SUBSEQUENT EVENTS	9 Months Ended
Jun. 30, 2011
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	NOTE K – SUBSEQUENT EVENTS Sale of common stock On July 15, 2011, the Company closed a private placement of its common stock. The Company issued and sold 105,263,158 shares of Common Stock at a purchase price of $0.0475 per share to accredited investors for gross proceeds of $5,000,000. A registered broker dealer firm acted as our placement agent with respect to the private placement. In connection with the private placement, the Company paid placement agent commissions and discounts aggregating $265,000. In addition, the placement agent or its designees were issued warrants with a seven-year term to purchase an aggregate of 7,578,948 shares of Common Stock with an exercise price of $0.0475 per share. Employment agreements On July 11, 2011, the Company’s Board of Directors approved the terms of employment for each of James A. Hayward, the Company’s Chief Executive Officer, and Kurt H. Jensen, the Company’s Chief Financial Officer. It is anticipated that new employment agreements will be entered into as soon as practicable reflecting these terms. In connection with his employment agreement, Dr. Hayward was granted options to purchase 40 million shares of the Company’s Common Stock at an exercise price per share equal to the average of the bid and asked prices of the Company’s Common Stock on the Over The Counter (OTC) Bulletin Board on the date of grant.. The option will vest as follows: 25% on the grant date, and 37.5% on each of the next two anniversaries of the grant date, subject to Dr. Hayward’s continuous employment. If Company revenues for any fiscal quarter increase by more than $1 million over the prior fiscal quarter, then the vesting date for the next 37.5% tranche will be accelerated. Exercisability of options for the 40 million shares will be conditioned upon stockholder approval of an amendment of the Company’s 2005 Incentive Stock Plan made by the Board of Directors increasing the aggregate and individual limits on the shares of Company Common Stock issuable under the Plan. The Company also granted 15 million shares of the Company’s Common Stock to Dr. Hayward. In addition, Dr. Hayward agreed to participate in the private placement described above and purchased 10,526,316 shares of the Company’s Common Stock using $500,000 recently advanced to the Company. The Company has also agreed to issue a one-year senior secured convertible note bearing interest at a rate of 4% per annum in the principal amount of $250,000. In connection with his employment agreement, Mr. Jensen was granted options to purchase 10 million shares of the Company’s Common Stock at an exercise price per share equal to the average of the bid and asked prices of the Company’s Common Stock on the Over The Counter (OTC) Bulletin Board on the date of grant. The option will vest as follows: 25% on the grant date, and 37.5% on each of the next two anniversaries of the grant date, subject to Mr. Jensen’s continuous employment. If Company revenues for any fiscal quarter increase by more than $1 million over the prior fiscal quarter, then the vesting date for the next 37.5% tranche will be accelerated. C.F. Martin & Co. Agreement On July 18, 2011, the Company entered into a Joint Development Agreement, dated as of June 30, 2011 with C.F. Martin & Co., Inc., a designer and manufacturer of acoustic guitars, strings for acoustic guitars, and related guitar components and accessories (“Martin”). Under the terms of the agreement, Martin and the Company will jointly develop, create and apply new techniques and know-how for labeling and authenticating guitars, guitar strings and related guitar components and accessories using DNA security markers created by the Company. Under the agreement, each party shall bear and be responsible for its own expenses and costs of the development and creation of the techniques and know-how. Subject to certain exceptions for the Company, the agreement provides for a period of exclusivity (“Period of Exclusivity”) of six (6) months beginning on June 30, 2011 whereby Martin and the Company agree not to sell, offer for sale, enter into any agreement with any third party for the future sale of, advertise, or market, anywhere in the world, any jointly developed technique for labeling guitars, guitar strings, and related guitar components and accessories with DNA security markers. The agreement also provides that Martin shall purchase DNA security markers exclusively from the Company during the longer of the term of the Agreement or the Period of Exclusivity. The term of the agreement will continue until the parties agree that the development and creation of techniques or know-how for labeling guitars or guitar strings with DNA security markers is complete, unless either party terminates the agreement by giving at least sixty (60) days written notice to the other party. Disc Graphics Agreement On July 8, 2011, the Company entered into an agreement, dated as of July 7, 2011 with Disc Graphics Inc., a provider of specialty packaging (“DG”). Under the terms of the agreement, DG will purchase DNA security markers from the Company to be incorporated into coatings for DG’s products. Additionally, DG will be the Company’s exclusive distributor in North America of Markers for the folding carton offset print sector and non-exclusive distributor of DNA security markers for pressure sensitive labels. Under the Agreement, the Company is obligated to provide DNA security markers for up to a fixed amount of coatings. The Company received an initial fee upon entering the agreement, and is entitled to an annual fee for the DNA security markers, as well as fees for any authentication services provided by the Company. The initial term of the agreement is three years and will automatically renew for successive one year periods, unless either party terminates the agreement by giving written notice to the other party at least ninety (90) days prior to the end of the third year. After the initial term, the Company has the right to terminate if DG does not pay the annual fee. 3SI Agreement On August 9, 2011, the Company entered into a Supplier Agreement, dated as of August 3, 2011 (the “Supplier Agreement”), with 3SI Security Systems, Inc., a manufacturer and seller of asset protection security systems based on ink and smoke staining as well as GPS technology (“3SI”). On the same date, the parties also entered into a License Agreement, dated as of August 3, 2011 (the “License Agreement”). Under the terms of the Supplier Agreement, 3SI will purchase DNA markers and related products (“Markers”) from the Company to be incorporated into products subject to certain patents (“Licensed Patents”) owned by 3SI (the “Products”). Pursuant to the License Agreement, 3SI granted a nonexclusive irrevocable license to the Company to make, have made, use, import, offer to sell and sell the Products. Under the terms of the Supplier Agreement, 3SI is permitted to purchase the Products from the Company from time to time pursuant to purchase orders. The purchase price for the Products will be as set forth in an applicable product schedule for the purchase orders and may be adjusted from time to time pursuant to the terms of the Supplier Agreement. Under the terms of the License Agreement, the Company agreed to pay an initial payment and royalties to 3SI based on the number of Products sold, with such royalties being subject to adjustment pursuant to the terms of the License Agreement. The terms of the Supplier Agreement and the License Agreement will continue until the expiration of the Licensed Patents, unless earlier terminated under the terms of the respective agreements. Under the terms of the Supplier Agreement, 3SI has the right to immediately terminate upon written notice to the Company in the event that the Company fails to continuously maintain a minimum number of Markers to be incorporated into the Products, or upon 30 days written notice to the Company. Under the terms of the License Agreement, 3SI has the right to immediately terminate upon written notice to the Company in the event that the Company fails to continuously maintain a minimum number of Markers, or fails to sell Markers to 3SI for incorporation into the Products for a certain time after being ordered.

