-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FvpTCo+fZ4U8+cIu7lssYOBoXVp0Pfra914gES5Yh0Q8dAa6CGh6/cg2rLrxO8jv si7DCSt44mVYA1z5Lld2/g== 0000892569-00-000072.txt : 20000202 0000892569-00-000072.hdr.sgml : 20000202 ACCESSION NUMBER: 0000892569-00-000072 CONFORMED SUBMISSION TYPE: 10KSB40 PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 20000114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SIONIX CORP /UT/ CENTRAL INDEX KEY: 0000764667 STANDARD INDUSTRIAL CLASSIFICATION: MACHINE TOOLS, METAL CUTTING TYPES [3541] IRS NUMBER: 870428526 STATE OF INCORPORATION: UT FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10KSB40 SEC ACT: SEC FILE NUMBER: 002-95626-D FILM NUMBER: 507895 BUSINESS ADDRESS: STREET 1: 9272 JERONIMO RD STREET 2: SUITE 108 CITY: IRVINE STATE: CA ZIP: 92618 BUSINESS PHONE: 9494549283 MAIL ADDRESS: STREET 1: 9272 JERONIMO RD STREET 2: SUITE 108 CITY: MISSION VIEJO STATE: CA ZIP: 92618 FORMER COMPANY: FORMER CONFORMED NAME: AUTOMATIC CONTROL CORP /NV DATE OF NAME CHANGE: 19960422 FORMER COMPANY: FORMER CONFORMED NAME: SIONIX CORP DATE OF NAME CHANGE: 19960214 FORMER COMPANY: FORMER CONFORMED NAME: CORONADO CAPITAL CORP DATE OF NAME CHANGE: 19950111 10KSB40 1 FORM 10-KSB 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, 1999 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, 1999 were $0. The aggregate market value of the voting stock held by non-affiliates as of November 30, 1999, computed based on the average of the bid and ask prices reported on the OTC Bulletin Board, was $5,507,620. As of November 30, 1999, there were 35,782,521 shares of Common Stock of the issuer outstanding. Documents Incorporated by Reference: NONE Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X] 2 PART I ITEM 1. DESCRIPTION OF BUSINESS. General. Sionix Corporation, formerly Coronado Capital Corporation (the"Company") designs and manufactures equipment for improving the treatment of water for commercial, industrial and public water treatment facilities. To date the Company's principal activities have been in the areas of research, development and testing of its products. The Company's 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. 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. It is estimated that in the United States alone, there are approximately 197,060 public rural water districts, the great majority of which are considered small public water systems, with populations less then 10,000. Reports of the U.S. Environmental Protection Agency in the Federal Registry listed over 50,000 communities in the United States that are currently in violation of the Safe Drinking Water Act, and those numbers are expected to increase as more stringent EPA rules for small public water systems become effective. In addition, urbanization in the third world and the spread of agricultural activities have increased the demand for public water systems. The company has targeted (1) small public water districts, with limited financial resources, which 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 applying this excess air in the form of microscopic bubbles in a particle separator. Pressurized water 2 3 can hold an excess amount of dissolved air and forms microscopic bubbles when injected into water which has a lower pressure. A booster pump recirculates a small amount (10%) of the post-filtered water through the dissolved air-saturation assembly. A compressor forces air under high pressure through small hollow-fiber polyolefin membrane fibers inside the air saturation assembly housing. 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 and the installation of ozone 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 reduce monthly energy costs. Higher ozone contact concentration levels using smaller sized generators are possible if most of the algae is first removed 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. Marketing and Customers. In the United States, the Company plans to initially target the established base of 185,000 small to very small water providers, as well as industrial users (such as the dairy industry, meat and poultry producers, food and beverage processors, cooling tower manufacturers and oil and gas producers) with a need for a clean, consistent water supply. In addition to the domestic markets, the Company has been contacted by representatives from local water systems in Europe, Latin America and Asia. 