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**VISUALANT,      INCORPORATED**

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

|  500                Union Street, Suite 406                                                          |
|-----------------------------------------------------------------------------------------------------------|
|  Seattle,                Washington USA   98101                                            |
|   (Address                of principal executive offices) (Zip Code)                            |
|                                                                                                           |
|  206-903-1351                                                                                        |
|  Registrant's                telephone number, including area code                                   |
|                                                                                                      |
|  N/A                                                                                                 |
|  (Former                name, address, and fiscal year, if changed since last                report) |

|  Class                                         |   |  Outstanding                as of March 31, 2007 |
|-----------------------------------------------------|--------|-------------------------------------------------------|
|  Common                Stock, $0.001 per share |   |  16,653,891                                      |

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|                       |  TABLE                OF CONTENTS                                                                                                                                                                                          |               |
|----------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|
|                       |                                                                                                                                                                                                                            |  Page         |
|                       |                                                                                                                                                                                                                            |   Number |
|                       |                                                                                                                                                                                                                            |               |
|  PART              1  |  FINANCIAL              INFORMATION                                                                                                                                                                                        |  3            |
|                       |                                                                                                                                                                                                                            |               |
|  ITEM              1  |  Financial              Statements (unaudited)                                                                                                                                                                             |  3            |
|                       |                                                                                                                                                                                                                            |               |
|                       |  Balance                Sheet as of March 31, 2007 and September 30, 2006                                                                                                                                                  |  4            |
|                       |                                                                                                                                                                                                                            |               |
|                       | Statements                of Operations For the three and six months ended March 31, 2007 and                2006, and the period from October 8, 1998 (Date of Inception) to                March 31,                2007 |  5            |
|                       |                                                                                                                                                                                                                            |               |
|                       | Statement                of Cash Flows For the six months ended March 31, 2007 and 2006 and                for the                period from October 8, 1998 (Date of Inception) to March 31,                2007              |  5            |
|                       |                                                                                                                                                                                                                            |               |
|                       | Notes                to the Financial Statements                                                                                                                                                                                |  7            |
|                       |                                                                                                                                                                                                                            |               |
|  ITEM              2  |  Management's              Plan of Operation                                                                                                                                                                               |  11           |
|                       |                                                                                                                                                                                                                            |               |
|  ITEM              3  |  Controls              and Procedures                                                                                                                                                                                      |  13           |
|                       |                                                                                                                                                                                                                            |               |
| ITEM 8B                    |  OTHER              INFORMATION                                                                                                                                                                                            |  13           |
|                       |                                                                                                                                                                                                                            |               |
|  PART              II |  OTHER              INFORMATION                                                                                                                                                                                            |  14           |
|                       |                                                                                                                                                                                                                            |               |
|  ITEM              6  |  Exhibits              and Reports on Form 8-K                                                                                                                                                                             |  14           |
|                       |                                                                                                                                                                                                                            |               |
|                       |  SIGNATURES                                                                                                                                                                                                                |  15           |
|                       |                                                                                                                                                                                                                            |               |

