,284,525 of the 4,000,000 Option Shares purchased by the Company and had failed to deliver the remaining 1,715,475 Option Shares. On June 17, 2013, the Company filed a complaint (the “Complaint”) against Ascendiant Capital Partners, LLC (“Ascendiant”) in the California Superior Court, County of Orange (Case No. 30-2013-00656770-CU-BC-CJC) for breach of contract, seeking damages, specific performance and injunctive relief against Ascendiant. On September 24, 2013, the California Superior Court granted Visualant’s motion, finding that Visualant was likely to prevail on the merits of its claim against Ascendiant.  The Court ordered Ascendiant to deliver 1,715,475 Option Shares to the Company by 4:00PM, September 27, 2013. The delivery occurred on September 27, 2013. The Company expects to pursue its damage claim.
	EMPLOYMENT AGREEMENTS
	Mr. Erickson, Mr. Scott and other named executive officers of Visualant do not have employment agreements.
	LEASES
	The Company is obligated under various non-cancelable operating leases for their various facilities and certain equipment.
	Corporate Offices
	The Company’s executive office is located at 500 Union Street, Suite 420, Seattle, Washington, USA, 98101. On August 1, 2012, we entered into a lease which expires August 31, 2014. The monthly lease rate was $1,944 for the year ending August 31, 2013 and $2,028 for the year ending August 31, 2014. On June 14, 2013, the Company amended the lease and added Suite 450, increasing its monthly payment to $3,978 through August 31, 2013, $4,057 from September 1, 2013 to May 31, 2014 and $4,140 from June 1, 2014 through August 31, 2014.
	TransTech Facilities
	TransTech is located at 12142 NE Sky Lane, Suite 130, Aurora, OR 97002. TransTech leases a total of approximately 9,750 square feet of office and warehouse space for its administrative offices, product inventory and shipping operations, at a monthly rental of $4,292. The lease was extended from March 2011 for an additional five year term at a monthly rental of $4,751. There are two additional five year renewals with a set accelerating increase of 10% per 5 year term.
	The aggregate future minimum lease payments under operating leases, to the extent the leases have early cancellation options and excluding escalation charges, are as follows:
	Years Ended December 31,	Total
	2014	$	81,437
	2015		65,292
	2016		9,502
	2017		-
	2018		-
	Beyond		-
	Total	$	156,231

17_SUBSEQUENT_EVENTS

17. SUBSEQUENT EVENTS	3 Months Ended
	Dec. 31, 2013
Subsequent Events [Abstract]	'
17. SUBSEQUENT EVENTS	'
	The Company evaluates subsequent events, for the purpose of adjustment or disclosure, up through the date the financial statements are available.
	Subsequent to December 31, 2013, the following material transactions occurred:
	Loan from Mr. Erickson
	On January 10, 2014, the Company entered into a Demand Promissory Note with Mr. Erickson and/or entities in which Mr. Erickson has a beneficial interest in the total principal amount of $200,000 at an average annual interest rate of 3.0%. The Note is due March 31, 2014.