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 3 4 that the customer will always have access to any refinements and improvements made to the Company's products. The Company plans to market its products through direct mail, participation in industry groups and trade shows, and through selected advertising in specialized publications. Patents. The Company holds three U.S. patents on technology incorporated into the Sionix Particle Separator Treatment System. One of the patents generally relates to the vortex system in the DAF Particle Separator, and another concerns the ozone mixing system. The third patent covers an automatic backflushing system using air pressure to activate the valves. The Company also holds several patents on the inline wet-chemistry water quality monitoring system. In addition, several active patent applications are being processed. 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. Employees. At November 30, 1999, 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. 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 used by the Company for manufacturing are carefully selected based on stringent specifications for usage and operating conditions. Every effort is made to specify parts from multiple sources for independence from manufacturers and distributors. 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. 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). 4 5 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. In the Complaint, the Company seeks monetary damages in an amount to be determined, injunctive relief, an accounting and a declaratory judgment. The case is currently in the discovery stage. 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, 1999. Fiscal 1999 High Low ----------- ---- --- First Quarter $ 1.187 $ .125 Second Quarter .437 .156 Third Quarter .250 .062 Fourth Quarter .469 .062 5 6 There were approximately 625 holders of record of the Company's common stock as of September 30, 1999. The Company has never declared or paid any cash dividend on its shares of common stock. During the fiscal year ended September 30, 1999, the Company sold 9,383,000 shares of Common Stock to approximately 73 purchasers, with gross proceeds of $938,300. 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, 1999, the Company had an accumulated deficit of $5,361,639. 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 which 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. The Company continues to believe its business plans and the assumptions upon which they are based are valid. 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, 1999 Compared to Year Ended September 30, 1998). During the 1999 fiscal year the focus of the Company's efforts has been on development, manufacturing and distribution of the Company's hardware products. 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. 6 7 The Company is continuing its engineering focus on hardware and water filtration equipment. The first phase of testing was completed in November 1998. The second phase of testing was completed in April 1999 and has revealed useful data. Final testing is expected to begin in January 2000 for the first production unit. Management is implementing engineering changes prior to the execution of contracts for production tooling. Management is in negotiations with suppliers for tooling and production of various support products that have their own markets. The Company expects that it will implement minor engineering adjustments in tooling prior to the execution of contracts for production tooling. For the year ended September 30, 1999, the Company reported a loss of $765,830, or $.02 per share. This compares with a loss of $1,898,376 or $.08 for the year ending September 30, 1998. The reduction in the loss is principally due to a write-down of certain intangible assets in the 1998 fiscal year, decreased interest expense, and decreases in general and administrative expenses. Liquidity and Capital Resources. On September 30, 1999, the Company had cash and cash equivalents of approximately $184,461. 