<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: JUNE 30, 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)
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)
(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 June 30, 1996, there were 22,999,992 shares of the registrant's Common
Stock, $.001 par value, outstanding and subscribed.
<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 June 30, 1996 and the results of its operations and changes in its
financial position from inception through June 30, 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
in January 1996, the Company 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 continues to reflect negative working capital, management
believes that with the sales of the retail version of its automation software
for industrial plants, beginning in August 1996, this position will change by
the end of the 3rd Quarter of 1996. Management is continuing discussions with a
number of individuals and groups considering an investment in the Company for
working capital purposes and is initiating discussions with underwriters for a
secondary offering.
RESULTS OF OPERATIONS
For the 2nd Quarter of 1996, the Company is reporting a loss of $283,000
or $0.01 per share. During the quarter the Company completed the development of
its automation software for industrial plants and began shipping a working model
preview version on CD-ROM to selected water treatment facilities in California.
Sales of the retail version of the software will begin in August 1996.
The Company maintains an Internet home page 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.
Not Required
ITEM 5. OTHER INFORMATION.
Not required.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) With the exception of the Unaudited Financial Statements for the
period covered by this report which are attached hereto, no other exhibits have
been filed with this Form 10-Q.
(b) With the exception of the Current Reports on Form 8-K dated April 2,
1996, April 17, 1996 and June 14, 1996, no other reports on Form 8-K were filed
during the last quarter of the period covered.
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: August 12, 1996 By: /S/ Jack F. Moorehead
--------------------------
Name: Jack F. Moorehead
Title: President
Dated: August 12, 1996 By: /S/ Michael A. Taylor
--------------------------
Name: Michael A. Taylor
Title: Chief Executive Officer
<PAGE> 5
SIONIX CORPORATION
(A Development Stage Company)
Balance Sheets
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
----------- -----------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash in banks $ 111,816 $ 229,407
Prepaid expenses and deposits 6,996 73,391
----------- -----------
Total Current Assets 118,812 302,798
----------- -----------
PROPERTY AND EQUIPMENT - NET 67,138 64,306
----------- -----------
INTANGIBLES - NET 1,209,489 1,235,489
----------- -----------
TOTAL ASSETS $ 1,395,439 $ 1,602,593
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Loan payable $ 50,000 $ 56,500
Accrued expenses 74,153 44,690
----------- -----------
Total Current Liabilities 124,153 101,190
----------- -----------
LOANS FROM STOCKHOLDERS' 68,700 --
----------- -----------
STOCKHOLDERS' EQUITY
Common stock $.001 par value,
100,000,000 shares authorized,
22,999,992 and 4,370,370 shares
issued and outstanding, respectively 23,000 4,370
Additional paid-in capital 5,062,910 4,744,633
Accumulated deficit (1,551,524) (915,800)
Less-subscription receivable (2,331,800) (2,331,800)
----------- -----------
Total Stockholders' Equity 1,202,586 1,501,403
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,395,439 $ 1,602,593
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE> 6
SIONIX CORPORATION
(A Development Stage Company)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
From
Inception on
For the Six Months For the Three Months October 3 ,
Ended June 30, Ended June 30, 1994, Through
----------------------- ----------------------- June 30,
1996 1995 1996 1995 1996
--------- --------- --------- --------- -------------
<S> <C> <C> <C> <C> <C>
REVENUE $ -- $ -- $ -- $ -- $ --
--------- --------- --------- --------- -----------
EXPENSES
Research and development 196,877 163,412 -- 127,728 716,179
Depreciation and amortization 34,990 -- 15,495 -- 112,395
Administrative and marketing 400,802 760 265,470 605 702,261
--------- --------- --------- --------- -----------
Total Expenses 632,669 164,172 280,965 128,333 1,530,835
--------- --------- --------- --------- -----------
(LOSS) FROM OPERATIONS (632,669) (164,172) (280,965) (128,333) (1,530,835)
--------- --------- --------- --------- -----------
OTHER INCOME (EXPENSE)
Interest (3,055) -- (1,981) -- (20,689)
--------- --------- --------- --------- -----------
Total Other Income
(Expense) (3,055) -- (1,981) -- (20,689)
--------- --------- --------- --------- -----------
NET LOSS $(635,724) $(164,172) $(282,946) $(128,333) $(1,551,524)
========= ========= ========= ========= ===========
LOSS PER SHARE $ (0.03) $ (0.00) $ (0.01) $ (0.00) $ (0.07)
========= ========= ========= ========= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 7
SIONIX CORPORATION
(A Development Stage Company)
Statements of Stockholders' Equity
From Inception on October 3, 1994 through June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional
------------------- Paid-in Accumulated
Share 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.