3_SIGNIFICANT_ACCOUNTING_POLIC1

3. SIGNIFICANT ACCOUNTING POLICIES: ADOPTION OF ACCOUNTING STANDARDS (Policies)	3 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
PRINCIPLES OF CONSOLIDATION	'
	The consolidated financial statements include the accounts of the Company and its wholly owned and majority-owned subsidiaries. Inter-Company items and transactions have been eliminated in consolidation.
CASH AND CASH EQUIVALENTS	'
	The Company classifies highly liquid temporary investments with an original maturity of three months or less when purchased as cash equivalents. The Company maintains cash balances at various financial institutions. Balances at US banks are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risk for cash on deposit.
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS	'
	Accounts receivable consist primarily of amounts due to the Company from normal business activities. The Company maintains an allowance for doubtful accounts to reflect the expected non-collection of accounts receivable based on past collection history and specific risks identified within the portfolio. If the financial condition of the customers were to deteriorate resulting in an impairment of their ability to make payments, or if payments from customers are significantly delayed, additional allowances might be required.
INVENTORIES	'
	Inventories consist primarily of printers and consumable supplies, including ribbons and cards, badge accessories, capture devices, and access control components held for resale and are stated at the lower of cost or market on the first-in, first-out (“FIFO”) method.  Inventories are considered available for resale when drop shipped and invoiced directly to a customer from a vendor, or when physically received by TransTech at a warehouse location.  The company records a provision for excess and obsolete inventory whenever an impairment has been identified. There is a $10,000 reserve for impaired inventory as of December 31, 2013 and September 30, 2013.
EQUIPMENT	'
	Equipment consists of machinery, leasehold improvements, furniture and fixtures and software, which are stated at cost less accumulated depreciation and amortization. Depreciation is computed by the straight-line method over the estimated useful lives or lease period of the relevant asset, generally 2-10 years, except for leasehold improvements which are depreciated over 5-20 years.
INTANGIBLE ASSETS / INTELLECTUAL PROPERTY	'
	The Company amortizes the intangible assets and intellectual property acquired in connection with the acquisition of TransTech, over sixty months on a straight - line basis, which was the time frame that the management of the Company was able to project forward for future revenue, either under agreement or through expected continued business activities.  Intangible assets and intellectual property acquired from RATLab LLC and Javelin are recorded likewise. The Company performs annual assessments and has determined that no impairment is necessary.
GOODWILL	'
	Goodwill is the excess of cost of an acquired entity over the fair value of amounts assigned to assets acquired and liabilities assumed in a business combination. With the adoption of ASC 350, goodwill is not amortized, rather it is tested for impairment annually, and will be tested for impairment between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. Impairment testing for goodwill is done at a reporting unit level. Reporting units are one level below the business segment level, but are combined when reporting units within the same segment have similar economic characteristics. Under the criteria set forth by ASC 350, the Company has one reporting unit based on the current structure.  An impairment loss generally would be recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit.  The Company performs annual assessments and has determined that no impairment is necessary.
LONG-LIVED ASSETS	'
	The Company reviews its long-lived assets for impairment annually or when changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets under certain circumstances are reported at the lower of carrying amount or fair value. Assets to be disposed of and assets not expected to provide any future service potential to the Company are recorded at the lower of carrying amount or fair value (less the projected cost associated with selling the asset). To the extent carrying values exceed fair values, an impairment loss is recognized in operating results.
FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS	'
	ASC Topic 820, Fair Value Measurement and Disclosures, defines fair value as the exchange price 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.  This topic also establishes a fair value hierarchy, which requires classification based on observable and unobservable inputs when measuring fair value.  The fair value hierarchy distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs).  The hierarchy consists of three levels:
	Level 1 – Quoted prices in active markets for identical assets and liabilities;
	Level 2 – Inputs other than level one inputs that are either directly or indirectly observable; and
	Level 3 – Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.
	Derivative Instruments – Warrants with the June 2013 Private Placement
									Carrying
		Fair Value Measurements Using Inputs							Amount at
	Financial Instruments	Level 1			Level 2		Level 3		31-Dec-13
	Liabilities:
	Derivative Instruments - Warrants	$	-		$	3,661,000	$	-	$	3,661,000
	Total	$	-		$	3,661,000	$	-	$	3,661,000
	Liabilities measured at fair value on a recurring basis are summarized as follows:
		31-Dec-13
	Market price and estimated fair value of common stock:	$	0.09
	Exercise price	$	0.15-0.20
	Expected term (years)	3-5 years
	Divident yield		-
	Expected volatility		90	%
	Risk-free interest rate		0.7	%
	The risk-free rate of return reflects the interest rate for the United States Treasury Note with similar time-to-maturity to that of the warrants.
	The Company issued warrants to 104,600,000 shares of common stock in connection with the June 2013 Private Placement of 52,300,000 shares of common stock.  The strike price of these warrants is $0.15 to $0.20 per share.  These warrants were not issued with the intent of effectively hedging any future cash flow, fair value of any asset, liability or any net investment in a foreign operation.  These warrants were issued with a down-round provision whereby the exercise price would be adjusted downward in the event that additional shares of the Company’s common stock or securities exercisable, convertible or exchangeable for the Company’s common stock were issued at a price less than the exercise price.  Therefore, the fair value of these warrants were recorded as a liability in the consolidated balance sheet and are marked to market each reporting period until they are exercised or expire or otherwise extinguished.
