Know Labs (KNWN) 10-K/A 5 Jun 17 2016 FY Annual report (amended) Financial data

Document and Entity Information

Document and Entity Information - USD ($)	12 Months Ended
	Sep. 30, 2016	Jan. 13, 2017	Mar. 31, 2016
Document And Entity Information
Entity Registrant Name	VISUALANT INC
Entity Central Index Key	1,074,828
Document Type	10-K/A
Document Period End Date	Sep. 30, 2016
Amendment Flag	true
Amendment Description	This Amendment No. 2 on Form 10-K/A amends the Company’s Annual Report on Form 10-K/A for the year ended September 30, 2016, as filed with the Securities and Exchange Commission (the “SEC”) on April 13, 2017, amending the Company's 10-K as filed on January 13, 2017 (the “Original Filing”). The purpose of this Amendment No. 2 on Form 10-K/A is to respond to certain comments received from the Staff of the SEC. For convenience and ease of reference, the Company is filing this Form 10-K/A in its entirety with all applicable changes and unless otherwise stated, all information contained in this amendment is as of the filing date of the Original Filing. Except as stated herein, this Form 10-K/A does not reflect events or transactions occurring after such filing date or modify or update those disclosures in the original Form 10-K that may have been affected by events or transactions occurring subsequent to such filing date. The Company has revised its statement of cash flows to more accurately reflect transactions between operating activities and financing activities that were previously netted. As a result, the change to cash used in operations was reduced from $3,373,734 to $2,746,333 and the change in cash provided by financing activities was reduced from $3,496,629 to $2,869,228. The Company revised its statement of stockholders’ equity (deficit) to correct a typographical error and to reflect the preferred B shares converted into common stock as a single line item on the statement of stockholder equity. These revisions had no effect on the Company’s net loss, asset or liabilities for the year ended September 30, 2016.
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 Public Float			$ 6,469,953
Entity Common Stock, Shares Outstanding		3,570,010
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2,016

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($)	Sep. 30, 2016	Sep. 30, 2015
CURRENT ASSETS:
Cash and cash equivalents	$ 188,309	$ 82,266
Accounts receivable, net of allowance of $55,000 and $40,000, respectively	808,955	619,849
Prepaid expenses	20,483	27,774
Inventories, net	295,218	217,824
Total current assets	1,312,965	947,713
EQUIPMENT, NET	285,415	366,250
OTHER ASSETS
Intangible assets, net	43,750	158,000
Goodwill	983,645	983,645
Other assets	5,070	5,070
TOTAL ASSETS	2,630,845	2,460,678
CURRENT LIABILITIES:
Accounts payable - trade	1,984,326	2,520,223
Accounts payable - related parties	41,365	73,455
Accrued expenses	80,481	4,068
Accrued expenses - related parties	1,109,046	1,256,861
Derivative liability	145,282	2,704,840
Convertible notes payable	909,500	109,000
Notes payable - current portion of long term debt	1,170,339	1,164,692
Deferred revenue	0	5,833
Total current liabilities	5,440,339	7,838,972
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT
Preferred stock - $0.001 par value, 5,000,000 shares authorized	0	0
Common stock - $0.001 par value, 100,000,000 shares authorized, 2,356,152 and 1,155,991 shares issued and outstanding at 6/30/2016 and 9/30/2015, respectively	2,356	1,156
Additional paid in capital	24,259,702	18,786,694
Accumulated deficit	(27,073,365)	(24,166,156)
Total stockholders' deficit	(2,809,494)	(5,378,294)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	2,630,845	2,460,678
Series A Convertible Preferred Stock
STOCKHOLDERS' DEFICIT
Preferred stock - $0.001 par value, 5,000,000 shares authorized	23	12
Series C Convertible Preferred Stock
STOCKHOLDERS' DEFICIT
Preferred stock - $0.001 par value, 5,000,000 shares authorized	$ 1,790	$ 0

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Sep. 30, 2016	Sep. 30, 2015
CURRENT ASSETS:
Allowance for Accounts receivable	$ 55,000	$ 40,000
EQUITY (DEFICIT)
Preferred stock par value	$ 0.001	$ 0.001
Preferred stock shares authorized	5,000,000	5,000,000
Preferred stock shares issued	0	0
Preferred stock shares outstanding	0	0
Common stock par value	$ 0.001	$ 0.001
Common stock shares authorized	100,000,000	100,000,000
Common stock shares issued	2,356,152	1,155,991
Common stock shares outstanding	2,356,152	1,155,991
Series A Convertible Preferred Stock
EQUITY (DEFICIT)
Preferred stock par value	$ 0.001	$ 0.001
Preferred stock shares authorized	23,334	23,334
Preferred stock shares issued	23,334	23,334
Preferred stock shares outstanding	23,334	23,334
Series C Convertible Preferred Stock
EQUITY (DEFICIT)
Preferred stock par value	$ 0.001	$ 0.001
Preferred stock shares authorized	1,785,715	1,785,715
Preferred stock shares issued	0	0
Preferred stock shares outstanding	0	0

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Income Statement [Abstract]
REVENUE	$ 6,023,600	$ 6,290,794
COST OF SALES	5,035,699	5,274,334
GROSS PROFIT	987,901	1,016,460
RESEARCH AND DEVELOPMENT EXPENSES	325,803	362,661
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	3,355,263	2,983,751
OPERATING LOSS	(2,693,165)	(2,329,952)
OTHER INCOME (EXPENSE):
Interest expense	(323,928)	(170,176)
Other (expense) income	(11,228)	40,672
Gain on change - derivative liability	2,559,558	(107,956)
(Loss) on conversion of debt	(1,277,732)	(34,035)
Total other income (expense)	946,670	(271,495)
(LOSS) BEFORE INCOME TAXES	(1,746,495)	(2,601,447)
Income taxes - current provision	0	29,590
NET (LOSS)	(1,746,495)	(2,631,037)
NET (LOSS) ATTRIBUTABLE TO VISUALANT, INC. AND SUBSIDIARIES COMMON SHAREHOLDERS	$ (1,746,495)	$ (2,631,037)
Basic and diluted loss per common share attributable to Visualant, Inc. and subsidiaries common shareholders-
Basic and diluted income (loss) per share	$ (1.22)	$ (2.33)
Weighted average shares of common stock outstanding- basic and diluted	1,428,763	1,131,622

CONSOLIDATED STATEMENT OF SHARE

CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY - USD ($)	Series A Convertible Preferred Stock	Series B Convertible Preferred Stock	Series C Convertible Preferred Stock	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Total
Beginning Balance, Amount at Sep. 30, 2014	$ 0	$ 0	$ 0	$ 1,121	$ 18,125,411	$ (21,535,119)	$ (3,408,587)
Beginning Balance, Shares at Sep. 30, 2014	0	0	0	1,121,150
Stock compensation expense - employee options					65,463		65,463
Issuance of Series A Convertible preferred stock, Amount	$ 12				233,310		233,322
Issuance of Series A Convertible preferred stock, Shares	11,667
Issuance of common stock for services, Amount				$ 9	137,491		137,500
Issuance of common stock for services, Shares				9,169
Issuance of common stock for debt conversion, Amount				$ 25	91,781		91,806
Issuance of common stock for debt conversion, Shares				24,710
Reversal of derivative liability for debt repayment					98,940		98,940
Effect of reverse stock split, Amount				$ 1	263		264
Effect of reverse stock split, Shares				962
Loss on conversion of debt					34,035		34,035
Net loss						(2,631,037)	(2,631,037)
Ending Balance, Amount at Sep. 30, 2015	$ 12	$ 0	$ 0	$ 1,156	18,786,694	(24,166,156)	(5,378,294)
Ending Balance, Shares at Sep. 30, 2015	11,667	0	0	1,155,992
Stock compensation expense - employee options					46,398		46,398
Issuance of Series A Convertible preferred stock, Amount	$ 11				(11)		0
Issuance of Series A Convertible preferred stock, Shares	11,667
Issuance of Series B Redeemable Convertible preferred stock, Amount		$ 5			504,995		505,000
Issuance of Series B Redeemable Convertible preferred stock, Shares		51
Issuance of Series C Convertible preferred stock, Amount			$ 1,790		1,248,214		1,250,004
Issuance of Series C Convertible preferred stock, Shares			0
Issuance of common stock for services, Amount				$ 63	273,948		274,011
Issuance of common stock for services, Shares				63,979
Issuance of warrant for services					120,751		120,751
Issuance of common stock for warrants exercise, Amount				$ 207	518,955		519,162
Issuance of common stock for warrants exercise, Shares				207,666
Issuance of common stock, Amount				$ 726	570,152		570,878
Issuance of common stock, Shares				724,786
Issuance of convertible notes payable					120,501		120,501
Conversion of Series B Redeemable Convertible Preferred Stock, Amount		$ (5)		$ 126	675,474		675,595
Conversion of Series B Redeemable Convertible Preferred Stock, Shares		(51)		126,064
Benefical conversion feature of Preferred Stock/dividend					1,160,714	(1,160,714)	0
Issuance of common stock for conversion of liabilities, Amount				$ 78	232,917		232,995
Issuance of common stock for conversion of liabilities, Shares				77,665
Net loss					(1,746,495)		(1,746,495)
Ending Balance, Amount at Sep. 30, 2016	$ 23	$ 0	$ 1,790	$ 2,356	$ 24,259,702	$ (27,073,365)	$ (2,809,494)
Ending Balance, Shares at Sep. 30, 2016	23,334	0	0	2,356,152

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (1,746,495)	$ (2,631,037)
Adjustments to reconcile net loss to net cash (used in) operating activities
Depreciation and amortization	178,762	353,229
Issuance of capital stock for services and expenses	394,825	137,500
Loss on conversion of preferred stock	675,695	0
Stock based compensation	46,398	65,463
Loss on termination of stock purchase agreement	505,000	0
Non cash loss on debt settlement	97,037	0
Loss (gain) on sale of assets	34,027	(20,042)
(Gain) loss on change - derivative liability	(2,559,558)	107,956
Amortization of debt discount	299,912	0
Provision for losses on accounts receivable	0	28,266
Non-cash related to issuance of convertible notes payable	177,011	0
Loss on conversion of debt	772,732	34,035
Changes in operating assets and liabilities:
Accounts receivable	(189,106)	167,345
Prepaid expenses	7,291	(2,707)
Inventory	(77,394)	195,007
Accounts payable - trade and accrued expenses	(406,394)	1,289,685
Income tax receivable	0	29,590
Deferred revenue	(5,833)	5,833
NET CASH (USED IN) OPERATING ACTIVITIES	(2,786,333)	(239,877)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(23,437)	0
Proceeds from sale of equipment	6,585	21,452
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES:	(16,852)	21,452
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds (repayments) from line of credit	5,647	(123,633)
Proceeds from sale of preferred stock	2,255,004	350,000
Proceeds from warrant exercises	519,162	0
Proceeds from convertible notes payable	1,174,500	173,000
Payment to terminate preferred stock purchase agreement	(505,000)	0
Repayment of convertible notes	(580,085)	(166,500)
Repayments of capital leases	0	(2,562)
NET CASH PROVIDED BY FINANCING ACTIVITIES	2,869,228	230,305
NET INCREASE IN CASH AND CASH EQUIVALENTS	106,043	11,880
CASH AND CASH EQUIVALENTS, beginning of period	82,266	70,386
CASH AND CASH EQUIVALENTS, end of period	188,309	82,266
Supplemental disclosures of cash flow information:
Interest paid	50,327	114,907
Taxes paid	0	0
Non-cash investing and financing activities:
Gain on change - derivative liability warrants	0	17,727
Issuance of common stock for debt conversion	$ 0	$ 91,806