3
<PAGE> 8
SIONIX CORPORATION
(A Development Stage Company)
Statements of Stockholders' Equity
From Inception on October 3, 1994 through June 30, 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
December 31, 1995 -- -- -- (914,279)
---------- ------- ----------- -----------
Balance, December 31, 1995 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 $1.00 per share 369,407 370 369,037 --
Issuance of common stock for
past services 525,313 525 (525) --
Net loss for the six months
ended June 30, 1996 -- -- -- (635,724)
---------- ------- ----------- -----------
Balance, June 30, 1996 22,999,992 $23,000 $ 5,062,910 $(1,551,524)
========== ======= =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 9
SIONIX CORPORATION
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
From
Inception on
For the Six Months For the Three Months October 3 ,
Ended June 30, Ended June 30, 1994, Through
----------------------- ------------------------ June 30,
1996 1995 1996 1995 1996
--------- --------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net Income (loss) $(635,724) $(164,172) $(282,946) $(128,333) $(1,551,524)
Depreciation and amortization 34,990 -- 15,495 --
112,395
Common stock issued for
services -- -- -- -- 135,618
(Increase) decrease in
other current assets 66,395 -- -- -- (6,996)
Increase in accrued expenses (3,036) 21,404 (31,165) 13,664 41,654
--------- --------- --------- --------- -----------
Net Cash Provided (Used) by
Operating Activities (537,375) (142,768) (298,616) (114,669) (1,268,853)
--------- --------- --------- --------- -----------
CASH FLOWS FROM
INVESTING ACTIVITIES
Purchase of intangibles -- (24,019) -- (24,019) (33,173)
Purchase of fixed assets (11,823) (29,627) (1,831) -- (52,937)
--------- --------- --------- --------- -----------
Net Cash Provided (Used) by
Investing Activities (11,823) (53,646) (1,831) (24,019) (86,110)
--------- --------- --------- --------- -----------
CASH FLOWS FROM
FINANCING ACTIVITIES
Repayment of notes payable (20,900) (2,000) (14,400) (2,000) (20,900)
Proceeds from sale of stock 369,407 157,500 242,907 157,500 1,348,079
Increase in notes payable 83,100 70,585 83,100 -- 139,600
--------- --------- --------- --------- -----------
Net Cash Provided (Used)
by Financing Activities $ 431,607 $ 226,085 $ 311,607 $ 155,500 $ 1,466,779
--------- --------- --------- --------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 10
SIONIX CORPORATION
(A Development Stage Company)
Statements of Cash Flows (Continued)
<TABLE>
<CAPTION>
From
Inception on
For the three Months For Three Months October 3 ,
Ended June 30, Ended June 30, 1994, Through
--------------------- ---------------------- June 30,
1996 1995 1996 1995 1996
--------- ------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE)
IN CASH $(117,591) $29,671 $ 11,160 $ 16,812 $ 111,816
CASH AT BEGINNING OF
PERIOD 229,407 -- 100,656 12,859 --
--------- ------- -------- ---------- -----------
CASH AT END OF PERIOD $ 111,816 $29,671 $111,816 $ 29,671 $ 111,816
========= ======= ======== ========== ===========
CASH PAID FOR:
Interest $ 3,055 $ -- $ 1,981 $ -- $ 20,689
Income taxes $ 1,588 $ -- $ 800 $ -- $ 1,588
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.
6
<PAGE> 11
SIONIX CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
June 30, 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 June 30, 1996 have been principally devoted to
research and development, organizational activities, and raising
capital. As of June 30, 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.
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 carry forwards
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 $1,550,000 expire by the year
2011.
7
<PAGE> 12
SIONIX CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
June 30, 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 Note Receivable - During the year ended December 31,
1995, 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.
8
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 118,812
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 118,812
<PP&E> 1,389,022
<DEPRECIATION> 112,395
<TOTAL-ASSETS> 1,395,439
<CURRENT-LIABILITIES> 192,353
<BONDS> 0
0
0
<COMMON> 23,000
<OTHER-SE> 1,179,586
<TOTAL-LIABILITY-AND-EQUITY> 1,395,439
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 632,669
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,055
<INCOME-PRETAX> (365,724)
<INCOME-TAX> (365,724)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (365,724)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
