Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Mar. 31, 2018 | May 09, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | VISUALANT INC | |
Entity Central Index Key | 1,074,828 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --09-30 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 7,439,726 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,018 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2018 | Sep. 30, 2017 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 0 | $ 103,181 |
Accounts receivable, net of allowance of $60,000 and $60,000, respectively | 556,996 | 693,320 |
Prepaid expenses | 23,395 | 27,687 |
Inventories, net | 204,293 | 225,909 |
Total current assets | 784,684 | 1,050,097 |
EQUIPMENT, NET | 102,742 | 133,204 |
OTHER ASSETS | ||
Other assets | 7,170 | 5,070 |
TOTAL ASSETS | 894,596 | 1,188,371 |
CURRENT LIABILITIES: | ||
Cash overdraft | 14,750 | 0 |
Accounts payable - trade | 2,139,633 | 2,156,646 |
Accounts payable - related parties | 4,808 | 2,905 |
Accrued expenses | 42,640 | 24,000 |
Accrued expenses - related parties | 656,004 | 1,166,049 |
Deferred revenue | 5,287 | 63,902 |
Convertible notes payable | 2,390,065 | 570,000 |
Notes payable - current portion of long term debt | 374,997 | 1,165,660 |
Total current liabilities | 5,628,184 | 5,149,162 |
COMMITMENTS AND CONTINGENCIES | ||
STOCKHOLDERS' DEFICIT | ||
Preferred stock - $0.001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding at 3/31/2018 and 9/30/2017, respectively | 0 | 0 |
Common stock - $0.001 par value, 100,000,000 shares authorized, 5,214,726 and 4,655,486 shares issued and outstanding at 3/31/2018 and 9/30/2017, respectively | 5,215 | 4,655 |
Additional paid in capital | 28,619,515 | 27,565,453 |
Accumulated deficit | (33,361,146) | (31,533,727) |
Total stockholders' deficit | (4,733,588) | (3,960,791) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | 894,596 | 1,188,371 |
Series A Convertible Preferred stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Preferred stock - $0.001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding at 3/31/2018 and 9/30/2017, respectively | 23 | 23 |
Series C Convertible Preferred stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Preferred stock - $0.001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding at 3/31/2018 and 9/30/2017, respectively | 1,790 | 1,790 |
Series D Convertible Preferred stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Preferred stock - $0.001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding at 3/31/2018 and 9/30/2017, respectively | $ 1,015 | $ 1,015 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Mar. 31, 2018 | Sep. 30, 2017 |
CURRENT ASSETS: | ||
Allowance for Accounts receivable | $ 60,000 | |
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 | 5,214,726 | 4,655,486 |
Common stock shares outstanding | 5,214,726 | 4,655,486 |
Series A Convertible Preferred stock [Member] | ||
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 [Member] | ||
EQUITY (DEFICIT) | ||
Preferred stock par value | $ 0.001 | $ 0.001 |
Preferred stock shares authorized | 1,785,715 | 1,785,715 |
Preferred stock shares issued | 1,785,715 | 1,785,715 |
Preferred stock shares outstanding | 1,785,715 | 1,785,715 |
Series D Convertible Preferred stock [Member] | ||
EQUITY (DEFICIT) | ||
Preferred stock par value | $ 0.001 | $ 0.001 |
Preferred stock shares authorized | 3,906,250 | 3,906,250 |
Preferred stock shares issued | 1,016,014 | 1,016,014 |
Preferred stock shares outstanding | 1,016,014 | 1,016,014 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Income Statement [Abstract] | ||||
REVENUE | $ 1,092,228 | $ 1,497,019 | $ 2,325,085 | $ 2,645,819 |
COST OF SALES | 865,571 | 1,192,474 | 1,850,594 | 2,150,916 |
GROSS PROFIT | 226,657 | 304,545 | 474,491 | 494,903 |
RESEARCH AND DEVELOPMENT EXPENSES | 153,300 | 6,875 | 241,020 | 47,483 |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 578,097 | 560,980 | 992,462 | 1,818,126 |
IMPAIRMENT OF GOODWILL | 0 | 0 | 0 | 983,645 |
OPERATING LOSS | (504,740) | (263,310) | (758,991) | (2,354,351) |
OTHER INCOME (EXPENSE): | ||||
Interest expense | (793,837) | (16,058) | (1,087,039) | (68,330) |
Other (expense) income | (577) | 39,533 | 18,611 | 43,140 |
(Loss) on change - derivative liability | 0 | (805,123) | 0 | (1,222,555) |
Total other (expense) | (794,414) | (781,648) | (1,068,428) | (1,247,745) |
(LOSS) BEFORE INCOME TAXES | (1,299,154) | (1,044,958) | (1,827,419) | (3,602,096) |
Income taxes - current provision | 0 | 0 | 0 | 0 |
NET (LOSS) | $ (1,299,154) | $ (1,044,958) | $ (1,827,419) | $ (3,602,096) |
Basic and diluted loss per common share attributable to Visualant, Inc. and subsidiaries common shareholders- Basic and diluted loss per share | $ (0.25) | $ (0.28) | $ (0.37) | $ (1.04) |
Weighted average shares of common stock outstanding- basic and diluted | 5,128,144 | 3,713,078 | 4,889,218 | 3,479,895 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 6 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (1,827,419) | $ (3,602,096) |
Adjustments to reconcile net loss to net cash (used in) operating activities | ||
Depreciation and amortization | 30,462 | 41,411 |
Issuance of capital stock for services and expenses | 70,641 | 376,989 |
Conversion of interest | 64,233 | 87,694 |
Stock based compensation | 7,334 | 21,774 |
Gain (loss) on sale of assets | 0 | (1,034) |
Loss on change - derivative liability | 0 | 1,222,555 |
Amortization of debt discount | 475,174 | 10,500 |
Conversion of accrued liabilites- related parties to convertible notes payable | 491,802 | 0 |
Provision on loss on accounts receivable | 21,406 | 120,000 |
Issuance of warrant for debt conversion | 110,545 | 0 |
Impairment of goodwill | 0 | 983,645 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 114,918 | (51,533) |
Prepaid expenses | 4,292 | 963 |
Inventory | 21,616 | 58,669 |
Other assets | (2,100) | 0 |
Accounts payable - trade and accrued expenses | 33,193 | 161,883 |
Deferred revenue | (58,615) | 0 |
NET CASH (USED IN) OPERATING ACTIVITIES | (442,518) | (568,580) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Investment in BioMedx, Inc., net | 0 | (260,000) |
Proceeds from investment in BioMedx, Inc, | 0 | 290,608 |
Proceeds from sale of equipment | 0 | 1,034 |
NET CASH PROVIDED BY INVESTING ACTIVITIES: | 0 | 31,642 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
(Repayments) from line of credit | (190,663) | (4,781) |
Proceeds from convertible notes payable | 530,000 | 330,000 |
Repayment of convertible notes | 0 | (125,000) |
Proceeds from issuance of common/preferred stock, net of costs | 0 | 300,000 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 339,337 | 500,219 |
NET (DECREASE) IN CASH AND CASH EQUIVALENTS | (103,181) | (36,719) |
CASH AND CASH EQUIVALENTS, beginning of period | 103,181 | 188,309 |
CASH AND CASH EQUIVALENTS, end of period | 0 | 151,590 |
Supplemental disclosures of cash flow information: | ||
Interest paid | 20,243 | 14,245 |
Taxes paid | 0 | 0 |
Non-cash investing and financing activities: | ||
Benificial conversion feature | 348,096 | 0 |
Conversion of convertible debt | 0 | 695,000 |
Benificial conversion feaature | 0 | 559,130 |
Conversion of conertible debt to preferred shares | 0 | 220,000 |
Related party accounts converted to notes | $ 482,014 | $ 0 |
1. GOING CONCERN
1. GOING CONCERN | 6 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