1. ORGANIZATION

1. ORGANIZATION	12 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
1. ORGANIZATION	The Company has revised its statement of cash flows to more accurately reflect transactions between operating activities and financing activities that were previously netted. As a result, the change to cash used in operations was reduced from $3,373,734 to $2,746,333 and the change in cash provided by financing activities was reduced from $3,496,629 to $2,869,228. The Company revised its statement of stockholders’ equity (deficit) to correct a typographical error and to reflect the preferred B shares converted into common stock as a single line item on the statement of stockholder equity. These revisions had no effect on the Company’s net loss, asset or liabilities for the year ended September 30, 2016. Visualant, Incorporated (the “Company,” “Visualant, Inc.” or “Visualant”) was incorporated under the laws of the State of Nevada in 1998. The Company has authorized 105,000,000 shares of capital stock, of which 100,000,000 are shares of voting common stock, par value $0.001 per share, and 5,000,000 are shares preferred stock, par value $0.001 per share. On March 8, 2016, the Company received approval from the State of Nevada for the Correction to the Company’s Amended and Restated Certificate of Designations, Preferences and Rights of its Series A Convertible Preferred Stock. The Amended and Restated Certificate filed July 21, 2015 changed the conversion price and the stated value from $0.10 (pre reverse stock split) to $30.00 (post-reverse stock split), and adding a provision adjusting the conversion price upon the occurrence of certain events. On August 11, 2016, the Company applied with the State of Nevada for the approval of the Certificate of Designations, Preferences, and Rights of Series C Convertible Preferred Stock. The Certificate designated 1,785,715 shares as Series C Convertible Preferred Stock at a par value of $.001 per share that is convertible into common stock at $0.70 per share, with certain adjustments as set forth in the Certificate. On August 31, 2016, the Company filed with the State of Nevada a Certificate of Correction to the Certificate of Designations of Preferences, Powers, Rights and Limitations for the Series C Redeemable Convertible Preferred Stock. The Certificate authorized 5,000 shares of Series C Preferred Stock at a par value of $.001 per share that is convertible into common stock at $0.70 per share, with certain adjustments as set forth in the Certificate. Since 2007 the Company has been focused primarily on the development of a proprietary technology which is capable of uniquely identifying and authenticating almost any substance using light at the “photon” level to detect the unique digital “signature” of the substance. The Company calls this its “ChromaID™” technology. In 2010, the Company acquired TransTech Systems, Inc. as an adjunct to its business. TransTech is a distributor of products for employee and personnel identification. TransTech currently provides substantially all of the Company’s revenues. The Company is in the process of commercializing its ChromaID™ technology. To date, the Company has entered into License Agreements with Sumitomo Precision Products Co., Ltd. and Intellicheck, Inc. In addition, it has a strategic relationship with Invention Development Management Company, L.L.C. (“IDMC”). The Company believes that its commercialization success is dependent upon its ability to significantly increase the number of customers that are purchasing and using its products. To date the Company has generated minimal revenue from sales of its ChromaID products. The Company is currently not profitable. Even if the Company succeeds in introducing the ChromaID technology and related products to its target markets, the Company may not be able to generate sufficient revenue to achieve or sustain profitability. ChromaID was invented by scientists from the University of Washington under contract with Visualant. The Company has pursued an aggressive intellectual property strategy and have been granted ten patents. The Company also has 20 patents pending. The Company possess all right, title and interest to the issued patents. Ten of the pending patents are licensed exclusively to the Company in perpetuity by the Company’s strategic partner, Intellectual Ventures through its subsidiary IDMC. On May 6, 2015, the Company’s stockholders approved a reverse split of our common stock, in a ratio to be determined by the Company’s Board of Directors, of not less than 1-for-50 nor more than 1-for-150. On June 9, 2015, the Company’s Board of Directors determined that the ratio of the reverse split would be 1-for-150. All warrant, option, share and per share information in this Form 10-Q gives retroactive effect for a 1-for-150 split with all numbers rounded up to the nearest whole share.

2. GOING CONCERN

2. GOING CONCERN	12 Months Ended
	Sep. 30, 2016
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 $1,746,495 and $2,631,037 for the years ended September 30, 2016 and 2015, respectively. Net cash used in operating activities was $(3,373,734) and $(239,877) for the years ended September 30, 2016 and 2015, respectively. The Company anticipates that it will record losses from operations for the foreseeable future. As of September 30, 2016, the Company’s accumulated deficit was $27,073,365. 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, or entities with which he is affiliated. These conditions raise substantial doubt about our ability to continue as a going concern. The audit report prepared by the Company’s independent registered public accounting firm relating to our financial statements for the year ended September 30, 2016 includes an explanatory paragraph expressing the substantial doubt about the Company’s 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	12 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
3. SIGNIFICANT ACCOUNTING POLICIES: ADOPTION OF ACCOUNTING STANDARDS	Basis of Presentation Principles of Consolidation Cash and Cash Equivalents Accounts Receivable and Allowance for Doubtful Accounts Inventories Equipment Intangible Assets/ Intellectual Property Goodwill Long-Lived Assets Fair Value Measurements and Financial Instruments Fair Value Measurement and Disclosures 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 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement. 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 September 30, 2016 and 2015 based upon the short-term nature of the assets and liabilities. Derivative financial instruments - Revenue Recognition Stock Based Compensation Convertible Securities Income Taxes . Net Loss per Share Dividend Policy Use of 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 the Company’s consolidated financial statements. In May 2014, as part of its ongoing efforts to assist in the convergence of GAAP and International Financial Reporting Standards, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, which is a new standard related to revenue recognition. Under the new standard, recognition of revenue occurs when a customer obtains control of promised services or goods in an amount that reflects the consideration to which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts. The standard must be adopted using either a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach. In July 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers - Deferral of the Effective Date, which defers the implementation of this new standard to be effective for fiscal years beginning after December 15, 2017. Early adoption is permitted effective January 1, 2017. In March 2016, the FASB issued ASU 2016-08, Principal versus Agent Considerations, which clarifies the implementation guidance on principal versus agent considerations in the new revenue recognition standard pursuant to ASU 2014-09. In April 2016, the FASB issued ASU 2016-10, Identifying Performance Obligations and Licensing, and in May 2016, the FASB issued ASU 2016-12, Narrow-Scope Improvements and Practical Expedients, which amend certain aspects of the new revenue recognition standard pursuant to ASU 2014-09. The Company currently evaluating which transition approach we will utilize and the impact of adopting this accounting standard on the Company’s financial statements. In August 2014, the FASB issued ASU 2014-15, Disclosures of Uncertainties About an Entity’s Ability to Continue as a Going Concern. The new standard provides guidance around management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. The Company does not expect that this guidance will have a material impact on its financial position, results of operations or cash flows. In January 2015, the FASB issued ASU 2015-01, Income Statement—Extraordinary and Unusual Items. The objective of this Update is to simplify the income statement presentation requirements in Subtopic 225-20 by eliminating the concept of extraordinary items. Extraordinary items are events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence. Eliminating the extraordinary classification simplifies income statement presentation by altogether removing the concept of extraordinary items from consideration. This Accounting Standards Update is the final version of Proposed Accounting Standards Update 2014-220—Income Statement—Extraordinary Items (Subtopic 225-20), which has been deleted. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. the Company’s does not expect this update to have a material impact on financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”). The standard amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 will be effective beginning in the first quarter of 2019. Early adoption of ASU 2016-02 is permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently evaluating the impact of adopting ASU 2016-02 on the Company’s financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This ASU makes targeted amendments to the accounting for employee share-based payments. This guidance is to be applied using various transition methods such as full retrospective, modified retrospective, and prospective based on the criteria for the specific amendments as outlined in the guidance. The guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. Early adoption is permitted, as long as all of the amendments are adopted in the same period. The Company is currently evaluating the impact of adopting ASU 2016-09 on the Company’s financial statements. In June 2016, the FASB issued Accounting Standards Update ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard significantly changes how entities will measure credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. The standard will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount, as they do today under the other-than-temporary impairment model. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. This ASU is effective for annual periods beginning after December 15, 2019, and interim periods therein. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods therein. This ASU is not expected to have a material impact on the Company’s financial statements. In August 2016, the FASB issued Accounting Standards Update ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. Stakeholders indicated that there is diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. This Accounting Standards Update addresses the following eight specific cash flow issues: Debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rateof the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (COLIs) (including bank-owned life insurance policies (BOLIs)); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. The amendments in this Update apply to all entities, including both business entities and not-for-profit entities that are required to present a statement of cash flows under Topic 230.This Update is the final version of Proposed Accounting Standards Update EITF-15F—Statement of Cash Flows—Classification of Certain Cash Receipts and Cash Payments (Topic 230), which has been deleted. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted as all of the amendments are adopted in the same period. This ASU is not expected to have a material impact on the Company’s financial statements.

