<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended September 30, 2000
Commission File No.2-95626-D
SIONIX CORPORATION
(Name of small business issuer in its charter)
UTAH 87-0428526
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
9272 JERONIMO ROAD, SUITE 108, IRVINE, CA 92618
(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number: (949) 454-9283
Securities registered under Section 12(b) of the Exchange Act:
NONE
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK, PAR VALUE $.001 PER SHARE
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 12 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is contained in this form, and no disclosure will be
contained to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]
The issuer's revenues for the year ended September 30, 2000 were $0.
The aggregate market value of the voting stock held by non-affiliates
as of September 30, 2000, computed based on the average of the bid and ask
prices reported on the OTC Bulletin Board, was $33,014,776.
As of September 30, 2000, there were 54,166,322 shares of Common Stock
of the issuer outstanding.
Documents Incorporated by Reference: NONE
Transitional Small Business Disclosure Format (Check one):
Yes [ ] No [X]
<PAGE> 2
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
General. Sionix Corporation (the "Company") designs and plans to
manufacture and market equipment for improving the treatment of water for
commercial, industrial and public water treatment facilities. The Company's
principal activities have been in the areas of research, development and testing
of its products. The Company was incorporated in Utah in 1996, and its executive
offices and principal operations are located at 9272 Jeronimo Road, Irvine,
California 92618. Its telephone number is (949) 454-9283, and its website is
located at www.sionix.com.
Industry Background. The purification and treatment of municipal
drinking water and wastewater to eliminate contaminants injurious to health and
the environment is a worldwide concern. In 1995, the world spent an estimated
$335 billion for the purification of drinking water, wastewater treatment and
treatment of industrial process water and fluids. World spending for drinking
water purification and municipal wastewater treatment only is estimated to reach
$300 billion per year (plus another $200 billion for industrial treatment needs)
by year 2000.
Strategy. The Company was formed to develop advanced water treatment
technology for public and private potable drinking water systems and wastewater
treatment systems, as well as industrial systems. In the United States alone
there are approximately 200,000 public rural water districts, the great majority
of which serve populations of less then 10,000, and are considered "small public
water systems". The Company believes that a substantial portion of these
districts operate in violation of the U.S. Safe Drinking Water Act, and those
numbers are expected to increase as more stringent Environmental Protection
Agency rules for small public water systems become effective. In addition,
urbanization in the third world and the spread of agricultural activities has
increased the demand for public water systems. The company has targeted (1)
small to medium public water districts that provide communities with drinking
water or sewage treatment service and (2) water reclamation systems of
commercial-industrial clients that create and dispose of contaminated
wastewater.
Products.
Sionix Modular Solids Separator Filtration System. Dissolved Air
Flotation ("DAF") technology is an established method for water treatment. The
Company's DAF Particle Separator utilizes and refines this technology for a
highly efficient pre-treatment process using ordinary oxygen. In addition, it
helps ordinary filters meet new EPA Safe Drinking Water Act (SDWA) regulations
and eliminates potentially cancer-causing disinfection by-product precursors
while reducing the risk of bacterial or parasitic contamination, particularly
THM's, cryptosporidium and giardia. The Company's patented equipment systems are
designed for quick installation, easy access for simple maintenance and to be
cost-effective for even the smallest water utilities or commercial applications.
A major problem facing the water treatment industry is the difficulty
in monitoring and disposing of microscopic parasites such as Cryptosporidium
(4-5 microns) and Giardia cysts (7-12 microns), common chlorine-resistant
organisms that have infected millions of people in the United States.
Sand-anthracite water filtration beds, in use in most of the nation's public
water districts, will not filter out these parasites and experience frequent
breakthroughs of Cryptosporidium sized particles.
The Company uses a more efficient method of saturating recirculated
post-filter water with excess dissolved air, and injecting this excess air in
the form of microscopic bubbles in a DAF particle separator. Pressurized water
can hold an excess amount of dissolved air and forms microscopic bubbles when
injected into
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water, which has a lower pressure. A booster pump recirculates a small amount
(approximately 10%) of the post-filtered water through the dissolved
air-saturation system. Oxygen and nitrogen molecules are transferred directly
into the recirculated high-pressure water without forming air bubbles. This
method of transferring air into water is 100% efficient, and reduces the amount
of energy required to saturate recirculated water with excess dissolved air. The
Sionix DAF separator provides a denser concentration of white water bubbles.
This process requires less energy than a conventional system, and a fraction of
the floor space.
In general, water districts using sand-anthracite filters cannot meet
the new EPA Surface Water Treatment rules without a massive increase in on-site
chemical filter-aids, additional filtering and the installation of ozone or
other disinfection equipment. Plant operators must continually test raw influent
water to adjust chemical filter aid dosage properly. Chemical and metal (alum)
filter-aids increase sludge volume and landfill disposal problems.
Each basic DAF module has a flow-through of 200 gallons per minute
(288,000 gallons per day), an amount necessary to supply all the drinking and
potable water requirements for approximately 2,400 people. And because modules
can be manifolded to meet any gallon per day requirement, many larger facilities
can benefit by this technology.
The Company's systems include automatic computer controls to optimize
ozone concentration levels and reduces monthly energy costs. Higher ozone
contact concentration levels using smaller sized generators are possible if most
of the algae are removed first by DAF. Extended contact time increases collision
rate of ionized ozone molecules with negatively charged organic suspended
particles. By utilizing the Sionix DAF particle separator to pre-treat the
feedwater, less energy is required to create the appropriate amount of ozone. By
creating a turbulent flow of water and gas within the mixing chamber, the
Company has achieved a much higher saturation with less ozone (and a minimum of
excess ozone) than in other mixing methods. This equipment was designed to match
flow-throughs with the Sionix DAF particle separator, can also be manifolded to
create more flow-through, is installed, not constructed, and can be used with or
without the DAF system, depending on the quality of the feedwater.