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 expected cash flow from operations plus the anticipated proceeds from sales of securities 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. Year 2000 Issues The "year 2000" issue concerns the potential exposure related to the possible automatic generation of business and financial misinformation resulting from the application of computer programs which have been written using two digits, rather than four, to define the applicable year of business transactions. The Company is dependent on multiple computer servers and the third-party computer programs running on them to provide data in support of its accounting and engineering functions. The Company's preparation for year 2000 compliance included the following phases: (i)it conducted a comprehensive inventory of the Company's internal systems, including information technology systems and non-information technology systems and the systems acquired or to be acquired by the Company from third parties, (ii) it assessed and prioritized any required changes, upgrades, or enhancements, (iii) it resolved any problems by repairing or, if appropriate, replacing the non-compliant systems, (iv) it tested any remediated systems for Year 2000 compliance, and (v) it developed contingency plans to be employed in the event that any system used by the Company was unexpectedly affected by a previously unanticipated problem relating to the Year 2000. To date the Company has not experienced any significant problems as a result of the change in the year. It will continue to monitor its systems to determine whether any problems arise. 7 8 ITEM 7. FINANCIAL STATEMENTS SIONIX CORPORATION (A DEVELOPMENT STAGE COMPANY) FINANCIAL STATEMENTS SEPTEMBER 30, 1999 8 9 C O N T E N T S Independent Auditors' Report................................................ 10 Balance Sheet............................................................... 11 Statements of Operations.................................................... 13 Statements of Stockholders' Equity (Deficit)................................ 14 Statements of Cash Flows.................................................... 19 Notes to the Financial Statements........................................... 21 9 10 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Board of Directors and Stockholders Sionix Corporation (A Development Stage Company) Irvine, California We have audited the accompanying balance sheet of Sionix Corporation (a development stage company) as of September 30, 1999, and the related statements of operations, stockholders' equity (deficit) and cash flows for the years ended September 30, 1999 and 1998 and from inception on October 3, 1994 through September 30, 1999. 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 financial position of Sionix Corporation (a development stage company) as of September 30, 1999 and the results of its operations and its cash flows for the years ended September 30, 1999 and 1998 and from inception on October 3, 1994 through September 30, 1999 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 7 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 7. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Jones, Jensen & Company Salt Lake City, Utah December 22, 1999 10 11 SIONIX CORPORATION (A Development Stage Company) Balance Sheet ASSETS ------
September 30, 1999 ------------- CURRENT ASSETS Cash $184,461 Other current assets 1,164 -------- Total Current Assets 185,625 -------- PROPERTY AND EQUIPMENT - NET (Notes 2 and 3) 112,637 -------- OTHER ASSETS Deposits 37,231 Intangibles - net (Note 4) 103,742 -------- Total Other Assets 140,973 -------- TOTAL ASSETS $439,235 ========
The accompanying notes are an integral part of these financial statements. 11 12 SIONIX CORPORATION (A Development Stage Company) Balance Sheet (Continued) LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) ----------------------------------------------
September 30, 1999 ------------- CURRENT LIABILITIES Accounts payable $ 18,895 Accrued expenses 143,790 Related party payables (Note 5) 377,351 ----------- Total Current Liabilities 540,036 ----------- Total Liabilities 540,036 ----------- COMMITMENTS (Note 8) STOCKHOLDERS' EQUITY (DEFICIT) Common stock $0.001 par value; 100,000,000 shares authorized, 35,310,621 shares issued and outstanding 35,311 Additional paid-in capital 5,225,527 Deficit accumulated during the development stage (5,361,639) ----------- Total Stockholders' Equity (Deficit) (100,801) ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 439,235 ===========
The accompanying notes are an integral part of these financial statements. 12 13 SIONIX CORPORATION (A Development Stage Company) Statements of Operations