	The proceeds from the Private Placement were allocated between the Common Shares and the Warrants issued in connection with the Private Placement based upon their estimated fair values as of the closing date at June 14, 2013, resulting in the aggregate amount of $2,494,710 to the Stockholders’ Equity and $2,735,290 to the warrant derivative.  During 2013, the Company recognized $1,448,710 of other expense resulting from the increase in the fair value of the warrant liability at September 30, 2013. During three months ended December 31, 2013, the Company recognized $523,000 of other income resulting from the decrease in the fair value of the warrant liability at December 31, 2013.
	Derivative Instruments – Warrant with the November 2013 IDMC Services and License Agreement
									Carrying
		Fair Value Measurements Using Inputs							Amount at
	Financial Instruments	Level 1			Level 2		Level 3		31-Dec-13
	Liabilities:
	Derivative Instruments - Warrants	$	-		$	510,135	$	-	$	510,135
	Total	$	-		$	510,135	$	-	$	510,135
	Liabilities measured at fair value on a recurring basis are summarized as follows:
		31-Dec-13
	Market price and estimated fair value of common stock:		0.07
	Exercise price		0.2
	Expected term (years)		5
	Divident yield		-
	Expected volatility		166	%
	Risk-free interest rate		0.7	%
	The risk-free rate of return reflects the interest rate for the United States Treasury Note with similar time-to-maturity to that of the warrants.
	The Company issued a warrant to purchase 14,575,286 shares of common stock as consideration for the exclusive IP license and application development services to IDMC signed on November 11, 2013. The warrant price of twenty cents ($0.20) per share expires November 10, 2018 and the per share price is subject to adjustment.  This warrant was not issued with the intent of effectively hedging any future cash flow, fair value of any asset, liability or any net investment in a foreign operation.  This warrant was issued with a down-round provision whereby the exercise price would be adjusted downward in the event that additional shares of the Company’s common stock or securities exercisable, convertible or exchangeable for the Company’s common stock were issued at a price less than the exercise price.  Therefore, the fair value of these warrants were recorded as a liability in the consolidated balance sheet and are marked to market each reporting period until they are exercised or expire or otherwise extinguished.
	During the three months ended December 31, 2013, the Company recognized $510,135 of other expense related to the IDMC warrant.
	The recorded value of other financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts receivable, other current assets, and accounts payable and accrued expenses approximate the fair value of the respective assets and liabilities at December 31, 2013 and September 30, 2013 based upon the short-term nature of the assets and liabilities.
REVENUE RECOGNITION	'
	TransTech revenue is derived from other products and services. Revenue is considered realized when the services have been provided to the customer, the work has been accepted by the customer and collectability is reasonably assured. Furthermore, if an actual measurement of revenue cannot be determined, we defer all revenue recognition until such time that an actual measurement can be determined. If during the course of a contract management determines that losses are expected to be incurred, such costs are charged to operations in the period such losses are determined. Revenues are deferred when cash has been received from the customer but the revenue has not been earned. The Sumitomo License fee was recorded as revenue over the life the Joint Development Agreement and was fully recorded as of May 31, 2013.
STOCK BASED COMPENSATION	'
	The Company has share-based compensation plans under which employees, consultants, suppliers and directors may be granted restricted stock, as well as options to purchase shares of Company common stock at the fair market value at the time of grant. Stock-based compensation cost is measured by the Company at the grant date, based on the fair value of the award, over the requisite service period. For options issued to employees, the Company recognizes stock compensation costs utilizing the fair value methodology over the related period of benefit.  Grants of stock options and stock to non-employees and other parties are accounted for in accordance with the ASC 505.
INCOME TAXES	'
	Income tax benefit is based on reported loss before income taxes. Deferred income taxes reflect the effect of temporary differences between asset and liability amounts that are recognized for financial reporting purposes and the amounts that are recognized for income tax purposes. These deferred taxes are measured by applying currently enacted tax laws where that company operates out of. The Company recognizes refundable and deferred assets to the extent that management has determined their realization. As of December 31, 2013 and September 30, 2013, the Company had refundable tax assets related to TransTech of $30,950 and $29,773, respectively.
NET LOSS PER SHARE	'
	Under the provisions of ASC 260, “Earnings Per Share,” basic loss per common share is computed by dividing net loss available to common shareholders by the weighted average number of shares of common stock outstanding for the periods presented. Diluted net loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would then share in the income of the Company, subject to anti-dilution limitations. The common stock equivalents have not been included as they are anti-dilutive. As of December 31, 2013, there were options outstanding for the purchase of 12,710,000 common shares, warrants for the purchase of 128,072,223 common shares which could potentially dilute future earnings per share As of December 31, 2012, there were options outstanding for the purchase of 5,920,000 common shares, warrants for the purchase of 3,369,050 common shares, and an undetermined number shares of common stock related to convertible debt, which could potentially dilute future earnings per share.
DIVIDEND POLICY	'
	The Company has never paid any cash dividends and intends, for the foreseeable future, to retain any future earnings for the development of our business. Our future dividend policy will be determined by the board of directors on the basis of various factors, including our results of operations, financial condition, capital requirements and investment opportunities.
USE OF ESTIMATES	'
	The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
RECENT ACCOUNTING PRONOUNCEMENTS	'
	A variety of proposed or otherwise potential accounting standards are currently under study by standard setting organizations and various regulatory agencies. Due to the tentative and preliminary nature of those proposed standards, management has not determined whether implementation of such proposed standards would be material to our consolidated financial statements.