1. 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 $(1,827,419), $(3,901,232) and $(1,746,495) for the six months ended March 31, 2018 and for the years ended September 30, 2017 and 2016, respectively. Net cash used in operating activities was $(442,518), $(1,264,324) and $(2,746,333) for the six months ended March 31, 2018 and for the years ended September 30, 2017 and 2016, respectively. The Company anticipates that it will record losses from operations for the foreseeable future. As of March 31, 2018, the Company’s accumulated deficit was $33,361,146. 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, the Company’s Chairman of the Board, 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, 2017 includes an explanatory paragraph expressing the substantial doubt about the Company’s ability to continue as a going concern. We believe that our cash on hand will be sufficient to fund our operations until May 31, 2018. We need additional financing to implement our business plan and to service our ongoing operations and pay our current debts. There can be no assurance that we will be able to secure any needed funding, or that if such funding is available, the terms or conditions would be acceptable to us. If we are unable to obtain additional financing when it is needed, we will need to restructure our operations, and divest all or a portion of our business. We may seek additional capital through a combination of private and public equity offerings, debt financings and strategic collaborations. Debt financing, if obtained, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, and could increase our expenses and require that our assets secure such debt. Equity financing, if obtained, could result in dilution to our then-existing stockholders and/or require such stockholders to waive certain rights and preferences. If such financing is not available on satisfactory terms, or is not available at all, we may be required to delay, scale back, eliminate the development of business opportunities or file for bankruptcy and our operations and financial condition may be materially adversely affected. |
2. ORGANIZATION
2. ORGANIZATION | 6 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
2. ORGANIZATION | 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. 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 electromagnetic energy to detect the unique digital “signature” of the substance. The Company calls this its technology “ChromaID™” and “Bio-RFID.” . 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™ and Bio-RFID™ technology. To date, the Company has entered into License Agreements with Sumitomo Precision Products Co., Ltd. and Intellicheck, Inc. In addition, it has a technology license agreement with Allied Inventors, formerly Xinova and Invention Development Management Company, a subsidiary of Intellectual Ventures. 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 and Bio-RFID products. The Company is currently not profitable. Even if the Company succeeds in introducing the ChromaID and Bio-RFID 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. Bio-RFID was invented by individuals working for the Company. The Company actively pursues a robust intellectual property strategy and has been granted twelve patents. The Company also 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 the Company in perpetuity by the Company’s strategic partner, Allied Inventors. |
3. SIGNIFICANT ACCOUNTING POLIC
3. SIGNIFICANT ACCOUNTING POLICIES: ADOPTION OF ACCOUNTING STANDARDS | 6 Months Ended |
Mar. 31, 2018 | |
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 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 as of March 31, 2018 and September 30, 2017 are based upon the short-term nature of the assets and liabilities. Derivative financial instruments - Revenue Recognition Stock Based Compensation Convertible Securities Net Loss per Share As of March 31, 2017, there were options outstanding for the purchase of 50,908 common shares, warrants for the purchase of 5,110,812 common shares, 2,467,910 shares of our common stock issuable upon the conversion of Series A, Series C and Series D Convertible Preferred Stock. In addition, the Company had an unknown number of shares issuable upon conversion of convertible debentures of $175,000. All of which could potentially dilute future earnings 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. |
4. ACCOUNTS RECEIVABLE_CUSTOMER
4. ACCOUNTS RECEIVABLE/CUSTOMER CONCENTRATION | 6 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
4. ACCOUNTS RECEIVABLE/CUSTOMER CONCENTRATION | Accounts receivable were $556,996 and $693,320, net of allowance, as of March 31, 2018 and September 30, 2017, respectively. The Company had one customer in excess of 10% (36.2%) of the Company’s consolidated revenues for the six months ended March 31, 2018. The Company had one customer (71.5%) with accounts receivable in excess of 10% as of March 31, 2018. The Company has a total allowance for bad debt in the amount of $60,000 as of March 31, 2018. |
5. INVENTORIES
5. INVENTORIES | 6 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
5. INVENTORIES | Inventories were $204,293 and $225,909 as of March 31, 2018 and September 30, 2017, 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 was a $35,000 reserve for impaired inventory as of March 31, 2018 and September 30, 2017, respectively. |
6. NOTES RECEIVABLE FROM BIOMED
6. NOTES RECEIVABLE FROM BIOMEDX, INC | 6 Months Ended |
Mar. 31, 2018 | |
Notes Receivable | |
6. NOTES RECEIVABLE | On November 1, 2016, the Company purchased an Original Issue Discount Convertible Promissory Note from BioMedx, Inc. The Company paid $260,000 for the Note with a principal amount of $286,000. The Note matured one year from issuance and bears interest at 5%. The principal and interest was convertible into BioMedx common stock at the option of the Company. The Company received 150,000 shares of BioMedx common stock as partial consideration for purchasing the Note. In addition, if BioMedx does not repay the Promissory Note, the Company would have the right to convert the Promissory Note into 51% of the ownership of BioMedx. Due to the uncertainty involved with a start-up company, The Company’s management determined that the value of the Promissory Note and BioMedx common stock was zero at December 31, 2016 and recorded an impairment reserve for the full value as of December 31, 2016. During the year ended September 30, 2017, BioMedx paid the Company $290,608 in full satisfaction of the Note. The Company recorded the gain as a reduction in SG&A expense during the year ended September 30, 2017. In addition, the Company has not valued the 150,000 shares of BioMedx common stock. |
7. FIXED ASSETS
7. FIXED ASSETS | 6 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
7. FIXED ASSETS | Fixed assets, net of accumulated depreciation, was $102,742 and $133,204 as of March 31, 2018 and September 30, 2017, respectively. Accumulated depreciation was $640,736 and $662,855 as of March 31, 2018 and September 30, 2017, respectively. Total depreciation expense was $30,462 and $17,399 for the six months ended March 31, 2018 and 2017, 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 March 31, 2018 was comprised of the following: Estimated March 31, 2018 Useful Lives Purchased Capital Leases Total TTS- Machinery and equipment 3-10 years $ 129,180 $ 42,681 $ 171,861 Leasehold improvements 2-3 years 272,500 - $ 272,500 Furniture and fixtures 2-3 years 31,197 95,020 $ 126,217 Software and websites 3- 7 years 35,830 - $ 35,830 Less: accumulated depreciation (365,965 ) (137,701 ) $ (503,666 ) $ 102,742 $ - $ 102,742 |
8. GOODWILL
8. GOODWILL | 6 Months Ended |
Mar. 31, 2018 | |
Goodwill | |
8. GOODWILL | The Company’s TransTech business is very capital intensive. The Company reviewed TransTech’s operations based on its overall financial constraints and determined the value has been impaired. The company recorded an impairment of goodwill associated with TransTech of $983,645 during the year ended September 30, 2017. |
9. DERIVATIVE INSTRUMENTS
9. DERIVATIVE INSTRUMENTS | 6 Months Ended |
Mar. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
9. 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. There was no derivative liability as of March 31, 2018 and September 30, 2017. For the year ended September 30, 2017, the Company recorded non-cash loss of $217,828 related to the “change in fair value of derivative” expense related to its derivative instruments. The Company early adopted ASU 2017-11 and has reclassified its financial instrument with down round features to equity in the amount of $410,524 at September 30, 2017. |
10. CONVERTIBLE NOTES PAYABLE
10. CONVERTIBLE NOTES PAYABLE | 6 Months Ended |
Mar. 31, 2018 | |
Convertible Notes Payable | |
