10KSB: Optional form for annual and transition reports of small business issuers [Section 13 or 15(d), not S-B Item 405]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-KSB

(X) ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (FEE REQUIRED) For the fiscal year ended September 30, 2005


( ) TRANSACTION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transaction period from
______________-to _______________


Commission File number 0-25541


VISUALANT, INCORPORATED
___________________________________________________
(Name of small business issuer in its charter)

Nevada 91-1948357
________________________________________________________________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation) or organization Identification No.)

500 Union Street, Suite 406
Seattle, Washington 98101
________________________________________________________________________________
(Address of principal executive offices) (Zip Code)

Issuer's telephone number, including area code 206-903-1351


Securities registered pursuant to section 12 (b) of the Exchange Act:

Title of each class Name of each exchange on which registered
None None
____________________ _________________________________________

Securities registered pursuant to Section 12 (g) of the Exchange Act:

None
________________
(Title of Class)

Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

(1) Yes [X] No [ ] (2) Yes [X] No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]

1

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes [ ] No [ X ]

State issuer's revenues for its most recent fiscal year: $ -0-


State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked prices of such common equity, as of a
specific date within the past 60 days.

As at September 30, 2005, the aggregate market value of the voting and
non-voting common equity held by non-affiliates is undeterminable and is
considered to be $ 0.


(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.

Not applicable

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.

As of September 30, 2005, the Company had 16,307,224 shares of common stock
issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Exhibits incorporated by reference are referred to under Part IV

Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ X ]


















2

TABLE OF CONTENTS
================================================================================

PART 1
Page

ITEM 1. Description of Business ............................................ 4

ITEM 2. Description of Property ............................................ 8

ITEM 3. Legal Proceedings .................................................. 8

ITEM 4. Submission of Matters to Vote of Securities Holders ................ 8

PART II

ITEM 5. Market for Common Equity and Related Stockholder Matters ........... 9

ITEM 6. Management's Discussion and Analysis or Plan of Operations ......... 9

ITEM 7. Financial Statements .............................................. 13

ITEM 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure .............................13

ITEM 8A. Controls and Procedures .......................................... 13

PART III

ITEM 9. Directors, Executive Officers, Promoters, and Control
Persons; Compliance with Section 16(a) of the Exchange Act ..... 14

ITEM 10. Executive Compensation ........................................... 18

ITEM 11. Security Ownership of Certain Beneficial Owners and Management ... 19

ITEM 12. Certain Relationships and Related Transactions ................... 20

PART IV

ITEM 13. Exhibits and Reports on Form 8-K ................................. 21

ITEM 14. Principal Accountant Fees and Services ........................... 23

SIGNATURES ....................................................... 24

3

PART I

ITEM 1. DESCRIPTION OF BUSINESS

History and Organization

Visualant, Incorporated (formerly Starberrys Corporation), a Nevada
corporation (the "Company"), was incorporated on October 8, 1998. The Company
has no subsidiaries and no affiliated companies. The Company's executive offices
are located in Seattle, Washington.

The Company's Articles of Incorporation currently provide that the Company
is authorized to issue 200,000,000 shares of Common Stock, par value $0.001 per
share, and 50,000,000 Preferred Shares. As at September 30, 2005 there were
16,307,224 Common Shares and no Preferred Shares outstanding.

On November 24, 1998 the Company acquired the exclusive rights to market
high quality cigars through a climate controlled kiosk merchandise display case,
known as the King Climate Control, by the payment of $50,000. The Company did
not proceed with this new business and in 2000 abandoned the activity.

In November 2002, the Company signed a Letter of Intent with eVision
Technologies Corporation ("eVision") and Ken Turpin (founder / inventor) to
acquire 100% of the assets related to the business of Colour By Number ("CBN").
The CBN System is a digital color management system providing one color language
across industries and materials, empowering architects, designers, contractors,
retailers and consumers to take full control of their choice and use of color.

The Company was unsuccessful in raising the financing to complete this
acquisition, which has been abandoned.

