<?xml version="1.0" encoding="us-ascii"?><InstanceReport xmlns:xsd="http://www.w3.org/2001/XMLSchema" xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance"><Version>2.4.0.8</Version><ReportLongName>0009 - Disclosure - 4. DEVELOPMENT OF CHROMAID(TM) TECHNOLOGY</ReportLongName><DisplayLabelColumn>true</DisplayLabelColumn><ShowElementNames>false</ShowElementNames><RoundingOption /><HasEmbeddedReports>false</HasEmbeddedReports><Columns><Column FlagID="0"><Id>1</Id><IsAbstractGroupTitle>false</IsAbstractGroupTitle><LabelSeparator>

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</LabelSeparator><Level>2</Level><ElementName>us-gaap_InProcessResearchAndDevelopmentPolicy</ElementName><ElementPrefix>us-gaap_</ElementPrefix><IsBaseElement>true</IsBaseElement><BalanceType>na</BalanceType><PeriodType>duration</PeriodType><IsReportTitle>false</IsReportTitle><IsSegmentTitle>false</IsSegmentTitle><IsCalendarTitle>false</IsCalendarTitle><IsEquityPrevioslyReportedAsRow>false</IsEquityPrevioslyReportedAsRow><IsEquityAdjustmentRow>false</IsEquityAdjustmentRow><IsBeginningBalance>false</IsBeginningBalance><IsEndingBalance>false</IsEndingBalance><IsReverseSign>false</IsReverseSign><FootnoteIndexer /><Cells><Cell FlagID="0" ContextID="From2012-10-01to2013-06-30" UnitID=""><Id>1</Id><IsNumeric>false</IsNumeric><IsRatio>false</IsRatio><DisplayZeroAsNone>false</DisplayZeroAsNone><NumericAmount>0</NumericAmount><RoundedNumericAmount>0</RoundedNumericAmount><NonNumbericText>&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;&lt;b&gt;The Company&amp;#146;s ChromaID&amp;#153; Technology&lt;/b&gt;&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;&amp;#160;&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;The Company has invented a way to project light
at a material (solid surface, liquid, or gas) and measure the amount of light that is reflected back. The pattern of this reflected
light is compared to other patterns the Company has captured and this allows the Company to identify, detect, or diagnose materials
that cannot be identified by the human eye. The Company refers to this pattern of reflected light as a ChromaID&amp;#153;. The Company
designs ChromaID scanning devices made with electronic, optical, and software parts to produce and capture the light.&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;&amp;#160;&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;The Company&amp;#146;s first product, the ChromaID
F12 Lab Kit, scans and identifies solid surfaces. The Company is marketing this product to customers who are considering licensing
the technology. Target markets include, but are not limited to, commercial paint manufacturers, pharmaceutical equipment manufacturers,
process control companies, currency paper and ink manufacturers, security card, reader, and scanner manufacturers, food processing,
and electronic gaming.&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;&amp;#160;&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;&lt;b&gt;The Company&amp;#146;s Patents&lt;/b&gt;&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;&amp;#160;&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;On August 9, 2011, the Company was issued US
Patent No. 7,996,173 B2 entitled &amp;#147;Method, Apparatus and Article to Facilitate Distributed Evaluation of Objects Using Electromagnetic
Energy,&amp;#148; by the United States Office of Patents and Trademarks. The patent expires August 24, 2029.&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"&gt;&amp;#160;&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;On December 13, 2011, the Company was issued
US Patent No. 8,076,630 B2 entitled &amp;#147;System and Method of Evaluating an Object Using Electromagnetic Energy&amp;#148; by the
United States Office of Patents and Trademarks. The patent expires November 7, 2028.&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;&amp;#160;&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;On December 20, 2011, the Company was issued
US Patent No. 8,081,304 B2 entitled &amp;#147;Method, Apparatus and Article to Facilitate Evaluation of Objects Using Electromagnetic
Energy&amp;#148; by the United States Office of Patents and Trademarks. The patent expires July 28, 2030.&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"&gt;&amp;#160;&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;On October 9, 2012, the Company was issued US
Patent No. 8,285,510 B2 entitled &amp;#147;Method, Apparatus, and Article to Facilitate Distributed Evaluation of Objects Using Electromagnetic
Energy&amp;#148; by the United States Office of Patents and Trademarks. The patent expires July 31, 2027.&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;&amp;#160;&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;On February 5, 2013, the Company was issued
US Patent No. 8,368,878 B2 entitled &amp;#147;Method, Apparatus and Article To Facilitate Evaluation of Objects Using Electromagnetic
Energy by the United States Office of Patents and Trademarks. The patent expires July 31, 2027.&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;&amp;#160;&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"&gt;The Company is pursuing an aggressive patent
strategy to expand our unique intellectual property in the United States and Japan and other countries.&lt;/p&gt;</NonNumbericText><FootnoteIndexer /><CurrencyCode /><CurrencySymbol /><IsIndependantCurrency>false</IsIndependantCurrency><ShowCurrencySymbol>false</ShowCurrencySymbol><DisplayDateInUSFormat>false</DisplayDateInUSFormat></Cell></Cells><ElementDataType>nonnum:textBlockItemType</ElementDataType><SimpleDataType>na</SimpleDataType><ElementDefenition>Disclosure of accounting policy for costs assigned to identifiable tangible and intangible assets of an acquired entity to be used in the research and development activities of the combined enterprise. An entity also may disclose the appraisal method or significant assumptions used to value acquired research and development assets.</ElementDefenition><ElementReferences>Reference 1: http://www.xbrl.org/2003/role/presentationRef

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