10. CONVERTIBLE NOTES PAYABLE | Convertible notes payable as of March 31, 2018 and September 30, 2017 consisted of the following: Convertible Promissory Note dated September 30, 2016 On September 30, 2016, the Company entered into a $210,000 Convertible Promissory Note with Clayton A. Struve, an accredited investor 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. During the year ended September 30, 2017, the Company recorded interest of $21,000 related to the convertible note. This note was extended in the Securities Purchase Agreement, General Security Agreement and Subordination Agreement dated August 14, 2017 with a maturity date of August 13, 2018. The Company recorded accrued interest of $31,741 as of March 31, 2018. Securities Purchase Agreement dated August 14, 2017 On August 14, 2017, the Company issued a senior convertible exchangeable debenture with a principal amount of $360,000 and a common stock purchase warrant to purchase 1,440,000 shares of common stock in a private placement to Clayton Struve for gross proceeds of $300,000 pursuant to a Securities Purchase Agreement dated August14, 2017. The debenture accrues interest at 20% per annum and matures August 13, 2018. The convertible debenture contains a beneficial conversion valued at $110,629. The warrants were valued at $111,429. Because the note is immediately convertible, the warrants and beneficial conversion were expensed as interest. On the same date, the Company entered into a General Security Agreement with the investor, pursuant to which the Company has agreed to grant a security interest to the investor in substantially all the Company’s assets, effective upon the filing of a UCC-3 termination statement to terminate the security interest held by Capital Source Business Finance Group in the assets of the Company. In addition, an entity affiliated with Ronald P. Erickson, the Company’s Chief Executive Officer, entered into a Subordination Agreement with the investor pursuant to which all debt owed by the Company to such entity is subordinated to amounts owed by the Company to the investor under the Debenture (including amounts that become owing under any Debentures issued to the investor in the future). The initial conversion price of the Debenture is $0.25 per share, subject to certain adjustments. The initial exercise price of the Warrant is $0.25 per share, also subject to certain adjustments. As part of the Purchase Agreement, the Company granted the investor “piggyback” registration rights to register the shares of common stock issuable upon the conversion of the Debenture and the exercise of the Warrant with the Securities and Exchange Commission for resale or other disposition. The Debenture and the 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(a)(2) of the Act and Rule 506 of SEC Regulation D under the Act. In connection with the private placement, the placement agent for the Debenture and the Warrant received a cash fee of $30,000 and the Company expects to issue warrants to purchase shares of the Company’s common stock to the placement agent based on 10% of proceeds. Under the terms of the Purchase Agreement, the investor may purchase up to an aggregate of $1,000,000 principal amount of Debentures (before a 20% original issue discount) (and Warrants to purchase up to an aggregate of 250,000 shares of common stock). These securities are being offered on a “best efforts” basis by the placement agent. During the year ended September 30, 2017, $156,941 was recorded as interest expense related to debt discounts, beneficial conversions and warrants associated with Convertible Promissory Notes. On December 12, 2017, the Company closed an additional $250,000 and issued a senior convertible exchangeable debenture with a principal amount of $300,000 and a common stock purchase warrant to purchase 1,200,000 shares of common stock in a private placement dated December 12, 2017 to an accredited investor pursuant to a Securities Purchase Agreement dated August 14, 2017. The convertible debenture contains a beneficial conversion valued at $93,174. The warrants were valued at $123,600. Because the note is immediately convertible, the warrants and beneficial conversion were expensed as interest. On March 2, 2018, the Company received gross proceeds of $280,000 in exchange for issuing a senior convertible redeemable debenture with a principal amount of $336,000 and a warrant to purchase 1,344,000 shares of common stock in a private placement dated February 28, 2018 to an accredited investor pursuant to a Securities Purchase Agreement dated August 14, 2017. The convertible debenture contains a beneficial conversion valued at $252,932. The warrants were valued at $348,096. Because the note is immediately convertible, the warrants and beneficial conversion were expensed as interest. In connection with the February 28, 2018 private placement, the placement agent for the debenture and the warrant received a cash fee of $28,000 and the Company issued warrants to purchase shares of the Company’s common stock to the placement agent or its affiliates based on 10% of proceeds. Convertible Redeemable Promissory Notes with Ronald P. Erickson and J3E2A2Z The Company entered into a Note and Account Payable Conversion Agreement pursuant to which (a) all $664,233 currently owing under the J3E2A2Z Notes was converted to a Convertible Redeemable Promissory Note in the principal amount of $664,233, and (b) all $519,833 of the J3E2A2Z Account Payable was converted into a Convertible Redeemable Promissory Note in the principal amount of $519,833 together with a warrant to purchase up to 1,039,666 shares of common stock of the Company for a period of five years. The initial exercise price of the warrants described above is $0.50 per share, also subject to certain adjustments. See Note 10 and 11 for additional details. The warrants were valued at $110,545. Because the note is immediately convertible, the warrants and beneficial conversion were expensed as interest. The Company recorded accrued interest of $5,836 as of March 31, 2018. |
11. NOTES PAYABLE, CAPITALIZED
11. NOTES PAYABLE, CAPITALIZED LEASES AND LONG TERM DEBT | 6 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
11. NOTES PAYABLE, CAPITALIZED LEASES AND LONG TERM DEBT | Notes payable, capitalized leases and long-term debt as of March 31, 2018 and September 30, 2017 consisted of the following: March 31, September 30, 2018 2017 Capital Source Business Finance Group $ 175,062 $ 365,725 Note payable to Umpqua Bank 199,935 199,935 Secured note payable to J3E2A2Z LP - related party - 600,000 Total debt 374,997 1,165,660 Less current portion of long term debt (374,997 ) (1,165,660 ) Long term debt $ - $ - Capital Source Business Finance Group The Company finances its TransTech operations from operations and a Secured Credit Facility with Capital Source Business Finance Group. Originally entered into on December 9, 2008, TransTech obtained an initial $1,000,000 secured credit facility with Capital Source to fund its operations. On June 6, 2017, TransTech entered into the Fourth Modification to the Loan and Security Agreement. This secured credit facility was renewed until June 12, 2018 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, and is now not to exceed $500,000. 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. The remaining balance on the accounts receivable line of $175,062 ($253,000 available) as of March 31, 2018 must be repaid by the time the secured credit facility expires on June 12, 2018, or the Company renews by automatic extension for the next successive one year term. Note Payable to Umpqua Bank The Company has a $199,935 Business Loan Agreement with Umpqua Bank. On March 26, 2018, the Umpqua Loan maturity was extended to March 31, 2019 and provides for interest at 4.75% 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 Chairman of the Board. 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 $25,332 as of March 31, 2018. Note Payables to Ronald P. Erickson or J3E2A2Z LP On January 25, 2018, the Company entered into amendments to two demand promissory notes, totaling $600,000 with Mr. Erickson, the Company’s Chief Executive Officer and/or entities in which Mr. Erickson has a beneficial interest. The amendments extend the due date from December 31, 2017 to March 31, 2018 and continue to provide for interest of 3% per annum and a third lien on company assets if not repaid by March 31, 2018 or converted into convertible debentures or equity on terms acceptable to the Holder. On March 16, 2018, the demand promissory notes and accrued interest were converted into convertible notes payable. See Note 10 for additional details. |