4. DEVELOPMENT OF CHROMAID(TM)

4. DEVELOPMENT OF CHROMAID(TM) TECHNOLOGY	12 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
4. DEVELOPMENT OF CHROMAID(TM) TECHNOLOGY	The Company is focused primarily on the development of a proprietary technology which is capable of uniquely identifying and authenticating almost any substance using light to create, record and detect the unique digital “signature” of the substance. The Company calls this its “ChromaID™” technology. The Company’s ChromaID™ Technology The Company has developed a proprietary technology to uniquely identify and authenticate almost any substance. This patented technology utilizes light at the photon (elementary particle of light) level through a series of emitters and detectors to generate a unique signature or “fingerprint” from a scan of almost any solid, liquid or gaseous material. This signature of reflected or transmitted light is digitized, creating a unique ChromaID signature. Each ChromaID signature is comprised of from hundreds or thousands of specific data points. The ChromaID technology looks beyond visible light frequencies to areas of near infra-red and ultraviolet light that are outside the humanly visible light spectrum. The data obtained allows the Company to create a very specific and unique ChromaID signature of the substance for a myriad of authentication and verification applications. Traditional light-based identification technology, called spectrophotometry, has relied upon a complex system of prisms, mirrors and visible light. Spectrophotometers typically have a higher cost and utilize a form factor more suited to a laboratory setting and require trained laboratory personnel to interpret the information. TheChromaID technology uses lower cost LEDs and photodiodes and specific frequencies of light resulting in a more accurate, portable and easy-to-use solution for a wide variety of applications. The ChromaID technology not only has significant cost advantages as compared to spectrophotometry, it is also completely flexible is size, shape and configuration. The ChromaID scan head can range in size from endoscopic to a scale that could be the size of a large ceiling-mounted florescent light fixture. In normal operation, a ChromaID master or reference scan is generated and stored in a database. The Visualant scan head can then scan similar materials to identify, authenticate or diagnose them by comparing the new ChromaID digital signature scan to that of the original or reference ChromaID signature or scan result. The following summarizes the Company’s plans for its Company’s proprietary ChromaID technology. Based on the Company’s anticipated expenditures on this technology, the expected efforts of its management and its relationship with Intellectual Ventures and its subsidiary, IDMC, and the Company’s other strategic partner, Sumitomo Precision Products, Ltd., the Company expects its ChromaID technology to provide an increasing portion of its revenues in future years from product sales, licenses, royalties and other revenue streams., as discussed further below. ChromaID: A Foundational Platform Technology The Company’s ChromaID technology provides a platform upon which a myriad of applications can be developed. As a platform technology, it is analogous to a smartphone, upon which an enormous number of previously unforeseen applications have been developed. The ChromaID technology is an enabling technology that brings the science of light and photonics to low cost, real world commercialization opportunities across multiple industries. The technology is foundational and as such, the basis upon which the Company believes a significant business can be built. As with other foundational technologies, a single application may reach across multiple industries. The ChromaID technology can, for example effectively differentiate and identify different brands of clear vodkas that appear identical to the human eye. By extension this same technology can identify pure water from water with contaminants present. It can provide real time detection of liquid medicines such as morphine that have been adulterated or compromised. It can detect if jet fuel has water contamination present. It could determine when it is time to change oil in a deep fat fryer. These are but a few of the potential applications of the ChromaID technology based upon extensions of its ability to identify different clear liquids. The cornerstone of a company with a foundational platform technology is its intellectual property. ChromaID was invented by scientists from the University of Washington under contract with Visualant. The Company has pursued an aggressive intellectual property strategy and has been granted nine patents. The Company currently has 20 patents pending. The Company possesses all right, title and interest to the issued patents. Ten of the pending patents are licensed exclusively to us in perpetuity by our strategic partner, the IDMC subsidiary of Intellectual Ventures. IDMC Relationship In November 2013, the Company entered into a strategic relationship with IDMC, a subsidiary of Intellectual Ventures, a private intellectual property fund. In May of 2016, Intellectual Ventures was spun out IDMC into an independent company called Xinova. The relationship remains intact. IDMC has worked to expand the reach and the potential application of the ChromaID technology and has filed ten patents base on the ChromaID technology, which it has licensed to the Company. In connection with IDMC’s work to expand the Company’s intellectual property portfolio, the Company agreed to curtail outbound marketing activities of its technology through the fourth fiscal quarter of 2014. Products The Company first delivered product, the ChromaID 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, commercial paint manufacturers, pharmaceutical equipment manufacturers, process control companies, currency paper and ink manufacturers, security cards, cosmetic companies, scanner manufactures and food processing companies. The Company’s second product, the ChromaID Liquid Lab Kit, scans and identifies liquids. This product is currently in prototype form. Similar to the Company’s first product, it will be marketed to customers who are considering licensing the technology. Rather than use an LED emitter to reflect light off of a surface that is captured by a photodiode to generate a ChromaID signature the liquid analysis product shines light through the liquid (transmissive) with the LEDs positioned on one side of the liquid sample and the photo detectors on the opposite side. This device is in a functional state in our laboratory and the Company anticipates having a Liquid ChromaID Lab Kit available for customers by the Company during the fall of 2015. Target markets include, but are not limited to, water companies, petrochemical companies, pharmaceutical companies, and numerous consumer applications. The ChromaID Lab Kits allows potential licensors of our technology to work with our technology and develop solutions for their particular application. Our contractual arrangements with IDMC are described in greater detail below. The Company’s next planned product should be an exemplar product is a prototype that will be produced to address several markets. The primary purpose of this prototype will be to demonstrate the technology to prospective business partners, and will consist of a small, hand held, battery powered, Bluetooth enabled scanning device. The scanner should wirelessly connect to a smart phone or tablet to transfer the scanned data. The smart phone application will include two or three industry specific but generic applications that allow for the demonstration of the scanning and matching of the ChromaID signatures. The applications will focus on drug identification, food safety and liquid detection. The prototype device will lend itself to consumer applications and can be a consumer product as well. Research and Development The Company’s research and development efforts are primarily focused improving the core foundational ChromaID technology and developing new and unique applications for the technology. As part of this effort, the Company typically conduct testing to ensure that ChromaID application methods are compatible with the customer’s requirements, and that they can be implemented in a cost effective manner. The Company is also actively involved in identifying new application methods. Visualant’s team has considerable experience working with the application of light-based technologies and their application to various industries. The Company believes that its continued development of new and enhanced technologies relating to our core business is essential to its future success. The Company spent $325,803 and $362,661 during the years ended September 30, 2016 and 2015, respectively, on research and development activities. The Company’s research and development efforts are supported internally, through its relationship with IDMC and through contractors led by Dr. Tom Furness and his team at RATLab LLC. The Company’s Patents The Company believes that it’s ten patents, 20 patent applications, and two registered trademarks, and our trade secrets, copyrights and other intellectual property rights are important assets. The Company’s patents will expire at various times between 2027 and 2033. The duration of the Company’s trademark registrations varies from country to country. However, trademarks are generally valid and may be renewed indefinitely as long as they are in use and/or their registrations are properly maintained. The patents that have been granted to Visualant include: 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. On November 21, 2014, the Company was issued US Patent No. 8,888,207 B2 entitled “Systems, Methods, and Articles Related to Machine-Readable Indicia and Symbols” by the United States Office of Patents and Trademarks. The patent expires February 7, 2033. On March 23, 2015, the Company was issued US Patent No. 8,988,666 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 May 26, 2015, the Company was issued patent US Patent No. 9,041,920 B2 entitled “Device for Evaluation of Fluids using Electromagnetic Energy” by the United States Office of Patents and Trademarks. The patent expires March 12, 2033. On April 19, 2016, the Company was issued patent US Patent No. 9,316,581 B2 entitled “Method, Apparatus, and Article to Facilitate Evaluation of Substances Using Electromagnetic Energy” by the United States Office of Patents and Trademarks. The patent expires March 12, 2033. The Company pursues an aggressive patent strategy to expand its unique intellectual property in the United States and other countries. Services and License Agreement Invention Development Management Company, L.L.C. In November 2013, the Company entered into a Services and License Agreement with IDMC. IDMC is affiliated with Intellectual Ventures, which collaborates with inventors and partners with pioneering companies and invests both expertise and capital in the process of invention. On November 19, 2014, the Company amended the Services and License Agreement with IDMC. This amendment exclusively licenses 10 filed patents to us. In May of 2016, Intellectual Ventures was spun out IDMC into an independent company called Xinova. The relationship remains intact. The agreement requires IDMC to identify and engage inventors to develop new applications of Visualant’s ChromaID™ technology, present the developments to us for approval, and file at least 10 patent applications to protect the developments. IDMC is responsible for the development and patent costs. The Company provided the Chroma ID Lab Kits to IDMC at no cost and are providing ongoing technical support. In addition, to provide time for this accelerated expansion of its intellectual property the Company delayed the selling of the ChromaID Lab Kits for 140 days except for certain select accounts. The Company continued its business development efforts during this period and have worked with IDMC and their global business development resources to secure potential customers and licensees for the ChromaID technology. The Company shipped 20 ChromaID Lab Kits to inventors in the IDMC network during December 2013 and January 2014. As part of the agreement with IDMC, the Company curtailed its ChromaID marketing efforts through the fourth calendar quarter of 2014 while IDMC worked to expand our intellectual property portfolio. Thereafter, the Company began to actively market the ChromaID Lab Kits to interested and qualified customers. The Company has received a worldwide, nontransferable, exclusive license to the intellectual property developed under the IDMC 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 received a nonexclusive and nontransferable option to acquire a worldwide, nontransferable, nonexclusive license to the useful intellectual property 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 is providing global business development services to us for geographies not being pursued by Visualant. Also, IDMC has introduced the Company to potential customers, licensees and distributors for the purpose of identifying and pursuing a license, sale or distribution arrangement or other monetization event. The Company granted to IDMC a nonexclusive, worldwide, fully paid, nontransferable, sublicenseable, perpetual license to our intellectual property 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, non-sublicenseable, perpetual license to access and use the Company’s technology solely for the purpose of marketing the aforementioned sublicenses of our intellectual property to third parties outside the designated fields of use. In connection with the original license agreement, the Company issued a warrant to purchase 97,169 shares of common stock to IDMC as consideration for the exclusive intellectual property license and application development services. The warrant has a current exercise price of $0.70 per share and expires November 10, 2018. The per share price is subject to adjustment based on any issuances below $0.70 per share except as described in the warrant. The Company agreed to pay IDMC a percentage of license revenue for the global development business services and a percentage of revenue received from any company introduced to us by IDMC. The Company also have also agreed to pay IDMC a royalty when the Company receives royalty product revenue from an IDMC-introduced company. IDMC has agreed to pay the Company a license fee for the nonexclusive license of the Company’s intellectual property. The term of both the exclusive intellectual property license and the nonexclusive intellectual property 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.

5. AGREEMENT WITH SUMITOMO PREC

5. AGREEMENT WITH SUMITOMO PRECISION PRODUCTS CO., LTD.	12 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
5. AGREEMENT WITH SUMITOMO PRECISION PRODUCTS CO., LTD.	In May 2012, the Company entered into a Joint Research and Product Development Agreement (the “Joint Development Agreement”) with Sumitomo Precision Products Co., Ltd., a publicly-traded Japanese corporation, for the commercialization of our ChromaID technology. In March 2013, the Company entered into an amendment to this agreement, which extended the Joint Development Agreement from March 31, 2013 to December 31, 2013. The extension provided for continuing work between Sumitomo and Visualant focused on advancing the ChromaID technology and market research aimed at identifying the most significant markets for the ChromaID technology. This agreement expired December 31, 2013. This collaborative work supported the development of the ChromaID Lab Kit. The current version of the technology was introduced to the marketplace as a part of our ChromaID Lab Kit during the fourth quarter of 2013. The Company also entered into a License Agreement with Sumitomo in May 2012 which provides for an exclusive license for the then-extant ChromaID technology. The territories covered by this license include Japan, China, Taiwan, Korea and the entirety of Southeast Asia (Burma, Indonesia, Thailand, Cambodia, Laos, Vietnam, Singapore and the Philippines). On May 21, 2015, the Company entered into an amendment to the License Agreement, which, effective as of June 18, 2014, which eliminated the Sumitomo exclusivity and provides that if the Company sells products in certain territories – Japan, China, Taiwan, Korea and the entirety of Southeast Asia (Burma, Indonesia, Thailand, Cambodia, Laos, Vietnam, Singapore and the Philippines) – the Company will pay Sumitomo a royalty rate of 2% of net sales (excluding non-recurring engineering revenues) over the remaining term of the five-year License Agreement (through May 2017).

6. ACCOUNTS RECEIVABLE_CUSTOMER

6. ACCOUNTS RECEIVABLE/CUSTOMER CONCENTRATION	12 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
6. ACCOUNTS RECEIVABLE/CUSTOMER CONCENTRATION	Accounts receivable were $808,955 and $619,849, net of allowance, as of September 30, 2016 and 2015, respectively. The Company had one customer (13.3%) in excess of 10% of the Company’s consolidated revenues for the year ended September 30, 2016. The Company had one customer (35.3%) with accounts receivable in excess of 10% as of September 30, 2016.

7. INVENTORIES

7. INVENTORIES	12 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
7. INVENTORIES	Inventories were $295,218 and $217,824 as of September 30, 2016 and 2015, 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 $25,000 and $20,000 reserve for impaired inventory as of September 30, 2016 and 2015, respectively.

8. FIXED ASSETS

8. FIXED ASSETS	12 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
8. FIXED ASSETS	Fixed assets, net of accumulated depreciation, was $285,415 and $366,250 as of September 30, 2016 and 2015, respectively. Accumulated depreciation was $796,481 and $803,705 as of September 30, 2016 and 2015, respectively. Total depreciation expense, was $64,512 and $79,576 for the years ended September 30, 2016 and 2015, respectively. All equipment is used for selling, general and administrative purposes and accordingly all depreciation is classified in selling, general and administrative expenses. Property and equipment as of September 30, 2016 was comprised of the following: Estimated September 30, 2016 Useful Lives Purchased Capital Leases Total Machinery and equipment 2-10 years $ 252,636 $ 69,581 $ 322,217 Leasehold improvements 5-20 years 548,612 - 548,612 Furniture and fixtures 3-10 years 73,977 101,260 175,237 Software and websites 3- 7 years 35,830 - 35,830 Less: accumulated depreciation (625,640 ) (170,841 ) (796,481 ) $ 285,415 $ - $ 285,415

9. INTANGIBLE ASSETS

9. INTANGIBLE ASSETS	12 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
9. INTANGIBLE ASSETS	Intangible assets as of September 30, 2016 and 2015 consisted of the following: Estimated September 30, September 30, Useful Lives 2016 2015 Customer contracts 5 years $ 983,645 $ 983,645 Technology 5 years 712,500 712,500 Less: accumulated amortization (1,652,395 ) (1,538,145 ) Intangible assets, net $ 43,750 $ 158,000 Total amortization expense was $114,250 and $273,653 for the years ended September 30, 2016 and 2015, 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 TransTech intellectual property was fully amortized as of September 30, 2016. 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 assets 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.

10. ACCOUNTS PAYABLE

10. ACCOUNTS PAYABLE	12 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
10. ACCOUNTS PAYABLE	Accounts payable were $1,984,326 and $2,520,223 as of September 30, 2016 and 2015, 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 one vendor (11.0%) with accounts payable in excess of 10% of its accounts payable as of September 30, 2016. The Company does expect to have vendors with accounts payable balances of 10% of total accounts payable in the foreseeable future.