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|                                                                                                                                                                                     |   |   | March                  31, 2007  |   |   | September                  30, 2006 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------------------------------------|--------|--------|-------------------------------------|--------|
| ASSETS                                                                                                                                                                                   |   |   |                                  |   |   |                                |   |
| CURRENT                  ASSETS                                                                                                                                                          |   |   |                                  |   |   |                                |   |
| Cash                                                                                                                                                                                     |   | $      | 1,149                                 |   | $      | 7,160                               |   |
| Prepaid                  Expenses                                                                                                                                                        |   | $      | 18,779                                |   |   | -                                   |   |
|                                                                                                                                                                                     |   |   |                                  |   |   |                                |   |
| TOTAL                  ASSETS                                                                                                                                                            |   | $      | 19,928                                |   | $      | 7,160                               |   |
|                                                                                                                                                                                     |   |   |                                  |   |   |                                |   |
| LIABILITIES                  AND STOCKHOLDERS' DEFICIT                                                                                                                                   |   |   |                                  |   |   |                                |   |
| CURRENT                  LIABILITIES                                                                                                                                                     |   |   |                                  |   |   |                                |   |
| Notes                  payable                                                                                                                                                           |   | $      | 300,471                               |   | $      | 165,705                             |   |
| Accrued                  expenses and other liabilities                                                                                                                                  |   |   | 132,105                               |   |   | 8,247                               |   |
| Accounts                  payable                                                                                                                                                        |   |   | 593,611                               |   |   | 306,424                             |   |
|                                                                                                                                                                                     |   |   |                                  |   |   |                                |   |
| Total                  Current Liabilities                                                                                                                                               |   |   | 1,026,187                             |   |   | 480,376                             |   |
|                                                                                                                                                                                     |   |   |                                  |   |   |                                |   |
| Commitments                  and Contingencies                                                                                                                                           |   |   | -                                     |   |   | -                                   |   |
|                                                                                                                                                                                     |   |   |                                  |   |   |                                |   |
| STOCKHOLDERS'                  DEFICIT                                                                                                                                                   |   |   |                                  |   |   |                                |   |
|                                                                                                                                                                                     |   |   |                                  |   |   |                                |   |
| Preferred                  stock - $0.001 par value, 50,000,000 shares authorized, no shares                  issued                  and outstanding                                    |   |   | -                                     |   |   | -                                   |   |
| Common                  stock - $0.001 par value, 200,000,000 shares authorized, 16,653,891                  and                  16,503,891 shares issued and outstanding, respectively |   |   | 16,654                                |   |   | 16,504                              |   |
| Additional                  paid in capital                                                                                                                                              |   |   | 4,020,732                             |   |   | 3,604,969                           |   |
| Deficit                  accumulated during the development stage                                                                                                                        |   |   | (5,043,645                            | )      |   | (4,094,689                          | )      |
|                                                                                                                                                                                     |   |   |                                  |   |   |                                |   |
|  Total                  Stockholders' Equity (Deficiency)                                                                                                                           |   |   | (1,006,259                            | )      |   | (473,216                            | )      |
|                                                                                                                                                                                     |   |   |                                  |   |   |                                |   |
|  TOTAL                  LIABILITIES & EQUITY                                                                                                                                    |   | $      | 19,928                                |   | $      | 7,160                               |   |

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|                                                                                                         |   |   | Three Months                Ended                March 31, 2007  |   |   | Three Months Ended                March 31,                2006 |   |   | Six                Months                Ended                March 31, 2007 |   |   | Six                Months Ended                March 31,                2006 |   |   | Period                of Inception from                October 8,                1998 to March                31,                2007 |   |
|--------------------------------------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                         |   |   |                                                                                 |   |   |                                                                           |   |   |                                                                                   |   |   |                                                                                   |   |   |                                                                                                                                                      |   |
| **Revenues**                                                                                                 |   | $      | -                                                                                    |   | $      | -                                                                              |   | $      | -                                                                                      |   | $      | -                                                                                      |   | $      | -                                                                                                                                                         |   |
|                                                                                                         |   |   |                                                                                 |   |   |                                                                           |   |   |                                                                                   |   |   |                                                                                   |   |   |                                                                                                                                                      |   |
| **Expenses**                                                                                                 |   |   |                                                                                 |   |   |                                                                           |   |   |                                                                                   |   |   |                                                                                   |   |   |                                                                                                                                                      |   |
| Research                and development                                                                      |   |   | 148,506                                                                              |   |   | 138,732                                                                        |   |   | 397,823                                                                                |   |   | 175,932                                                                                |   |   | 1,085,232                                                                                                                                                 |   |
| Administrative                                                                                               |   |   | 261,298                                                                              |   |   | 101,476                                                                        |   |   | 525,401                                                                                |   |   | 292,221                                                                                |   |   | 2,707,215                                                                                                                                                 |   |
| Total                Operating Expense                                                                       |   |   | 409,804                                                                              |   |   | 240,208                                                                        |   |   | 923,224                                                                                |   |   | 468,153                                                                                |   |   | 3,792,477                                                                                                                                                 |   |
|  Loss                from Operations                                                                    |   |   | (409,804                                                                             | )      |   | (240,208                                                                       | )      |   | (923,224                                                                               | )      |   | (468,153                                                                               | )      |   | (3,792,447                                                                                                                                                | )      |
|                                                                                                         |   |   |                                                                                 |   |   |                                                                           |   |   |                                                                                   |   |   |                                                                                   |   |   |                                                                                                                                                      |   |
| **Other                Income (Expense)**                                                                    |   |   |                                                                                 |   |   |                                                                           |   |   |                                                                                   |   |   |                                                                                   |   |   |                                                                                                                                                      |   |
| Settlement                of debt                                                                            |   |   | -                                                                                    |   |   | -                                                                              |   |   | -                                                                                      |   |   | -                                                                                      |   |   | 43,400                                                                                                                                                    |   |
| Interest                expense                                                                              |   |   | (14,256                                                                              | )      |   | -                                                                              |   |   | (25,732                                                                                | )      |   | (10,726                                                                                | )      |   | (139,521                                                                                                                                                  | )      |
| Loss                of deposit                                                                               |   |   | -                                                                                    |   |   | -                                                                              |   |   | -                                                                                      |   |   | -                                                                                      |   |   | (1,154,327                                                                                                                                                | )      |
|                                                                                                         |   |   |                                                                                 |   |   |                                                                           |   |   |                                                                                   |   |   |                                                                                   |   |   |                                                                                                                                                      |   |
| **Net                Loss**                                                                                  |   |   | ($424,060                                                                            | )      |   | ($240,208                                                                      | )      |   | ($948,956                                                                              | )      |   | ($478,879                                                                              | )      |   | ($5,042,895                                                                                                                                               | )      |
|  Net                Loss Applicable to Common Stockholders Basic and diluted                            |   | $      | (0.03                                                                                | )      | $      | (0.01                                                                          | )      | $      | (0.06                                                                                  | )      | $      | (0.03                                                                                  | )      |   |                                                                                                                                                      |   |
| Weighted                Average Shares used in computing basic and diluted net loss per                share |   |   | 16,535,558                                                                           |   |   | 16,347,000                                                                     |   |   | 16,519,550                                                                             |   |   | 16,347,000                                                                             |   |   |                                                                                                                                                      |   |
|                                                                                                         |   |   |                                                                                 |   |   |                                                                           |   |   |                                                                                   |   |   |                                                                                   |   |   |                                                                                                                                                      |   |