12. EQUITY
12. EQUITY | 6 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
12. 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 preferred stock, par value $0.001 per 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 six months ended March 31, 2018: A supplier converted accounts payable totaling $48,300 into 230,000 shares of common stock. The Company issued 329,240 shares of common stock to two Names Executive Officers employees and three consultants and for services during 2017 and 2018. The Company expensed $70,640 during the six months ended March 31, 2018. Warrants to Purchase Common Stock The following warrants were issued during the six months ended March 31, 2018: On December 15, 2017, the Company received $250,000 and issued a senior convertible exchangeable debenture with a principal amount of $300,000 and a five year common stock purchase warrant to purchase 1,200,000 shares of common stock in a private placement dated December 12, 2017 to an accredited investor pursuant to a Securities Purchase Agreement dated August 14, 2017. See Note 10 for additional details. The initial exercise price of the warrants described above is $0.25 per share, also subject to certain adjustments. On March 2, 2018, the Company received gross proceeds of $280,000 in exchange for issuing a senior convertible redeemable debenture with a principal amount of $336,000 and a five year warrant to purchase 1,344,000 shares of common stock in a private placement dated February 28, 2018 to an accredited investor pursuant to a Securities Purchase Agreement dated August 14, 2017 See Note 10 for additional details. The initial exercise price of the warrants described above is $0.25 per share, also subject to certain adjustments. The Company entered into a Note and Account Payable Conversion Agreement pursuant to which (a) all $664,233 currently owing under the J3E2A2Z Notes was converted to a Convertible Redeemable Promissory Note in the principal amount of $664,233, and (b) all $519,833 of the J3E2A2Z Account Payable was converted into a Convertible Redeemable Promissory Note in the principal amount of $519,833 together with a warrant to purchase up to 1,039,666 shares of common stock of the Company for a period of five years. The initial exercise price of the warrants described above is $0.50 per share, also subject to certain adjustments. See Note 10 and 11 for additional details. In addition, effective as of January 31, 2018, Erickson was issued a warrant to purchase up to 855,000 shares of common stock of the Company for a period of five years. The initial exercise price of the warrants described above is $0.50 per share, also subject to certain adjustments. See Note 10 and 11 for additional details. During the six months ended March 31, 2108, The Company issued placement agent warrants related to the issuance of senior convertible redeemable debentures and Series D Preferred Stock to purchase up to 473,400 shares of common stock for a period of five years. The initial exercise price of the warrants described above is $0.25 per share, also subject to certain adjustments. A summary of the warrants outstanding as of March 31, 2018 were as follows: March 31, 2018 Weighted Average Exercise Shares Price Outstanding at beginning of period 6,900,356 $ 0.428 Issued 4,937,066 0.250 Exercised - - Forfeited - - Expired - - Outstanding at end of period 11,837,422 $ 0.354 Exerciseable at end of period 11,837,422 A summary of the status of the warrants outstanding as of March 31, 2018 is presented below: March 31, 2018 Weighted Weighted Weighted Average Average Average Number of Remaining Exercise Shares Exercise Warrants Life ( In Years) Price Exerciseable Price 10,159,682 3.98 $ 0.250 10,159,682 $ 0.250 734,725 3.24 0.700 734,725 0.700 936,348 3.62 1.000 936,348 1.000 6,667 0.75 30.000 6,667 30.000 11,837,422 3.65 $ 0.354 11,837,422 $ 0.354 The significant weighted average assumptions relating to the valuation of the Company’s warrants for the six months ended March 31, 2018 were as follows: Assumptions Dividend yield 0% Expected life 2-5 years Expected volatility 125% Risk free interest rate 2.14%-2.65% There were vested warrants of 11,837,422 as of March 31, 2018 with an aggregate intrinsic value of $0. |
13. STOCK OPTIONS
13. STOCK OPTIONS | 6 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
13. STOCK OPTIONS | Description of Stock Option 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 six months ended March 31, 2018. A former employee forfeited stock option grants for 10,668 shares of common stock at $14.719 per share. There are currently 4,736 options to purchase common stock at an average exercise price of $14.577 per share outstanding as of March 31, 2018 under the 2011 Stock Incentive Plan. The Company recorded $7,334 and $21,774 of compensation expense, net of related tax effects, relative to stock options for the six months ended March 31, 2018 and in accordance with ASC 505. Net loss per share (basic and diluted) associated with this expense was approximately ($0.00) and ($0.01) per share, respectively. As of March 31, 2018, there is approximately $2,722 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 1.38 years. Stock option activity for the six months ended March 31, 2018 and for the years ended September 30, 2017 and 2016 was as follows: Weighted Average Options Exercise Price $ Outstanding as of September 30, 2015 57,407 18.425 1,057,725 Granted - - - Exercised - - - Forfeitures (6,499 ) (21.403 ) (139,098 ) Outstanding as of September 30, 2016 50,908 18.045 918,627 Granted - - - Exercised - - - Forfeitures (35,504 ) (19.507 ) (692,568 ) Outstanding as of September 30, 2017 15,404 $ 14.675 $ 226,059 Granted - - - Exercised - - - Forfeitures (10,668 ) 14.719 (157,020 ) Outstanding as of March 31, 2018 4,736 $ 14.577 $ 69,039 The following table summarizes information about stock options outstanding and exercisable as of March 31, 2018: 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 1,334 2.25 $ 13.500 1,334 $ 13.50 15.000 3,402 1.04 15.000 2,068 15.00 4,736 1.38 $ 14.577 3,402 $ 14.41 There is no aggregate intrinsic value of the exercisable options as of March 31, 2018. |
14. OTHER SIGNIFICANT TRANSACTI
14. OTHER SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES | 6 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
14. OTHER SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES | Related Party Transactions with Ronald P. Erickson See Note 10 and 11 for Convertible Notes Payable and Notes Payable with Ronald P. Erickson, our Chairman 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. On March 26, 2018, the Umpqua Loan maturity was extended to March 31, 2019 and provides for interest at 4.75% 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 Chairman of the Board. 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 $25,332 as of March 31, 2018. Note Payables to Ronald P. Erickson or J3E2A2Z LP On January 25, 2018, the Company entered into amendments to two demand promissory notes, totaling $600,000 with Mr. Erickson, the Company’s Chief Executive Officer and/or entities in which Mr. Erickson has a beneficial interest. The amendments extend the due date from December 31, 2017 to March 31, 2018 and continue to provide for interest of 3% per annum and a third lien on company assets if not repaid by March 31, 2018 or converted into convertible debentures or equity on terms acceptable to the Holder. On March 16, 2018, the demand promissory notes and accrued interest were converted into convertible notes payable. See Note 10 for additional details. Other Amounts Due to Mr. Erickson Mr. Erickson and/or entities with which he is affiliated also have advanced $24,500 and have unreimbursed expenses and compensation of approximately $493,476. The Company owes Mr. Erickson, or entities with which he is affiliated, $517,916 as of March 31, 2018. |
15. COMMITMENTS, CONTINGENCIES
15. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS | 6 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
15. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS | 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 the following non-cancelable operating leases for its various facilities and certain equipment. Years Ended March 31, Total 2019 $ 86,190 2020 117,169 2021 41,414 2022 - 2023 - Beyond - Total $ 244,773 Corporate Offices On April 13, 2017, the Company leased its executive office located at 500 Union Street, Suite 810, Seattle, Washington, USA, 98101. The Company leases 943 square feet and the net monthly payment is $2,672. The monthly payment increases approximately 3% each year and the lease expires on May 31, 2022. TransTech Facilities TransTech is located at 12142 NE Sky Lane, Suite 130, Aurora, OR 97002. TransTech leases a total of approximately 6,340 square feet of office and warehouse space for its administrative offices, product inventory and shipping operations. Effective December 1, 2017, TransTech leases this office from December 1, 2017 at $4,465 per month. The monthly payment increases approximately 3% each year and the lease expires on January 31, 2020. Until December 1, 2017, TransTech leased this office on a month to month basis at $6,942 per month. Consulting Agreement with Phillip A. Bosua On July 7, 2017, the Company entered into a Consulting Agreement with Phillip A. Bosua whereby Mr. Bosua can earn up to 200,000 shares of the Company’s company stock based on achieving certain product development and funding milestones. On March 1, 2018, the Company entered into a Consulting and Services Agreement with Blaze, Inc. and Mr. Bosua. The Consulting Agreement supersedes the Consulting Relationship Letter dated July 6, 2017 between the Company and Mr. Bosua. Under the terms of the Consulting Agreement, Blaze and Mr. Bosua are performing certain development work on behalf of the Company related to potential products for the consumer marketplace. The Consulting Agreement is deemed to be effective as of the date of the July 7, 2017 Consulting Relationship Letter and is effective until the completion of services or earlier termination in accordance with the terms of the Agreement. Entry into Employment Agreement with Ronald P. Erickson, Chief Executive Officer On August 4, 2017, the Board of Directors approved an Employment Agreement with Ronald P. Erickson pursuant to which the Company engaged Mr. Erickson as the Company’s Chief Executive Officer through December 31, 2018. Mr. Erickson’s annual compensation is $180,000. Mr. Erickson is also entitled to receive an annual bonus and equity awards compensation as approved by the Board. The bonus should be paid no later than 30 days following earning of the bonus. Mr. Erickson will be entitled to participate in all group employment benefits that are offered by the Company to the Company’s senior executives and management employees from time to time, subject to the terms and conditions of such benefit plans, including any eligibility requirements. If the Company terminates Mr. Erickson’s employment at any time prior to the expiration of the Term without Cause, as defined in the Employment Agreement, or if Mr. Erickson terminates his employment at any time for “Good Reason” or due to a “Disability”, Mr. Erickson will be entitled to receive (i) his Base Salary amount for one year; and (ii) medical benefits for eighteen months. |
16. SUBSEQUENT EVENTS
16. SUBSEQUENT EVENTS | 6 Months Ended |
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
16. SUBSEQUENT EVENTS | The Company evaluates subsequent events, for the purpose of adjustment or disclosure, up through the date the financial statements are available. Subsequent to March 31, 2018, there were the following material transactions that require disclosure: The Company issued 2,225,000 common shares valued at $0.25 related to service awards. The Company issued stock option grants to two employees to acquire 700,000 shares of the Company’s common stock. The stock option grants vest annually over four years. Finally, the Company issued a warrant to purchase 100,000 shares of the common stock. The grant price of the five year warrant was $0.25 per share. Issuance of Twelfth Patent on ChromaID™ Technology On April 4, 2018, the Company was issued US Patent No. 9,869,636 B2, entitled “Device For Evaluation Of Fluids Using Electromagnetic Energy.” The patent expires approximately April 2033. This patent pertains to the use of ChromaID technology for evaluating and analyzing fluids such as those following through an IV drip in a hospital or water, for example. Merger with RAAI Lighting, Inc. On April 10, 2018, the Company entered into an Agreement and Plan of Merger with 500 Union Corporation, a Delaware corporation and a wholly owned subsidiary of the Company, and RAAI Lighting, Inc., a Delaware corporation. Pursuant to the Merger Agreement, the Company has agreed to acquire all the outstanding shares of RAAI’s capital stock through a merger of Merger Sub with and into RAAI, with RAAI surviving the Merger as a wholly owned subsidiary of the Company. The Merger and the Merger Agreement were approved by (a) the sole director and stockholder of RAAI and (b) the Board of Directors of the Company (acting on behalf of the Company directly and on behalf of the Company as the sole stockholder of Merger Sub). Under the terms of the Merger Agreement, each share of RAAI common stock issued and outstanding immediately before the Merger (1,000 shares) will be cancelled and converted into the right to receive 2,000 shares of the Company’s common stock. As a result, the Company will issue 2,000,000 shares of its common stock to Phillip A. Bosua, formerly the sole stockholder of RAAI. The consideration for the Merger was determined through arms-length bargaining by the Company and RAAI. The shares issued to Mr. Bosua represent approximately 27.7% of the Company’s issued and outstanding common stock after the Merger. The shares issued to Mr. Bosua represent approximately 9.0% of the Company’s fully diluted common stock after the Merger. The Merger was structured to qualify as a tax-free reorganization for U.S. federal income tax purposes. The Company received intellectual property, copy rights and trademarks related to RAAI. The Company did not acquire a business, customer list or employees. Appointment of Director On April 10, 2018, the Board increased the size of the Board from three to four members and Phillip A. Bosua was appointed as a member of the Board. Mr. Bosua’s term of office expire at the next annual meeting of the Company’s stockholders. Appointment of Officers On April 10, 2018, the Company appointed Mr. Bosua as Chief Executive Officer of the Company, replacing Ronald P. Erickson, who remains Chairman of the Company. Mr. Erickson Phillip A. Bosua was appointed the Company’s CEO on April 10, 2018. Previously, Mr. Bosua served as the Company’s Chief Product Officer since August 2017 and the Company entered into a Consulting Agreement on July 7, 2017. From September 2012 to February 2015, he was the founder and Chief Executive Officer of LIFX Inc. (where he developed and marketed an innovative“smart” light bulb) and from August 2015 until February 2016 was Vice President Consumer Products at Soraa (which markets specialty LED light bulbs). From February 2016 to July 2017, Mr. Bosua was the founder and CEO of RAAI, Inc. (where he continued the development of his smart lighting technology). From May 2008 to February 2013 he was the Founder and CEO of LimeMouse Apps, a leading developer of applications for the Apple App Store. On April 10, 2018, the Company entered into an Employment Agreement with Mr. Bosua reflecting his appointment as Chief Executive Officer. The Employment Agreement is for an initial term of 12 months (subject to earlier termination) and will be automatically extended for additional 12-month terms unless either party notifiesthe other party of its intention to terminate the Employment Agreement. Mr. Bosua will be paid a base salary of $225,000 per year and may be entitled to bonuses and equity awards at the discretion of the Board or a committee of the Board. The Employment Agreement provides for severance pay equal to 12 months of base salary if Mr. Bosua is terminated without “cause” or voluntarily terminates his employment for “good reason.” On April 10, 2018, the Company entered into an Amended Employment Agreement for Ronald P. Erickson which amends the Employment Agreement dated July 1, 2017. The Agreement expires March 21, 2019. Amendment of Equity Incentive Plan On April 10, 2018, the Board approved