11. DERIVATIVE INSTRUMENTS

11. DERIVATIVE INSTRUMENTS	12 Months Ended
	Sep. 30, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract]
11. DERIVATIVE INSTRUMENTS	In April 2008, the FASB issued a pronouncement that provides guidance on determining what types of instruments or embedded features in an instrument held by a reporting entity can be considered indexed to its own stock for the purpose of evaluating the first criteria of the scope exception in the pronouncement on accounting for derivatives. This pronouncement was effective for financial statements issued for fiscal years beginning after December 15, 2008. The adoption of these requirements can affect the accounting for warrants and many convertible instruments with provisions that protect holders from a decline in the stock price (or “down-round” provisions). For example, warrants or conversion features with such provisions are no longer recorded in equity. Down-round provisions reduce the exercise price of a warrant or convertible instrument if a company either issues equity shares for a price that is lower than the exercise price of those instruments or issues new warrants or convertible instruments that have a lower exercise price. Derivative liability as of September 30, 2016 is as follows: Carrying Fair Value Measurements Using Inputs Amount at Financial Instruments Level 1 Level 2 Level 3 September 30, 2016 Liabilities: Derivative Instruments $ - $ 145,282 $ - $ 145,282 Total $ - $ 145,282 $ - $ 145,282 Derivative liability as of September 30, 2015 is as follows: Carrying Fair Value Measurements Using Inputs Amount at Financial Instruments Level 1 Level 2 Level 3 September 30, 2015 Liabilities: Derivative Instruments $ - $ 2,704,840 $ - $ 2,704,840 Total $ - $ 2,704,840 $ - $ 2,704,840 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. Derivative Instruments – Warrants with the June 2013 Private Placement The Company issued warrants to purchase 697,370 shares of common stock in connection with our June 2013 private placement of 348,685 shares of common stock. The per share price is subject to adjustment. In August 2016 the exercise price was reset to $0.70 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 our 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 shares of common stock 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 allocated to stockholders’ equity and $2,735,290 allocated to the warrant derivative. 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 the year ended September 30, 2014, the Company recognized $2,092,000 of other income resulting from the decrease in the fair value of the warrant liability at September 30, 2014. During the year ended September 30, 2015, the Company recognized $104,716 of other expense resulting from the decrease in the fair value of the warrant liability at September 30, 2015. During the year ended September 30, 2016, the Company recognized $2,085,536 of other income resulting from the increase in the fair value of the warrant liability at September 30, 2016. Derivative Instruments – Warrant with the November 2013 IDMC Services and License Agreement 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 97,169 shares of common stock in connection with the November 2013 IDMC Services and License Agreement. The warrant price of $30.00 per share expires November 10, 2018 and the per share price is subject to adjustment. In August 2016 the exercise price was reset to $0.70 per share. 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 our common stock or securities exercisable, convertible or exchangeable for our common stock were issued at a price less than the exercise price. Therefore, the fair value of these warrants was 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 year ended September 30, 2014, the Company recognized $320,657 of other expense related to the IDMC warrant. During the year ended September 30, 2015, the Company recognized $14,574 of other income related to the IDMC warrant. During the year ended September 30, 2016, the Company recognized $286,260 of other income from the increase in the fair value of the warrant liability at September 30, 2016. Derivative Instrument – Series A Convertible Preferred Stock 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 Series A Convertible Preferred Stock. The Company issued 11,667 shares of Series A Convertible Preferred Stock with attached warrants during the year ended September 30, 2015. The Company allocated $233,322 to stockholder’s equity and $116,678 to the derivative warrant liability. The warrants were issued with a down round provision. The warrants have a term of five years, 23,334 are exercisable at $30 per common share and 23,334 are exercisable at $45 per common share. On August 4, 2016 the exercise price was adjusted to $0.70 per share. During the year ended September 30, 2015, the Company recognized $30,338 of other expense related to the warrant liability. During the year ended September 30, 2016, the Company recognized $132,724 of other income resulting from the increase in the fair value of the warrant liability at September 30, 2016. Derivative Instrument – Convertible Note Payable Vis Vires Group, Inc. The Company entered into a Convertible Note Payable with Vis Vires Group, Inc. on February 19, 2016 for $100,000 to fund short-term working capital. The Vis Vires Note accrues interest at a rate of 8% per annum and became due on November 22, 2016 and was convertible into common stock on August 19, 2016. The Vis Vires Note was convertible at 65% of the average of the lowest three day trading price in the 10 days prior to conversion. On August 11, 2016, the Company paid $136,770 to Vis Vires Group, Inc. to repay the Note Payable in full and recorded a loss on debt settlement of $35,784. The Company recognized other income resulting from the decrease in the fair value of the warrant liability at September 30, 2016 of $55,243. Derivative Instrument – Convertible Note Payable Vis Vires Group, Inc. The Company entered into a Convertible Note Payable with Vis Vires Group, Inc. on August 10, 2015 for $84,000 to fund short-term working capital. The Vis Vires Note accrued interest at a rate of 8% per annum and was due on May 12, 2016 and was convertible into common stock on February 5, 2016. The Vis Vires Note was convertible at 65% of the average of the lowest three day trading price in the 10 days prior to conversion. The Company recorded accrued interest of $405 as of September 30, 2015. During the year ended September 30, 2015, the Company recognized $55,038 of other expense related to the Vis Vires Note. On February 6, 2016, the Company paid $114,979 to Vis Vires to repay the Note Payable in full. The Company recognized other income of $47,028 during the year ended September 30, 2016.

12. CONVERTIBLE NOTES PAYABLE

12. CONVERTIBLE NOTES PAYABLE	12 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
12. CONVERTIBLE NOTES PAYABLE	Convertible notes payable as of September 30, 2016 consisted of the following: The Company entered into Convertible Promissory Notes totaling $710,000 with accredited investors during September 2015 to February 2016 to fund short-term working capital. The Notes accrue interest at a rate of 8% per annum and become due September 2016 to February 2017 and are convertible into common stock at the same price of our next financing. The Company recorded accrued interest of $45,436 as of September 30, 2016. The investors received $710,000 in warrants that are exercisable into common stock at the price equal to the price of the common stock sold in our next public financing. The Company entered into 8%-10% Convertible Promissory Notes and Securities Purchase Agreements with three accredited investors on February 4, 2016, totaling $165,000 with an original issue discount of $15,000. The Notes become due on February 3, 2017 and are convertible into common stock after six months from issuance. The Notes were convertible at 60% of the average of the lowest trading price in the 25 days prior to conversion but not less than $0.001 per share. The Company issued a total of 10,500 shares of restricted common stock to the investors valued at $70,875 and paid $7,500 in legal fees. The Company received $128,500 net of all fees. On February 5, 2016, the Company valued the beneficial conversion feature of this senior secured convertible redeemable debenture at $110,000 and recorded additional paid in capital of $110,000. During the year ended September 30, 2016, $175,173 was amortized to interest expense related to debt discount associated with the Convertible Promissory Notes. On August 5, 2016, the Company paid $217,366 to the three accredited investors to repay the Notes Payable in full and recorded a loss on debt settlement of $52,336. The Company entered into a Convertible Note Payable with Vis Vires Group, Inc. on February 19, 2016 for $100,000 to fund short-term working capital. The Vis Vires Note accrues interest at a rate of 8% per annum had an original discount of $14,000 and became due on November 22, 2016 and was convertible into common stock on August 19, 2016. The Vis Vires Note was convertible at 65% of the average of the lowest three day trading price in the 10 days prior to conversion. The Company recorded a beneficial conversion of $65,172. On August 11, 2016, the Company paid $136,770 to Vis Vires Group, Inc. to repay the Note Payable in full and recorded a loss on debt settlement of $35,784. The Company entered into a Convertible Promissory Note with JSJ Investments, Inc. on August 2, 2016 for $100,000 to fund short-term working capital. The company paid $12,000 in fees related to this note. The Note accrues interest at a rate of 12% per annum and became due on May 1, 2017. On August 31, 2016, the Company paid $110,000 to JSJ Investments, Inc. to repay the Note Payable in full and recorded a loss on debt settlement of $9,014. On September 30, 2016, the Company entered into a $175,000 Convertible Promissory Note with Clayton A. Struve, an accredited investor and affiliate of the Company, to fund short-term working capital. The Convertible Promissory Note accrues interest at a rate of 10% per annum and becomes due on March 30, 2017. The Note holder can convert to common stock at $0.70 per share. The Company recorded a beneficial conversion feature of $10,500 and paid an additional $24,500 related to the convertible note. During the year ended September 30, 2016, $238,375 was amortized to interest expense related to debt discount associated with Convertible Promissory Notes.

13. NOTES PAYABLE, CAPITALIZED

13. NOTES PAYABLE, CAPITALIZED LEASES AND LONG TERM DEBT	12 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
13. NOTES PAYABLE, CAPITALIZED LEASES AND LONG TERM DEBT	Notes payable, capitalized leases and long term debt as of September 30, 2016 and 2015 consisted of the following: September 30, September 30, 2016 2015 Capital Source Business Finance Group $ 370,404 $ 364,757 Note payable to Umpqua Bank 199,935 199,935 Secured note payable to J3E2A2Z LP - related party 600,000 600,000 Total debt 1,170,339 1,164,692 Less current portion of long term debt (1,170,339 ) (1,164,692 ) Long term debt $ - $ - The Company finances its TransTech operations from operations and a Secured Credit Facility with Capital Source Note Payable to Umpqua Bank The Company has a $199,935 Business Loan Agreement with Umpqua Bank (the “Umpqua Loan”), which matures on December 31, 2017 and provides for interest at 3.25% per year. Related to this Umpqua Loan, the Company entered into a demand promissory note for $200,000 on January 10, 2014 with an entity affiliated with Ronald P. Erickson, our Chief Executive Officer. This demand promissory note will be effective in case of a default by the Company under the Umpqua Loan. The Company recorded accrued interest of $16,340 as of September 30, 2016. Note Payables to Ronald P. Erickson or J3E2A2Z LP The Company also has two other demand promissory notes payable to entities affiliated with Mr. Erickson, totaling $600,000. Each of these notes were issued between January and July 2014, provide for interest of 3% per year and now mature on March 31, 2017. The notes payable also provide for a second lien on our assets if not repaid by March 31, 2017 or converted into convertible debentures or equity on terms acceptable to the Mr. Erickson. The Company recorded accrued interest of $40,167 as of September 30, 2016. Aggregate maturities totaling $1,170,339 are all due within twelve months.