From For the Inception on Years Ended October 3, September 30, 1994 Through -------------------------- September 30, 1999 1998 1999 --------- ----------- ------------- REVENUE $ -- $ -- $ 15,500 COST OF SALES -- -- 6,540 --------- ----------- ----------- GROSS PROFIT -- -- 8,960 --------- ----------- ----------- EXPENSES Research and development 7,085 -- 857,438 Depreciation and amortization 49,095 130,719 433,190 Administrative and marketing 699,316 649,306 2,828,459 --------- ----------- ----------- Total Expenses 755,496 780,025 4,119,087 --------- ----------- ----------- LOSS FROM OPERATIONS (755,496) (780,025) (4,110,127) --------- ----------- ----------- OTHER INCOME (EXPENSE) Write down of obsolete intangibles -- (1,040,865) (1,040,865) Write down of obsolete software -- -- (53,614) Settlement costs -- -- (25,125) Interest expense (29,856) (77,486) (151,430) --------- ----------- ----------- Total Other Income (Expense) (29,856) (1,118,351) (1,271,034) --------- ----------- ----------- LOSS BEFORE EXTRAORDINARY INCOME AND INCOME TAXES (785,352) (1,898,376) (5,381,161) EXTRAORDINARY INCOME Gain on settlement of debt - net of zero tax benefit 19,522 -- 19,522 --------- ----------- ----------- Total Extraordinary Income 19,522 -- 19,522 --------- ----------- ----------- PROVISION FOR INCOME TAXES -- -- -- --------- ----------- ----------- NET LOSS $(765,830) $(1,898,376) $(5,361,639) ========= =========== =========== BASIC LOSS PER SHARE $ (0.02) $ (0.08) ========= ===========
The accompanying notes are an integral part of these financial statements. 13 14 SIONIX CORPORATION (A Development Stage Company) Statements of Stockholders' Equity (Deficit) From Inception on October 3, 1994 through September 30, 1999
Deficit Accumulated Common Stock Additional During the ------------------------ Paid-in Subscription Development Shares Amount Capital Receivable Stage --------- ------ ----------- ------------ ----------- 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) --------- ------ ----------- ---------- -------
The accompanying notes are an integral part of these financial statements. 14 15 SIONIX CORPORATION (A Development Stage Company) Statements of Stockholders' Equity (Deficit) (Continued) From Inception on October 3, 1994 through September 30, 1999
Deficit Accumulated Common Stock Additional During the -------------------------- Paid-in Subscription Development Shares Amount Capital Receivable Stage ---------- ------- ----------- ------------ ----------- 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 (2,331,800) (915,800) 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 $(2,331,800) $(1,838,517) ---------- ------- ----------- ----------- -----------
The accompanying notes are an integral part of these financial statements. 15 16 SIONIX CORPORATION (A Development Stage Company) Statements of Stockholders' Equity (Deficit) (Continued) From Inception on October 3, 1994 through September 30, 1999
Deficit Accumulated Common Stock Additional During the ----------------------------- Paid-in Subscription Development Shares Amount Capital Receivable Stage ----------- -------- ----------- ------------ ----------- Balance, September 30, 1996 23,599,696 $ 23,600 $ 5,282,717 $(2,331,800) $(1,838,517) 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 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 $(1,656,800) $(2,697,433) ----------- -------- ----------- ----------- -----------
The accompanying notes are an integral part of these financial statements. 16 17 SIONIX CORPORATION (A Development Stage Company) Statements of Stockholders' Equity (Deficit) (Continued) From Inception on October 3, 1994 through September 30, 1999
Deficit Accumulated Common Stock Additional During the ---------------------------- Paid-in Subscription Development Shares Amount Capital Receivable Stage ----------- -------- ----------- ----------- ----------- Balance, September 30, 1997 24,054,590 $ 24,055 $ 5,028,702 $(1,656,800) $(2,697,433) Common stock issued for cash at $0.10 per share 2,810,000 2,810 278,190 -- -- Common stock issued for services valued at $0.10 per share 895,455 895 88,651 -- -- Option to purchase 2,200,000 shares of common stock at $0.001 per share -- -- 220,000 -- -- Cancellation of common stock and options (2,538,170) (2,538) (1,534,262) 1,656,800 -- Net loss for the year ended September 30, 1998 -- -- -- -- (1,898,376) ----------- -------- ----------- ----------- ----------- Balance, September 30, 1998 25,221,875 25,222 4,081,281 -- (4,595,809) Common stock issued for services valued at $1.25 per share 42,138 42 52,420 -- -- Common stock issued for services valued at $0.22 per share 141,108 141 30,619 -- -- Common stock issued for services valued at $0.25 per share 505,000 505 125,745 -- -- Common stock issued for services valued at $0.38 per share 17,500 18 6,545 -- -- ----------- -------- ----------- ----------- ----------- Balance forward 25,927,621 $ 25,928 $ 4,296,610 $ -- $(4,595,809) ----------- -------- ----------- ----------- -----------
