<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR QUARTER ENDED: DECEMBER 31, 1997; 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)
5355 Mira Sorrento Pl., Suite 100, 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 March 31, 1997, there were 24,054,590 shares of the registrant's
Common Stock, $.001 par value, outstanding and subscribed.
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The 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, 1997 and the results of its operations and
changes in its financial position from inception through March 31, 1997 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.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Balance Sheets -.................................................... 3
Statement of Operations............................................. 5
Statement of Stockholders' Equity................................... 6
Statement of Cash Flows ............................................ 9
Notes to Financial Statements for Period .......................... 11
Independent Auditor's Report ....................................... 16
</TABLE>
All other schedules are not submitted because they are not applicable
or not required or because the information is included in the financial
statements or notes thereto.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 3
SIONIX CORPORATION
(A Development Stage Company)
Balance Sheets
ASSETS
<TABLE>
<CAPTION>
December 31, September 30,
1997 1997
------------ ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash in banks $ 15,090 $ 271
Inventory (Note 2) 6,525 6,525
------------ ------------
Total Current Assets 21,615 6,796
------------ ------------
PROPERTY AND EQUIPMENT - NET (Notes 2 and 3) 84,636 90,436
------------ ------------
OTHER ASSETS
Intangibles - net (Notes 2 and 4) 1,209,075 1,216,574
------------ ------------
Total Other Assets 1,209,075 1,216,574
------------ ------------
TOTAL ASSETS $ 1,315,326 $ 1,313,806
============ ============
</TABLE>
The accompanying notes are an integral part of this financial statement
3
<PAGE> 4
SIONIX CORPORATION
(A Development Stage Company)
Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
December 31, September 30,
1997 1997
------------ ------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 185,400 $ 209,448
Convertible debenture, current portion (Note 8) 10,000 10,000
Loan payable (Note 5) 50,000 50,000
Lease payable, current portion (Note 6) 8,609 7,847
Accrued expenses 43,434 38,934
------------ ------------
Total Current Liabilities 297,443 316,229
------------ ------------
LONG-TERM DEBTS
Lease payable (Note 6) 6,128 4,279
Related party payables (Note 7) 331,148 274,774
Convertible debenture (Note 8) 20,000 20,000
------------ ------------
Total Long-Term Debts 357,276 299,053
------------ ------------
Total Liabilities 654,719 615,282
------------ ------------
COMMITMENTS AND CONTINGENCIES
(Notes 6 and 11) -- --
------------ ------------
STOCKHOLDERS' EQUITY
Common stock, $.001 par value,
100,000,000 shares authorized,
24,054,590 and 24,054,590 shares
issued and outstanding, respectively 24,055 24,055
Additional paid-in capital 5,028,702 5,028,702
Deficit accumulated during the developmental stage (2,735,350) (2,697,433)
Subscription receivable (Note 10) (1,656,800) (1,656,800)
------------ ------------
Total Stockholders' Equity 660,607 698,524
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,315,326 $ 1,313,806
============ ============
</TABLE>
The accompanying notes are an integral part of this financial statement
4
<PAGE> 5
SIONIX CORPORATION
(A Development Stage Company)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
From
Inception on
For the Three Months Ended October 3,
December 31, 1994 Through
-------------------------------- December 31,
1997 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
REVENUE $ -- $ -- $ 15,500
Cost of sales -- -- 6,540
------------ ------------ ------------
Gross Profit -- -- 8,960
------------ ------------ ------------
EXPENSES
Research and development -- -- 850,353
Depreciation and amortization 23,300 27,600 276,676
Administrative and marketing 6,286 218,135 1,486,123
------------ ------------ ------------
Total Expenses 29,586 245,735 2,613,152
------------ ------------ ------------
(LOSS) FROM OPERATIONS (29,586) (245,735) (2,604,192)
------------ ------------ ------------
OTHER INCOME (EXPENSE)
Write-down of obsolete software -- -- (53,614)
Settlement costs -- -- (25,125)
Interest (8,331) (3,125) (52,419)
------------ ------------ ------------
Total Other Income (Expense) (8,331) (3,125) (131,158)