NOTE K – SUBSEQUENT EVENTS

Sale of common stock

On July 15, 2011, the Company closed a private placement of its common stock. The Company issued and sold 105,263,158 shares of Common Stock at a purchase price of $0.0475 per share to accredited investors for gross proceeds of $5,000,000.

A registered broker dealer firm acted as our placement agent with respect to the private placement. In connection with the private placement, the Company paid placement agent commissions and discounts aggregating $265,000. In addition, the placement agent or its designees were issued warrants with a seven-year term to purchase an aggregate of 7,578,948 shares of Common Stock with an exercise price of $0.0475 per share.

Employment agreements

On July 11, 2011, the Company’s Board of Directors approved the terms of employment for each of James A. Hayward, the Company’s Chief Executive Officer, and Kurt H. Jensen, the Company’s Chief Financial Officer. It is anticipated that new employment agreements will be entered into as soon as practicable reflecting these terms.

In connection with his employment agreement, Dr. Hayward was granted options to purchase 40 million shares of the Company’s Common Stock at an exercise price per share equal to the average of the bid and asked prices of the Company’s Common Stock on the Over The Counter (OTC) Bulletin Board on the date of grant.. The option will vest as follows: 25% on the grant date, and 37.5% on each of the next two anniversaries of the grant date, subject to Dr. Hayward’s continuous employment. If Company revenues for any fiscal quarter increase by more than $1 million over the prior fiscal quarter, then the vesting date for the next 37.5% tranche will be accelerated. Exercisability of options for the 40 million shares will be conditioned upon stockholder approval of an amendment of the Company’s 2005 Incentive Stock Plan made by the Board of Directors increasing the aggregate and individual limits on the shares of Company Common Stock issuable under the Plan. The Company also granted 15 million shares of the Company’s Common Stock to Dr. Hayward.

In addition, Dr. Hayward agreed to participate in the private placement described above and purchased 10,526,316 shares of the Company’s Common Stock using $500,000 recently advanced to the Company. The Company has also agreed to issue a one-year senior secured convertible note bearing interest at a rate of 4% per annum in the principal amount of $250,000.