In addition, the Company signed a Letter of Intent on 19 January 2003 with
Malaremastarnas Riksforening, the owner of all the shares of Skandinaviska
Farinstituter AB ("SCI" or the Scandinavian Color Institute) which owns the
color notation system Natural Color Systems ("NCS") and the Scandinavian Color
School, outlining the general terms of a proposed acquisition by the Company of
all of the shares of SCI. On April 9, 2003 the Company signed a Definitive
Purchase Agreement to complete the acquisition, subject to certain conditions,
of all the shares of SCI for a price of SEK 35,000,000. Subsequent to June 30,
2003 that Agreement was amended to change the Closing Date from August 31, 2003
to November 30, 2003. NCS is the leading color notation system in Europe and is
also highly regarded around the world. It is the national standard for color in
Sweden, Norway, Spain and South Africa.

The Company was unsuccessful in raising the financing to complete this
acquisition, and it has also been abandoned.

The Company changed its name to Visualant, Incorporated on August 18, 2004.

On June 16, 2004, the Company entered into a contract with eVision for the
development of its color technology providing 3D spectral-based pattern file
creation and matching. Color pattern files can be created from any digital
photograph or scan, without having to reprint, recreate, recall or modify
existing digital source of documents. Those pattern files are then matched
against existing databases to detect and identify crime, forgery, counterfeiting
and other frauds. It is the intent of the Company to develop this technology to
provide a new, accurate and fast detection tool for critical applications such
as national security, forgery/fraud prevention, brand protection, and product
tampering. As of the time of this filing, no commercial products have been
developed using this technology and no significant progress has been made in
such development.

4

ITEM 1. DESCRIPTION OF BUSINESS - continued

The Company has no revenue to date from its operations, and its ability to
effect its plans for the future will depend on the availability of financing.
Such financing will be required to enable the Company to acquire new businesses.
The Company anticipates obtaining such funds from its officers and directors,
financial institutions or by way of the sale of its capital stock through
private offerings. However, there can be no assurance that the Company will be
successful in obtaining additional capital for such business acquisitions from
the sale of its capital stock, or in otherwise raising substantial capital.

During the fiscal year ended September 30, 2005, the Company filed with the
SEC various documents such as Forms 10-KSB, 10-QSB, 8-K and an SB-2, including
amendments thereto. The Company did not distribute an annual report to its
shareholders for the fiscal year ended September 30, 2005.

The shareholders may read and copy any materials filed by the Company with
the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C., 20549. The shareholders may obtain information on the
operations of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In
addition, the SEC maintains an Internet site that contains reports, proxy and
information statements, and other information which the Company has filed
electronically with the SEC, by accessing the website using the following
address: http://www.sec.gov. The Company is prepared to distribute, upon request
from shareholders, any of the material previously filed with the SEC. The
Company also has a website at www.visualant.net from which additional
information about the Company can be obtained.

Special Note Regarding Forward-Looking Statements

This Form 10-KSB contains forward-looking statements as that term is
defined in the Private Securities Litigation Reform Act of 1995. These
statements relate to future events or the Company's future financial
performance. In some cases, the reader can identify forward-looking statements
by terminology such as "may", "will", "should", "expects", "plans",
"anticipates", "believes", "estimates", "predicts", "potential" or "continue" or
the negative of these terms or other comparable terminology. These statements
are only predictions and involve known and unknown risks, uncertainties and
other factors, including the risks in the section entitled "Risk Factors", that
may cause the Company or its industry's actual results, levels of activity,
performance or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or implied by these
forward-looking statements. Although the Company believes that the expectations
reflected in the forward-looking statements are reasonable, it cannot guarantee
future results, levels of activity, performance or achievements. Except as
required by applicable law, including the securities laws of the United States,
the Company does not intend to update any of the forward-looking statements to
conform these statements to actual results.

The Company's financial statements are stated in United States Dollars and
are prepared in accordance with United States Generally Accepted Accounting
Principles. In this annual report, unless otherwise specified, all dollar
amounts are expressed in United States Dollars.








5

RISK FACTORS

There are certain inherent risks which will have an effect on the Company's
development in the future and some of these risk factors are noted below but are
not all encompassing since there may be others unknown to management at the
present time which might have an impact in the future on the development of the
Company.

1. The Company is uncertain if it will be able to obtain additional capital
necessary for its development.

The Company has incurred a cumulative net loss for the period from October
8, 1998 (date of inception) to September 30, 2005 of $3,062,653. As a result of
these losses and negative cash flows from operations, the Company's ability to
continue operations will be dependent upon the availability of capital from
outside sources unless and until it achieves profitability.