an amendment to its 2011 Stock Incentive Plan increasing the number of shares of common stock reserved under the Incentive Plan from 93,333 to 1,200,000. Merger with Know Lab, Inc. On May 1, 2018, Know Labs, Inc. – a Nevada corporation incorporated on April 3, 2018, and our wholly-owned subsidiary – merged with and into the Company pursuant to an Agreement and Plan of Merger dated May 1, 2018. In connection with the merger, our Articles of Incorporation were effectively amended to change our name to “Know Labs, Inc.” by and through the filing of Articles of Merger which are filed herewith as Exhibit 3.1. This parent-subsidiary merger was approved by us, the parent, in accordance with Nevada Revised Statutes Section 92A.180. Stockholder approval was not required. This amendment was filed with the Nevada Secretary of State and became effective on May 1, 2018. Corporate Name Change and Symbol Change On May 1, 2018, the Company filed a corporate action with FINRA to effectively change the Company’s OTC trading symbol and change the Company’s name to “Know Labs, Inc.” The Company’s Board of Directors approved the Symbol Change on April 10, 2018, and in accordance with the Nevada Revised Statutes, no shareholder approval was required. The Symbol Change would change the Company’s current symbol from “VSUL” to “KNWN,” or, if unavailable, either “KNLB” or “KLBS,” pending FINRA’s confirmation. |
3. SIGNIFICANT ACCOUNTING POL22
3. SIGNIFICANT ACCOUNTING POLICIES: ADOPTION OF ACCOUNTING STANDARDS (Policies) | 6 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
Basis of Presentation | The accompanying unaudited consolidated financial statements include the accounts of the Company. Intercompany accounts and transactions have been eliminated. The preparation of these unaudited condensed consolidated financial statements were prepared in conformity with U.S. generally accepted accounting principles (“GAAP”). |
Principles of Consolidation | The consolidated financial statements include the accounts of the Company and its wholly owned and majority-owned subsidiaries, TransTech Systems, Inc. Inter-Company items and transactions have been eliminated in consolidation. |
Cash and Cash Equivalents | The Company classifies highly liquid temporary investments with an original maturity of three months or less when purchased as cash equivalents. The Company maintains cash balances at various financial institutions. Balances at US banks are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risk for cash on deposit. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts receivable consist primarily of amounts due to the Company from normal business activities. The Company maintains an allowance for doubtful accounts to reflect the expected non-collection of accounts receivable based on past collection history and specific risks identified within the portfolio. If the financial condition of the customers were to deteriorate resulting in an impairment of their ability to make payments, or if payments from customers are significantly delayed, additional allowances might be required. |
Inventories | Inventories consist primarily of printers and consumable supplies, including ribbons and cards, badge accessories, capture devices, and access control components held for resale and are stated at the lower of cost or market on the first-in, first-out (“FIFO”) method. Inventories are considered available for resale when drop shipped and invoiced directly to a customer from a vendor, or when physically received by TransTech at a warehouse location. The Company records a provision for excess and obsolete inventory whenever an impairment has been identified. There is a $35,000 reserve for impaired inventory as of March 31, 2018 and September 30, 2017, respectively. |
Equipment | Equipment consists of machinery, leasehold improvements, furniture and fixtures and software, which are stated at cost less accumulated depreciation and amortization. Depreciation is computed by the straight-line method over the estimated useful lives or lease period of the relevant asset, generally 2-10 years, except for leasehold improvements which are depreciated over 2-3 years. |
Goodwill | Goodwill is the excess of cost of an acquired entity over the fair value of amounts assigned to assets acquired and liabilities assumed in a business combination. With the adoption of ASC 350, goodwill is not amortized, rather it is tested for impairment annually, and will be tested for impairment between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. Impairment testing for goodwill is done at a reporting unit level. Reporting units are one level below the business segment level, but are combined when reporting units within the same segment have similar economic characteristics. Under the criteria set forth by ASC 350, the Company has one reporting unit based on the current structure. An impairment loss generally would be recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit. The Company determined that its goodwill related to the 2010 acquisition of TransTech Systems was impaired and recorded an impairment of $983,645 as selling, general and administrative expenses during the year ended September 30, 2017. |
Long-Lived Assets | The Company reviews its long-lived assets for impairment annually or when changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets under certain circumstances are reported at the lower of carrying amount or fair value. Assets to be disposed of and assets not expected to provide any future service potential to the Company are recorded at the lower of carrying amount or fair value (less the projected cost associated with selling the asset). To the extent carrying values exceed fair values, an impairment loss is recognized in operating results. |
Fair Value Measurements and Financial Instruments | ASC Topic 820, Fair Value Measurement and Disclosures 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 as of March 31, 2018 and September 30, 2017 are based upon the short-term nature of the assets and liabilities. |
Derivative financial instruments | The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, the Company uses a Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within twelve months of the balance sheet date. |
Revenue Recognition | Visualant and TransTech revenue are derived from products and services. Revenue is considered realized when the products or services have been provided to the customer, the work has been accepted by the customer and collectability is reasonably assured. Furthermore, if an actual measurement of revenue cannot be determined, the Company defers all revenue recognition until such time that an actual measurement can be determined. If during the course of a contract management determines that losses are expected to be incurred, such costs are charged to operations in the period such losses are determined. Revenues are deferred when cash has been received from the customer but the revenue has not been earned. |
Stock Based Compensation | The Company has share-based compensation plans under which employees, consultants, suppliers and directors may be granted restricted stock, as well as options to purchase shares of Company common stock at the fair market value at the time of grant. Stock-based compensation cost is measured by the Company at the grant date, based on the fair value of the award, over the requisite service period. For options issued to employees, the Company recognizes stock compensation costs utilizing the fair value methodology over the related period of benefit. Grants of stock options and stock to non-employees and other parties are accounted for in accordance with the ASC 505. |
Convertible Securities | Based upon ASC 815-15, we have adopted a sequencing approach regarding the application of ASC 815-40 to convertible securities issued subsequent to September 30, 2015. We will evaluate our contracts based upon the earliest issuance date. In the event partial reclassification of contracts subject to ASC 815-40-25 is necessary, due to our inability to demonstrate we have sufficient shares authorized and unissued, shares will be allocated on the basis of issuance date, with the earliest issuance date receiving first allocation of shares. If a reclassification of an instrument were required, it would result in the instrument issued latest being reclassified first. |