14. EQUITY

14. EQUITY	12 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
14. EQUITY	Authorized Capital Stock The Company has authorized 105,000,000 shares of capital stock, of which 100,000,000 are shares of voting common stock, par value $0.001 per share, and 5,000,000 are shares of voting preferred stock, par value $0.001 per share. Voting Preferred Stock The Company is authorized to issue up to 5,000,000 shares of preferred stock with a par value of $0.001. On July 21, 2015, the Company filed with the Nevada Secretary of State an Amended and Restated Certificate of Designations, Preferences and Rights for our Series A Convertible Preferred Stock. Among other things, the Amended and Restated Certificate changed the conversion price and the stated value of the Series A Preferred from $0.10 (pre reverse stock split) to $30.00 (post-reverse stock split), and added a provision adjusting the conversion price upon the occurrence of certain events. Under the Amended and Restated Certificate, the Company had 23,334 shares of Series A Preferred authorized, all of which are outstanding. Each holder of outstanding shares of Series A Preferred is entitled to the number of votes equal to the number of whole shares of common stock into which the shares of Series A Preferred held by such holder are then convertible as of the applicable record date. The Company cannot amend, alter or repeal any preferences, rights, or other terms of the Series A Preferred so as to adversely affect the Series A Preferred, without the written consent or affirmative vote of the holders of at least 66% of the then outstanding shares of Series A Preferred, voting as a separate voting group, given by written consent or by vote at a meeting called for such purpose for which notice shall have been duly given to the holders of the Series A Preferred. During the year ended September 30, 2015, the Company sold 11,667 Series A Preferred Stock to two investors totaling $350,000. These shares are expected to be convertible into 11,667 shares of common stock at $30.00 per share, subject to adjustment, for a period of five years. The Series A Preferred Stock has voting rights and may not be redeemed without the consent of the holder. The Company also issued (i) a Series C five-year Warrant for 23,334 shares of common stock at an exercise price of $30.00 per share, which is callable at $60.00 per share; and (ii) a Series D five-year Warrant for 23,334 shares of common stock at an exercise price of $45.00 per share, which is callable at $90.00 per share. The Series A Preferred Stock and Series C and D Warrants had registration rights. On July 20, 2015, the two investors entered into an Amendment to Series A Preferred Stock Terms whereby they agreed to the terms of the Amended and Restated Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock and waived all registration rights. On August 4, 2016, the price of the Series A Preferred Stock was adjusted to $0.70 per share due to the issuance of common stock at that price. On March 8, 2016, the Company received approval from the State of Nevada for the Correction to the Company’s Amended and Restated Certificate of Designations, Preferences and Rights of its Series A Convertible Preferred Stock. The Amended and Restated Certificate filed July 21, 2015 changed the conversion price and the stated value from $0.10 (pre reverse stock split) to $30.00 (post-reverse stock split), and adding a provision adjusting the conversion price upon the occurrence of certain events. On February 19, 2016, the holders of Series A Convertible Preferred Stock entered into Amendment 2 of Series A Preferred Stock Terms and increased the number of Preferred Stock Shares to properly account for the reverse stock split. We have 23,334 Series A Preferred Stock issued and outstanding. Series B Redeemable Convertible Preferred Stock On March 8, 2016, the Company received approval from the State of Nevada for the Certificate of Designations of Preferences, Powers, Rights and Limitations of Series B Redeemable Convertible Preferred Stock. The Certificate authorized 5,000 shares of Series B Preferred Stock at a par value of $.001 per share that is convertible into common stock at $7.50 per share, subject to certain adjustments as set forth in the Certificate. The Company entered into a Stock Purchase Agreement with an institutional investor pursuant to which the Company issued 255 Shares of Series B Redeemable Preferred Shares (“Series B Preferred Shares”) of the Company at $10,000 per share with a 5.0% original issue discount for the sum of $2,500,000. At closing, the Company sold 51 Series B Preferred Shares in exchange for payment to the Company of $505,000 in cash and issued an additional 204 Series B Preferred Shares in exchange for delivery of a full recourse 1% Promissory Note (“Note”) for $1,995,000 and payment to the Company of $5,000 in cash (paid). The Note is collateralized by the Series B Preferred Shares. Under the terms of the Note, the Company is to receive an additional $500,000 for each $5 million, or in certain cases a lower amount, in aggregate trading volume of the common stock, so long as it meets certain other requirements. Any remaining balance under the Note is payable at its maturity in seven years. Due to the uncertainty on the receipt of achieving future funding, the Company has not booked the full recourse 1% Promissory Note. The Series B Preferred Shares are convertible into common stock at $7.50 per share; provided that the institutional investor may not convert any Series B Preferred Shares into common stock until that portion of the Note underlying the purchase of the converted portion of Series B Preferred Shares is paid in cash to Company. The Company may issue, at our sole discretion in lieu of cash, as a conversion premium or in payment of dividends on such shares of Series B Preferred Shares. The number of additional common shares that we may issue as a conversion premium or in payment of dividends, is dependent on the dividend rate which can vary depending on our underlying stock price at the time of conversion and assuming no triggering event has occurred. The Company filed a Registration Statement on Form S-1, which was declared effective May 6, 2016, to register $2,675,000 for the resale of all shares of common stock issuable upon conversion of the Series B Shares. In the third quarter ended June 30, 2016, the investor converted 35 preferred shares into 74,064 shares of common stock valued at $506,695. Prior to the closing of the First Amendment to the Stock Purchase Agreement the investor converted the remaining 16 preferred shares into 52,000 shares for common stock valued at $169,000. On August 5, 2016, the Company closed the First Amendment to Stock Purchase Agreement with the institutional investor. As a result of this amendment agreement the Company paid the sum of $505,000 to the institutional investor and cancelled the remaining 204 shares of Series B Preferred Stock that had not been purchased, and the parties terminated the relationship and all aspects of the Stock Purchase Agreement described above in its entirety. We recorded an expense of $674,000 related to this Amendment Agreement during the three months ended September 30, 2016, which includes the conversion of the remaining shares On September 1, 2016, the Company filed a Withdrawal of Certificate of Designations of Preferences, Powers, Rights and Limitations of Series B Redeemable Convertible Preferred Stock with the State of Nevada. In August 15, 2016, the SEC approved the withdrawal of the Registration Statement on Form S-1. Series C Convertible Preferred Stock On August 5, 2016, the Company closed a Series C Preferred Stock and Warrant Purchase Agreement with an accredited investor for the purchase of $1,250,000 of preferred stock with a conversion price of $0.70 per share. The preferred has a yield of 8% and an ownership blocker of 4.99%. In addition, the investor received 100% warrant coverage with five year warrants having a strike price of $0.70. Both the Series C and warrants were included in a registration statement filed by the Company. On August 11, 2016, the Company applied with the State of Nevada for the approval of the Certificate of Designations, Preferences, and Rights of Series C Convertible Preferred Stock. The Certificate designated 1,785,715 shares as Series C Convertible Preferred Stock at a par value of $.001 per share that is convertible into common stock at $0.70 per share, with certain adjustments as set forth in the Certificate. On August 31, 2016, the Company filed with the State of Nevada a Certificate of Correction to the Certificate of Designations of Preferences, Powers, Rights and Limitations for the Series C Redeemable Convertible Preferred Stock. The Certificate authorized 5,000 shares of Series C Preferred Stock at a par value of $.001 per share that is convertible into common stock at $0.70 per share, with certain adjustments as set forth in the Certificate. To determine the effective conversion price, a portion of the proceeds received by the Company upon issuance of the Series C Preferred Stock was first allocated to the freestanding warrants issued as part of this transaction. Given that the warrants will not subsequently be measured at fair value, the Company determined that the warrants should receive an allocation of the proceeds based on their relative fair value. This is based on the understanding that the FASB staff and the SEC staff believe that a freestanding instrument issued in a basket transaction should be initially measured at fair value if it is required to be subsequently measured at fair value pursuant to US generally accepted accounting principles (“GAAP”), with the residual proceeds from the transaction allocated to any remaining instruments based on their relative fair values. As such, the warrants were allocated a fair value of approximately $514,706 upon issuance, with the remaining $735,294 of proceeds allocated to the Series C Preferred Stock. Proportionately, this allocation resulted in approximately 59% of the face amount of the Series C Preferred Stock issuance remaining, which applied to the stated conversion price of $0.70 resulted in an effective conversion price of approximately $0.41. Having determined the effective conversion price, the Company then compared this to the fair value of the underlying Common Stock as of the commitment date, which was approximately $1.06 per share, and concluded that the conversion feature did have an intrinsic value of $0.65 per share. As such, the Company concluded that the Series C Preferred Stock did contain a beneficial conversion feature and an accounting entry and additional financial statement disclosure was required. Because our preferred stock is perpetual, with no stated maturity date, and the conversions may occur any time from inception, the dividend is recognized immediately when a beneficial conversion exists at issuance. During the year ending September 30, 2016, the Company. recognized preferred stock dividends of $1.16 million on Series C preferred stock related to the beneficial conversion feature arising from a common stock effective conversion rate of $0.41 versus a current market price of $1.06 per common share. Common Stock All of the offerings and sales described below were deemed to be exempt under Rule 506 of Regulation D and/or Section 4(a)(2) of the Securities Act. No advertising or general solicitation was employed in offering the securities, the offerings and sales were made to a limited number of persons, all of whom were accredited investors and transfer was restricted by the company in accordance with the requirements of Regulation D and the Securities Act. All issuances to accredited and non-accredited investors were structured to comply with the requirements of the safe harbor afforded by Rule 506 of Regulation D, including limiting the number of non-accredited investors to no more than 35 investors who have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of an investment in our securities. The following equity issuances occurred during the year ended September 30, 2016: Thirteen investors exercised warrants at $2.50 per share and were issued 207,667 shares of common stock, for a total of $519,162 in proceeds to the Company. On October 21, 2015, the Company entered into a Public Relations Agreement with Financial Genetics LLC for public relation services. Under the Agreement, Financial Genetics was issued 35,268 shares of our common stock. The Company expensed $218,653 during the year ended September 30, 2016. On October 6, 2015, the Company entered into a Consulting Agreement with Joshua Conroy for business development services. Under the Agreement, Mr. Conroy was issued 1,711 shares of our common stock. The Company expensed $11,977 during the year ended September 30, 2016. The Company entered into Convertible Promissory Notes totaling $710,000 with accredited investors during September 2015 to February 2016 to fund short-term working capital. The Notes accrue interest at a rate of 8% per annum and become due September 2016 to February 2017 and are convertible into common stock as part of our next financing. The investors received $710,000 in warrants that are exercisable into common stock at the price equal to the price of the common stock sold in our next public financing. The Company entered into 8%-10% Convertible Promissory Notes and Securities Purchase Agreements with three accredited investors on February 4, 2016, totaling $165,000 with an original issue discount of $15,000. The Company issued a total of 10,500 shares of restricted common stock to the investors valued at $70,875 and paid $7,500 in legal fees. The Company received $128,500 net of all fees. On February 23, 2016, the Company entered into a Consulting Agreement with David Markowski for business development services. On February 29, 2016, Mr. Markowski was issued 2,000 shares of our common stock. The Company expensed $14,600 during the year ended September 30, 2016. On July 12, 2016, a supplier converted accounts payable totaling $232,966 into 77,665 shares of common stock valued at $3.00 per share. On August 1, 2016, the Company entered an Agreement with Axiom Financial, Inc. for business development services. Under the Agreement, the Company issued 25,000 shares of our common stock. The Company expensed $29,000 during the year ended September 30, 2016. On August 10, 2016, the Company closed a Stock Purchase Agreement with Dale Broadrick, an accredited investor and affiliate of the Company for the purchase of $500,000 of the Company’s common stock at $0.70 per share or 714,286 shares of common stock. In addition, the investor received 100% warrant coverage with a five year warrant having a strike price of $0.70. These common shares and warrants are not subject to a registration statement. The following equity issuances occurred during the year ended September 30, 2015: On December 14, 2014, the Company entered into an Advisory Agreement with Lester Garfinkel for financial consulting services. Under the Advisory Agreement, Mr. Garfinkel was awarded 167 shares of our common stock. The Company expensed $2,500 during the year ended September 30, 2015. On January 23, 2015, the Company issued 9,002 shares of restricted common stock to seven employees and directors for services during 2014. The shares were issued in accordance with the 2011 Stock Incentive Plan and were valued at $15.00 per share, the market price of our common stock. The Company expensed $135,000 during the year ended September 30, 2015. On February 23, 2015, the Company issued 1,700 shares of common stock to NVPR LLC related to a conversion of $25,499 under a 7% Convertible Debenture. On April 24, 2015, the Company filed a registration statement on Form S-1 to register $10 million of Company securities in a proposed public offering. The Company has applied for listing of the Company’s common stock and the warrants on The NASDAQ Capital Market. On May 6, 2015, the Company’s stockholders approved a reverse split of our common stock, in a ratio to be determined by the Company’s Board of Directors, of not less than 1-for-50 nor more than 1-for-150. On June 9, 2015, the Company’s Board of Directors determined that the ratio of the reverse split would be 1-for-150 , and the reverse split became effective on June 17, 2015. All warrant, option, share and per share information in this Form 10-Q gives retroactive effect for a 1-for-150 split with all numbers rounded up to the nearest whole share. The Company issued 962 fractional shares related to the reverse split. On August 3, 10, 13 and 14, 2015, the Company issued a total of 23,010 shares of common stock to KBM Worldwide, Inc. related to the conversion of $64,000 of debt and interest of $2,560 pursuant to a Securities Purchase Agreement dated January 27, 2015. The shares were issued at an average of $2.785 per share, with a low price of $2.50 per share. The Company recorded on a loss on conversion of $34,035 and allocated $34,035 to stockholder’s equity. Warrants to Purchase Common Stock The following warrant issuances occurred during the year ended September 30, 2016: The Company previously issued warrants to investors and partners which contained a provision that would require an adjustment in the exercise price if the Company issues common stock, warrants or equity below the price that is reflected in the warrants. These warrants included the following: 1. Series A Warrants to purchase a total of 252,060 shares of common stock at a current exercise price of $2.50 per share. 2. Series B Warrants to purchase a total of 252,060 shares of common stock at a current exercise price of $2.50 per share. 3. A warrant issued to IDMC to purchase 97,169 shares of common stock at a current exercise price of $2.50 per share. 4. Series C Warrants to purchase 23,334 shares of common stock at a current exercise price of $2.50 per share. 5. Series D Warrants to purchase 23,334 shares of common stock at a current exercise price of $2.50 per share. 6. Placement Agent Warrants to purchase a total of 20,439 shares of common stock at a current exercise price of $2.50 per share. 7. Series A Convertible Preferred Stock to purchase a total of 23,334 shares of common stock at a current exercise price of $15.00. On August 4, 2016, the Company adjusted the exercise price of the warrants and conversion price of the Series A Convertible Preferred Stock detailed above to $0.70 per share. On August 5, 2016, the Company closed a Series C Preferred Stock and Warrant Purchase Agreement with Clayton A. Struve, an accredited investor for the purchase of $1,250,000 of preferred stock with a conversion price of $0.70 per share. The preferred stock has a yield of 8% and an ownership blocker of 4.99%. In addition, Mr. Struve received a five year warrant to acquire 1,785,714 shares of common stock at $0.70 per share. Both the Series C and warrants will be included in a registration statement to be filed by the Company. On August 10, 2016, the Company closed a Stock Purchase Agreement with Dale Broadrick, an accredited investor and affiliate of the Company for the purchase of $500,000 of the Company’s common stock at $0.70 per share. In addition, the investor received a five year warrant to acquire 714,286 shares of common stock at $0.70 per share. These common shares and warrants are not subject to a registration statement. The Company issued a five year warrant to Garden State Securities, Inc. to acquire 250,000 shares of common stock at $1.00 per share. The warrants were valued at $120,750. The Company issued five year warrants to placement agents to acquire 20,439 shares of common stock at $0.70 per share. Thirteen investors exercised warrants at $2.50 per share and were issued 207,670 shares of common stock, for a total of $519,162 in proceeds to the Company. Warrants to acquire 9,348 shares of common stock at $26.22 per share expired. The Company entered into Convertible Promissory Notes totaling $710,000 with accredited investors during September 2015 to February 2016 to fund short-term working capital. The investors received $710,000 in warrants that are exercisable into common stock at the price equal to the price of the common stock sold in our next public financing. The number of warrants convertible into shares of common stock is not known at this time as the number of shares is determined by the price of the next up-lift offering by an investment banker. The following warrant issuances occurred during the year ended September 30, 2015: On June 14, 2013, the Company entered into a Purchase Agreement, Warrants, and Registration Rights Agreement with Special Situations Technology Funds and forty other accredited investors, pursuant to which the Company issued 348,685 shares of common stock at $15.00 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 348,685 shares of common stock at $22.50 per share; and (ii) five year Series B Warrants to purchase a total of 348,685 shares of common stock at $30.00 per share. The Company also issued 34,871 placement agent warrants exercisable at $15.00 per share to GVC Capital, with an obligation to issue up to 34,871 additional placement agent warrants exercisable at $22.50 per share. The placement agent warrants shall issue only upon the exercise of the Series A Warrants by the investors, and are issuable ratably based upon the number of Warrants exercised by the investors. The placement agent warrants have a term of five years from the date of closing of the transaction. On August 4, 2016, the warrant exercise price was adjusted to $0.70 per share due the issuance of common stock at this price. Warrants to purchase 4,000 shares of common stock at $15.00 per share were forfeited. A summary of the warrants issued as of September 30, 2016 were as follows: September 30, 2016 Weighted Average Exercise Shares Price Outstanding at beginning of period 899,750 $ 3.18 Issued 2,770,439 0.73 Exercised (207,670 ) (2.50 ) Forfeited - - Expired (9,348 ) (26.22 ) Outstanding at end of period 3,453,171 $ 0.84 Exerciseable at end of period 3,453,171 A summary of the status of the warrants outstanding as of September 30, 2016 is presented below: September 30, 2016 Weighted Weighted Weighted Average Average Average Number of Remaining Exercise Shares Exercise Warrants Life ( In Years) Price Exerciseable Price 3,188,835 4.10 $ 0.70 3,188,835 $ 0.70 250,000 4.83 1.00 250,000 1.00 14,336 1.24 $ 30.00 14,336 30.00 3,453,171 3.74 $ 0.84 3,453,171 $ 0.84 The significant weighted average assumptions relating to the valuation of the Company’s warrants for the year ended September 30, 2016 were as follows: Dividend yield 0% Expected life .25-3 Expected volatility 90% Risk free interest rate .01-.07% At September 30, 2016, vested warrants totaling 3,188,835 shares had an aggregate intrinsic value of $127,553.