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**VISUALANT,      INCORPORATED**

**(Development      Stage Company)**

**STATEMENTS      OF CASH FLOWS**

**For      the Six Months Ended March 31, 2007 and 2006 and the Period      from**

**October      8, 1998 (Date of Inception) to March 31, 2007**

|                                                                                                        |   |   | **Six                Months**** Ended**  |   |   | **Six                Months**** Ended** |   |   | **October                8, 1998** |   |
|-------------------------------------------------------------------------------------------------------------|--------|--------|----------------------------------------------------|--------|--------|----------------------------------------------|--------|--------|------------------------------------|--------|
|                                                                                                        |   |   | **March                31,**                  |   |   | **March                31,**                 |   |   | **to                March 31,**    |   |
|                                                                                                        |   |   | **2007**                                           |   |   | **2006**                                     |   |   | **2007**                           |   |
| **CASH                FLOWS FROM OPERATING ACTIVITIES**                                                     |   |   |                                               |   |   |                                         |   |   |                               |   |
| Net                loss                                                                                     |   | $      | (948,956                                           | )      | $      | (478,879                                     | )      | $      | (5,043,645                         | )      |
| Reconciliation                of net loss to net cash used in operating activities:                         |   |   |                                               |   |   |                                         |   |   |                               |   |
| Depreciation,                amortization and tangible and intangible asset impairments                     |   |   | -                                                  |   |   | 708                                          |   |   | 19,808                             |   |
| Issuance                of capital stock for expenses                                                       |   |   | 75,000                                             |   |   | -                                            |   |   | 157,956                            |   |
| Stock                based compensation                                                                     |   |   | 183,342                                            |   |   | -                                            |   |   | 255,342                            |   |
| Stock                Options Issued in exchange for services                                                |   |   | 157,571                                            |   |   | -                                            |   |   | 157,571                            |   |
| Loss                of deposit                                                                              |   |   | -                                                  |   |   | -                                            |   |   | 1,154,327                          |   |
| Capital                contributions - expenses                                                             |   |   | -                                                  |   |   | -                                            |   |   | 10,950                             |   |
| Increase                (decrease) in cash resulting from changes in assets and                liabilities: |   |   |                                               |   |   |
| Prepaid                expenses                                                                             |   |   | (18,779                                            | )      |   | -                                            |   |   | (18,779                            | )      |
| Accounts                payable and accrued expenses                                                        |   |   | 411,045                                            |   |   | (40,163                                      | )      |   | 2,152,952                          |   |
| Net                Cash Used in Operating Activities                                                        |   |   | (140,027                                           | )      |   | (518,334                                     | )      |   | (1,153,518)                        |   |
|                                                                                                        |   |   |                                               |   |   |                                         |   |   |                               |   |
| **CASH                FLOWS FROM INVESTING ACTIVITIES**                                                     |   |   |                                               |   |   |                                         |   |   |                               |   |
| Purchase                of property and equipment                                                           |   |   | -                                                  |   |   | -                                            |   |   | (12,308                            | )      |
| Purchase                of investment - deposit                                                             |   |   | -                                                  |   |   | -                                            |   |   | (1,154,327                         | )      |
| Net                Cash Used in Investing Activities                                                        |   |   | -                                                  |   |   | -                                            |   |   | (1,166,635                         | )      |
|                                                                                                        |   |   |                                               |   |   |                                         |   |   |                               |   |
| **CASH                FLOWS FROM FINANCING ACTIVITIES**                                                     |   |   |                                               |   |   |                                         |   |   |                               |   |
| Proceeds                from issuance of common stock                                                       |   |   | -                                                  |   |   | -                                            |   |   | 2,022,892                          |   |
| Proceeds                from issuance of notes payable                                                      |   |   | 134,766                                            |   |   | 44,372                                       |   |   | 298,410                            |   |
| Net                Cash Provided by Financing Activities                                                    |   |   | 134,766                                            |   |   | 44,372                                       |   |   | 2,321,302                          |   |
|                                                                                                        |   |   |                                               |   |   |                                         |   |   |                               |   |
| Net                Change in Cash                                                                           |   |   | (6,011                                             | )      |   | (473,962                                     | )      |   | 1,149                              |   |
| Cash                at Beginning of Period                                                                  |   |   | 7,160                                              |   |   | 519,009                                      |   |   | -                                  |   |
| Cash                at End of Period                                                                        |   | $      | 1,149                                              |   | $      | 45,047                                       |   | $      | 1,149                              |   |