2. Whether the Company will continue to be a going concern

The Company's auditors' concern in the audit opinion with regard to the
Company's financial statements as at September 30, 2005, as to whether the
Company will be able to raise sufficient funds to complete its objectives
indicates that the Company might not be able to continue as a going concern.
Without adequate future financing, the Company might cease to operate and the
existing shareholders and any future shareholders will lose their entire
investment.

3. Some of the present shareholders have acquired shares at extremely low
prices

Some of the present shareholders have acquired shares at prices ranging
from $0.001 to $0.25 per share whereas other shareholders have purchased their
shares at $0.50 and $0.75 per share. In addition, the Company has issued 300,000
incentive stock options to a related party at $0.10 per share exercisable in
whole or in part on or before August 15, 2009.

4. Future issuance of stock options, warrants and/or rights will have a
diluting factor on existing and future shareholders

The grant and exercise of stock options, warrants or rights to be issued in
the future would likely result in a dilution of the value of the Company's
common shares for all shareholders. At present, the Company has established a
Non-Qualified Stock Option Plan as noted on page 37 of this report and may in
the future issue further stock options to officers, directors and consultants
which will dilute the interest of the existing and future shareholders.
Moreover, the Company may seek authorization to increase the number of its
authorized shares and to sell additional securities and/or rights to purchase
such securities at any time in the future. Dilution of the value of the common
shares would likely result from such sales.

5. The Company does not expect to declare or pay any dividends

The Company has not declared or paid any dividends on its common stock
since its inception, and it does not anticipate paying any such dividends for
the foreseeable future.

6

RISK FACTORS - continued

6. Conflict of interest

Some of the Directors of the Company are also directors and officers of
other companies and conflicts of interest may arise between their duties as
directors of the Company and as directors and officers of other companies.

7. Concentration of ownership by management.

The management of the Company, either directly or indirectly, owns
1,472,500 shares. Even though this represents only 9.02 % of the issued and
outstanding shares, it might be difficult for any one shareholder to solicit
sufficient votes to replace the existing management. Therefore, any given
shareholder may never have a voice in the direction of the Company.

8. Key-man insurance

The Company carries no key-man insurance. In the event that either Mr.
Erickson, Mr. Brier, or Mr. Goldberg departed the Company or passed away, the
Company would not have the available funds to attract an individual of similar
experience. Management is considering obtaining key-man insurance once it has
sufficient funds to do so.

9. Limited full time employees

The only director who works full time for the Company is its President,
Ralph Brier. The other directors will devote time to the activities of the
Company as required from time to time. At the present time, the Company has no
other full-time employees other than Ralph Brier.

10. Future trading in the Company's stock may be restricted by the SEC's Penny
Stock Regulations which may limit a stockholder's ability to buy and sell
the Company's shares when, and if, the shares are eventually quoted.

The SEC has adopted regulations which generally define "penny stock" to be
any equity security that has a market price (as defined) less than $5.00 per
share or an exercise price of less than $5.00 per share, subject to certain
exceptions. The Company's shares most likely will be covered by the penny stock
rules, which impose additional sales practice requirements on broker-dealers who
sell to persons other than established customers and "accredited investors." The
term "accredited investor" refers generally to institutions with assets in
excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or
annual income exceeding $200,000 or $300,000 jointly with their spouse. The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document in a form prepared by the SEC which provides information
about penny stocks and the nature and level of risks in the penny stock market.
The broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction and monthly account statements showing the market
value of each penny stock held in the customer's account. The bid and offer
quotations, and the broker-dealer and salesperson compensation information, must
be given to the customer orally or in writing prior to effecting the transaction
and must be given to the customer in writing before or with the customer's
confirmation. In addition, the penny stock rules require that prior to a
transaction in a penny stock not otherwise exempt from these rules, the
broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction. These disclosure requirements may have the effect


7

RISK FACTORS - continued

of reducing the level of trading activity in the secondary market for the stock
that is subject to broker-dealers to trade in the Company's securities. The
Company believes that the penny stock rules discourage investor interest in and
limit the marketability of, its common stock when, and if, it is called for
trading. The Company feels that its shares will be considered to be penny stock
when the shares are finally quoted.