The Joint Venture. In October 2000 the Company entered into a joint
venture arrangement with the Environmental Products Division of Hoffinger
Industries ("Hoffinger"), through the development of a limited liability company
known as EPD/Sionix Joint Venture, LLC. Hoffinger is a privately held
corporation which develops and manufactures commercial water filtration systems
and equipment for pools, water parks, and drinking water systems, as well as
above ground swimming pools, pumps, filters, and accessories. Hoffinger has been
involved in the water industry for over 55 years.
Under the joint venture arrangement, the Company and Hoffinger will
jointly develop, manufacture and market water filtration products, with the
Company furnishing the technology and engineering expertise and Hoffinger
handling most of the manufacturing, marketing and distribution. The Company is
entitled to 51% of profits and losses from the joint venture, with Hoffinger
allocated the remaining 49%. The joint venture agreement is for a period of two
years; at the end of the period, the Company retains all the technology and
associated intellectual property, and Hoffinger will be entitled to
non-exclusive distribution rights to the products.
Marketing and Customers. The potable water market includes residential,
commercial, and food service customers throughout the world. According to
industry data, it is estimated that one billion people in the world do not have
safe drinking water. Demand is driven both by consumers' desire to improve the
taste and quality of their drinking water and by the expanded concern of
regulatory agencies. There is significant market potential in Asian, Pacific and
Latin American countries, where the quality of drinking water has been found to
be severely deficient in several regions. Outbreaks of cryptosporidium and
giardia cyst in the United States and
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Australia have also raised health concerns in major developed countries. Water
safety concerns have driven the growth of the consumer bottled water market to
over $2 billion in the United States, as well as the growth in the water
filtration market.
The food service industry has an increasing need for consistent global
product quality. Food service includes water used for fountain beverages, steam
ovens, coffee and tea. Specifically, restaurants have become increasingly aware
of the need for water filtration to control the taste and quality of the water
used in their businesses.
In the United States, the Company plans to initially target the
established base of small to medium water providers, as well as industrial users
(such as the dairy industry, meat and poultry producers, food and beverage
processors, pharmaceuticals, cooling tower manufacturers and oil and gas
producers) with a need for a clean, consistent water supply. Outside the United
States, the Company plans to market to local water systems.
The Company's marketing efforts emphasize that its products are easily
expandable and upgradable; for example, adding ozone and microfiltration
equipment to a DAF unit is similar to adding a new hard drive to a personal
computer. Each piece of equipment comes with state-of-the-art telemetry and
wet-chemistry monitoring that expands as the system does. The Company plans to
provide lease financing for all of its products, not only making it easy for a
customer to acquire the equipment, but also guaranteeing that the customer will
always have access to any refinements and improvements made to the Company's
products.
In addition to a marketing through the Joint Venture, which will involve
use of Hoffinger's existing network of distributors and sales representatives,
the Company plans to market its products through Sionix' marketing and sales
department, their contacts and inquiries, direct mail, participation in industry
groups, trade shows, and through selected advertising in specialized
publications.
Patents. The Company holds seven U.S. patents on technology incorporated
into the Sionix Particle Separator Treatment System and related components. One
patent covers an automatic backflushing system using air pressure to activate
the valves and another concerns the ozone mixing system. The Company also holds
several patents on the inline wet-chemistry water quality monitoring system, and
regularly processes new patent applications. The extent to which patents provide
a commercial advantage or inhibit the development of competing products varies.
To some extent, however, the Company is required to rely upon common law
concepts of confidentiality and trade secrets, as well as economic barriers
created by the required investments in tooling and technical personnel and the
development of customer relationships, to protect its proprietary products.
Competition. The Company's products will compete with other producers
of water filtration and purification equipment, such as U.S. Filter and Cuno,
Inc., many of which are more established and have significantly greater
resources. In addition to conventional methods such as chlorination and
ozonation, the Company's products may also compete with other new technologies
for water filtration. Competitive factors include system effectiveness,
operational cost, practicality of application, pilot study requirements and
potential adverse environmental effects. In competing in this marketplace, the
Company will have to address the conservative nature of public water agencies
and fiscal constraints on the installation of new systems and technologies.
Regulatory Matters. Process water treatment plants and wastewater
plants must comply with clean water standards set by the Environmental
Protection Agency under the authority of the Clean Water Act and standards set
by states and local communities. In many jurisdictions, including the United
States, because process water treatment facilities and wastewater treatment
systems require permits from
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environmental regulatory agencies, delays in permitting could cause delays in
construction or usage of the systems by prospective customers.
Research and Development. The Company invests significantly in the
development of products for new applications. Only direct costs associated with
tooling for new products are capitalized. All other costs, including salaries
and wages of employees included in research and development, are expensed as
incurred. Most of the Company's research and development efforts are in
connection with development and refinement of the DAF Particle Separator and
related components.
Raw Materials. Materials and components to be used by the Company for
manufacturing will be carefully selected based on stringent specifications for
usage and operating conditions. At the outset, the specification of parts and
raw materials will be jointly managed by Sionix and Hoffinger Industries through
the joint venture arrangement, utilizing many of Hoffinger's existing
procurement resources. Every effort will be made to specify parts from multiple
sources for independence from manufacturers and distributors. In developing its
products, the Company has avoided using hard-to-get special parts to further
minimize dependency from vendors. Simplicity in design and the use of common,
widely used and readily available components is emphasized.
Employees. At September 30, 2000, the Company had four full-time
employees, none of whom are covered by any collective bargaining agreement. The
Company considers its relationship with its employees to be good.
ITEM 2. DESCRIPTION OF PROPERTY.
The Company's office/manufacturing facility is located in Irvine,
California and is leased pursuant to a lease expiring in July of 2001. The
facility consists of approximately 3,400 square feet, including office area and
adjoining manufacturing/ warehouse area. Management believes the Company's
facility will provide adequate space for its office, product assembly and
warehouse activities, although it may lease additional space for component
assembly and warehouse uses, depending on demand. The Company believes that
suitable additional space will be available to accommodate planned expansion.
ITEM 3. LEGAL PROCEEDINGS.