Net Loss per Share | Under the provisions of ASC 260, “Earnings Per Share,” basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding for the periods presented. Diluted net loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would then share in the income of the Company, subject to anti-dilution limitations. The common stock equivalents have not been included as they are anti-dilutive. As of March 31, 2018, there were options outstanding for the purchase of 4,736 common shares, warrants for the purchase of 11,837,422 common shares, 2,825,053 shares of the Company’s common stock issuable upon the conversion of Series A, Series C and Series D Convertible Preferred Stock. In addition, the Company has an unknown number of shares issuable upon conversion of convertible debentures of $2,390,066. All of which could potentially dilute future earnings per share. As of March 31, 2017, there were options outstanding for the purchase of 50,908 common shares, warrants for the purchase of 5,110,812 common shares, 2,467,910 shares of our common stock issuable upon the conversion of Series A, Series C and Series D Convertible Preferred Stock. In addition, the Company had an unknown number of shares issuable upon conversion of convertible debentures of $175,000. All of which could potentially dilute future earnings per share. |
Dividend Policy | The Company has never paid any cash dividends and intends, for the foreseeable future, to retain any future earnings for the development of our business. Our future dividend policy will be determined by the board of directors on the basis of various factors, including our results of operations, financial condition, capital requirements and investment opportunities. |
Use of Estimates | The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Recent Accounting Pronouncements | A variety of proposed or otherwise potential accounting standards are currently under study by standard setting organizations and various regulatory agencies. Due to the tentative and preliminary nature of those proposed standards, management has not determined whether implementation of such proposed standards would be material to the Company’s consolidated financial statements. |
7. FIXED ASSETS (Tables)
7. FIXED ASSETS (Tables) | 6 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
Schedule of Property and equipment | Estimated March 31, 2018 Useful Lives Purchased Capital Leases Total TTS- Machinery and equipment 3-10 years $ 129,180 $ 42,681 $ 171,861 Leasehold improvements 2-3 years 272,500 - $ 272,500 Furniture and fixtures 2-3 years 31,197 95,020 $ 126,217 Software and websites 3- 7 years 35,830 - $ 35,830 Less: accumulated depreciation (365,965 ) (137,701 ) $ (503,666 ) $ 102,742 $ - $ 102,742 |
11. NOTES PAYABLE, CAPITALIZE24
11. NOTES PAYABLE, CAPITALIZED LEASES AND LONG TERM DEBT (Tables) | 6 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
Notes payable, capitalized leases and long term debt | March 31, September 30, 2018 2017 Capital Source Business Finance Group $ 175,062 $ 365,725 Note payable to Umpqua Bank 199,935 199,935 Secured note payable to J3E2A2Z LP - related party - 600,000 Total debt 374,997 1,165,660 Less current portion of long term debt (374,997 ) (1,165,660 ) Long term debt $ - $ - |
12. EQUITY (Tables)
12. EQUITY (Tables) | 6 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
Summary of the warrants issued | March 31, 2018 Weighted Average Exercise Shares Price Outstanding at beginning of period 6,900,356 $ 0.428 Issued 4,937,066 0.250 Exercised - - Forfeited - - Expired - - Outstanding at end of period 11,837,422 $ 0.354 Exerciseable at end of period 11,837,422 |
Summary of the status of the warrants outstanding | March 31, 2018 Weighted Weighted Weighted Average Average Average Number of Remaining Exercise Shares Exercise Warrants Life ( In Years) Price Exerciseable Price 10,159,682 3.98 $ 0.250 10,159,682 $ 0.250 734,725 3.24 0.700 734,725 0.700 936,348 3.62 1.000 936,348 1.000 6,667 0.75 30.000 6,667 30.000 11,837,422 3.65 $ 0.354 11,837,422 $ 0.354 |
Weighted average assumptions relating to the valuation of the Companys warrants | Dividend yield 0% Expected life 2-5 years Expected volatility 125% Risk free interest rate 2.14%-2.65% |
13. STOCK OPTIONS (Tables)
13. STOCK OPTIONS (Tables) | 6 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
Stock option activity | Weighted Average Options Exercise Price $ Outstanding as of September 30, 2015 57,407 18.425 1,057,725 Granted - - - Exercised - - - Forfeitures (6,499 ) (21.403 ) (139,098 ) Outstanding as of September 30, 2016 50,908 18.045 918,627 Granted - - - Exercised - - - Forfeitures (35,504 ) (19.507 ) (692,568 ) Outstanding as of September 30, 2017 15,404 $ 14.675 $ 226,059 Granted - - - Exercised - - - Forfeitures (10,668 ) 14.719 (157,020 ) Outstanding as of March 31, 2018 4,736 $ 14.577 $ 69,039 |
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 1,334 2.25 $ 13.500 1,334 $ 13.50 15.000 3,402 1.04 15.000 2,068 15.00 4,736 1.38 $ 14.577 3,402 $ 14.41 |
15. COMMITMENTS, CONTINGENCIE27
15. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS (Tables) | 6 Months Ended |
Mar. 31, 2018 | |
Commitments Contingencies And Legal Proceedings Tables | |
Properties and Operating Leases | Years Ended March 31, Total 2019 $ 86,190 2020 117,169 2021 41,414 2022 - 2023 - Beyond - Total $ 244,773 |
1. GOING CONCERN (Details Narra
1. GOING CONCERN (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | |
Notes to Financial Statements | ||||
Net loss | $ (1,827,419) | $ (3,901,232) | $ (1,746,495) | |
Net cash used in operating activities | $ (442,518) | $ (568,580) | (2,746,333) | |
Accumulated Deficit | $ 33,361,146 | $ 31,533,727 |
3. SIGNIFICANT ACCOUNTING POL29
3. SIGNIFICANT ACCOUNTING POLICIES: ADOPTION OF ACCOUNTING STANDARDS (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | Sep. 30, 2017 | |
Reserve for impaired inventory | $ 35,000 | $ 35,000 | $ 35,000 | ||
Goodwill impairment | $ 0 | $ 0 | $ 0 | $ 983,645 | |
Minimum [Member] | |||||
Estimated useful lives of assets | 2 years | ||||
Maximum [Member] | |||||
Estimated useful lives of assets | 10 years | ||||
Leasehold Improvements [Member] | Minimum [Member] | |||||
Estimated useful lives of assets | 5 years | ||||
Leasehold Improvements [Member] | Maximum [Member] | |||||
Estimated useful lives of assets | 20 years |
4. ACCOUNTS RECEIVABLE_CUSTOM30
4. ACCOUNTS RECEIVABLE/CUSTOMER CONCENTRATION (Details Narrative) - USD ($) | Mar. 31, 2018 | Sep. 30, 2017 |
Notes to Financial Statements | ||
Accounts receivable, net of allowance | $ 556,996 | $ 693,320 |
Allowance for bad debt | $ 60,000 |
5. INVENTORIES (Details Narrati
5. INVENTORIES (Details Narrative) - USD ($) | Mar. 31, 2018 | Sep. 30, 2017 |
Notes to Financial Statements | ||
Inventories | $ 204,293 | $ 225,909 |
Reserve for impaired inventory | $ 35,000 | $ 35,000 |
7. FIXED ASSETS (Details)
7. FIXED ASSETS (Details) - USD ($) | Mar. 31, 2018 | Sep. 30, 2017 |
Machinery and equipment (2-10 years) | $ 171,861 | |
Leasehold improvements (5-20 years) | 272,500 | |
Furniture and fixtures (3-10 years) | 126,217 | |
Software and websites (3- 7 years) | 35,830 | |
Less: accumulated depreciation | (640,736) | $ (662,855) |
Property and equipment, net | 102,742 | $ 133,204 |
Purchased [Member] | ||
Machinery and equipment (2-10 years) | 129,180 | |
Leasehold improvements (5-20 years) | 272,500 | |
Furniture and fixtures (3-10 years) | 31,197 | |
Software and websites (3- 7 years) | 35,830 | |
Less: accumulated depreciation | (365,965) | |
Property and equipment, net | 102,742 | |
Capital Leases [Member] | ||
Machinery and equipment (2-10 years) | 42,681 | |
Leasehold improvements (5-20 years) | 0 | |
Furniture and fixtures (3-10 years) | 95,020 | |
Software and websites (3- 7 years) | 0 | |
Less: accumulated depreciation | (137,701) | |
Property and equipment, net | $ 0 |
7. FIXED ASSETS (Details Narrat
7. FIXED ASSETS (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Sep. 30, 2017 | |
Notes to Financial Statements | |||
Property and equipment, net | $ 102,742 | $ 133,204 | |
Property and equipment, accumulated depreciation | 640,736 | $ 662,855 | |
Depreciation expense | $ 30,462 | $ 17,399 |