15. STOCK OPTIONS

15. STOCK OPTIONS	12 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
15. STOCK OPTIONS	Description of Stock Option Plan On April 29, 2011, the Company’s 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 46,667 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 93,333 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 The Company had the following stock option transactions during the year ended December 31, 2016: During the year ended September 30, 2016, employees forfeited stock option grants for 6,499 shares of common stock at $21.40 per share. The Company had the following stock option transactions during the year ended September 30, 2015: During the year ended September 30, 2015, twelve employees and directors, forfeited stock option grants for 41,621 shares of common stock at $18.29 per share. On January 23, 2015, three employees were issued performance grants for 11,335 shares of common stock at $15.00 per share. The grants were issued in accordance with the 2011 Stock Incentive Plan, vest quarterly over three years after being earned and expire January 22, 2020. As of September 30, 2015, none of the stock option grants were earned. There are currently 50,908 options to purchase common stock at an average exercise price of $18.05 per share outstanding as of September 30, 2016 under the 2011 Stock Incentive Plan. The Company recorded $46,398 and $65,463 of compensation expense, net of related tax effects, relative to stock options for the year ended September 30, 2016 and 2015 in accordance with ASC 505. Net loss per share (basic and diluted) associated with this expense was approximately ($0.03) and ($0.06) per share, respectively. As of September 30, 2016, there is approximately $113,163 of total unrecognized costs related to employee granted stock options that are not vested. These costs are expected to be recognized over a period of approximately 3.12years. Stock option activity for the year ended September 30, 2016 and 2015 was as follows: Weighted Average Options Exercise Price $ Outstanding as of September 30, 2014 87,333 18.804 1,642,200 Granted 11,335 15.000 170,025 Exercised - - - Forfeitures (41,261 ) (18.286 ) (754,500 ) Outstanding as of September 30, 2015 57,407 18.43 1,057,725 Granted - - - Exercised - - - Forfeitures (6,499 ) (21.403 ) (139,098 ) Outstanding as of September 30, 2016 50,908 $ 18.045 $ 918,627 The following table summarizes information about stock options outstanding and exercisable at September 30, 2016: Weighted Weighted Weighted Average Average Average Range of Number Remaining Life Exercise Price Number Exercise Price Exercise Prices Outstanding In Years Exerciseable Exerciseable Exerciseable 13.500 3,334 1.88 $ 13.50 3,334 $ 13.50 15.000 20,906 2.83 15.00 9,348 15.00 19.500 13,334 2.92 19.50 13,334 19.50 22.500 13,334 3.63 22.50 13,334 22.50 50,908 3.12 $ 18.04 39,350 $ 18.94 There is no aggregate intrinsic value of the exercisable options as of September 30, 2016.

16. OTHER SIGNIFICANT TRANSACTI

16. OTHER SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES	12 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
16. OTHER SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES	Related Party Transactions with Ronald P. Erickson See Note 13 for Notes Payable to Ronald P. Erickson, our Chief Executive Officer Chief and/or entities in which Mr. Erickson has a beneficial interest. Note Payable to Umpqua Bank The Company has a $199,935 Business Loan Agreement with Umpqua Bank (the “Umpqua Loan”), which matures on December 31, 2017 and provides for interest at 3.25% per year. Related to this Umpqua Loan, the Company entered into a demand promissory note for $200,000 on January 10, 2014 with an entity affiliated with Ronald P. Erickson, our Chief Executive Officer. This demand promissory note will be effective in case of a default by the Company under the Umpqua Loan. The Company recorded accrued interest of $16,340 as of September 30, 2016. Note Payables to Ronald P. Erickson or J3E2A2Z LP The Company also has two other demand promissory notes payable to entities affiliated with Mr. Erickson, totaling $600,000. Each of these notes were issued between January and July 2014, provide for interest of 3% per year and now mature on March 31, 2017. The notes payable also provide for a second lien on our assets if not repaid by March 31, 2017 or converted into convertible debentures or equity on terms acceptable to the Mr. Erickson. The Company recorded accrued interest of $40,167 as of September 30, 2016. Other Amounts Due to Mr. Erickson Mr. Erickson and/or entities with which he is affiliated also have advanced $521,833 and have unreimbursed expenses and compensation of approximately $424,872. The Company owes Mr. Erickson, or entities with which he is affiliated, $1,546,705 as of September 30, 2016. Issuance of Common Stock to Mr. Erickson On July 12, 2016, Mr. Erickson and/or entities with which he is affiliated exercised a warrant for 66,667 shares of the Company’s common stock at $2.50 per share or $166,668.

17. COMMITMENTS, CONTINGENCIES

17. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS	12 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
17. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS	The Company may from time to time become a party to various legal proceedings arising in the ordinary course of our business. The Company is currently not a party to any pending legal proceeding that is not ordinary routine litigation incidental to our business. Properties and Operating Leases The Company is obligated under various non-cancelable operating leases for its various facilities and certain equipment. Corporate Offices The Company’s executive office is located at 500 Union Street, Suite 420, Seattle, Washington, USA, 98101. The Company leases 1,014 square feet and its net monthly payment is $2,535. The Company leases this office on a month to month basis. 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. The Company leases this office on a month to month basis at $6,942 per month. The aggregate future minimum lease payments under operating leases as of September 30, 2016 were $10,030.

18. INCOME TAXES

18. INCOME TAXES	12 Months Ended
	Sep. 30, 2016
Income Tax Disclosure [Abstract]
18. INCOME TAXES	The Company has incurred losses since inception, which have generated net operating loss carryforwards. The net operating loss carryforwards arise from United States sources. Pretax losses arising from United States operations were approximately $2,650,000 for the year ended September 30, 2016. Pretax losses arising from United States operations were approximately $773,000 for the year ended September 30, 2015. The Company has net operating loss carryforwards of approximately $22,721,000, which expire in 2021-2034. Because it is not more likely than not that sufficient tax earnings will be generated to utilize the net operating loss carryforwards, a corresponding valuation allowance of approximately $7,725,000 was established as of September 30, 2016. Additionally, under the Tax Reform Act of 1986, the amounts of, and benefits from, net operating losses may be limited in certain circumstances, including a change in control. Section 382 of the Internal Revenue Code generally imposes an annual limitation on the amount of net operating loss carryforwards that may be used to offset taxable income when a corporation has undergone significant changes in its stock ownership. There can be no assurance that the Company will be able to utilize any net operating loss carryforwards in the future. The Company is subject to possible tax examination for the years 2011 through 2016. For the year ended September 30, 2016, the Company’s effective tax rate differs from the federal statutory rate principally due to net operating losses and warrants issued for services. The principal components of the Company’s deferred tax assets at September 30, 2016 and 2015 are as follows: 2016 2015 U.S. operations loss carry forward at statutory rate of 34% $ (7,724,974 ) $ (6,824,141 ) Non-U.S. operations loss carry forward at statutory rate of 20.5% 0 0 Total (7,724,974 ) (6,824,141 ) Less Valuation Allowance 7,724,974 6,824,141 Net Deferred Tax Assets - - Change in Valuation allowance $ 7,724,974 $ 6,824,141 A reconciliation of the United States Federal Statutory rate to the Company’s effective tax rate for the years ended September 30, 2016 and 2015 are as follows: 2016 2015 Federal Statutory Rate -34.0 % -34.0 % Increase in Income Taxes Resulting from: Change in Valuation allowance 34.0 % 34.0 % Effective Tax Rate 0.0 % 0.0 %

19. SUBSEQUENT EVENTS

19. SUBSEQUENT EVENTS	12 Months Ended
	Sep. 30, 2016
Subsequent Events [Abstract]
19. SUBSEQUENT EVENTS	The Company evaluated subsequent events, for the purpose of adjustment or disclosure, up through the date the financial statements were issued. Extension of Related Party Notes On October 14, 2016, the Company entered into amendments to two demand promissory notes, totaling $600,000, and a note payable for $200,000 related to the Umpqua Bank Business Loan Agreement with Mr. Erickson, our Chief Executive Officer and/or entities in which Mr. Erickson has a beneficial interest. The amendments extend the due date from September 30, 2016 to December 31, 2016 and continue to provide for interest of 3% per annum and a second lien on company assets if not repaid by December 31, 2016 or converted into convertible debentures or equity on terms acceptable to the Holder. Extension of Services Agreement On October 18, 2016, the Company agreed to a six month extention to our investor relations agreement with Financial Genetics. The Company agreed to issue Financial Genetics 33,333 shares of our common stock per month for their services. Issuance of Convertible Notes On November 2, 2016, the Company closed two 10% Convertible Redeemable Note Purchase Agreements with an accredited investor and an affiliate of the Company for aggregate gross proceeds to the Company of $300,000. The notes are due on May 1, 2017 and may be paid in either $330,000 in cash or converted into equity securities on the same terms as the Company’s next financing transaction. Garden State Securities, Inc., a FINRA member, acted as our exclusive placement agent. They received a 10% ($30,000) cash fee on the transaction. Purchase of Original Issue Discount Convertible Promissory Note from Pulse Biologics On November 2, 2016, Pulse Biologics, Inc. issued an Original Issue Discount Convertible Promissory Note to the Company. Pursuant to the Note, the Company loaned $260,000 with a principal amount of $286,000 to Pulse Biologics, Inc. The Note matures one year from issuance and bears interest at 5%. The principal and interest can be converted to Biologic common stock at the option of the Company. The Company will receive 150,000 shares of Pulse Biologics common stock as partial consideration for purchasing the Note. In addition, the Company and Pulse Biologics agreed to negotiate in good faith to enter a joint development agreement and subsequent merger transaction prior to calendar year-end 2017. Issuance of Series D Convertible Preferred Stock On November 14, 2016, the Company issued 187,500 shares of Series D Convertible Preferred Stock (the “Series D Shares”) and a warrant to purchase 187,500 shares of common stock in a private placement to certain accredited investors for gross proceeds of $150,000 pursuant to a Series D Preferred Stock and Warrant Purchase Agreement dated November 10, 2016. On December 19, 2016, the Company issued 187,500 shares of Series D Shares and a warrant to purchase 187,500 shares of common stock in a private placement to an accredited investor for gross proceeds of $150,000 pursuant to a Series D Preferred Stock and Warrant Purchase Agreement dated December 14, 2016. The initial conversion price of the Series D Shares is $0.80 per share, subject to certain adjustments. The initial exercise price of the warrant is $1.00 per share, also subject to certain adjustments. As part of the Purchase Agreement, the Company has agreed to register the shares of common stock sold in the private placement and the shares of common stock issuable upon exercise of the warrant for resale or other disposition. The Series D Shares and warrant were issued in a transaction that was not registered under the Securities Act of 1933, as Amended (the “Act”) in reliance upon applicable exemptions from registration under Section 4(2) of the Act and Rule 506(b) of SEC Regulation D under the Act. The Company intends to issue up to 3,125,000 Series D Shares (and an equal number of warrants) for gross proceeds of $2,500,000 pursuant on a “best efforts” basis. Conversion of Promissory Notes On November 30, 2016, holders of $695,000 of our Convertible Promissory Notes converted the principal and outstanding interest into 936,347 shares of common stock at a conversion rate of $0.80 per share and warrants to purchase 936,347 shares of common stock at a price of $1.00 per share. Extension of Secured Credit Facility On December 9, 2008, TransTech entered a $1,000,000 secured credit facility with Capital Source to fund its operations. On December 12, 2016, 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 eligible borrowing is 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 a security interest in all assets of Visualant. Availability under this Secured Credit ranges from $0 to $175,000 ($33,000 as of September 30, 2016,) on a daily basis. The remaining balance on the accounts receivable line of $370,404 as of September 30, 2016, must be repaid by the time the secured credit facility expires on June 12, 2017, or we renew by automatic extension for the next successive six-month term. Extension of Secured Credit Facility The Company has a $199,935 Business Loan Agreement with Umpqua Bank (the “Umpqua Loan”). On December 22, 2016, the Umpqua Loan maturity was extended to December 31, 2017 and provides for interest at 3.25% per year. Related to this Umpqua Loan, the Company entered a demand promissory note for $200,000 on January 10, 2014 with an entity affiliated with Ronald P. Erickson, our Chief Executive Officer. This demand promissory note will be effective in case of a default by the Company under the Umpqua Loan. Extension of Related Party Notes On January 9, 2017, the Company entered into amendments to two demand promissory notes, totaling $600,000, and a note payable for $200,000 related to the Umpqua Bank Business Loan Agreement with Mr. Erickson, our Chief Executive Officer and/or entities in which Mr. Erickson has a beneficial interest. The amendments extend the due date from December 31, 2016 to March 31, 2017 and continue to provide for interest of 3% per annum and a second lien on company assets if not repaid by March 31, 2017 or converted into convertible debentures or equity on terms acceptable to the Holder.