3_SIGNIFICANT_ACCOUNTING_POLIC2

3. SIGNIFICANT ACCOUNTING POLICIES: ADOPTION OF ACCOUNTING STANDARDS (Tables)	3 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
Fair value of financial Instruments	'
	Derivative Instruments – Warrants with the June 2013 Private Placement
									Carrying
		Fair Value Measurements Using Inputs							Amount at
	Financial Instruments	Level 1			Level 2		Level 3		31-Dec-13
	Liabilities:
	Derivative Instruments - Warrants	$	-		$	3,661,000	$	-	$	3,661,000
	Total	$	-		$	3,661,000	$	-	$	3,661,000
	Derivative Instruments – Warrant with the November 2013 IDMC Services and License Agreement
									Carrying
		Fair Value Measurements Using Inputs							Amount at
	Financial Instruments	Level 1			Level 2		Level 3		31-Dec-13
	Liabilities:
	Derivative Instruments - Warrants	$	-		$	510,135	$	-	$	510,135
	Total	$	-		$	510,135	$	-	$	510,135
Valuation assumptions for liabilities measured at fair value on a recurring basis	'
	Derivative Instruments – Warrants with the June 2013 Private Placement
		31-Dec-13
	Market price and estimated fair value of common stock:	$	0.09
	Exercise price	$	0.15-0.20
	Expected term (years)	3-5 years
	Divident yield		-
	Expected volatility		90	%
	Risk-free interest rate		0.7	%
	Derivative Instruments – Warrant with the November 2013 IDMC Services and License Agreement
		31-Dec-13
	Market price and estimated fair value of common stock:		0.07
	Exercise price		0.2
	Expected term (years)		5
	Divident yield		-
	Expected volatility		166	%
	Risk-free interest rate		0.7	%

9_FIXED_ASSETS_Tables

9. FIXED ASSETS (Tables)	3 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
Schedule of Property and equipment	'
		Estimated	31-Dec-13
		Useful Lives	Purchased			Capital Leases			Total
	Machinery and equipment	2-10 years	$	115,772		$	87,038		$	202,810
	Leasehold improvements	5-20 years		603,612			-			603,612
	Furniture and fixtures	3-10 years		73,539			101,260			174,799
	Software and websites	3- 7 years		63,783			44,849			108,632
	Less: accumulated depreciation			(455,618	)		(220,389	)		(676,007	)
			$	401,088		$	12,758		$	413,846

10_INTANGIBLE_ASSETS_Tables

10. INTANGIBLE ASSETS (Tables)	3 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
Schedule Of Intangible Assets	'
		Estimated	December 31,			September 30,
		Useful Lives	2013			2013
	Customer contracts	5 years	$	983,645		$	983,645
	Technology	5 years		712,500		$	712,500
	Less: accumulated amortization			(1,010,071	)		(925,263	)
	Intangible assets, net		$	686,074		$	770,882

12_NOTES_PAYABLE_CAPITALIZED_L1

12. NOTES PAYABLE, CAPITALIZED LEASES AND LONG TERM DEBT (Tables)	3 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
Notes payable, capitalized leases and long term debt	'
		December 31,			September 30,
		2013			2013
	BFI Business Finance Secured Credit Facility	$	241,653		$	749,323
	TransTech capitalized leases, net of capitalized interest		4,588			5,700
	Total debt		246,241			755,023
	Less current portion of long term debt		(244,965	)		(753,129	)
	Long term debt	$	1,276		$	1,894
Schedule Of Future Minimum Lease Payments For Capital Leases	'
	Years Ended December 31,	Total
	2014	$	3,312
	2015		1,276
	2016		-
	2017		-
	2018		-
	Total		4,588
	Less current portion of capitalized leases		(3,312	)
	Long term capital leases	$	1,276
Schedule Of Maturities Of Long Term Debt	'
	Years Ended  December 31,	Total
	2014	$	244,965
	2015		1,276
	2016		-
	2017		-
	2018		-
	Total	$	246,241

13_EQUITY_Tables

13. EQUITY (Tables)	3 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
Summary of the warrants issued	'
			31-Dec-13
							Weighted
							Average
							Exercise
			Shares				Price
	Outstanding at beginning of period			113,507,050			$	0.307
	Issued			14,575,286				0.2
	Exercised			-				-
	Forfeited			-				-
	Expired			(10,113	)			(0.214	)
	Outstanding at end of period			128,072,223			$	0.176
	Exerciseable at end of period			128,072,223
Summary of the status of the warrants outstanding	'
					31-Dec-13
					Weighted				Weighted				Weighted
					Average				Average				Average
	Number of				Remaining				Exercise		Shares		Exercise
	Warrants				Life				Price		Exerciseable		Price
		6,330,000				3.89			$	0.10-013		6,330,000	$	0.10-013
		52,300,000				4.38				0.15		52,300,000		0.15
		67,775,286				4.46				0.2		67,775,286		0.2
		1,048,960				0.12				0.20-0.29		1,048,960		0.20-0.29
		117,977				0.3				0.30-0.39		117,977		0.30-0.39
		500,000				0.13				0.40-0.49		500,000		0.40-0.49
		128,072,223				4.32			$	0.176		128,072,223	$	0.176
Weighted average assumptions relating to the valuation of the Companys warrants	'
	Dividend yield	0%
	Expected life	3
	Expected volatility	90%
	Risk free interest rate	0.70%