In June 1999 the Company filed an action against Jack Moorehead,
Dascore, LLC, S. Donna Friedman and certain others in the U.S. District Court
for the Southern District of California (Case No. 99-cv-1201-K-LSP). Moorehead
is the former President of the Company, and Dascore LLC is an entity controlled
by him and in a business related to that of the Company. S. Donna Friedman is a
former officer and director of the Company.
The Complaint alleges, among other things, that the defendants have
infringed and continue to infringe on certain patents owned by the Company, and
that they are familiar with the Company's intellectual property through their
past positions with the Company. The Complaint also alleges that the defendants
have sold or attempted to sell technology owned by the Company and covered by
the Company's patents, and that the defendants are unfairly competing with the
Company by exploiting its technology without payment. In addition, the action
includes claims of false advertising, in that the defendants are falsely
representing that they own the technology; interference with economic relations
and interference with prospective advantage, relating to the effect that the
defendants' conduct has had on the Company's dealings with third parties; and
misappropriation of trade secrets learned by the defendants while associated
with the Company. The complaint further alleges that the defendants conspired to
convert technology, money and equipment owned by the Company, and used Company
funds to pay personal expenses. Finally, the complaint alleges that Moorehead
and Friedman defrauded the Company and breached their fiduciary duties to the
Company in connection with their departure from the Company and their retention
of property of the Company.
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In February of 1999, the United States District Court issued a
preliminary injunction enjoining defendants from selling or transferring in
excess of 10,000,000 shares of stock held by them. The defendants have twice
sought to have that injunction modified or dissolved and both such attempts were
unsuccessful.
The defendants have filed a cross-complaint against the Company based
on a breach of contract cause of action and to collect loans allegedly made by
them to the Company. The case is currently in the discovery stage.
The Company has filed an action for professional negligence,
malpractice, breach of fiduciary duty and breach of contract against Gilliam,
Duncan & Harms, its previous patent counsel (San Diego County Superior Court,
Case No. GIC 754391), and a separate action against Wenthur & Chachas, its
previous corporate counsel, and the individual attorneys in those firms (San
Diego County Superior Court Case No. GIC 747267). The action against the patent
attorneys alleges that the patent attorneys represented the Company and
Moorehead contemporaneously and failed to advise the corporation of the inherent
conflict of interest in representing both parties. The action further alleges
the patent attorneys aided Moorehead and others in misappropriating the
Company's intellectual property and trade secrets. The action seeks monetary
damages, attorneys fees and interest. The action against the former corporate
counsel seeks damages arising out of their alleged creation of false documents
to defraud the corporation with respect to certain intellectual property rights
and securities transactions. Both actions are in the discovery stage.
The Company is the defendant in an action, Barnett v. Sionix
Corporation, pending in Orange County Superior Court, (Case No. 00CC05463). The
complaint seeks repayment of approximately $150,000 in alleged loans by the
plaintiff, who is the mother-in-law of the former Chief Executive Officer of the
Company, Michael Taylor. The Company has cross-complained against the plaintiff
and Mr. Taylor for breach of fiduciary duty relating to the alleged loans.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Inapplicable
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock is listed and traded on the OTC Bulletin
Board under the symbol "SINX". There has been relatively limited trading
activity in the Company's stock since inception. The following table represents
the high and low bid prices for the Company's common stock for each quarter of
the fiscal year ended September 30, 2000.
Fiscal 2000 High Low
----------- ---- ---
First Quarter $ .375 .065
Second Quarter 3.875 .203
Third Quarter 1.781 .937
Fourth Quarter 1.01 .66
There were approximately 723 holders of record of the Company's common
stock as of September 30, 2000.
The Company has never declared or paid any cash dividend on its shares
of common stock.
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During the fiscal year ended September 30, 2000, the Company sold
10,303,500 shares of Common Stock to approximately 161 purchasers, with gross
proceeds of $1,030,350. The Company believes all such sales were exempt from
registration under the Securities Act of 1933 by reason of Section 4(2) thereof
and Regulation D thereunder.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
General.
As of September 30, 2000, the Company had an accumulated deficit of
$8,168,751. It can be expected that the future operating results will continue
to be subject to many of the problems, expenses, delays and risks inherent in
the establishment of a new business enterprise, many of which the Company cannot
control.
The Company has formulated its business plans and strategies based on
certain assumptions of the Company's management regarding the size of the market
for the products the Company will be able to offer, the Company's anticipated
share of the market, and the estimated prices for and acceptance of the
Company's products. Although these plans and assumptions are based on the best
estimates of management, there can be no assurance that these assessments will
prove to be correct. No independent marketing studies have been conducted on
behalf of or otherwise obtained by the Company, nor are any such studies
planned. Any future success that the Company might enjoy will depend upon many
factors, including factors which may be beyond the control of the Company or
which cannot be predicted at this time. These factors may include product
obsolescence, increased levels of competition, including the entry of additional
competitors and increased success by existing competitors, changes in general
economic conditions, increases in operating costs including cost of supplies,
personnel and equipment, reduced margins caused by competitive pressures and
other factors, and changes in governmental regulation imposed under federal,
state or local laws.
The Company's operating results may vary significantly due to a variety
of factors, including changing customers profiles, the availability and cost of
raw materials, the introduction of new products by the Company or its
competitors, the timing of the Company's advertising and promotional campaigns,
pricing pressures, general economic and industry conditions that affect customer
demand, and other factors.
Results of Operations (Year Ended September 30, 2000 Compared to Year
Ended September 30, 1999). During the 2000 fiscal year the focus of the
Company's efforts have been on development of the Company's hardware products,
and preparation for commencement of manufacturing and distribution. The
immediate focus is on the DAF (Dissolved Air Flotation), Automatic Back-Flush
Filtration System, O-Zone Mixing Chamber and other related products, some of
which have their own separate markets.
The Company is continuing its engineering focus on hardware and water
filtration equipment. The Company has completed several phases of testing, and
is currently previewing its products with experienced treatment plant managers
and certified operators to gauge their level of acceptance. The Company has also
been working with Hoffinger Industries, its joint venture partner, to prepare
for manufacturing of the products. Also, the Company has arranged for lease and
maintenance financing for its product lines.
