<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED: MARCH 31, 1996; OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD _________ TO __________
COMMISSION FILE NUMBER: 2-95626-D
SIONIX CORPORATION
------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
UTAH 87-0428526
------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5405 Morehouse Drive, Suite 250, San Diego, California 92121
- - - ------------------------------------------------------ ---------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
(619) 622-0200
----------------------------------------------------
(Registrant's telephone number, including area code)
N/A
-----------------------------------------------------------
(Former name or former address, if changed since last report)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that a
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ] No [ ]
On March 31, 1996, there were 22,147,472 shares of the registrant's
Common Stock, $.001 par value, outstanding.
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The condensed financial statements included herein have been prepared
by the Company, without audit pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosure
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading.
In the opinion of the Company, all adjustments, consisting of only
normal recurring adjustments, necessary to present fairly the financial
position of the Company as of March 31, 1996 and the results of its operations
and changes in its financial position from inception through March 31, 1996
have been made. The results of its operations for such interim period is not
necessarily indicative of the results to be expected for the entire year.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
LIQUIDITY AND CAPITAL RESOURCES
By virtue of the Company's merger with Automatic Control
Corporation, the Company has made substantial progress to become a viable
business. This combination, treated as a pooling-of-interests, generated
sizable increases in the Company's cash and capital positions. Although the
Company's interim balance sheet reflects a negative working capital, management
believes that with the release of the Company's initial products, this position
will change by the end of the 2nd Quarter of 1996. Management is also in
discussion with a number of groups considering an investment in the Company for
working capital purposes, including the possibility of a secondary offering.
RESULTS OF OPERATIONS
For the 1st Quarter of 1996, the Company is reporting a loss of
$353,000 or $0.02 per share. This loss was a result of the costs necessary to
complete the development of the Company's initial products, computer software
and hardware used to automate and optimize water monitoring processes of small
to medium sized public and private water treatment facilities. The initial
release of the Company's software program will occur during the 2nd Quarter of
1996, on a geographical basis beginning with California. The preliminary
response from various water treatment officials who have seen preview versions
of the software program have been very favorable.
To further expand the marketing of the Company's products and services
the Company has established a home page on the World Wide Web of the internet
at http://www.sionix.com.
2
<PAGE> 3
PART II - OTHER INFORMATION.
ITEM 1. LEGAL PROCEEDINGS.
At the present time there are no legal proceedings against the Company
and the Company is unaware of any unasserted claim or assessment which will
have a material effect on the financial position or future operations of the
Company.
ITEM 2. CHANGES IN SECURITIES.
Not required.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not required.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On January 23, 1996, the Company held a Special Meeting of the
Shareholders. The purpose of said meeting was to consider and act upon the
proposals to (1) Amend the Articles of Incorporation to change the name of the
corporation to SIONIX CORPORATION; and (2) Amend the Articles of Incorporation
to provide that any action required to be taken at any annual or special
meeting of shareholders of the corporation, or any action which may be taken at
any annual or special meeting of such shareholders, may be taken without a
meeting pursuant to Section 1-10a-704 of the Utah Revised Business Corporation
Act, without prior notice and without a vote, if a consent in writing, setting
forth the action so taken, shall be signed by the holders of outstanding stock
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to vote
thereon were present and voted.
There were 22,105,569 shares of the common stock entitled to vote at
the meeting. There were present in person or by proxy at the meeting 13,788,658
shares. Both proposals were approved by the shareholders with 13,788,658 shares
voting for adoption of the proposals. There were no votes against the
proposals.
ITEM 5. OTHER INFORMATION.
Not required.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) 27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter for which
this report covers.
3
<PAGE> 4
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the Undersigned, thereunto duly authorized.