In connection with his employment agreement, Mr. Jensen was granted options to purchase 10 million shares of the Company’s Common Stock at an exercise price per share equal to the average of the bid and asked prices of the Company’s Common Stock on the Over The Counter (OTC) Bulletin Board on the date of grant. The option will vest as follows: 25% on the grant date, and 37.5% on each of the next two anniversaries of the grant date, subject to Mr. Jensen’s continuous employment. If Company revenues for any fiscal quarter increase by more than $1 million over the prior fiscal quarter, then the vesting date for the next 37.5% tranche will be accelerated.

C.F. Martin & Co. Agreement

On July 18, 2011, the Company entered into a Joint Development Agreement, dated as of June 30, 2011 with C.F. Martin & Co., Inc., a designer and manufacturer of acoustic guitars, strings for acoustic guitars, and related guitar components and accessories (“Martin”). Under the terms of the agreement, Martin and the Company will jointly develop, create and apply new techniques and know-how for labeling and authenticating guitars, guitar strings and related guitar components and accessories using DNA security markers created by the Company. Under the agreement, each party shall bear and be responsible for its own expenses and costs of the development and creation of the techniques and know-how.

Subject to certain exceptions for the Company, the agreement provides for a period of exclusivity (“Period of Exclusivity”) of six (6) months beginning on June 30, 2011 whereby Martin and the Company agree not to sell, offer for sale, enter into any agreement with any third party for the future sale of, advertise, or market, anywhere in the world, any jointly developed technique for labeling guitars, guitar strings, and related guitar components and accessories with DNA security markers. The agreement also provides that Martin shall purchase DNA security markers exclusively from the Company during the longer of the term of the Agreement or the Period of Exclusivity.

The term of the agreement will continue until the parties agree that the development and creation of techniques or know-how for labeling guitars or guitar strings with DNA security markers is complete, unless either party terminates the agreement by giving at least sixty (60) days written notice to the other party.

Disc Graphics Agreement

On July 8, 2011, the Company entered into an agreement, dated as of July 7, 2011 with Disc Graphics Inc., a provider of specialty packaging (“DG”).

Under the terms of the agreement, DG will purchase DNA security markers from the Company to be incorporated into coatings for DG’s products. Additionally, DG will be the Company’s exclusive distributor in North America of Markers for the folding carton offset print sector and non-exclusive distributor of DNA security markers for pressure sensitive labels. Under the Agreement, the Company is obligated to provide DNA security markers for up to a fixed amount of coatings. The Company received an initial fee upon entering the agreement, and is entitled to an annual fee for the DNA security markers, as well as fees for any authentication services provided by the Company. The initial term of the agreement is three years and will automatically renew for successive one year periods, unless
either party terminates the agreement by giving written notice to the other party at least ninety (90) days prior to the end of the third year. After the initial term, the Company has the right to terminate if DG does not pay the annual fee.

3SI Agreement

On August 9, 2011, the Company entered into a Supplier Agreement, dated as of August 3, 2011 (the “Supplier Agreement”), with 3SI Security Systems, Inc., a manufacturer and seller of asset protection security systems based on ink and smoke staining as well as GPS technology (“3SI”). On the same date, the parties also entered into a License Agreement, dated as of August 3, 2011 (the “License Agreement”).

Under the terms of the Supplier Agreement, 3SI will purchase DNA markers and related products (“Markers”) from the Company to be incorporated into products subject to certain patents (“Licensed Patents”) owned by 3SI (the “Products”). Pursuant to the License Agreement, 3SI granted a nonexclusive irrevocable license to the Company to make, have made, use, import, offer to sell and sell the Products. Under the terms of the Supplier Agreement, 3SI is permitted to purchase the Products from the Company from time to time pursuant to purchase orders. The purchase price for the Products will be as set forth in an applicable product schedule for the purchase orders and may be adjusted from time to time pursuant to the terms of the Supplier Agreement. Under the terms of the License Agreement, the Company agreed to pay an initial payment and royalties to 3SI based on the number of Products sold, with such royalties being subject to adjustment pursuant to the terms of the License Agreement.

The terms of the Supplier Agreement and the License Agreement will continue until the expiration of the Licensed Patents, unless earlier terminated under the terms of the respective agreements. Under the terms of the Supplier Agreement, 3SI has the right to immediately terminate upon written notice to the Company in the event that the Company fails to continuously maintain a minimum number of Markers to be incorporated into the Products, or upon 30 days written notice to the Company. Under the terms of the License Agreement, 3SI has the right to immediately terminate upon written notice to the Company in the event that the Company fails to continuously maintain a minimum number of Markers, or fails to sell Markers to 3SI for incorporation into the Products for a certain time after being ordered.