For the year ended September 30, 2000, the Company reported a loss of
$2,414,188, or $.07 per share. This compares with a loss of $1,158,755 (as
restated) or $.04 per share for the year ending September 30, 1999. The increase
in the loss is principally due to expense accruals in connection with stock
compensation paid to officers and employees, as well as increased research and
development expenses.
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Liquidity and Capital Resources. On September 30, 2000, the Company had
cash and cash equivalents of approximately $379,999. The principal source of
liquidity has been sales of securities. Management anticipates that additional
capital will be required to finance the Company's operations. The Company
believes that anticipated proceeds from sales of securities, plus expected cash
flow from operations towards the end of the fiscal year, will be sufficient to
finance the Company's operations at currently anticipated levels for a period of
at least twelve months. However, there can be no assurance that the Company will
not encounter unforeseen difficulties that may deplete its capital resources
more rapidly than anticipated. Also, the Company may not be able to generate
revenues from operations during the fiscal year.
ITEM 7. FINANCIAL STATEMENTS
SIONIX CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
C O N T E N T S
Page
----
Report of Independent Certified Public Accountants...................... 9
Independent Auditor's Report............................................ 10
Balance Sheet........................................................... 11
Statements of Operations................................................ 12
Statements of Stockholders' Equity (Deficit)............................ 13
Statements of Cash Flows................................................ 15
Notes to the Financial Statements....................................... 16
8
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Sionix Corporation
(A Development Stage Company)
We have audited the accompanying balance sheet of Sionix Corporation (a
development stage company) (the "Company") as of September 30, 2000, and the
related statements of operations, stockholders' equity (deficit) and cash flows
for the year then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes, on a test basis, examination of evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall consolidated financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Sionix Corporation (a
development stage company) as of September 30, 2000, and the results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 12 to the
financial statements, the Company has incurred significant losses since its
inception and lacks the capital necessary to pursue its operating plan. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans regarding these matters are also described in
Note 12. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
As discussed in Note 8, the Company restated the financial statements referred
to above.
/s/ CACCIAMATTA ACCOUNTANCY CORPORATION
Irvine, California
December 8, 2000
<PAGE> 10
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
Sionix Corporation
(A Development Stage Company)
Irvine, California
We have audited the accompanying statements of operations, stockholders' equity
(deficit) and cash flows for the year ended September 30, 1999 and from
inception on October 3, 1994 through September 30, 1999 of Sionix Corporation (a
development stage company). These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of its operations and its cash flows for the
year ended September 30, 1999 and from inception on October 3, 1994 through
September 30, 1999 of Sionix Corporation (a development stage company) in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 12 to the
financial statements, the Company is a development stage company with no
significant operating results to date and has suffered recurring losses which
raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 12. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
As discussed in Note 8 to the financial statements, an error was discovered by
management of the Company during the current year in recording common stock
issued for compensation. This resulted in the understatement of the Company's
net loss for the year ended September 30, 1999 by $392,925. Accordingly, an
adjustment has been made to the financial statements for the year ended
September 30, 1999 to correct the error.
Jones, Jensen & Company
Salt Lake City, Utah
December 22, 1999 except as to Note 8, which is as of December 28, 2000
<PAGE> 11
SIONIX CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
<TABLE>
<CAPTION>
September 30,
2000
-------------
<S> <C>
ASSETS
Current assets:
Cash $ 279,999
Marketable securities 100,000
-----------
Total current assets 379,999
Equipment 34,564
Deposits 6,831
Patents 94,741
-----------
$ 516,135
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Note payable $ 50,000
Accounts payable and accrued expenses 149,019
Notes payable to affiliates 327,351
-----------
Total current liabilities 526,370
-----------
Commitments --
Stockholders' deficit:
Common stock $0.001 par value; 100,000,000 shares authorized,
54,166,322 shares issued and outstanding 54,166
Additional paid-in capital 8,104,350
Deficit accumulated during the development stage (8,168,751)
-----------
Total stockholders' deficit (10,235)
-----------
$ 516,135
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 12
SIONIX CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Cumulative
Year Ended from inception
September 30, (October 3, 1994)
---------------------------- to September 30,
2000 1999 2000
------------ ------------ -----------------
RESTATED RESTATED
<S> <C> <C> <C>
Costs and expenses:
Administrative and marketing $ 2,169,362 $ 1,072,719 $ 5,387,389
Research and development 182,308 7,085 2,134,224
Depreciation and amortization 51,847 49,095 485,037
------------ ------------ -----------
Operating loss (2,403,517) (1,128,899) (8,006,650)
------------ ------------ -----------
Other income (expense):
Interest income 24,440 8,283 32,723
Interest expense (35,111) (38,139) (194,824)
------------ ------------ -----------
(10,671) (29,856) (162,101)
------------ ------------ -----------
Net loss $ (2,414,188) $ (1,158,755) $(8,168,751)
============ ============ ===========
Basic and diluted net loss per share $ (0.07) $ (0.04)
------------ ------------
Basic and diluted weighted average