SIONIX CORPORATION
A UTAH CORPORATION
Dated: May 14, 1996 By: /s/ JACK F. MOOREHEAD
-------------------------
Name: Jack F. Moorehead
Title: President
Dated: May 14, 1996 By: /s/ MICHAEL A. TAYLOR
-------------------------
Name: Michael A. Taylor
Title: Chief Financial Officer
4
<PAGE> 5
SIONIX CORPORATION
(A Development Stage Company)
March 31, 1996 and 1995
Financial Statements
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<S> <C>
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Statements of Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
<PAGE> 7
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Sionix Corporation
(A Development Stage Company)
San Diego, California
The accompanying consolidated balance sheets of Sionix Corporation (a
development stage company) as of March 31, 1996, and the related statements of
operations, stockholders' equity, and cash flows for the three months then
ended and for the three months ended March 31, 1995 and from inception on
October 31, 1994 through March 31, 1996 were not audited by us and,
accordingly, we do not express an opinion on them. The accompanying balance
sheet of Sionix Corporation as of December 31, 1995 was audited by us and we
expressed an unqualified opinion on it in our report dated February 14, 1996.
Jones, Jensen & Company
May 6, 1996
<PAGE> 8
SIONIX CORPORATION
(A Development Stage Company)
Balance Sheets
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------------ ------------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash in banks $ 100,656 $ 229,407
Prepaid expenses and deposits 6,996 73,391
------------------ ------------------
Total Current Assets 107,652 302,798
------------------ ------------------
PROPERTY AND EQUIPMENT - NET 69,803 64,306
------------------ ------------------
INTANGIBLES - NET 1,220,489 1,235,489
------------------ ------------------
TOTAL ASSETS $ 1,397,944 $ 1,602,593
================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Loan payable $ 50,000 $ 56,500
Accrued expenses 105,319 44,690
------------------ ------------------
Total Current Liabilities 155,319 101,190
------------------ ------------------
STOCKHOLDERS' EQUITY
Common stock $.001 par value,
100,000,000 shares authorized,
22,147,472 and 4,370,370 shares
issued and outstanding, respectively 22,147 4,370
Additional paid-in capital 4,820,856 4,744,633
Accumulated deficit (1,268,578) (915,800)
Less-subscription receivable (2,331,800) (2,331,800)
------------------ ------------------
Total Stockholders' Equity 1,242,625 1,501,403
------------------ ------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,397,944 $ 1,602,593
================== ==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 9
SIONIX CORPORATION
(A Development Stage Company)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
From
Inception on
For the Three Months Ended October 3,
March 31, 1994, Through
--------------------------------------- March 31,
1996 1995 1996
----------------- ------------------ ------------------
<S> <C> <C> <C>
REVENUE $ - $ - $ -
----------------- ------------------ ------------------
EXPENSES
Research and development 200,701 35,684 716,179
Depreciation and amortization 19,495 - 96,900
Administrative and marketing 131,508 155 436,791
----------------- ------------------ ------------------
Total Expenses 351,704 (35,839) 1,249,870
----------------- ------------------ ------------------
(LOSS) FROM OPERATIONS (351,704) (35,839) (1,249,870)
----------------- ------------------ ------------------
OTHER INCOME (EXPENSE)
Interest (1,074) - (18,708)
----------------- ------------------ ------------------
Total Other Income (Expense) (1,074) - (18,708)
----------------- ------------------ ------------------
NET LOSS $ (352,778) $ (35,839) $ (1,268,578)
================= ================== ==================
LOSS PER SHARE $ (0.02) $ (0.00) $ (0.07)
================= ================== ==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 10
SIONIX CORPORATION
(A Development Stage Company)
Statements of Stockholders' Equity
From Inception on October 3, 1994 through March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional
-------------------------------- Paid-in Accumulated
Shares Amount Capital Deficit
-------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Balance, October 3, 1994 - $ - $ - $ -
Shares issued to initial
stockholders in October 1994
at par 10,000 10 90 -
Net loss from October 3, 1994
through December 31, 1994 - - - (1,521)
-------------- -------------- -------------- ---------------
Balance, December 31, 1994 10,000 10 90 (1,521)
Issuance of common stock
for assignment of rights
recorded at predecessor
cost 1,990,000 1,990 (1,990) -
Issuance of common stock
for services at $0.25 per share 572,473 572 135,046 -