14_STOCK_OPTIONS_Tables

14. STOCK OPTIONS (Tables)	3 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
Stock option activity	'
							Weighted Average
			Options				Exercise Price			$
	Outstanding as of September 30, 2011			6,920,000			$	0.296		$	2,050,800
	Granted			2,200,000				0.104			229,000
	Exercised			-				-			-
	Forfeitures			(3,200,000	)			0.47			(1,503,000	)
	Outstanding as of September 30, 2012			5,920,000				0.131			776,800
	Granted			6,830,000				0.122			836,000
	Exercised			-				-			-
	Forfeitures			(15,000	)			0.24			(3,600	)
	Outstanding as of September 30, 2013			12,735,000				0.126			1,609,200
	Granted			-				-			-
	Exercised			-				-			-
	Forfeitures			(25,000	)			0.24			(6,000	)
	Outstanding as of December 31, 2013			12,710,000			$	0.126		$	1,603,200
Stock options outstanding and exercisable	'
								Average	Average						Average
	Range of				Number			Remaining Life	Exercise Price				Number		Exercise Price
	Exercise Prices				Outstanding			In Years	Exerciseable				Exerciseable		Exerciseable
		0.09				500,000		6.00 years		0.09				500,000		0.09
		0.1				3,630,000		6.28 years		0.1				2,092,223		0.1
		0.12				200,000		.50 years		0.12				133,334		0.12
		0.13				5,100,000		5.93 years		0.13				4,177,777		0.13
		0.15				3,100,000		6.03 years		0.15				3,100,000		0.15
		0.24				180,000		1.50 years		0.24				180,000		0.24
						12,710,000		6.10 years	$	0.126				10,183,334	$	0.134

16_COMMITMENTS_CONTINGENCIES_A1

16. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS (Tables)	3 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
Schedule Of Future Minimum Lease Payments For Operating Leases	'
	Years Ended December 31,	Total
	2014	$	81,437
	2015		65,292
	2016		9,502
	2017		-
	2018		-
	Beyond		-
	Total	$	156,231

2_GOING_CONCERN_Details_Narrat

2. GOING CONCERN (Details Narrative) (USD $)	3 Months Ended		12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Sep. 30, 2013	Sep. 30, 2012
Notes to Financial Statements	'	'	'	'
Net loss	$845,599	$700,936	$6,604,631	$2,725,692
CASH (USED IN) OPERATING ACTIVITIES	188,394	559,137	3,503,580	'
Accumulated Deficit	$21,399,592	'	$20,537,825	'

3_SIGNIFICANT_ACCOUNTING_POLIC3

3. SIGNIFICANT ACCOUNTING POLICIES: ADOPTION OF ACCOUNTING STANDARDS (Details) (USD $)	Dec. 31, 2013
Fair Value Measurements Level 1 [Member]	'
Liabilities:	'
Derivative Instruments - Warrants with the June 2013 Private Placement	'
Total	'
Derivative Instruments - Warrants with the November 2013 IDMC Services and License Agreement	'
Total	'
Fair Value Measurements Level 2 [Member]	'
Liabilities:	'
Derivative Instruments - Warrants with the June 2013 Private Placement	3,661,000
Total	3,661,000
Derivative Instruments - Warrants with the November 2013 IDMC Services and License Agreement	510,135
Total	510,135
Fair Value Measurements Level 3 [Member]	'
Liabilities:	'
Derivative Instruments - Warrants with the June 2013 Private Placement	'
Total	'
Derivative Instruments - Warrants with the November 2013 IDMC Services and License Agreement	'
Total	'
Carrying Value [Member]	'
Liabilities:	'
Derivative Instruments - Warrants with the June 2013 Private Placement	3,661,000
Total	3,661,000
Derivative Instruments - Warrants with the November 2013 IDMC Services and License Agreement	510,135
Total	$510,135

3_SIGNIFICANT_ACCOUNTING_POLIC4

3. SIGNIFICANT ACCOUNTING POLICIES: ADOPTION OF ACCOUNTING STANDARDS (Details1) (USD $)	3 Months Ended
	Dec. 31, 2013
Warrants - June 2013 Private Placement	'
Market price and estimated fair value of common stock:	$0.09
Exercise price	'0.15-0.20
Expected term (years)	'3-5 years
Dividend yield	0.00%
Expected volatility	90.00%
Risk-free interest rate	0.70%
Warrants - November 2013 IDMC Services and License Agreement	'
Market price and estimated fair value of common stock:	$0.07
Exercise price	'0.20
Expected term (years)	'5 years
Dividend yield	0.00%
Expected volatility	166.00%
Risk-free interest rate	0.70%