11. Recently Enacted and Proposed Regulatory Changes

Recently enacted and proposed changes in the laws and regulations affecting
public companies, including the provisions of the Sarbanes-Oxley Act of 2002 and
rules proposed by the SEC and NASDAQ could cause the Company to incur increased
costs as it evaluates the implications of new rules and responds to new
requirements. The new rules will make it more difficult for the Company to
obtain certain types of insurance, including directors and officers liability
insurance, and the Company may be forced to accept reduced policy limits and
coverage or incur substantially higher costs to obtain the same or similar
coverage. The impact of these events could also make it more difficult for the
Company to attract and retain qualified persons to serve on the Company's board
of directors, or as executive officers. The Company is presently evaluating and
monitoring developments with respect to these new and proposed rules, and it
cannot predict or estimate the amount of the additional costs it may incur or
the timing of such costs.


ITEM 2. DESCRIPTION OF PROPERTY

Offices

The Company's executive offices are located at 500 Union Street, Suite 406,
Seattle, Washington, USA, 98101. The office is located in premises which are
also used by the Chairman of the Board of the Company for other business
interests. The Company pays rent of $200.00 per month for using this office.
Other Property

The Company owns capital equipment used for research valued at less than
$20,000.

ITEM 3. LEGAL PROCEEDINGS

There are no legal proceedings to which the Company is a party or to which
its property is subject, nor to the best of management's knowledge are any
material legal proceedings contemplated.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The last annual meeting was on August 7, 2002. No matters have been
submitted to a vote of securities holders in the most recent fiscal year.










8

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

During the past year there has been no established trading market for the
Company's common stock. Since its inception, the Company has not paid any
dividends on its common stock, and the Company does not anticipate that it will
pay dividends in the foreseeable future. As at September 30, 2005 the Company
had 16,307,224 shares of common stock issued and outstanding held by 96
shareholders of record. In addition, the Company had outstanding options to
purchase 575,000 shares of common stock at exercise prices ranging from $0.10 to
$1.00 per share.

On August 1, 2005 the Company filed an SB-2 Registration Statement (and
subsequent post-effective amendments thereto) to register 13,448,375 shares of
the Company's common stock held by current shareholders of the Company. The
Registration Statement was filed by the Company pursuant to a contractual
obligation with one or more of its shareholders to provide for such
registration. All of the shares owned by the Company's officers, directors and
owners of more than 5% of the common stock were excluded from this Registration
Statement.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Overview

The Company was incorporated on October 8, 1998 under the laws of the State
of Nevada. The Company's Articles of Incorporation currently provide that the
Company is authorized to issue 200,000,000 shares of Common Stock, par value
$0.001 per share, and 50,000,000 shares of Preferred Stock with such terms as
will be specified by the Board of Directors at the time it acts to create a
specific series of the Preferred Stock to be issued. As at September 30, 2005
there were 16,307,224 Common Shares and no Preferred Shares outstanding.

The Company has no current commercial products. The Company is in the business
of researching, developing, acquiring, and commercializing products and services
related to color technology outside the visible spectrum, using specialized
narrow and N-IR and N-UV sensors and spatial analysis software modeling which
translate the invisible into the visible. The Company owns or has obtained an
exclusive license to use this specialized and proprietary color technology.

On June 16, 2004, the Company entered into a contract with eVision Technologies
Corporation for the development of its color technology providing 3D
spectral-based pattern file creation and matching. Color pattern files can be
created from any digital photograph or scan, without having to reprint,
recreate, recall or modify existing digital source of documents. Those pattern
files can then be matched against existing databases to detect and identify
crime, forgery, counterfeiting and other frauds. The Company believes that its
technology has the potential to provide a new, accurate and fast detection tool
for critical applications such as national security, forgery/fraud prevention,
brand protection, and product tampering. As of the date of this filing, no
material progress has been made towards such development.

On December 16, 2005 the Company entered into a research and development
contract with RatLab LLC, a privately-owned research laboratory in Seattle,
Washington. The contract calls for monthly payments by the Company to RatLab LLC
for an initial research Phase 1, expected to last approximately three months.
The contract also includes provisions for extending the payments and research
agreement for multiple phases, which could extend in excess of one year. Under
the contract, RatLab will perform research and development using the Company's


9

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION - continued

existing intellectual property, as well as newly developed research and
technologies in order to assist the Company with the commercialization of its
core technologies in the areas of brand and forgery protection, homeland
security, medical diagnostics, and color-based file creation and matching.