number of shares outstanding 35,366,748 26,863,383
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 13
SIONIX CORPORATION
(A Development Stage Company)
Statement of Shareholders' Equity (Deficit) - RESTATED
From Inception (October 3, 1994) through September 30, 2000
<TABLE>
<CAPTION>
COMMON STOCK
----------------------------------------------
AMOUNT ADDITIONAL
NUMBER OF ---------------------------- PAID-IN
SHARES PER SHARE TOTAL CAPITAL
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
BALANCE, OCTOBER 3, 1994 -- -- $ -- $ --
Issuance of common stock for cash 10,000 0.01 10 90
Net loss, October 3, 1994 to December 31, 1994 -- -- -- --
----------- ----------- ----------- -----------
BALANCE, DECEMBER 31, 1994 10,000 -- 10 90
----------- ----------- ----------- -----------
Issuance of common stock for assignment rights 1,990,000 -- 1,990 (1,990)
Issuance of common stock for services 572,473 0.25 572 135,046
Issuance of common stock for debt 1,038,640 0.25 - 4.00 1,038 1,164,915
Issuance of common stock for cash 232,557 4.00 - 6.00 233 1,119,027
Issuance of common stock for subscription note receivable 414,200 4.00 414 1,652,658
Issuance of common for future production costs 112,500 6.00 113 674,887
Net loss -- -- -- --
----------- ----------- ----------- -----------
BALANCE, DECEMBER 31, 1995 4,370,370 -- 4,370 4,744,633
----------- ----------- ----------- -----------
Issuance of common stock in reorganization 18,632,612 -- 18,633 (58,033)
Issuance of common stock for cash 572,407 1.00 573 571,834
Issuance of common stock for services 24,307 1.00 24 24,283
Net loss, nine months ended September 30, 1996 -- -- -- --
----------- ----------- ----------- -----------
BALANCE, SEPTEMBER 30, 1996 23,599,696 -- 23,600 5,282,717
----------- ----------- ----------- -----------
Issuance of common stock for cash 722,733 .25 - 1.00 723 365,857
Issuance of common stock for services 274,299 0.20 274 54,586
Cancellation of shares issued for future production agreement (542,138) -- (542) (674,458)
Net loss -- -- -- --
----------- ----------- ----------- -----------
BALANCE, SEPTEMBER 30, 1997 24,054,590 -- 24,055 5,028,702
----------- ----------- ----------- -----------
Issuance of common stock for cash 2,810,000 0.10 2,810 278,190
<CAPTION>
DEFICIT
ACCUMULATED
DURING THE TOTAL
SUBSCRIPTION DEVELOPMENT SHAREHOLDERS'
RECEIVABLE STAGE (DEFICIT)
------------ ----------- -------------
<S> <C> <C> <C>
BALANCE, OCTOBER 3, 1994 $ -- $ -- $ --
Issuance of common stock for cash -- -- 100
Net loss, October 3, 1994 to December 31, 1994 -- (1,521) (1,521)
----------- ----------- -----------
BALANCE, DECEMBER 31, 1994 -- (1,521) (1,421)
----------- ----------- -----------
Issuance of common stock for assignment rights -- -- --
Issuance of common stock for services -- -- 135,618
Issuance of common stock for debt -- -- 1,165,953
Issuance of common stock for cash -- -- 1,119,260
Issuance of common stock for subscription note receivable (1,656,800) -- (3,728)
Issuance of common for future production costs (675,000) -- --
Net loss -- (914,279) (914,279)
----------- ----------- -----------
BALANCE, DECEMBER 31, 1995 (2,331,800) (915,800) 1,501,403
----------- ----------- -----------
Issuance of common stock in reorganization -- -- (39,400)
Issuance of common stock for cash -- -- 572,407
Issuance of common stock for services -- -- 24,307
Net loss, nine months ended September 30, 1996 -- (922,717) (922,717)
----------- ----------- -----------
BALANCE, SEPTEMBER 30, 1996 (2,331,800) (1,838,517) 1,136,000
----------- ----------- -----------
Issuance of common stock for cash -- -- 366,580
Issuance of common stock for services -- -- 54,860
Cancellation of shares issued for future production agreement 675,000 -- --
Net loss -- (858,915) (858,915)
----------- ----------- -----------
BALANCE, SEPTEMBER 30, 1997 (1,656,800) (2,697,432) 698,525
----------- ----------- -----------
Issuance of common stock for cash -- -- 281,000
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE> 14
SIONIX CORPORATION
(A Development Stage Company)
Statement of Shareholders' Equity (Deficit) - RESTATED
From Inception (October 3, 1994) through September 30, 2000
<TABLE>
<CAPTION>
COMMON STOCK
----------------------------------------------
AMOUNT ADDITIONAL
NUMBER OF ---------------------------- PAID-IN
SHARES PER SHARE TOTAL CAPITAL
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Issuance of common stock for services 895,455 0.10 895 88,651
Issuance of common stock for compensation 2,200,000 0.10 2,200 217,800
Cancellation of stock (2,538,170) -- (2,538) (1,534,262)
Net loss -- -- -- --
----------- ----------- ----------- -----------
BALANCE, SEPTEMBER 30, 1998 27,421,875 -- 27,422 4,079,081
----------- ----------- ----------- -----------
Common stock issued for compensation - RESTATED 3,847,742 0.10 3,847 389,078
Issuance of common stock for services 705,746 .22 - 1.25 706 215,329
Issuance of common stock for cash 9,383,000 0.10 9,383 928,917
Net loss - RESTATED -- -- -- --
----------- ----------- ----------- -----------
BALANCE, SEPTEMBER 30, 1999 41,358,363 -- 41,358 5,612,405
----------- ----------- ----------- -----------
Issuance of common stock for cash 10,303,500 0.10 10,304 1,020,046
Issuance of common stock for compensation 1,517,615 .15 - 1.17 1,518 1,218,598
Issuance of common stock for legal services 816,844 .10 - 1.71 816 142,111
Issuance of common stock for consulting services 170,000 .10 - .83 170 111,190
Net loss -- -- -- --
----------- ----------- ----------- -----------
BALANCE, SEPTEMBER 30, 2000 54,166,322 -- $ 54,166 $ 8,104,350
=========== =========== =========== ===========
<CAPTION>
DEFICIT
ACCUMULATED
DURING THE TOTAL
SUBSCRIPTION DEVELOPMENT SHAREHOLDERS'
RECEIVABLE STAGE (DEFICIT)
------------ ----------- -------------
<S> <C> <C> <C>
Issuance of common stock for services -- -- 89,546
Issuance of common stock for compensation -- 220,000
Cancellation of stock 1,656,800 -- 120,000
Net loss -- (1,898,376) (1,898,376)
----------- ----------- -----------
BALANCE, SEPTEMBER 30, 1998 -- (4,595,808) (489,305)
----------- ----------- -----------
Common stock issued for compensation - RESTATED -- -- 392,925
Issuance of common stock for services -- -- 216,035
Issuance of common stock for cash -- -- 938,300
Net loss - RESTATED -- (1,158,755) (1,158,755)
----------- ----------- -----------
BALANCE, SEPTEMBER 30, 1999 -- (5,754,563) (100,800)
----------- ----------- -----------
Issuance of common stock for cash -- -- 1,030,350