3_SIGNIFICANT_ACCOUNTING_POLIC5

3. SIGNIFICANT ACCOUNTING POLICIES: ADOPTION OF ACCOUNTING STANDARDS (Details Narrative) (USD $)	3 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Sep. 30, 2013
Reserve for impaired inventory	$10,000	'	$10,000
Loss on change - derivative liability warrants	12,865	0	'
Refundable tax assets	$30,950	'	$29,773
Options outstanding	12,710,000	5,920,000	'
Warrants outstanding	128,072,223	3,369,050	'
Minimum [Member] | Land Improvements [Member]	'	'	'
Estimated useful lives of assets	'5 years	'	'
Maximum [Member] | Land Improvements [Member]	'	'	'
Estimated useful lives of assets	'20 years	'	'

7_ACCOUNTS_RECEIVABLECUSTOMER_1

7. ACCOUNTS RECEIVABLE/CUSTOMER CONCENTRATION (Details Narrative) (USD $)	Dec. 31, 2013	Sep. 30, 2013
Notes to Financial Statements	'	'
Accounts receivable, net of allowance	$602,965	$1,007,074

8_INVENTORIES_Details_Narrativ

8. INVENTORIES (Details Narrative) (USD $)	Dec. 31, 2013	Sep. 30, 2013
Notes to Financial Statements	'	'
Inventories	$510,069	$600,790
Reserve for impaired inventory	$10,000	$10,000

9_FIXED_ASSETS_Details

9. FIXED ASSETS (Details) (USD $)	Dec. 31, 2013	Sep. 30, 2013
Machinery and equipment (2-10 years)	$202,810	'
Leasehold improvements (5-20 years)	603,612	'
Furniture and fixtures (3-10 years)	174,799	'
Software and websites (3- 7 years)	108,632	'
Less: accumulated depreciation	-676,007	-663,213
Property and equipment, net	413,846	427,215
PurchasedMember	'	'
Machinery and equipment (2-10 years)	115,772	'
Leasehold improvements (5-20 years)	603,612	'
Furniture and fixtures (3-10 years)	73,539	'
Software and websites (3- 7 years)	63,783	'
Less: accumulated depreciation	-455,618	'
Property and equipment, net	401,088	'
CapitalLeaseObligationsMember	'	'
Machinery and equipment (2-10 years)	87,038	'
Leasehold improvements (5-20 years)	0	'
Furniture and fixtures (3-10 years)	101,260	'
Software and websites (3- 7 years)	44,849	'
Less: accumulated depreciation	-220,389	'
Property and equipment, net	$12,758	'

9_FIXED_ASSETS_Details_Narrati

9. FIXED ASSETS (Details Narrative) (USD $)	3 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Sep. 30, 2013
Notes to Financial Statements	'	'	'
Property and equipment, net	$413,846	'	$427,215
Property and equipment, accumulated depreciation	676,007	'	663,213
Depreciation expense	$12,794	$17,273	'

10_INTANGIBLE_ASSETS_Details

10. INTANGIBLE ASSETS (Details) (USD $)	Dec. 31, 2013	Sep. 30, 2013
Intangible Assets Gross	$1,696,145	$1,696,145
Less: accumulated amortization	-1,010,071	-925,263
Intangible assets, net	686,074	770,882
CustomerContractsMember	'	'
Intangible Assets Gross	983,645	983,645
TechnologyMember	'	'
Intangible Assets Gross	$712,500	$712,500

10_INTANGIBLE_ASSETS_Details_N

10. INTANGIBLE ASSETS (Details Narrative) (USD $)	3 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Notes to Financial Statements	'	'
Amortization expense	$84,808	$84,807
Customer contracts - Estimated Useful life	'5 years	'5 years
Estimated fair value of transtech	983,645	'
Intangible assets acquired of transtech	450,000	'
Estimated assets acquired of transtech	$262,500	'

11_ACCOUNTS_PAYABLE_Details_Na

11. ACCOUNTS PAYABLE (Details Narrative) (USD $)	Dec. 31, 2013	Sep. 30, 2013
Notes to Financial Statements	'	'
Accounts payable	$2,120,691	$2,301,149
Vendor1 with accounts payble on excess of 10%	21.50%	'
Vendor2 with accounts payble on excess of 10%	11.90%	'
Vendor3 with accounts payble on excess of 10%	11.50%	'