RatLab LLC is a research laboratory formed primarily by Dr. Thomas Furness,
founder and former director of the Human Interface Technology Lab (HitLab) at
the University of Washington, and one of the leading researchers in the world in
the area of human interface technology. Dr. Furness also is the founder of the
Virtual World Consortium, an organization of more than fifty leading technology
companies and enterprises dedicated to sharing and advancing research in many
scientific research areas important to the Company. The Company has been a
member of the Virtual World Consortium since July 2005. RatLab LLC also employs
other leading scientists and research associates in the areas of computer
science, imaging technology, and light sensing technology, who will be part of
the team conducting research on behalf of the Company.

The Company intends to position its technology as both a revolutionary as well
as a practical solution for security and fraud prevention applications and
markets. The Company's current focus is to capitalize upon the potential
business opportunities in the areas of national security, document
forgery/fraud, brand protection, label fraud and product tampering.

Liquidity and Capital Resources

As at September 30, 2005, the Company had assets of $543,318, and $51,172
in liabilities.

During the year, the Company has incurred the following expenses:

Expenditure Amount
----------- ----------
Administrative expenses
-----------------------
Accounting and audit $ 11,363
Bank charges 2,108
Stock Options 24,000
Consulting fees i 440,654
Financing Fees ii 53,508
Legal fees iii 54,268
Loss on foreign exchange iv 2,159
Office v 19,289
Transfer agent's fees vi 2,811
Contributions vii 50,000
Other administrative expenses 42,380

Research and development viii 153,579
Interest expense ix 12,524
-------

Total expenses $ 868,643
==========




10

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION - continued

i. The Company paid consulting fees to its Chief Executive Officer, Chairman,
Chief Financial Officer, a Director, and several other independent
contractors during the year.

ii. The Company incurred expenses related to the sale of its stock sold during
the year to certain groups and individuals.

iii. Legal fees of $54,268 were incurred during the year. These fees included
activities related to its financing efforts, legal and other filings,
patent applications, and other general legal advisory services.

iv. Loss on foreign exchange consists of the difference between the US and
Canadian dollar exchange rate on monies expended by the Company in Canadian
dollars.

v. Office expenses consist of rent, photocopy, fax and courier expenses and
other miscellaneous expenses incurred by the officers of the Company.

vi. During the period, the Company received its annual billing from Nevada
Agency and Trust Company for acting as transfer agent for the year in the
amount of $2,811.

vii. The Company made a tax-deductible contribution to the Virtual Worlds
Consortium, a research membership organization affiliated with the
University of Washington's Human Interface Laboratory. The Company joined
the Consortium for the purpose of pursuing certain research and partnership
arrangements important to the development of its technologies

viii.Research and development fees of $153,579 were paid according to the terms
of an independent contractor agreement.

ix. Interest expense on the note payable to a related party was $12,524.


Results of Operations
- ---------------------

The Company has had no revenues from operations since its inception.

Plan of Operation.
- -----------------

The Company has no revenue to date from its operations, and its ability to
implement its plans for the future will depend on the future availability of
financing. Such financing will be required to enable the Company to develop its
technology and acquire new businesses. The Company intends to raise further
funds through private placements of the Company's common stock. The financing
activities of the Company are current and ongoing, and it will expand and
accelerate its marketing program as the timing and amount of financing allow.
However, there can be no assurance that the Company will be successful in
obtaining additional capital for such technology development and/or business
acquisitions from the sale of its capital stock, or in otherwise raising
substantial capital.

The Company's cost to continue operations as they are now conducted is
approximately $63,000 per month, and the Company has sufficient funds to cover
existing operations for approximately five (5) months. However, the Company will
need to raise additional funds in order to finance its plans to expand its


11

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION - continued

operations for the next year. The Company intends to raise the required funds by
obtaining share capital from outside sources. During the three months ended
December 31, 2004, the Company raised $212,000 in additional share capital
through the sale of common shares. From January 2005 through September 30, 2005,
an additional $1,140,000 was raised through the sale of common shares. The
Company plans to raise a minimum of $500,000 and a maximum of $1,300,000 through
the sale of common shares in 2006. If the Company is successful in raising
additional funds, the Company's research and development efforts will be
increased.

The Company plans to purchase up to approximately $20,000 in new equipment to be
used primarily as part of its research and development agreement with RatLab
LLC.

If the Company is successful in raising additional funds, it intends to hire two
to three programmers and/or software engineers to accelerate its research and
development program and complete the development of its technology, as well as
file patents and initiate marketing of the technology. With the hiring of
additional personnel, the Company expects to have a product available for
demonstration within the next six months. The Company's software currently is in
modular form, and eventually will be developed into software development kits
specific to market/application needs. In lieu of such hirings, the Company may
contract with certain research organizations to perform development activities
on behalf of the Company.