Issuance of common stock for compensation -- -- 1,220,116
Issuance of common stock for legal services -- -- 142,927
Issuance of common stock for consulting services -- -- 111,360
Net loss -- (2,414,188) (2,414,188)
----------- ----------- -----------
BALANCE, SEPTEMBER 30, 2000 -- $(8,168,751) $ (10,235)
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE> 15
SIONIX CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Cumulative
September 30, from inception
-------------------------------- (October 3, 1994)
2000 1999 to September 30, 2000
----------- ----------- ---------------------
RESTATED RESTATED
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(2,414,188) $(1,158,755) $(8,168,751)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation 42,846 40,094 140,801
Amortization 9,001 9,001 40,292
Common stock issued for compensation 1,220,116 392,925 1,833,041
Common stock issued for legal services 142,927 216,035 663,293
Common stock issued for consulting services 111,360 -- 111,360
Write-down of obsolete assets 38,862 -- 38,862
Write-down of intangible assets -- -- 1,185,475
Other 76,872
Gain on settlement of debt -- (19,522) (19,522)
Change in assets and liabilities:
Other assets 1,164 (1,164) --
Marketable securities (100,000) -- (100,000)
Deposits 30,400 (30,400) (6,831)
Accounts payable and accrued expenses (13,665) (151,103) 149,019
----------- ----------- -----------
Net cash used by operating activities (931,177) (702,889) (4,056,089)
----------- ----------- -----------
Cash flows from investing activities:
Purchase of patents -- -- (135,033)
Purchase of equipment (3,635) (49,875) (214,227)
----------- ----------- -----------
Net cash used by investing activities (3,635) (49,875) (349,260)
----------- ----------- -----------
Cash flows from financing activities:
Payments of notes -- (12,305) (18,422)
Issuance of common stock for cash 1,030,350 938,300 4,307,997
Proceeds from issuance of notes 395,773
----------- ----------- -----------
Net cash provided by financing activities 1,030,350 925,995 4,685,348
----------- ----------- -----------
Net increase in cash 95,538 173,231 279,999
Cash, beginning of period 184,461 11,230 --
----------- ----------- -----------
Cash, end of period $ 279,999 $ 184,461 $ 279,999
=========== =========== ===========
Supplemental disclosures of non-cash investing
and financing activities:
Acquisition of intangibles for debt $ -- $ -- $ 1,185,475
Conversion of debt to equity $ -- $ -- $ 1,165,953
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 16
SIONIX CORPORATION
(A DEVELOPMENT STAGE COMPANY)
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of operations
Sionix Corporation (the "Company") was incorporated in Utah in 1985.
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 have been
principally devoted to research and development, organizational
activities, and raising capital.
Summary of significant accounting policies
Cash equivalents
Cash and cash equivalents represent cash and short-term highly liquid
investments with original maturities of three months or less.
Marketable securities
Marketable securities are classified as available for sale. and mature
in one year from the purchase date. Marketable securities are recorded
at cost which approximates market.. At September 30, 2000 marketable
securities were pledged as collateral under a compensating balance
arrangement associated with a line of credit.
Property and equipment
Property and equipment are stated at cost. The cost of additions and
improvements are capitalized while maintenance and repairs are expensed
as incurred. Depreciation of property and equipment is provided on a
straight-line basis over the estimated five year useful lives of the
assets.
Research and development
Research and development costs are expensed as incurred.
Patents
Patents are stated at cost and are being amortized using the
straight-line method over their estimated useful lives of 15 years.
<PAGE> 17
SIONIX CORPORATION
(A DEVELOPMENT STAGE COMPANY)
Summary of significant accounting policies (continued)
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.
Advertising
The cost of advertising is expensed as incurred. Total advertising
costs were $1,345 and $1,135 for the years ended September 30, 2000 and
1999, respectively.
Basic and diluted net loss per share
Net loss per share is calculated in accordance with Statement of
Financial Accounting Standards 128, Earnings Per Share ("SFAS 128").
Basic net loss per share is based upon the weighted average number of
common shares outstanding. Diluted net loss per share is based on the
assumption that all dilutive convertible shares and stock options were
converted or exercised. Dilution is computed by applying the treasury
stock method. Under this method, options and warrants are assumed to be
exercised at the beginning of the period (or at the time of issuance,
if later), and as if funds obtained thereby were used to purchase
common stock at the average market price during the period.
Fair value of financial instruments
The carrying amounts of cash, notes payable and accounts payable
approximate fair value due to the short-term maturities of these assets
and liabilities. The fair value of marketable securities is based on
quoted market prices,
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.
Reclassifications
Certain prior year amounts have been reclassified to conform the fiscal
year 2000 presentation.
<PAGE> 18
SIONIX CORPORATION
(A DEVELOPMENT STAGE COMPANY)
2. BASIC AND DILUTED LOSS PER SHARE
The following table illustrates the reconciliation of the numerators
and denominators of the basic loss per share computations. The Company
has no potentially dilutive securities, options, warrants or other
rights outstanding.
<TABLE>
<CAPTION>
Year ended September 30,
-------------------------------
2000 1999
------------ ------------
RESTATED
<S> <C> <C>
Numerator:
Net loss $ (2,414,188) $ (1,158,755)
------------ ------------
Denominator:
Basic and diluted weighted average
number of common shares
outstanding during the period 35,366,748 26,863,383
------------ ------------
Basic and diluted loss per share $ (0.07) $ (0.04)
============ ============
</TABLE>
3. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
September 30,
2000
-------------
<S> <C>
Equipment $ 155,125
Furnitures and fixtures 20,240
---------
175,365
Less accumulated depreciation (140,801)
---------
$ 34,564
=========
</TABLE>
Depreciation expense for the years ended September 30, 2000 and 1999
was $42,846 and $40,093, respectively.