12_NOTES_PAYABLE_CAPITALIZED_L2

12. NOTES PAYABLE, CAPITALIZED LEASES AND LONG TERM DEBT (Details) (USD $)	Dec. 31, 2013	Sep. 30, 2013
Notes Payable Capitalized Leases And Long Term Debt Details	'	'
BFI Finance Corp Secured Credit Facility	$241,653	$749,323
TransTech capitalized leases, net of capitalized interest	4,588	5,700
Total debt	246,241	755,023
Less current portion of long term debt	-244,965	-753,129
Long term debt	$1,276	$1,894

12_NOTES_PAYABLE_CAPITALIZED_L3

12. NOTES PAYABLE, CAPITALIZED LEASES AND LONG TERM DEBT (Details 1) (USD $)	Dec. 31, 2013
Notes to Financial Statements	'
2014	$3,312
2015	1,276
2016	0
2017	0
2018	0
Total	4,588
Less current portion of capitalized leases	-3,312
Long term capital leases	$1,276

12_NOTES_PAYABLE_CAPITALIZED_L4

12. NOTES PAYABLE, CAPITALIZED LEASES AND LONG TERM DEBT (Details 2) (USD $)	Dec. 31, 2013
Notes to Financial Statements	'
2014	$244,965
2015	1,276
2016	0
2017	0
2018	0
Total	$246,241

13_EQUITY_Details

13. EQUITY (Details) (USD $)	3 Months Ended
	Dec. 31, 2013
Shares	'
Outstanding at beginning of period	113,507,050
Issued	14,575,286
Exercised	0
Forfeited	0
Expired	-10,113
Outstanding at end of period	128,072,223
Exerciseable at end of period	128,072,223
Weighted Average Exercise Price:	'
Outstanding at beginning of period	$0.31
Issued	$0.20
Exercised	$0
Forfeited	$0
Expired	($0.21)
Outstanding at end of period	$0.18

13_EQUITY_Details_1

13. EQUITY (Details 1) (USD $)	3 Months Ended
	Dec. 31, 2013
Number of Warrants	128,072,223
Weighted Average Remaining Life (years)	'4 years 3 months 25 days
Weighted Average Exercise Price	$0.18
Shares Exercisable	128,072,223
0.10-013 [Member]	'
Number of Warrants	6,330,000
Weighted Average Remaining Life (years)	'3 years 10 months 20 days
Shares Exercisable	6,330,000
0.10-013 [Member] | Minimum [Member]	'
Weighted Average Exercise Price	$0.10
0.10-013 [Member] | Maximum [Member]	'
Weighted Average Exercise Price	$0.01
0.150 [Member]	'
Number of Warrants	52,300,000
Weighted Average Remaining Life (years)	'4 years 4 months 17 days
Weighted Average Exercise Price	$0.15
Shares Exercisable	52,300,000
0.200 [Member]	'
Number of Warrants	67,775,286
Weighted Average Remaining Life (years)	'4 years 5 months 16 days
Weighted Average Exercise Price	$0.20
Shares Exercisable	67,775,286
0.20-0.29 [Member]	'
Number of Warrants	1,048,960
Weighted Average Remaining Life (years)	'1 month 13 days
Shares Exercisable	1,048,960
0.20-0.29 [Member] | Minimum [Member]	'
Weighted Average Exercise Price	$0.20
0.20-0.29 [Member] | Maximum [Member]	'
Weighted Average Exercise Price	$0.29
0.30-0.39 [Member]	'
Number of Warrants	117,977
Weighted Average Remaining Life (years)	'3 months 18 days
Shares Exercisable	117,977
0.30-0.39 [Member] | Minimum [Member]	'
Weighted Average Exercise Price	$0.30
0.30-0.39 [Member] | Maximum [Member]	'
Weighted Average Exercise Price	$0.39
0.40-0.49 [Member]	'
Number of Warrants	500,000
Weighted Average Remaining Life (years)	'1 month 17 days
Shares Exercisable	500,000
0.40-0.49 [Member] | Minimum [Member]	'
Weighted Average Exercise Price	$0.40
0.40-0.49 [Member] | Maximum [Member]	'
Weighted Average Exercise Price	$0.49

13_EQUITY_Details_2

13. EQUITY (Details 2)	3 Months Ended
	Dec. 31, 2013
Expected dividend yield	0.00%
Expected life	'3 years
Expected volatility	90.00%
Risk-free interest rate	0.70%

13_EQUITY_Details_Narrative

13. EQUITY (Details Narrative) (USD $)	Dec. 31, 2013	Sep. 30, 2013
Notes to Financial Statements	'	'
Vested warrants	128,072,223	113,507,050
Intrinsic value	$0	'