3. SIGNIFICANT ACCOUNTING POL26

3. SIGNIFICANT ACCOUNTING POLICIES: ADOPTION OF ACCOUNTING STANDARDS (Policies)	12 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
BASIS OF PRESENTATION	Basis of Presentation
PRINCIPLES OF CONSOLIDATION	Principles of Consolidation
CASH AND CASH EQUIVALENTS	Cash and Cash Equivalents
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS	Accounts Receivable and Allowance for Doubtful Accounts
INVENTORIES	Inventories
EQUIPMENT	Equipment
INTANGIBLE ASSETS / INTELLECTUAL PROPERTY	Intangible Assets/ Intellectual Property
GOODWILL	Goodwill
LONG-LIVED ASSETS	Long-Lived Assets
FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS	Fair Value Measurements and Financial Instruments Fair Value Measurement and Disclosures 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 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement. 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 September 30, 2016 and 2015 based upon the short-term nature of the assets and liabilities.
DERIVATIVE FINANCIAL INSTRUMENTS	Derivative financial instruments -
REVENUE RECOGNITION	Revenue Recognition
STOCK BASED COMPENSATION	Stock Based Compensation
CONVERTIBLE SECURITIES	Convertible Securities
INCOME TAXES	Income Taxes .
NET LOSS PER SHARE	Net Loss per Share
DIVIDEND POLICY	Dividend Policy
USE OF ESTIMATES	Use of 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 the Company’s consolidated financial statements. In May 2014, as part of its ongoing efforts to assist in the convergence of GAAP and International Financial Reporting Standards, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, which is a new standard related to revenue recognition. Under the new standard, recognition of revenue occurs when a customer obtains control of promised services or goods in an amount that reflects the consideration to which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts. The standard must be adopted using either a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach. In July 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers - Deferral of the Effective Date, which defers the implementation of this new standard to be effective for fiscal years beginning after December 15, 2017. Early adoption is permitted effective January 1, 2017. In March 2016, the FASB issued ASU 2016-08, Principal versus Agent Considerations, which clarifies the implementation guidance on principal versus agent considerations in the new revenue recognition standard pursuant to ASU 2014-09. In April 2016, the FASB issued ASU 2016-10, Identifying Performance Obligations and Licensing, and in May 2016, the FASB issued ASU 2016-12, Narrow-Scope Improvements and Practical Expedients, which amend certain aspects of the new revenue recognition standard pursuant to ASU 2014-09. The Company currently evaluating which transition approach we will utilize and the impact of adopting this accounting standard on the Company’s financial statements. In August 2014, the FASB issued ASU 2014-15, Disclosures of Uncertainties About an Entity’s Ability to Continue as a Going Concern. The new standard provides guidance around management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. The Company does not expect that this guidance will have a material impact on its financial position, results of operations or cash flows. In January 2015, the FASB issued ASU 2015-01, Income Statement—Extraordinary and Unusual Items. The objective of this Update is to simplify the income statement presentation requirements in Subtopic 225-20 by eliminating the concept of extraordinary items. Extraordinary items are events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence. Eliminating the extraordinary classification simplifies income statement presentation by altogether removing the concept of extraordinary items from consideration. This Accounting Standards Update is the final version of Proposed Accounting Standards Update 2014-220—Income Statement—Extraordinary Items (Subtopic 225-20), which has been deleted. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. the Company’s does not expect this update to have a material impact on financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”). The standard amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 will be effective beginning in the first quarter of 2019. Early adoption of ASU 2016-02 is permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently evaluating the impact of adopting ASU 2016-02 on the Company’s financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This ASU makes targeted amendments to the accounting for employee share-based payments. This guidance is to be applied using various transition methods such as full retrospective, modified retrospective, and prospective based on the criteria for the specific amendments as outlined in the guidance. The guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. Early adoption is permitted, as long as all of the amendments are adopted in the same period. The Company is currently evaluating the impact of adopting ASU 2016-09 on the Company’s financial statements. In June 2016, the FASB issued Accounting Standards Update ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard significantly changes how entities will measure credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. The standard will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount, as they do today under the other-than-temporary impairment model. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. This ASU is effective for annual periods beginning after December 15, 2019, and interim periods therein. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods therein. This ASU is not expected to have a material impact on the Company’s financial statements. In August 2016, the FASB issued Accounting Standards Update ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. Stakeholders indicated that there is diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. This Accounting Standards Update addresses the following eight specific cash flow issues: Debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rateof the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (COLIs) (including bank-owned life insurance policies (BOLIs)); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. The amendments in this Update apply to all entities, including both business entities and not-for-profit entities that are required to present a statement of cash flows under Topic 230.This Update is the final version of Proposed Accounting Standards Update EITF-15F—Statement of Cash Flows—Classification of Certain Cash Receipts and Cash Payments (Topic 230), which has been deleted. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted as all of the amendments are adopted in the same period. This ASU is not expected to have a material impact on the Company’s financial statements.

8. FIXED ASSETS (Tables)

8. FIXED ASSETS (Tables)	12 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
Schedule of Property and equipment	Estimated September 30, 2016 Useful Lives Purchased Capital Leases Total Machinery and equipment 2-10 years $ 252,636 $ 69,581 $ 322,217 Leasehold improvements 5-20 years 548,612 - 548,612 Furniture and fixtures 3-10 years 73,977 101,260 175,237 Software and websites 3- 7 years 35,830 - 35,830 Less: accumulated depreciation (625,640 ) (170,841 ) (796,481 ) $ 285,415 $ - $ 285,415

9. INTANGIBLE ASSETS (Tables)

9. INTANGIBLE ASSETS (Tables)	12 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
Schedule Of Intangible Assets	Estimated September 30, September 30, Useful Lives 2016 2015 Customer contracts 5 years $ 983,645 $ 983,645 Technology 5 years 712,500 712,500 Less: accumulated amortization (1,652,395 ) (1,538,145 ) Intangible assets, net $ 43,750 $ 158,000

11. DERIVATIVE INSTRUMENTS (Tab

11. DERIVATIVE INSTRUMENTS (Tables)	12 Months Ended
	Sep. 30, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Derivative liability	Derivative liability as of September 30, 2016 is as follows: Carrying Fair Value Measurements Using Inputs Amount at Financial Instruments Level 1 Level 2 Level 3 September 30, 2016 Liabilities: Derivative Instruments $ - $ 145,282 $ - $ 145,282 Total $ - $ 145,282 $ - $ 145,282 Derivative liability as of September 30, 2015 is as follows: Carrying Fair Value Measurements Using Inputs Amount at Financial Instruments Level 1 Level 2 Level 3 September 30, 2015 Liabilities: Derivative Instruments $ - $ 2,704,840 $ - $ 2,704,840 Total $ - $ 2,704,840 $ - $ 2,704,840

13. NOTES PAYABLE, CAPITALIZE30

13. NOTES PAYABLE, CAPITALIZED LEASES AND LONG TERM DEBT (Tables)	12 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
Notes payable, capitalized leases and long term debt	September 30, September 30, 2016 2015 Capital Source Business Finance Group $ 370,404 $ 364,757 Note payable to Umpqua Bank 199,935 199,935 Secured note payable to J3E2A2Z LP - related party 600,000 600,000 Total debt 1,170,339 1,164,692 Less current portion of long term debt (1,170,339 ) (1,164,692 ) Long term debt $ - $ -

14. EQUITY (Tables)

14. EQUITY (Tables)	12 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
Summary of the warrants issued	September 30, 2016 Weighted Average Exercise Shares Price Outstanding at beginning of period 899,750 $ 3.18 Issued 2,770,439 0.73 Exercised (207,670 ) (2.50 ) Forfeited - - Expired (9,348 ) (26.22 ) Outstanding at end of period 3,453,171 $ 0.84 Exerciseable at end of period 3,453,171
Summary of the status of the warrants outstanding	September 30, 2016 Weighted Weighted Weighted Average Average Average Number of Remaining Exercise Shares Exercise Warrants Life ( In Years) Price Exerciseable Price 3,188,835 4.10 $ 0.70 3,188,835 $ 0.70 250,000 4.83 1.00 250,000 1.00 14,336 1.24 $ 30.00 14,336 30.00 3,453,171 3.74 $ 0.84 3,453,171 $ 0.84
Weighted average assumptions relating to the valuation of the Companys warrants	Dividend yield 0% Expected life .25-3 Expected volatility 90% Risk free interest rate .01-.07%

15. STOCK OPTIONS (Tables)

15. STOCK OPTIONS (Tables)	12 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
Stock option activity	Weighted Average Options Exercise Price $ Outstanding as of September 30, 2014 87,333 18.804 1,642,200 Granted 11,335 15.000 170,025 Exercised - - - Forfeitures (41,261 ) (18.286 ) (754,500 ) Outstanding as of September 30, 2015 57,407 18.43 1,057,725 Granted - - - Exercised - - - Forfeitures (6,499 ) (21.403 ) (139,098 ) Outstanding as of September 30, 2016 50,908 $ 18.045 $ 918,627
Stock options outstanding and exercisable	Weighted Weighted Weighted Average Average Average Range of Number Remaining Life Exercise Price Number Exercise Price Exercise Prices Outstanding In Years Exerciseable Exerciseable Exerciseable 13.500 3,334 1.88 $ 13.50 3,334 $ 13.50 15.000 20,906 2.83 15.00 9,348 15.00 19.500 13,334 2.92 19.50 13,334 19.50 22.500 13,334 3.63 22.50 13,334 22.50 50,908 3.12 $ 18.04 39,350 $ 18.94

18. INCOME TAXES (Tables)

18. INCOME TAXES (Tables)	12 Months Ended
	Sep. 30, 2016
Income Tax Disclosure [Abstract]
Schedule of components of the Company’s deferred tax assets	2016 2015 U.S. operations loss carry forward at statutory rate of 34% $ (7,724,974 ) $ (6,824,141 ) Non-U.S. operations loss carry forward at statutory rate of 20.5% 0 0 Total (7,724,974 ) (6,824,141 ) Less Valuation Allowance 7,724,974 6,824,141 Net Deferred Tax Assets - - Change in Valuation allowance $ 7,724,974 $ 6,824,141
Schedule of effective tax rate reconciliation	2016 2015 Federal Statutory Rate -34.0 % -34.0 % Increase in Income Taxes Resulting from: Change in Valuation allowance 34.0 % 34.0 % Effective Tax Rate 0.0 % 0.0 %