8. Goodwill (Details Narrative)
8. Goodwill (Details Narrative) | 12 Months Ended |
Sep. 30, 2017USD ($) | |
Goodwill Details Narrative | |
Impairment of goodwill | $ 983,645 |
9. DERIVATIVE INSTRUMENTS (Deta
9. DERIVATIVE INSTRUMENTS (Details Narrative) | 12 Months Ended |
Sep. 30, 2017USD ($) | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Change in the fair value of the liability | $ 217,828 |
10. CONVERTIBLE NOTES PAYABLE (
10. CONVERTIBLE NOTES PAYABLE (Details Narrative) | Mar. 31, 2018USD ($) |
Vis Vires Group, Inc [Member] | |
Accrued interest | $ 31,741 |
11. NOTES PAYABLE, CAPITALIZE37
11. NOTES PAYABLE, CAPITALIZED LEASES AND LONG TERM DEBT (Details) - USD ($) | Mar. 31, 2018 | Sep. 30, 2017 |
Notes Payable Capitalized Leases And Long Term Debt Details | ||
Capital Source Business Finance Group | $ 175,062 | $ 365,725 |
Note payable to Umpqua Bank | 199,935 | 199,935 |
Secured note payable to J3E2A2Z LP - related party | 0 | 600,000 |
Total debt | 374,997 | 1,165,660 |
Less current portion of long term debt | (374,997) | (1,165,660) |
Long term debt | $ 0 | $ 0 |
12. EQUITY (Details)
12. EQUITY (Details) | 6 Months Ended |
Mar. 31, 2018$ / sharesshares | |
Shares | |
Outstanding at beginning of period | 6,900,356 |
Issued | 4,937,066 |
Exercised | 0 |
Forfeited | 0 |
Expired | 0 |
Outstanding at end of period | 11,837,422 |
Exercisable at end of period | 11,837,422 |
Weighted Average Exercise Price: | |
Outstanding at beginning of period | $ / shares | $ 0.428 |
Issued | $ / shares | 0.250 |
Exercised | $ / shares | 0 |
Forfeited | $ / shares | 0 |
Expired | $ / shares | 0 |
Outstanding at end of period | $ / shares | $ 0.354 |
12. EQUITY (Details 1)
12. EQUITY (Details 1) | 6 Months Ended |
Mar. 31, 2018$ / sharesshares | |
Number of Warrants | shares | 11,837,422 |
Weighted Average Remaining Life (years) | 3 years 7 months 24 days |
Weighted Average Exercise Price, outstanding | $ / shares | $ 0.354 |
Shares Exercisable | shares | 11,837,422 |
Weighted Average Exercise Price, exerciseable | $ / shares | $ 0.354 |
Warrant One [Member] | |
Number of Warrants | shares | 10,159,682 |
Weighted Average Remaining Life (years) | 3 years 11 months 23 days |
Weighted Average Exercise Price, outstanding | $ / shares | $ 0.25 |
Shares Exercisable | shares | 10,159,682 |
Weighted Average Exercise Price, exerciseable | $ / shares | $ 0.25 |
Warrant Two [Member] | |
Number of Warrants | shares | 734,725 |
Weighted Average Remaining Life (years) | 3 years 2 months 26 days |
Weighted Average Exercise Price, outstanding | $ / shares | $ 0.7 |
Shares Exercisable | shares | 734,725 |
Weighted Average Exercise Price, exerciseable | $ / shares | $ 0.7 |
Warrant Three [Member] | |
Number of Warrants | shares | 936,348 |
Weighted Average Remaining Life (years) | 3 years 7 months 13 days |
Weighted Average Exercise Price, outstanding | $ / shares | $ 1 |
Shares Exercisable | shares | 936,348 |
Weighted Average Exercise Price, exerciseable | $ / shares | $ 1 |
Warrant Four [Member] | |
Number of Warrants | shares | 6,667 |
Weighted Average Remaining Life (years) | 9 months |
Weighted Average Exercise Price, outstanding | $ / shares | $ 30 |
Shares Exercisable | shares | 6,667 |
Weighted Average Exercise Price, exerciseable | $ / shares | $ 30 |
12. EQUITY (Details 2)
12. EQUITY (Details 2) | 6 Months Ended |
Mar. 31, 2018 | |
Dividend yield | 0.00% |
Expected volatility | 125.00% |
Minimum [Member] | |
Expected life | 2 years |
Risk free interest rate | 2.14% |
Maximum [Member] | |
Expected life | 5 years |
Risk free interest rate | 2.65% |
12. EQUITY (Details Narrative)
12. EQUITY (Details Narrative) | Mar. 31, 2018USD ($)shares |
Notes to Financial Statements | |
Intrinsic value | $ | $ 0 |
Warrants Vested | shares | 11,837,422 |
13. STOCK OPTIONS (Details)
13. STOCK OPTIONS (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Shares: | |||
Outstanding at beginning of period | 6,900,356 | ||
Shares granted | 4,937,066 | ||
Shares exercised | 0 | ||
Shares forfeitures | 0 | ||
Outstanding at end of period | 11,837,422 | 6,900,356 | |
Weighted Average Exercise Price: | |||
Outstanding at beginning of period | $ 0.428 | ||
Shares granted | 0.250 | ||
Shares exercised | 0 | ||
Shares forfeitures | 0 | ||
Outstanding at end of period | $ 0.354 | $ 0.428 | |
Aggregate Intrinsic Value | |||
Aggregate Intrinsic Value Outstanding, End | $ 0 | ||
Stock Options | |||
Shares: | |||
Outstanding at beginning of period | 15,404 | 50,908 | 57,407 |
Shares granted | 0 | 0 | 0 |
Shares exercised | 0 | 0 | 0 |
Shares forfeitures | (10,668) | (35,504) | (6,499) |
Outstanding at end of period | 4,736 | 15,404 | 50,908 |
Weighted Average Exercise Price: | |||
Outstanding at beginning of period | $ 14.675 | $ 18.045 | $ 18.425 |
Shares granted | 0 | 0 | 0 |
Shares exercised | 0 | 0 | 0 |
Shares forfeitures | 14.719 | (19.507) | (21.403) |
Outstanding at end of period | $ 14.577 | $ 14.675 | $ 18.045 |
Aggregate Intrinsic Value | |||
Aggregate Intrinsic Value Outstanding, Beginning | $ 226,059 | $ 918,267 | $ 1,057,725 |
Aggregate Intrinsic Value Outstanding, Granted | $ 0 | $ 0 | $ 0 |
Aggregate Intrinsic Value Outstanding, Exercised | $ 0 | $ 0 | $ 0 |
Aggregate Intrinsic Value Outstanding, Forefeitures | $ (157,020) | $ (692,568) | $ (139,098) |
Aggregate Intrinsic Value Outstanding, End | $ 69,039 | $ 226,059 | $ 918,267 |
13. STOCK OPTIONS (Details 1)
13. STOCK OPTIONS (Details 1) | 6 Months Ended |
Mar. 31, 2018$ / sharesshares | |
Number of Outstanding Stock Options | 11,837,422 |
Weighted Average Remaining Life (years) | 3 years 7 months 24 days |
Weighted Average Exercise Price Exerciseable | $ / shares | $ 0.354 |
Number Exercisable | 11,837,422 |
Weighted Average Exercise Price Exerciseable | $ / shares | $ 3,402 |
Exercise Price 13.500 | |
Number of Outstanding Stock Options | 1,334 |
Weighted Average Remaining Life (years) | 2 years 3 months |
Weighted Average Exercise Price Exerciseable | $ / shares | $ 13.5 |
Weighted Average Exercise Price Exerciseable | $ / shares | $ 1,334 |
Exercise Price 15.000 | |
Number of Outstanding Stock Options | 3,402 |
Weighted Average Remaining Life (years) | 1 year 14 days |
Weighted Average Exercise Price Exerciseable | $ / shares | $ 15 |
Weighted Average Exercise Price Exerciseable | $ / shares | $ 2,068 |
Warrant One [Member] | |
Number of Outstanding Stock Options | 10,159,682 |
Weighted Average Remaining Life (years) | 3 years 11 months 23 days |
Weighted Average Exercise Price Exerciseable | $ / shares | $ 0.25 |
Number Exercisable | 10,159,682 |
Warrant Two [Member] | |
Number of Outstanding Stock Options | 734,725 |
Weighted Average Remaining Life (years) | 3 years 2 months 26 days |
Weighted Average Exercise Price Exerciseable | $ / shares | $ 0.7 |
Number Exercisable | 734,725 |
Warrant Three [Member] | |
Number of Outstanding Stock Options | 936,348 |
Weighted Average Remaining Life (years) | 3 years 7 months 13 days |
Weighted Average Exercise Price Exerciseable | $ / shares | $ 1 |
Number Exercisable | 936,348 |
2011 Stock Incentive Plan | |
Number of Outstanding Stock Options | 4,736 |
13. STOCK OPTIONS (Details Narr
13. STOCK OPTIONS (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Compensation expense | $ 7,334 | $ 21,774 |
Unrecognized compensation costs | $ 2,722 | |
Period for recognition | 1 year 4 months 17 days | |
Options to purchase common stock under 2011 Stock Incentive Plan | 11,837,422 | |
Average exercise price under 2011 Stock Incentive Plan | $ 0.354 | |
Exercisable at end of period | 11,837,422 | |
2011 Stock Incentive Plan | ||
Options to purchase common stock under 2011 Stock Incentive Plan | 4,736 |
14. OTHER SIGNIFICANT TRANSAC45
14. OTHER SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES (Details narrative) | 6 Months Ended |
Mar. 31, 2018USD ($) | |
Umpqua Bank | |
Accrued liabilities related parties from advances | $ 25,332 |
Chief Executive Officer | |
Accrued liabilities related parties from advances | $ 517,916 |
15. COMMITMENTS, CONTINGENCIE46
15. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS (Details) | Mar. 31, 2018USD ($) |
Commitments Contingencies And Legal Proceedings Details | |
2,019 | $ 86,190 |
2,020 | 117,169 |
2,021 | 41,414 |
2,022 | 0 |
2,023 | 0 |
Beyond | 0 |
Total | $ 244,773 |