------------ ------------ ------------
NET LOSS $ (37,917) $ (248,860) $ (2,735,350)
============ ============ ============
LOSS PER SHARE $ (0.00) $ (0.01)
============ ============
</TABLE>
The accompanying notes are an integral part of this financial statement
5
<PAGE> 6
SIONIX CORPORATION
(A Development Stage Company)
Statements of Stockholders' Equity
From Inception on October 3, 1994 through December 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional
----------------------------- Paid-in Accumulated
Shares Amount Capital Deficit Subscription
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Receivable
- ----------
Balance,
October 3, 1994 -- $ -- $ -- $ -- $ --
Shares issued to initial
stockholders in October
1994 at $0.01 per share 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 at
$0.00 per share 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 -- --
------------ ------------ ------------ ------------ ------------
Balance forward 3,611,113 $ 3,610 $ 1,298,061 $ (1,521) $ --
------------ ------------ ------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of this financial statement
6
<PAGE> 7
SIONIX CORPORATION
(A Development Stage Company)
Statements of Stockholders' Equity (Continued)
From Inception on October 3, 1994 through December 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional
------------------------------ Paid-in Accumulated Subscription
Shares Amount Capital Deficit Receivable
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance forward 3,611,113 $ 3,610 $ 1,298,061 $ (1,521) $ --
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 -- (1,656,800)
Issuance of common
stock for future production
costs at $6.00 per share 112,500 113 674,887 -- (675,000)
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) (2,331,800)
Issuance of common
stock in reorganization 18,632,612 18,633 (58,033) -- --
Issuance of common
stock for cash at $1.00
per share 572,407 573 571,834 -- --
Issuance of common
stock for services at
$1.00 per share 24,307 24 24,283 -- --
Net loss for the nine
months ended
September 30, 1996 -- -- -- (922,717) --
------------ ------------ ------------ ------------ ------------
Balance,
September 30, 1996 23,599,696 $ 23,600 $ 5,282,717 $ (1,838,517) $ (2,331,800)
------------ ------------ ------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of this financial statement
7
<PAGE> 8
SIONIX CORPORATION
(A Development Stage Company)
Statements of Stockholders' Equity (Continued)
From Inception on October 3, 1994 through December 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional
------------------------------- Paid-in Accumulated Subscription
Shares Amount Capital Deficit Receivable
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance,
September 30, 1996 23,599,696 $ 23,600 $ 5,282,717 $ (1,838,517) $ (2,331,800)
Issuance of common stock
for cash at $1.00 per share 80,880 81 80,799 -- --
Issuance of common stock
for cash at $0.69 per share 14,545 15 9,985 -- --
Issuance of common stock
for cash at $0.67 per share 60,000 60 39,940 -- --
Issuance of common stock
for cash at $0.56 per share 4,444 4 2,496 -- --
Issuance of common stock
for cash at $0.50 per share 368,000 368 183,632 -- --
Issuance of common stock
for cash at $0.31 per share 8,064 8 2,492 -- --
Issuance of common stock
for cash at $0.25 per share 186,800 187 46,513 -- --
Issuance of common stock
for services at $0.20 per
share 274,299 274 54,586 -- --
Cancellation of shares issued
issued for agreement for
future production costs and
other shares (542,138) (542) (674,458) -- 675,000
Net loss for the year ended
September 30, 1997 -- -- -- (858,916) --
------------ ------------ ------------ ------------ ------------
Balance,
September 30, 1997 24,054,590 24,055 5,028,702 (2,697,433) (1,656,800)
Net loss for the three months
ended December 31, 1997 -- -- -- (37,917) --
------------ ------------ ------------ ------------ ------------
Balance,
December 31, 1997 24,054,590 $ 24,055 $ 5,028,702 $ (2,735,350) $ (1,656,800)
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of this financial statement
8
<PAGE> 9
SIONIX CORPORATION
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
From
Inception on
For the Three Months Ended October 3,
December 31, 1994 Through
------------------------------- December 31,
1997 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $ (37,917) $ (248,860) $ (2,735,350)
Adjustments to Reconcile Net Loss
to Net Cash Used by Operating
Activities
Depreciation and amortization 23,300 27,600 276,676
Common stock issued for services -- -- 214,785
Change in Assets and Liabilities