4. PATENTS
Patents issued and pending $135,033
Less accumulated amortization (40,292)
--------
$ 94,741
========
Amortization expense for the years ended September 30, 2000 and 1999
was $9,001 and $9,002, respectively.
<PAGE> 19
SIONIX CORPORATION
(A DEVELOPMENT STAGE COMPANY)
5. NOTE PAYABLE
Pursuant to a 1992 acquisition agreement, the Company assumed an
unsecured promissory note totaling $50,000. The note bears interest at
8% and is due on demand.
6. NOTES PAYABLE TO AFFILIATES
The Company has received advances in the form of unsecured promissory
notes from shareholders and other related parties in order to pay
ongoing operating expenses. These notes are at interest rates up to
13.5% and are due on demand. As of September 30, 2000, amounts due to
related parties totaled $327,351.
7. LINE OF CREDIT
On March 1, 2000, the Company obtained a $100,000 line of credit with a
bank which matures on March 1, 2001. The line of credit bears interest
at 11.5% and is secured by a $100,000 certificate of deposit. At
September 30, 2000 no amounts were outstanding under this line.
8. PRIOR PERIOD ADJUSTMENT
The Company's 1999 financial statements have been restated to correct
an error in the recording of the value of common stock issued for
compensation. Generally Accepted Accounting Principles requires that
services received in exchange for common stock must be accounted for
based on the fair value of the consideration received or the fair value
of the equity instruments issued, whichever is more reliably
measurable. The previously reported 1999 financial statements did not
reflect the fair value of the compensation earned The effect of the
$392,925 restatement is as follows:
<TABLE>
<CAPTION>
As Previously As
Year ended September 30, 1999 Reported Restated
----------------------------- ------------- -----------
<S> <C> <C>
Statement of Shareholders' Equity
Accumulated deficit: $ 5,361,638 $ 5,754,563
Additional paid-in capital and common stock $ 5,225,527 $ 5,612,405
Common stock $ 35,311 $ 41,358
Statement of operations:
Administrative and marketing expenses $ 679,794 $ 1,072,719
Net loss $ (765,830) $(1,158,755)
Basic and diluted net loss per share: $ (0.02) $ (0.04)
</TABLE>
<PAGE> 20
SIONIX CORPORATION
(A DEVELOPMENT STAGE COMPANY)
9. LEASES
On August 6, 1998, the Company entered into a three-year noncancelable
operating lease relating to its office facility. The lease expires on
August 30, 2001. Rent expense totaled $41,098 and $42,386 during fiscal
2000 and 1999 respectively.
10. INCOME TAXES
The Company recognizes deferred tax assets and liabilities for
temporary differences between the financial reporting and tax bases of
its assets and liabilities. Deferred tax assets are reduced by a
valuation allowance when deemed appropriate.
At September 30, 2000, the Company has a net operating loss
carryforward for federal tax purposes of $4,200,000 which, if unused to
offset future taxable income, will expire beginning in 2008.
The Company has deferred tax assets of $ 1,680,000 at September 30,
2000 relating to its net operating losses and the Company provided a
100% valuation allowance for these deferred tax assets. The Company
recorded no benefit for income taxes during the periods presented.
During the periods ended September 30, 2000 and 1999, the Company's
total valuation allowance increased approximately $218,000 and
$1,293,000, respectively.
11. STOCKHOLDERS' EQUITY
The company issued 22,496,500 shares of common stock for cash in
connection with a private placement. The shares were issued during
fiscal years 1998 through 2000 at a per share price of $.10 per share.
The Company issues shares of its common stock in exchange for
compensation under the terms of certain employment contracts. The
employment contracts expire between November 30, 2000 and September 30,
2003 and call for quarterly issuances of common stock to four
employees. Subsequent to year end, the employment contracts have been
amended to remove all stock-based compensation. In addition, the
Company issued shares of its common stock in exchange for legal and
consulting services. Common stock issued in exchange for compensation,
legal and consulting services are recorded at fair value, generally the
average low bid price, over the period the services are rendered.
On August 14, 2000 the Company entered into an agreement with a firm
(the "Firm") to obtain investment capital. Under the terms of the
agreement, the company employed the services of the Firm to obtain
investment capital of no less than $1,000,000 for the acquisition,
restructuring, marketing and procurement of new management relating to
a water bottling and distribution venture. During fiscal 2000, the Firm
received cash of $2,500 and 100,000 shares of the Company's restricted
common stock upon execution of the agreement. The shares of common
stock issued were recorded at fair value (low bid price). At September
30, 2000 no investment capital has been raised under the terms of the
agreement.
<PAGE> 21
SIONIX CORPORATION
(A DEVELOPMENT STAGE COMPANY)
12. GOING CONCERN
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. This basis of accounting
contemplates the recovery of the Company's assets and the satisfaction
of its liabilities in the normal course of business. Through September
30, 2000, the Company had incurred cumulative losses of $8,168,751. The
Company's successful transition from a development stage company to
attaining profitable operations is dependent upon obtaining financing
adequate to fulfill its research and development activities, production
of its equipment and achieving a level of revenues adequate to support
the Company's cost structure. Management's plan of operations
anticipates that the cash requirements for the next twelve months will
be met by obtaining capital contributions through the sale of common
stock and cash flow from operations. However, there is no assurance
that the Company will be able to implement its plan.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT.
See Item 11 for information on beneficial ownership of the Company's
securities.
The directors and executive officers of the Company are as follows:
Name Age Position
---- --- --------
James J. Houtz 61 President, Chief Operating Officer and a Director
Robert E. McCray 64 Chief Financial Officer and a Director
Joan C. Horowitz 58 Secretary/Treasurer and a Director
<PAGE> 22
SIONIX CORPORATION
(A DEVELOPMENT STAGE COMPANY)
Mr. Houtz has been President and Chief Operating Officer of the Company
since March 1998. For more than five years prior to that time he was a
self-employed consultant in the areas of engineering and new product
development. Mr. Houtz is married to Joan C. Horowitz, Secretary/Treasure of the
Company.