In addition to securing the necessary funds, commercialization of the Company's
technology and the availability of a marketable product are dependent upon a
number of factors including:

(i) Securing patent protection for the Company's intellectual property. The
Company has filed a patent application on its core technology, and expects to
receive notification from the U.S. Patent and Trademark Office before the end of
2006 as to whether a patent will be granted.

(ii) Development of new applications for the Company's technology and
pursuit of new markets and market segments that will utilize the technology.

(iii) Ongoing patent research and writing relating to the evolution of the
Company's technology and its product application(s) as the Company's technology
is tested and refined.

In July 2005 the Company became a member of the University of Washington HIT Lab
Consortium. The Lab is supported in part by the Virtual Worlds Consortium, a
group of over 45 companies or organizations that provide funding and direction
to the Lab. These companies include: Advanced Telecommunications Research (ATR),
Alias/Wavefront, American Express Company, Armstrong Aeromedical Research
Laboratory (AAMRL), Battelle, The Broken Hill Proprietary Company (BHP), Boeing,
Chevron Petroleum Technology Company, Change Tools, Eastman Kodak Company,
Fluke, Ford Motor Company, Franz, Fujitsu, Hewlett Packard, Hughes, Industrial
Technology Research Institute, Intel Corporation, Institute for Information
Industry, Kopin Corporation, Lockheed-Martin, Marconi Aerospace Systems Inc.,
Microsoft, Microvision Inc., Museum of Flight, NBBJ, NEC Corporation, Nike,
Omron Corporation, Pentax Corporation, Philips, Reachin Technologies, Rockwell
Science Center Inc., Samsung, SensAble Technologies, Sense8/EAI, Sharp
Corporation, Stratos, Sun Microsystems, Tektronix, Telecom Italia, Texas
Instruments, U.S. Navy, U.S. West Communications, VisionGate, and Virtual
Vision.

12

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION - continued

Membership in the HIT Lab Consortium enables the Company to conduct specific
testing and research projects at the HIT Lab involving its color screening
technology. Other potential benefits of membership in the Consortium include
academic testing, validation and certification of the Company's technology,
recommendations for technology investments and additional applications for the
Company's technology, and introductions to strategic partners and prospective
customers in the industry.


ITEM 7. FINANCIAL STATEMENTS

The financial statements of the Company are included following the
signature page to this Form 10-KSB.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

The reports of the Company's independent accountants, Madsen & Associates, CPA's
Inc., for the financial statements as at September 30, 2003, September 30, 2004,
and September 30, 2005 are included herein. To the Company's knowledge, there
are no disputes with our auditors.


================================================================================

ITEM 8A. CONTROLS AND PROCEDURES

================================================================================

(a) Evaluation of Disclosure Controls and Procedures
------------------------------------------------

The Company's Chief Executive Officer and Chief Financial Officer, after
evaluating the effectiveness of the Company's controls and procedures (as
defined in the Securities Act of 1934 Rule 13a-15(e) or Rule 15d-15(e)) as of
the end of the Company's Fiscal Year covered by this annual report on Form
10-KSB (the "Evaluation Date"), have concluded that as of the Evaluation Date,
the Company's disclosure controls and procedures were adequate and effective to
ensure that material information relating to it would be made known to it by
others, particularly during the period in which this annual report on Form
10-KSB was being made.

(b) Changes in Internal Controls
----------------------------

There were no significant changes in the Company's internal controls or in other
factors that could significantly affect the Company's disclosure controls and
procedures subsequent to the Evaluation Date, nor any significant deficiencies
or material weaknesses in such disclosure controls and procedures requiring
corrective actions.

ITEM 8B. OTHER INFORMATION

There is no additional information that was not disclosed by the Company through
8K filings throughout the fiscal year.



13

PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT

The following table sets forth as of September 30, 2005, the name, age, and
position of each executive officer and director and the term of office of each
director of the Company.


Term as
Director
Name Age Position Held Since
===================== ===== ================================== ===============
Ronald P. Erickson 62 Chairman of the Board and Director April 24, 2003
Ralph Brier 54 Chief Executive Officer, President Aug. 31, 2004
and Director
Terry H. McKay(1) 55 Director June 6, 2002
Mary Hethey(2) 55 Chief Financial Officer, Chief n/a
Accounting Officer and Secretary
Jerry D. Goldberg(3) 41 Secretary-Treasurer and Chief n/a
Financial Officer
Ken Turpin 58 Chief Science Officer n/a


1 On September 13, 2005, the Company accepted the resignation of Terry McKay
as a Director of the Company. Mr. McKay's resignation was not due to any
disagreement with the Company on any matter relating to the Company's
operations, policies or practices.