14_STOCK_OPTIONS_Details

14. STOCK OPTIONS (Details) (USD $)	3 Months Ended	12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Sep. 30, 2012
Shares:	'	'	'
Outstanding at beginning of period	113,507,050	'	'
Shares granted	14,575,286	'	'
Shares exercised	0	'	'
Shares forfeitures	0	'	'
Outstanding at end of period	128,072,223	'	'
Weighted Average Exercise Price:	'	'	'
Outstanding at beginning of period	$0.31	'	'
Shares granted	$0.20	'	'
Shares exercised	$0	'	'
Shares forfeitures	$0	'	'
Outstanding at end of period	$0.18	'	'
Aggregate Intrinsic Value	'	'	'
Aggregate Intrinsic Value Outstanding, End	$0	'	'
Stock Options	'	'	'
Shares:	'	'	'
Outstanding at beginning of period	12,735,000	5,920,000	6,920,000
Shares granted	0	6,830,000	2,200,000
Shares exercised	0	0	0
Shares forfeitures	-25,000	-15,000	-3,200,000
Outstanding at end of period	12,710,000	12,735,000	5,920,000
Weighted Average Exercise Price:	'	'	'
Outstanding at beginning of period	$0.13	$0.13	$0.30
Shares granted	$0	$0.12	$0.10
Shares exercised	$0	$0	$0
Shares forfeitures	$0.24	$0.24	$0.47
Outstanding at end of period	$0.13	$0.13	$0.13
Aggregate Intrinsic Value	'	'	'
Aggregate Intrinsic Value Outstanding, Beginning	1,609,200	776,800	2,050,800
Aggregate Intrinsic Value Outstanding, Granted	$0	$836,000	$229,000
Aggregate Intrinsic Value Outstanding, Forefeitures	-6,000	-3,600	-1,503,000
Aggregate Intrinsic Value Outstanding, End	$1,603,200	$1,609,200	$776,800

14_STOCK_OPTIONS_Details_1

14. STOCK OPTIONS (Details 1) (USD $)	3 Months Ended
	Dec. 31, 2013
Number of Outstanding Stock Options	128,072,223
Weighted Average Remaining Life (years)	'4 years 3 months 25 days
Weighted Average Exercise Price Exerciseable	$0.18
Shares Exercisable	128,072,223
Stock Options	'
Number of Outstanding Stock Options	12,710,000
Weighted Average Remaining Life (years)	'6 years 1 month 6 days
Weighted Average Exercise Price Exerciseable	$0.13
Shares Exercisable	10,183,334
Exercise Price 0.090 [Member]	'
Number of Outstanding Stock Options	500,000
Weighted Average Remaining Life (years)	'6 years
Weighted Average Exercise Price Exerciseable	$0.09
Shares Exercisable	500,000
Exercise Price 0.100 [Member]	'
Number of Outstanding Stock Options	3,630,000
Weighted Average Remaining Life (years)	'6 years 3 months 11 days
Weighted Average Exercise Price Exerciseable	$0.10
Shares Exercisable	2,092,223
Exercise Price 0.120 [Member]	'
Number of Outstanding Stock Options	200,000
Weighted Average Remaining Life (years)	'6 months
Weighted Average Exercise Price Exerciseable	$0.12
Shares Exercisable	133,334
Exercise Price 0.130 [Member]	'
Number of Outstanding Stock Options	5,100,000
Weighted Average Remaining Life (years)	'5 years 11 months 5 days
Weighted Average Exercise Price Exerciseable	$0.13
Shares Exercisable	4,177,777
Exercise Price 0.150 [Member]	'
Number of Outstanding Stock Options	3,100,000
Weighted Average Remaining Life (years)	'6 years 11 days
Weighted Average Exercise Price Exerciseable	$0.15
Shares Exercisable	3,100,000
Exercise Price 0.240 [Member]	'
Number of Outstanding Stock Options	180,000
Weighted Average Remaining Life (years)	'1 year 6 months
Weighted Average Exercise Price Exerciseable	$0.24
Shares Exercisable	180,000

14_STOCK_OPTIONS_Details_Narra

14. STOCK OPTIONS (Details Narrative) (USD $)	3 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Compensation expense	$23,503	$16,014
Options to purchase common stock under 2011 Stock Incentive Plan	128,072,223	'
2011 Stock Incentive Plan	'	'
Options to purchase common stock under 2011 Stock Incentive Plan	12,710,000	'
Average exercise price under 2011 Stock Incentive Plan	$0.13	'

16_COMMITMENTS_CONTINGENCIES_A2

16. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS (Details) (USD $)	Dec. 31, 2013
Notes to Financial Statements	'
2014	$81,437
2015	65,292
2016	9,502
2017	0
2018	0
Beyond	0
Total	$156,231