Issuance of common stock
for debt at $0.25 per share 188,561 188 47,347 -
Issuance of common stock
for debt at $0.50 per share 595,860 596 297,334 -
Issuance of common stock
for debt at $2.00 per share 98,194 98 196,290 -
Issuance of common stock
for debt at $4.00 per share 156,025 156 623,944 -
Issuance of common stock
for cash at $4.00 per share 138,040 138 552,022 -
Issuance of common stock for
subscription note receivable
at $4.00 per share 414,200 414 1,652,658 -
-------------- -------------- -------------- ---------------
Balance forward 4,163,353 $ 4,162 $ 3,502,741 $ (1,521)
-------------- -------------- -------------- ---------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 11
SIONIX CORPORATION
(A Development Stage Company)
Statements of Stockholders' Equity
From Inception on October 3, 1994 through March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional
-------------------------------- Paid-in Accumulated
Shares Amount Capital Deficit
-------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Balance forward 4,163,353 $ 4,162 $ 3,502,741 $ (1,521)
Issuance of common stock for
future production costs at
$6.00 per share 112,500 113 674,887 -
Issuance of common stock
for cash at $6.00 per share 94,517 95 567,005 -
Net loss for the year ended
March 31, 1996 - - - (914,279)
-------------- -------------- -------------- ---------------
Balance, March 31, 1996 4,370,370 4,370 4,744,633 (915,800)
Recapitalization through merger
with Coronado Capital
Corporation (Note 3) 17,734,902 17,735 (50,235) -
Issuance of common stock
for cash at $3.00 per share 42,200 42 126,458 -
Net loss for the three
months ended
March 31, 1996 - - - (352,778)
-------------- -------------- -------------- ---------------
Balance, March 31, 1996 22,147,472 $ 22,147 $ 4,820,856 $ (1,268,578)
============== ============== ============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE> 12
SIONIX CORPORATION
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
From
Inception on
For the Three Months Ended October 3,
March 31, 1994, Through
--------------------------------------- March 31,
1996 1995 1996
------------------ ----------------- ------------------
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net Income (loss) $ (352,778) $ (35,839) $ (1,268,578)
Depreciation and amortization 19,495 - 96,900
Common stock issued for services - - 135,618
(Increase) decrease in
other current assets 66,395 - (6,996)
Increase in accrued expenses 28,129 7,740 72,820
------------------ ---------------- ------------------
Net Cash Provided (Used) by
Operating Activities (238,759) (28,099) (970,236)
------------------ ----------------- ------------------
CASH FLOWS FROM
INVESTING ACTIVITIES
Purchase of intangibles - - (33,173)
Purchase of fixed assets (9,992) (29,627) (51,106)
------------------ ----------------- ------------------
Net Cash Provided (Used) by
Investing Activities (9,992) (29,627) (84,279)
------------------ ----------------- ------------------
CASH FLOWS FROM
FINANCING ACTIVITIES
Repayment of notes payable (6,500) - (6,500)
Proceeds from sale of stock 126,500 - 1,105,191
Increase in notes payable - 70,585 56,500
------------------ ----------------- ------------------
Net Cash Provided (Used) by
Financing Activities 120,000 70,585 1,155,171
------------------ ----------------- ------------------
INCREASE (DECREASE) IN CASH (128,751) 12,859 100,656
CASH AT BEGINNING OF PERIOD 229,407 - -
------------------ ----------------- ------------------
CASH AT END OF PERIOD $ 100,656 $ 12,859 $ 100,656
================== ================= ==================
CASH PAID FOR:
Interest $ 1,074 $ - $ 18,708
Income taxes $ - $ - $ -
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE> 13
SIONIX CORPORATION
(A Development Stage Company)
Statements of Cash Flows (Continued)
<TABLE>
<CAPTION>
From
Inception on
For the Three Months Ended October 3,
1994, Through
<March 31, March 31,
--------------------------------------- ------------------
1996 1995 1996
------------------ ----------------- ------------------
<S> <C> <C> <C>
Supplemental disclosures of non-
cash investing and financing
activities:
Increase in subscription notes
receivable and future production
costs receivable $ - $ - $ (2,331,800)
Addition to debt for acquisition of
intangibles - 1,273,285 1,302,914
Common stock issued for services - - 135,618
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE> 14
SIONIX CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
March 31, 1996 and 1995
NOTE 1 - COMPANY ORGANIZATION AND BUSINESS ACTIVITY
Organization - Sionix Corporation (the "Company") was incorporated
in Nevada on October 3, 1994. The Company was formed to design,
develop, and market an automatic water filtration system primarily
for small water districts.