2 On August 31, 2005, Mary Hethey resigned as Chief Financial Officer, Chief
Accounting Officer and Secretary of the Company. Ms. Hethey's resignation
was not due to any disagreement with the Company on any accounting matters.

3 On August 24, 2005, Jerry Goldberg was appointed Chief Financial Officer,
Secretary and Treasurer.

Each director of the Company serves for a term of one year and until his
successor is elected at the Company's annual shareholders' meeting and is
qualified, subject to removal by the Company's shareholders. Each officer
serves, at the pleasure of the Board of Directors, for a term of one year and
until his successor is elected at the Annual General Meeting of the Board of
Directors and is qualified.

Set forth below is certain biographical information regarding each of the
Company's executive officers and directors.

RONALD P. ERICKSON has been a director and officer of the Company since
April 24, 2003. He was appointed President and Chief Executive Officer of the
Company on September 29, 2003, and resigned from this position on August 31,
2004 at which time he was appointed Chairman of the Board. Resident in Seattle,
he is a seasoned executive with more than 20 years of expertise in the high
technology, telecommunications and microcomputer industries. Mr. Erickson was
formerly Chairman of Intrinsyc Software Inc., a Vancouver-based publicly-traded
company providing proprietary software and solutions which enable the
development and networking of intelligent devices such as PDA's. Mr. Erickson is
the current chair, and former CEO of eCharge, an electronic payment systems
developer, where he played a major role in raising approximately US $100 million
in equity capital from major international investors. Mr. Erickson previously
was co-founder, Chairman, President and CEO of GlobalTel Resources, Inc., a
provider of telecommunication services, messaging and intranet solutions. During


14

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT - continued

his career Mr. Erickson has also held executive positions at Egghead Software
Inc, NBI Inc and MicroRim, Inc. With a law degree from the University of
California, Davis, he maintains an active license to practice law in the State
of Washington and the District of Columbia.

RALPH BRIER was appointed CEO, President and Director of the Company on
August 31, 2004. He has over 25 years of diverse experience in marketing, sales,
business development and strategic planning, with a focus in the security and
biometrics sector. Ralph was Executive Vice President Strategic Sales with
Applied DNA Sciences, a Los Angeles based biotechnology security firm. He was
previously employed by Sagem Morpho, a division of Groupe SAGEM in France, a
global leader in the provisioning of biometric solutions for business and
government. During his tenure there, he doubled commercial sales revenues,
serving as the senior commercial, channel and OEM business executive of
biometric software, smart card implementation and hardware.

TERRY H. MCKAY, who had been a director since June 6, 2002, resigned as a
director of the Company effective September 13, 2005. Dr. McKay currently
practices Dentistry in North Vancouver, BC. Since 1999 he has been a director of
Swident, a Swiss dental insurance company, and serves on its Financial Audit
Committee. Dr. McKay is past Clinical Director for Knowell Technology and a past
Board member of longivitystore.com. Dr. McKay graduated from the University of
British Columbia with a B.A. and D.M.D. in 1975. He has practiced Dentistry in
British Columbia and in Seattle, Washington. Dr. McKay's professional
memberships include the Canadian Dental Association, B.C. College of Dental
Surgeons, Washington State Dental Association, American Academy of Gold Foil
Operations and the American Academy of Operative Dentists.

JERRY D. GOLDBERG was appointed Chief Financial Officer and
Secretary/Treasurer on August 31, 2005. He has more than 15 years of experience
in financial and operational management of emerging and early-stage companies.
Most recently, he was CFO and President of Emanation Software Inc., a start-up
software development firm focused on digital media distribution. Prior to that,
Mr. Goldberg was Director of Finance for The Ackerley Group, a major
publicly-traded media and entertainment firm. He also spent nearly 10 years as
CFO and principal of Strategic Capital Corp, an investment banking advisory
firm, through which he performed many interim-CFO assignments and was involved
in dozens of merger and acquisition and financing transactions. During his
career, Mr. Goldberg has also held financial management positions with such
companies as AT&T Wireless Services.