3. SIGNIFICANT ACCOUNTING POL34

3. SIGNIFICANT ACCOUNTING POLICIES: ADOPTION OF ACCOUNTING STANDARDS (Details Narrative) - USD ($)	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Reserve for impaired inventory	$ 25,000	$ 20,000
Minimum [Member]
Estimated useful lives of assets	2 years
Minimum [Member] | Leasehold Improvements [Member]
Estimated useful lives of assets	5 years
Maximum [Member]
Estimated useful lives of assets	10 years
Maximum [Member] | Leasehold Improvements [Member]
Estimated useful lives of assets	20 years

6. ACCOUNTS RECEIVABLE_CUSTOM35

6. ACCOUNTS RECEIVABLE/CUSTOMER CONCENTRATION (Details Narrative) - USD ($)	Sep. 30, 2016	Sep. 30, 2015
Notes to Financial Statements
Accounts receivable, net of allowance	$ 808,955	$ 619,849

7. INVENTORIES (Details Narrati

7. INVENTORIES (Details Narrative) - USD ($)	Sep. 30, 2016	Sep. 30, 2015
Inventories Details Narrative
Inventory	$ 295,218	$ 217,824

8. FIXED ASSETS (Details)

8. FIXED ASSETS (Details) - USD ($)	Sep. 30, 2016	Sep. 30, 2015
Machinery and equipment (2-10 years)	$ 322,217
Leasehold improvements (5-20 years)	548,612
Furniture and fixtures (3-10 years)	175,237
Software and websites (3- 7 years)	35,830
Less: accumulated depreciation	(796,481)	$ (803,705)
Property and equipment, net	285,415	$ 366,250
Purchased
Machinery and equipment (2-10 years)	252,636
Leasehold improvements (5-20 years)	548,612
Furniture and fixtures (3-10 years)	73,977
Software and websites (3- 7 years)	35,830
Less: accumulated depreciation	(625,640)
Property and equipment, net	285,415
Capital Leases
Machinery and equipment (2-10 years)	69,581
Leasehold improvements (5-20 years)	0
Furniture and fixtures (3-10 years)	101,260
Software and websites (3- 7 years)	0
Less: accumulated depreciation	(170,841)
Property and equipment, net	$ 0

8. FIXED ASSETS (Details Narrat

8. FIXED ASSETS (Details Narrative) - USD ($)	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Notes to Financial Statements
Property and equipment, net	$ 285,415	$ 366,250
Property and equipment, accumulated depreciation	796,481	803,705
Depreciation expense	$ 64,512	$ 79,576

9. INTANGIBLE ASSETS (Details)

9. INTANGIBLE ASSETS (Details) - USD ($)	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Less: accumulated amortization	$ (1,652,395)	$ (1,538,145)
Intangible assets, net	43,750	158,000
Customer Contracts [Member]
Intangible Assets Gross	$ 983,645	983,645
Estimated Useful life	5 years
Technology [Member]
Intangible Assets Gross	$ 712,500	$ 712,500
Estimated Useful life	5 years

9. INTANGIBLE ASSETS (Details N

9. INTANGIBLE ASSETS (Details Narrative) - USD ($)	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Notes to Financial Statements
Amortization expense	$ 114,250	$ 273,653

10. ACCOUNTS PAYABLE (Details N

10. ACCOUNTS PAYABLE (Details Narrative) - USD ($)	Sep. 30, 2016	Sep. 30, 2015
Notes to Financial Statements
Accounts payable	$ 1,984,326	$ 2,520,223
Percentage of accounts payable by one vendors with accounts payble on excess of 10%	11.00%

11. DERIVATIVE INSTRUMENTS (Det

11. DERIVATIVE INSTRUMENTS (Details) - USD ($)	Sep. 30, 2016	Sep. 30, 2015
Fair Value Measurements Level 1 [Member]
Liabilities:
Derivative Instruments	$ 0	$ 0
Total	0	0
Fair Value Measurements Level 2 [Member]
Liabilities:
Derivative Instruments	145,282	2,704,840
Total	145,282	2,704,840
Fair Value Measurements Level 3 [Member]
Liabilities:
Derivative Instruments	0	0
Total	0	0
Carrying Amount [Member]
Liabilities:
Derivative Instruments	145,282	2,704,840
Total	$ 145,282	$ 2,704,840

11. DERIVATIVE INSTRUMENTS (D43

11. DERIVATIVE INSTRUMENTS (Details Narrative) - USD ($)	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
Warrants June 2013 Private Placement [Member]
Fair value of the warrant liability	$ 104,716	$ 2,092,000	$ 1,448,710
Warrant November 2013 IDMC Services and License Agreement [Member]
Fair value of the warrant liability	14,574	$ 320,657
Series A Convertible Preferred Stock [Member]
Fair value of the warrant liability	$ 30,338
Shares issued	11,667
Convertible Note Payable Vis Vires Group, Inc. [Member]
Accrued interest	$ 405
Other expense	$ 55,038

13. NOTES PAYABLE, CAPITALIZE44

13. NOTES PAYABLE, CAPITALIZED LEASES AND LONG TERM DEBT (Details) - USD ($)	Sep. 30, 2016	Sep. 30, 2015
Notes Payable Capitalized Leases And Long Term Debt Details
Capital Source Business Finance Group	$ 370,404	$ 364,757
Note payable to Umpqua Bank	199,935	199,935
Secured note payable to J3E2A2Z LP - related party	600,000	600,000
Total debt	1,170,339	1,164,692
Less current portion of long term debt	(1,170,339)	(1,164,692)
Long term debt	$ 0	$ 0

14. EQUITY (Details)

14. EQUITY (Details) - Warrants	12 Months Ended
	Sep. 30, 2016$ / sharesshares
Shares
Outstanding at beginning of period	899,750
Issued	2,770,439
Exercised	(207,670)
Forfeited	0
Expired	(9,348)
Outstanding at end of period	3,453,171
Exerciseable at end of period	3,453,171
Weighted Average Exercise Price:
Outstanding at beginning of period | $ / shares	$ 3.18
Issued | $ / shares	.73
Exercised | $ / shares	(2.50)
Forfeited | $ / shares	0
Expired | $ / shares	(26.22)
Outstanding at end of period | $ / shares	$ .84

14. EQUITY (Details 1)

14. EQUITY (Details 1)	12 Months Ended
	Sep. 30, 2016$ / sharesshares
Number of Warrants | shares	3,453,171
Weighted Average Remaining Life (years)	3 years 8 months 27 days
Weighted Average Exercise Price | $ / shares	$ .84
Shares Exercisable | shares	3,453,171
Weighted Average Exercise Price | $ / shares	$ .84
Warrant 1
Number of Warrants | shares	3,188,835
Weighted Average Remaining Life (years)	4 years 1 month 6 days
Weighted Average Exercise Price | $ / shares	$ .70
Shares Exercisable | shares	3,188,835
Weighted Average Exercise Price | $ / shares	$ .70
Warrant 2
Number of Warrants | shares	250,000
Weighted Average Remaining Life (years)	4 years 9 months 29 days
Weighted Average Exercise Price | $ / shares	$ 1
Shares Exercisable | shares	250,000
Weighted Average Exercise Price | $ / shares	$ 1
Warrant 3
Number of Warrants | shares	14,336
Weighted Average Remaining Life (years)	1 year 2 months 26 days
Weighted Average Exercise Price | $ / shares	$ 30
Shares Exercisable | shares	14,336
Weighted Average Exercise Price | $ / shares	$ 30

14. EQUITY (Details 2)

14. EQUITY (Details 2)	12 Months Ended
	Sep. 30, 2016
Dividend yield	0.00%
Expected volatility	90.00%
Minimum [Member]
Expected life	3 months
Risk free interest rate	0.01%
Maximum [Member]
Expected life	3 months 18 days
Risk free interest rate	0.07%

15. STOCK OPTIONS (Details)

15. STOCK OPTIONS (Details) - Stock Options - USD ($)	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Shares:
Outstanding at beginning of period	57,407	87,333
Shares granted	0	11,335
Shares exercised	0	0
Shares forfeitures	(6,499)	(41,261)
Outstanding at end of period	50,908	57,407
Weighted Average Exercise Price:
Outstanding at beginning of period	$ 18.43	$ 18.804
Shares granted	0	15
Shares exercised	0	0
Shares forfeitures	(21.403)	(18.286)
Outstanding at end of period	$ 18.045	$ 18.43
Aggregate Intrinsic Value
Aggregate Intrinsic Value Outstanding, Beginning	$ 1,057,725	$ 1,642,200
Aggregate Intrinsic Value Outstanding, Granted	$ 0	$ 170,025
Aggregate Intrinsic Value Outstanding, Exercised	$ 0	$ 0
Aggregate Intrinsic Value Outstanding, Forefeitures	$ (139,098)	$ (754,500)
Aggregate Intrinsic Value Outstanding, End	$ 918,627	$ 1,057,725

15. STOCK OPTIONS (Details 1)

15. STOCK OPTIONS (Details 1)	12 Months Ended
	Sep. 30, 2016$ / sharesshares
Number of Outstanding Stock Options | shares	3,453,171
Weighted Average Remaining Life (years)	3 years 8 months 27 days
Weighted Average Exercise Price Exerciseable | $ / shares	$ .84
Number Exercisable | shares	3,453,171
Weighted Average Exercise Price Exerciseable | $ / shares	$ .84
Stock Options
Number of Outstanding Stock Options | shares	50,908
Weighted Average Remaining Life (years)	3 years 1 month 13 days
Weighted Average Exercise Price Exerciseable | $ / shares	$ 18.04
Number Exercisable | shares	39,350
Weighted Average Exercise Price Exerciseable | $ / shares	$ 18.94
Exercise Price 13.500
Number of Outstanding Stock Options | shares	3,334
Weighted Average Remaining Life (years)	1 year 10 months 17 days
Weighted Average Exercise Price Exerciseable | $ / shares	$ 13.50
Number Exercisable | shares	3,334
Weighted Average Exercise Price Exerciseable | $ / shares	$ 13.50
Exercise Price 15.000
Number of Outstanding Stock Options | shares	20,906
Weighted Average Remaining Life (years)	2 years 9 months 29 days
Weighted Average Exercise Price Exerciseable | $ / shares	$ 15
Number Exercisable | shares	9,348
Weighted Average Exercise Price Exerciseable | $ / shares	$ 15
Exercise Price 19.500
Number of Outstanding Stock Options | shares	13,334
Weighted Average Remaining Life (years)	2 years 11 months 1 day
Weighted Average Exercise Price Exerciseable | $ / shares	$ 19.50
Number Exercisable | shares	13,334
Weighted Average Exercise Price Exerciseable | $ / shares	$ 19.50
Exercise Price 22.500
Number of Outstanding Stock Options | shares	13,334
Weighted Average Remaining Life (years)	3 years 7 months 17 days
Weighted Average Exercise Price Exerciseable | $ / shares	$ 22.50
Number Exercisable | shares	13,334
Weighted Average Exercise Price Exerciseable | $ / shares	$ 22.50

15. STOCK OPTIONS (Details Narr

15. STOCK OPTIONS (Details Narrative) - USD ($)	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Compensation expense	$ 46,398	$ 65,463
Options to purchase common stock under 2011 Stock Incentive Plan	3,453,171
2011 Stock Incentive Plan
Options to purchase common stock under 2011 Stock Incentive Plan	50,908
Average exercise price under 2011 Stock Incentive Plan	$ 18.05

16. OTHER SIGNIFICANT TRANSAC51

16. OTHER SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES (Details narrative)	12 Months Ended
	Sep. 30, 2016USD ($)
Future minimum lease payments under operating leases	$ 10,030
Chief Executive Officer
Accrued liabilities related parties from advances from Ronald P. Erickson	$ 1,546,705

18. INCOME TAXES - Deferred tax

18. INCOME TAXES - Deferred tax assets (Details) - USD ($)	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Income Taxes - Deferred Tax Assets Details
U.S. operations loss carry forward at statutory rate of 34%	$ (7,724,974)	$ (6,824,141)
Non-U.S. operations loss carry forward at statutory rate of 20.5%	0	0
Total	(7,724,974)	(6,824,141)
Less Valuation Allowance	7,724,974	6,824,141
Net Deferred Tax Assets	0	0
Change in Valuation allowance	$ 7,724,974	$ 6,824,141

18. INCOME TAXES - Effective ta

18. INCOME TAXES - Effective tax rate (Details)	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Income Taxes - Effective Tax Rate Details
Federal Statutory Rate	(34.00%)	(34.00%)
Increase in Income Taxes Resulting from:
Change in Valuation allowance	34.00%	34.00%
Effective Tax Rate	0.00%	0.00%