(Increase) decrease in inventory -- (21,552) (6,525)
Increase (decrease) in accrued
expenses (19,549) 61,184 189,435
------------ ------------ ------------
Net Cash Used by
Operating Activities (34,166) (181,628) (2,060,979)
------------ ------------ ------------
CASH FLOWS FROM
INVESTING ACTIVITIES
Purchase of intangibles (10,000) (66,207) (160,188)
Purchase of fixed assets -- (1,642) (81,753)
------------ ------------ ------------
Net Cash Used by
Investing Activities (10,000) (67,849) (241,941)
------------ ------------ ------------
CASH FLOWS FROM
FINANCING ACTIVITIES
Repayment of notes payable and
contracts payable 2,611 (2,487) (17,296)
Proceeds from sale of stock -- 125,380 1,917,658
Proceeds from notes payable and
convertible debenture 56,374 116,169 417,648
------------ ------------ ------------
Net Cash Provided by
Financing Activities $ 58,985 $ 239,062 $ 2,318,010
------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of this financial statement
9
<PAGE> 10
SIONIX CORPORATION
(A Development Stage Company)
Statements of Cash Flows (Continued)
(Unaudited)
<TABLE>
<CAPTION>
From
Inception on
For the Three Months Ended October 3,
December 31, 1994 Through
------------------------------ December 31,
1997 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH $ 14,819 $ (10,415) $ 15,090
CASH AT BEGINNING OF PERIOD 271 36,041 --
------------ ------------ ------------
CASH AT END OF PERIOD $ 15,090 $ 25,626 $ 15,090
============ ============ ============
CASH PAID FOR:
Interest $ -- $ 3,125 $ 9,259
Income taxes $ -- $ -- $ --
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 $ -- $ -- $ 1,302,914
Common stock issued for services $ -- $ -- $ 159,925
Equipment acquired under lease
payable $ -- $ -- $ 25,533
</TABLE>
The accompanying notes are an integral part of this financial statement
10
<PAGE> 11
SIONIX CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1997 and September 30, 1997
NOTE 1 - COMPANY ORGANIZATION AND BUSINESS ACTIVITY
Sionix Corporation (formerly Automatic Control 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.
The Company is in the development stage and its efforts through
December 31, 1997 have been principally devoted to research and
development, organizational activities, and raising capital. As of
December 31, 1997, the Company has had $15,500 of revenues. 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
a. Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting. The Company has elected to change its year
end to September 30.
b. Cash Equivalents
The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents.
c. Property and Equipment
Property and equipment are recorded at cost. Major additions and
improvements are capitalized. Minor replacements, maintenance and
repairs that do not increase the useful life of the assets are
expensed as incurred. Depreciation of property and equipment is
determined using the straight-line method over the expected useful
lives of the assets as follows:
Description Useful Lives
----------------------------- ------------
Computers and test equipment 5 years
Furniture and fixtures 5 years
d. Capitalized Marketing Costs
Capitalized marketing costs are recorded at cost. The Company
follows the policy of capitalizing marketing costs associated with
the development of marketing materials. Amortization of the costs
are determined using the straight-line method over the expected
useful life of 15 years.
11
<PAGE> 12
SIONIX CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1997 and September 30, 1997
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
e. Inventory
Inventory is stated at the lower of average cost of market.
f. Research and Development
Research and development costs are expenses as incurred.
g. Net Loss Per Share
The computation of net loss per share of common stock is based on
the weighted average number of shares outstanding at the date of
the financial statements.
h. Provision for Income Taxes
No provision for federal income taxes have been recorded due to
net operating losses. The Company accounts 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 carryforwards of approximately
$2,735,000 will expire by the year 2012.
i. Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1997 consisted of the
following:
<TABLE>
<S> <C>
Computers $ 125,603
Furniture and fixtures 10,503
---------------------
Total 136,106
Less accumulated depreciation (51,470)
---------------------
Property and Equipment - Net $ 84,636
=====================
</TABLE>
Depreciation expense for the three months ended December 31, 1997,
and for the year ended September 30, 1997 was $5,800 and $23,602,
respectively.