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**VISUALANT,          INCORPORATED**

**(Development          Stage Company)**

**NOTES          TO FINANCIAL STATEMENTS**

**1.**
**ORGANIZATION**

**2.      GOING CONCERN **

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**VISUALANT,          INCORPORATED**

**(Development          Stage Company)**

**NOTES          TO FINANCIAL STATEMENTS**

**3.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

***Accounting      for Income Taxes***

***Financial      Statement Restatement***

***Basic      and Diluted Net Income (Loss) Per Share***

***Recent      Accounting Pronouncements***

*Fair      Value Measurements *

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**VISUALANT,          INCORPORATED**

**(Development          Stage Company)**

**NOTES          TO FINANCIAL STATEMENTS**

**4.      DEVELOPMENT OF TECHNOLOGIES OWNED BY THE COMPANY**

**5.      NOTES PAYABLE **

**6.      COMMON CAPITAL STOCK **

**7.      STOCK OPTIONS**

**8.      SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES**

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**VISUALANT,          INCORPORATED**

**(Development          Stage Company)**

**NOTES          TO FINANCIAL STATEMENTS**

**9.      CANCELLATION OF AGREEMENT TO PURCHASE SHARES OF SCI**

**10.      SUBSEQUENT EVENTS**

*Notes      Payable*

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**General      **

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**Off-Balance      Sheet Arrangements**

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**ITEM      8B. OTHER INFORMATION**

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|  | 31.1 | Certification                  of the Chief Executive Officer Pursuant to Section 906 of the                  Sarbanes-Oxley Act of 2002 |
|--|------|------------------------------------------------------------------------------------------------------------------------------------------|

|  | 31.2 | Certification                of the Chief Financial Officer Pursuant to Section 906 of the                Sarbanes-Oxley Act of 2002 |
|--|------|--------------------------------------------------------------------------------------------------------------------------------------|

|  | 32.1 | Certificate                Pursuant to 18 U.S.C. Section 1350 signed by the Chief Executive                Officer |
|--|------|--------------------------------------------------------------------------------------------------------------------|

|  | 32.2 | Certificate                Pursuant to 18 U.S.C. Section 1350 signed by the Chief Financial                Officer |
|--|------|--------------------------------------------------------------------------------------------------------------------|

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|                                  |                                                                                    |                                    |
|---------------------------------------|-----------------------------------------------------------------------------------------|-----------------------------------------|
|                                  | VISUALANT,              INCORPORATED                                                    |
|                             |                                                                               |  (Registrant)                 |
| Date:              May 15, 2007  | By:                                                                           | /s/ Bradley              E. Sparks |
|                                  | Bradley              E. Sparks                                                          |
|                                  | Title:              Chief Executive Officer, President, and              Director  |

|                            |                                                                                    |                                    |
|---------------------------------|-----------------------------------------------------------------------------------------|-----------------------------------------|
|                       |                                                                               |                               |
| Date:              May 15, 2007 | By:                                                                           | /s/ Bradley              E. Sparks |
|                            | Bradley              E. Sparks                                                          |
|                            | Title:              Chief Financial Officer, and Secretary              Treasurer  |

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