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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 has been a director and officer of Visualant since April 2003. He was appointed as our CEO and President in November 2009 and as Chairman of the Board in February 2015. Previously, Mr. Erickson was our President and Chief Executive Officer from September 2003 through August 2004, and was Chairman of the Board from August 2004 until May 2011. 

 

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.