12
<PAGE> 13
SIONIX CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1997 and September 30, 1997
NOTE 4 - INTANGIBLE ASSETS
Intangible assets at December 31, 1997 consisted of the following:
<TABLE>
<S> <C>
Patents issued and pending $ 112,466
Intellectual property 1,227,138
Marketing and development costs 84,676
Less accumulated amortization (215,205)
---------------------
Intangible Assets - Net $ 1,209,075
=====================
</TABLE>
Amortization expense for the three months ended December 31, 1997
and for the year ended September 30, 1997 was $17,500 and $69,818,
respectively.
NOTE 5 - LOAN PAYABLE
Pursuant to an acquisition agreement, the Company assumed various
promissory notes originally signed in 1992 and 1993 totaling
$50,000. The notes bear interest at 8% and were originally due in
1994. Management of the Company currently cannot locate the holder
of the notes and consequently has not been able to settle the
liability. The amount is being included as a current liability in
the accompanying financial statements until management can locate
the note holder and settle the debt.
NOTE 6 - LEASE COMMITMENTS
The Company leases equipment with a lease term through July of
1999. Obligations under this capital lease have been recorded in
the accompanying financial statements at the present value of
future minimum lease payments. The capitalized cost of $25,533
less accumulated depreciation of $9,160 is included in property
and equipment in the accompanying financial statements.
Depreciation expense for this equipment for the three months ended
December 31, 1997 and for the year ended September 30, 1997 was
$1,500 and $5,107, respectively.
Obligations under this capital lease consist of the following:
<TABLE>
<S> <C>
Total $ 14,737
Less: current portion (8,609)
---------------------
Long-term portion $ 6,128
=====================
</TABLE>
13
<PAGE> 14
SIONIX CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1997 and September 30, 1997
The future minimum lease payments under this capital lease and the
net present value of the future minimum lease payments are as
follows:
<TABLE>
<CAPTION>
Year Ending
September 30,
-----------------
<S> <C> <C>
1998 $ 9,470
1999 7,346
2000 -
2001 and thereafter -
---------------
Total future minimum lease payments 16,816
Less, amount representing interest (2,079)
---------------
Present value of future minimum lease payments $ 14,737
===============
</TABLE>
NOTE 7 - RELATED PARTY PAYABLES
The Company has received advances in the form of promissory notes
from various shareholders and other related parties in order to
pay minimal ongoing operating expenses. As of December 31, 1997,
$331,148 was due by the Company as a result of these promissory
notes. Some of the notes bear interest at rates of 7% to 13%. All
notes are due on demand and unsecured.
NOTE 8 - CONVERTIBLE DEBENTURE
As of December 31, 1997, the Company has $30,000 in 10%
redeemable, convertible debentures outstanding. Interest accrues
at a rate of 10% and is payable on a quarterly basis. The
principle and unpaid interest are due during September, October
and November 1998. The principal amount is convertible at the
option of the holder at any time prior to maturity into shares of
the Company's common stock at a rate of $1.00 per common share.
NOTE 9 - STOCKHOLDERS' EQUITY
During the year ended December 31, 1995, 414,200 shares of common
stock were issued in return for notes receivable in the amount of
$1,656,800. these notes are secured by the shares issued and are
non-recourse. They have a stated interest rate of 6% and have
maturity dates ranging from March 1, 1998 to September 7, 1998.