Development Stage - The Company is in the development stage and
its efforts through March 31, 1996 have been principally devoted
to research and development, organizational activities, and
raising capital. As of March 31, 1996, the Company does not yet
have revenues from the sale of its water filtration systems. The
ultimate recovery of investments and costs is dependent on future
profitable operations, which presently cannot be determined.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Recognition of Revenue - The Company recognizes income and expense
on the accrual basis of accounting.
Commitments and Contingencies - The Company has no commitments or
contingencies not disclosed in the financial statements.
Property and Equipment - Property and equipment are stated at
cost. Depreciation is computed using the straight-line method
over a five year life.
Intangibles - Intangibles are stated at cost. Amortization is
computed over the estimated useful lives.
Research and Development - The Company entered into an agreement
with Sionix Technology (ACT) on February 28, 1995. Under this
agreement, ACT acts as research and development consultant for the
Company. In consideration for the performance of this agreement,
the Company agrees to pay ACT total reimbursement of costs for
consulting plus 5% as a consulting fee. ACT is a related party
through significant common ownership.
All research and development costs are expensed as incurred.
Earnings (Loss) Per Share - The computation of earnings per share
of common stock is based on the weighted average number of shares
outstanding at the date of the financial statements.
Provision for Income Taxes - No provision for income taxes have
been recorded due to net operating losses. The Company will
account for income taxes pursuant to FASB Statement No. 109. The
Internal Revenue Code contains provisions which may limit the loss
carryforwards available should certain events occur, including
significant changes in stockholder ownership interests,
accordingly the tax benefit of the loss carryovers is offset by a
valuation allowance of the same amount. The loss carryovers of
approximately $1,265,000 expire by the year 2011.
10
<PAGE> 15
SIONIX CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
March 31, 1996 and 1995
NOTE 3 - ACQUISITION AGREEMENT AND PLAN OF REVERSE MERGER
On December 1, 1995, the Company entered into an Acquisition
Agreement and Plan of Reverse Merger with Coronado Capital
Corporation (Coronado). The shareholders of the Company and
Coronado approved the merger on December 21, 1995 and December 28,
1995, respectively. The merger was effective on January 5, 1996.
Under the terms of the merger agreement between the two companies,
the stock of Coronado was reverse-split on a 1-for-4 basis
effective as of January 16, 1996, and each pre-merger shareholder
of the Company shall receive 4.819 new shares of the surviving
corporation. As a result of the merger, the pre-merger
shareholders of the Company make up approximately 95.0% of the
total issued and outstanding shares of Coronado, following the
effective date of the merger.
Under the terms of the merger agreement, the name of Coronado was
changed to Sionix Corporation. On January 23, 1996, the
shareholders approved the change of the Company's name to "SIONIX
CORPORATION."
NOTE 4 - STOCKHOLDERS' EQUITY
Subscription Receivable - During the year ended March 31, 1996,
414,200 shares of common stock were issued in return for notes in
the amount of $1,656,800. These notes are secured by the shares
issued are non-recourse otherwise. They have stated interest rate
of 6% and have maturity dates ranging from March 1, 1998 to
September 7, 1998.
In addition to the above mentioned notes, the Company entered into
an agreement for future production costs. Under this agreement,
the Company issued 112,500 shares at $6.00 per share for
production costs valued at $675,000.
NOTE 5 - RELATED PARTY TRANSACTIONS
Sionix Technology (ACT) is related to the Company through
significant common control. The Company has purchased from ACT
research and development services and various pieces of office
equipment.
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 107,652
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 107,652
<PP&E> 1,387,192
<DEPRECIATION> 96,900
<TOTAL-ASSETS> 1,397,944
<CURRENT-LIABILITIES> 155,319
<BONDS> 0
0
0
<COMMON> 22,147
<OTHER-SE> 1,220,478
<TOTAL-LIABILITY-AND-EQUITY> 1,397,944
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 351,704
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,074
<INCOME-PRETAX> (352,778)
<INCOME-TAX> (352,778)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (352,778)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