KEN TURPIN was appointed Chief Science Officer on August 31, 2004. He has
worked with the visual world of color as it applies to building materials for
the past 15 years. His most recent business success was the founding,
development, and sale of Fire Stop Systems, which was acquired and renamed to
PFP Partners by Johns Manville in 1998. Throughout his career in manufacturing
building products, Ken often dealt with the world of color, where he observed
how people viewed and used color. In 1999, he began to allocate significant
human, technical and financial resources to the world of visual color. The
result of this research and development is CBN Systems. While doing the research
on this project, he identified many other opportunities in the "non-visual to
humans" spectrum of color.

To the knowledge of management, during the past five years, no present or
former director, executive officer or person nominated to become a director or
an executive officer of the Company:

15

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT - continued

(1) filed a petition under the federal bankruptcy laws or any state
insolvency law, nor had a receiver, fiscal agent or similar officer
appointed by the court for the business or property of such person, or any
partnership in which he was a general partner at or within two years before
the time of such filings;

(2) was convicted in a criminal proceeding or named subject of a pending
criminal proceeding (excluding traffic violations and other minor
offenses);

(3) was the subject of any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining him from or otherwise limiting, the
following activities:

(i) acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker,
leverage transaction merchant, associated person of any of the
foregoing, or as an investment advisor, underwriter, broker or dealer
in securities, or as an affiliate person, director or employee of any
investment company, or engaging in or continuing any conduct or
practice in connection with such activity;

(ii) engaging in any type of business practice; or

(iii) engaging in any activities in connection with the purchase or
sale of any security or commodity or in connection with any violation
of federal or state securities laws or federal commodities laws;

(4) was the subject of any order, judgment, or decree, not subsequently
reversed, suspended, or vacated, of any federal or state authority barring,
suspending or otherwise limiting for more than 60 days the right of such
person to engage in any activity described above under this Item, or to be
associated with persons engaged in any such activities;

(5) was found by a court of competent jurisdiction in a civil action or by
the Securities and Exchange Commission to have violated any federal or
state securities law, and the judgment in such civil action or finding by
the Securities and Exchange Commission has not been subsequently reversed,
suspended, or vacated.

(6) was found by a court of competent jurisdiction in a civil action or by
the Commodity Futures Trading Commission to have violated any federal
commodities law, and the judgment in such civil action or finding by the
Commodity Futures Trading Commission has not been subsequently reversed,
suspended or vacated.

Audit Committee Financial Expert

At this time the Company has only two members of its Board of Directors and
does not have a member with enough financial expertise to serve on an audit
committee. The Company expects to expand its Board to four to five members
during fiscal 2006, and also plans to form both an audit as well as a
compensation committee.

16

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT - continued

Compliance with Section 16 (a) of the Exchange Act

The Company knows of no director, officer, beneficial owner of more than
ten percent of any class of equity securities of the registrant registered
pursuant to Section 12 ("Reporting Person") that failed to file any reports
required to be furnished pursuant to Section 16(a). Other than those disclosed
below, the registrant knows of no Reporting Person that failed to file the
required reports during the most recent fiscal year.

The following table sets forth as at September 30, 2005, the name and
position of each Reporting Person that failed to file on a timely basis any
reports required pursuant to Section 16 (a) during the most recent fiscal year.

Report to be
Name Position Filed
================== ==================================== ============
Ronald P. Erickson Chairman of the Board and Director Form 3

Ralph Brier CEO, President and Director Form 3

Mary Hethey Former Chief Financial Officer &
Secretary Treasurer Form 3

Kenneth Turpin Chief Science Officer Form 3

Jerry D. Goldberg Chief Financial Officer Form 3

Terry H. McKay Former Director Form 3

Since the end of the fiscal year, Mr. Erickson, Mr. Brier, Mr. Goldberg and Mr.
Turpin have each filed a Form 3 report.

Code of Ethics

The Company has not as of this filing date implemented a Code of Ethics, but
does intend to do so during the first half of 2006.



17

ITEM 10. EXECUTIVE COMPENSATION

Cash Compensation

The following table sets forth compensation paid or accrued by the Company
for the last three years ended September 30, 2003, 2004 and 2005 with regard to
individuals who served as its Chief Executive Officer during this period. (No
executive officers or directors received annual compensation of $100,000 or more
during this period.):

Summary Compensation Table ( 2003, 2004 and 2005)