14
<PAGE> 15
SIONIX CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1997 and September 30, 1997
NOTE 10 - COMMON STOCK PURCHASE WARRANTS
The Company's Board of Directors has authorized and approved
1,526,720 common stock purchase warrants as of December 31, 1997
as follows:
<TABLE>
<CAPTION>
Number Exercise Price Expiration
of Warrants Per Share Date(s)
------------- ----------------- -----------------------------
<S> <C> <C>
570,100 $ 1.00 May 15, 1998 - Sept. 30, 1998
104,445 $ 10.00 January 4, 1998
783 $ 5.50 May 15, 1998
851,400 $ 0.50 January 2, 1998 - June 30, 1999
</TABLE>
NOTE 11 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern
which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. However, the
Company does not have significant cash or other material assets,
nor does it have an established source of revenues sufficient to
cover its operating costs and to allow it to continue as a going
concern. It is the intent of the Company to generate revenue
through the sales of its software and hardware products. During
the later part of the Fiscal 1996, the Company focused its
energies on raising capital to begin the manufacturing and
marketing of its equipment products. Toward these ends, the
Company engaged the public relations firm of Howard Bronson
Associates of New York to aid in the raising of capital and
presented seminars on its technology in areas where water
quality is a serious problem. Management believes, with
successful completion of a financial package, that delivered
sales of the Company's equipment products will occur. In the
opinion of management, sales of the Company's products, together
with the proceeds of an offering, will be sufficient for it to
continue as a going concern.
15
<PAGE> 16
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Sionix Corporation
(A Development Stage Company)
San Diego, California
The accompanying balance sheet of Sionix Corporation (a development stage
company) as of December 31, 1997 and the related statements of operations,
stockholders' equity, and cash flows for the three months then ended and for the
three months ended December 31, 1996 and from inception on October 3, 1994
through December 31, 1997 were not audited by us and, accordingly, we do not
express an opinion on them. The accompanying balance sheet of Sionix Corporation
as of September 30, 1997 was audited by us and we expressed an unqualified
opinion on it in our report dated February 2, 1998.
/S/ Jones, Jensen & Company
February 11, 1998
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
16
<PAGE> 17
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
LIQUIDITY AND CAPITAL RESOURCES
Management is continuing discussions with a number of individuals and
groups considering an investment in the Company. Additional loans by officers
and shareholders have allowed the Company to continue operations. The Company
has engaged the public relations firm of Howard Bronson Associates to aid it in
the raising of capital for manufacturing.
RESULTS OF OPERATIONS
For the quarter the Company is reporting a loss of $37,917 or $0.00 per
share on no revenues.
The Company is continuing to meet with many potential foreign customers
that are looking for immediate solutions to their water problems.
Representatives from Brazil, Chile and Argentina in South America and Saudi
Arabia and India in the middle east have indicated an interest in the Sionix
filtration technology for use in their countries as soon as manufacturing
begins.
The Company maintains an Internet home page at http://www.sionix.com.
17
<PAGE> 18
PART II - OTHER INFORMATION.
ITEM 1. LEGAL PROCEEDINGS.
The Company is a defendant in a lawsuit in San Diego Superior Courts
filed at the end of December of 1997 by a disgruntled stockholder. The
stockholder alleges that he was improperly informed of the risks of his
investment in the Company. The ultimate outcome of the case is
uncertain but management believes that an unfavorable outcome is
unlikely. Therefore, no accrual has been recorded in the accompanying
financial statements.
The Company has been declared a judgement creditor in three lawsuits.
The amounts due on these judgements were previously recorded
liabilities in the accompanying financial statements.
With the exception of the above referenced matters, 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) Exhibits
(b) 27 Financial Data Schedule
18
<PAGE> 19
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: February 13, 1997 /s/ Jack F. Moorehead
------------------------
By: Jack F. Moorehead
Its: President
Dated: February 13, 1997 /s/ Michael A. Taylor
------------------------
By: Michael A. Taylor
Its: Chief Executive
Officer
19
<PAGE> 20
EXHIBIT INDEX
-------------
EXHIBIT
NO. DESCRIPTION
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM QUARTERLY
UNAUDITED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH.
</LEGEND>
<CURRENCY> 1
<S> <C>
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0
0
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