Mr. McCray has been Chief Financial Officer of the Company since July
1998. Prior to that time he was employed by San Clemente Hospital and Medical
Center, as Supervisor-Accounts Payable and Supervisor-Data Processing.
Ms. Horowitz has been Secretary/Treasurer and Office Manager of the
Company since April 1998. Prior to that time she was employed by Coldwell Banker
in office management. Ms. Horowitz is married to James J. Houtz, President of
the Company.
The term of office of each director is one year or until his successor
is elected at the Company's annual meeting. Each officer is appointed by the
Board of Directors and serves at the pleasure of the Board.
In 1988 the Company entered into a five-year employment agreement with
James J. Houtz, which was amended and restated in October 2000.The amended
agreement calls for salary to Mr. Houtz of $85,000 per year, which amount is
increased by 10% each year.
In 1998 the Company entered into an employment agreement with Robert E.
McCray, which was amended and restated in October 2000, and which expires in
September 2001. The amended agreement calls for salary to Mr. McCray of $50,000
per year, which amount is increased by 8% each year.
In 1998 the Company entered into an employment agreement with Joan C.
Horowitz, which was amended and restated in October 2000, and which expires in
September 2001. The amended agreement calls for salary to Ms. Horowitz of
$32,000 per year, which amount is increased by 8% each year.
The Employment Agreements of Messrs. Houtz and McCray and Ms. Horowitz
had provided for quarterly grants of restricted stock. The Employment Agreements
were amended in October 2000 to delete any such grants, as the Company was
required to record the fair market value of the shares so issued as a current
expense. The Company contemplates that it will adopt a conventional Stock Option
Plan to replace the grants of restricted stock.
ITEM 10. EXECUTIVE COMPENSATION.
SUMMARY COMPENSATION TABLE
The following table sets forth certain compensation awarded or paid by
the Company to its three highest paid persons who are officers or directors
during the fiscal years ended September 30, 2000, 1999 and 1998, respectively.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------- ----------------------- ------------------
OTHER SECURITIES ALL
ANNUAL RESTRICTED UNDERLYING OTHER
NAME AND FISCAL COMPEN- STOCK OPTIONS/ LTIP COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS SATION AWARDS SARs PAYOUTS SATION
------------------ ------ -------- ----- ------- ---------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James J. Houtz, President 1998 $ 49,583 -0- -0- -0- -0- -0- -0-
1999 $107,667 -0- -0- 344,272 -0- -0- -0-
2000 $115,679 -0- -0- 989,352 -0- -0- -0-
Robert McCray, 1998 $ 12,500 -0- -0- -0- -0- -0- -0-
Chief Financial Officer 1999 $ 44,713 -0- -0- 16,191 -0- -0- -0-
2000 $ 55,080 -0- -0- 88,895 -0- -0- -0-
Joan Horowitz, Secretary 1998 $ 18,667 -0- -0- -0- -0- -0- -0-
1999 $ 25,000 -0- -0- 18,406 -0- -0- -0-
2000 $ 21,565 -0- -0- 54,739 -0- -0- -0-
</TABLE>
<PAGE> 23
None of the executive officers or directors of the Company hold any
options or stock appreciation rights.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth ownership information as of September 30,
2000 with respect to all officers and directors and promoters, and each
shareholder who beneficially owns more than 5% of the outstanding shares:
<TABLE>
<CAPTION>
Name and Address No. of Shares Percentage
---------------- ------------- ----------
<S> <C> <C>
S. Donna Friedman Trust 5,968,000 11.0%
4120 Porte De Merano #80
San Diego, CA. 92122
James J. Houtz 6,996,817 12.9%
9272 Jeronimo Road, Suite 108
Irvine, CA 92618
Robert E. McCray 306,873 .6%
9272 Jeronimo Road, Suite 108
Irvine, CA 92618
Joan C. Horowitz 261,061 .5%
9272 Jeronimo Road, Suite 108
Irvine, CA 92618
All Directors and Officers
as a Group (3 Persons) 7,564,751 14.0%
</TABLE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Inapplicable
<PAGE> 24
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following exhibits are filed herewith or incorporated by reference:
Exhibit 10.1 Amended and Restated Employment Agreement with James J. Houtz,
dated October 1, 2000.
Exhibit 10.2 Amended and Restated Employment Agreement with Robert E.
McCray, dated October 1, 2000.
Exhibit 10.3 Amended and Restated Employment Agreement with Joan C.
Horowitz, dated October 1, 2000.
Exhibit 10.4* Industrial Lease between the Company and The Irvine Company,
dated August 6, 1998.
Exhibit 10.5 Joint Venture Agreement between the Company and the
Environmental Products Division of Hoffinger Industries, dated
October 17, 2000.
Exhibit 27 Financial Data Schedule
-------------
* Incorporated by reference from the Company's Annual Report on Form 10-KSB for
the fiscal year ending September 30, 1999, filed on January 14, 2000.
(b) Reports on Form 8-K
None.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Sionix Corporation
Date: January 16, 2000 By /s/ James J. Houtz
-----------------------------
James J. Houtz, President
<PAGE> 25
EXHIBIT INDEX
Exhibit 10.1 Amended and Restated Employment Agreement with James J. Houtz,
dated October 1, 2000.
Exhibit 10.2 Amended and Restated Employment Agreement with Robert E.
McCray, dated October 1, 2000.
Exhibit 10.3 Amended and Restated Employment Agreement with Joan C.
Horowitz, dated October 1, 2000.
Exhibit 10.4* Industrial Lease between the Company and The Irvine Company,
dated August 6, 1998.
Exhibit 10.5 Joint Venture Agreement between the Company and the
Environmental Products Division of Hoffinger Industries, dated
October 17, 2000.
Exhibit 27 Financial Data Schedule
-------------
* Incorporated by reference from the Company's Annual Report on Form 10-KSB for
the fiscal year ending September 30, 1999, filed on January 14, 2000.