The accompanying notes are an integral part of these financial statements. 17 18 SIONIX CORPORATION (A Development Stage Company) Statements of Stockholders' Equity (Deficit) (Continued) From Inception on October 3, 1994 through September 30, 1999
Deficit Accumulated Common Stock Additional During the ------------------------- Paid-in Subscription Development Shares Amount Capital Receivable Stage ---------- ------- ---------- ------------ ----------- Balance forward 25,927,621 $25,928 $4,296,610 $ -- $(4,595,809) Common stock issued for cash at $0.10 per share 9,383,000 9,383 928,917 -- -- Net loss for the year ended September 30, 1999 -- -- -- -- (765,830) ---------- ------- ---------- --------- ----------- Balance, September 30, 1999 35,310,621 $35,311 $5,225,527 $ -- $(5,361,639) ========== ======= ========== ========= ===========
The accompanying notes are an integral part of these financial statements. 18 19 SIONIX CORPORATION (A Development Stage Company) Statements of Cash Flows
From For the Inception on Years Ended October 3, September 30, 1994 Through --------------------------- September 30, 1999 1998 1999 --------- ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(765,830) $(1,898,376) $(5,361,639) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation and amortization 49,095 130,719 433,190 Common stock issued for services 216,035 429,546 860,366 Write-down of obsolete assets -- 1,040,865 1,040,865 Gain on settlement of debt (19,522) -- (19,522) Change in assets and liabilities: Decrease in inventory -- 6,525 -- (Increase) in other current assets (1,164) -- (1,164) (Increase) in deposits (30,400) (6,831) (37,231) Increase (decrease) in accounts payable and accrued expenses (90,103) 81,495 200,376 --------- ----------- ----------- Net Cash Used by Operating Activities (641,889) (216,057) (2,884,759) --------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of intangibles -- -- (150,188) Purchase of fixed assets (49,875) (43,984) (175,612) --------- ----------- ----------- Net Cash Used by Investing Activities (49,875) (43,984) (325,800) --------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Repayment of notes payable and contracts payable (12,305) (10,000) (42,212) Proceeds from sale of stock 938,300 281,000 3,136,958 Proceeds from notes payable and convertible debenture -- -- 361,274 Payment of notes payable and convertible debenture (61,000) -- (61,000) --------- ----------- ----------- Net Cash Provided by Financing Activities $ 864,995 $ 271,000 $ 3,395,020 --------- ----------- -----------
The accompanying notes are an integral part of these financial statements 19 20 SIONIX CORPORATION (A Development Stage Company) Statements of Cash Flows (Continued)
From For the Inception on Years Ended October 3, September 30, 1994 Through ---------------------- September 30, 1999 1998 1999 -------- -------- ---------- INCREASE IN CASH $173,231 $ 10,959 $ 184,461 CASH AT BEGINNING OF PERIOD 11,230 271 -- -------- -------- ---------- CASH AT END OF PERIOD $184,461 $ 11,230 $ 184,461 ======== ======== ========== SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Addition to debt for acquisition of intangibles $ -- $ -- $1,302,914 Common stock issued for services $216,035 $429,546 $ 860,366 Equipment acquired under lease payable $ -- $ -- $ 25,533 CASH PAID FOR: Interest $ -- $ -- $ 6,134 Income taxes $ -- $ -- $ --
The accompanying notes are an integral part of these financial statements. 20 21 SIONIX CORPORATION (A Development Stage Company) Notes to the Financial Statements September 30, 1999 NOTE 1 - COMPANY ORGANIZATION AND BUSINESS ACTIVITY 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. The Company is in the development stage and its efforts through September 30, 1999 have been principally devoted to research and development, organizational activities, and raising capital. As of September 30, 1999, 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 a September 30 year end. 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. Research and Development Research and development costs are expensed as incurred. 21 22 SIONIX CORPORATION (A Development Stage Company) Notes to the Financial Statements September 30, 1999 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) e. Basic Net Loss Per Share
For the Year Ended September 30, 1999 --------------------------------------------- (Denominator) (Numerator) Weighted Income Average Net Income (Loss) Number of (Loss) Per Amounts Shares Share ------------ ------------- ------ Loss before extraordinary income $ (785,352) 31,186,275 $(0.02) Gain on settlement of debt 19,522 31,186,275 0.00 ------------ ----------- ------ $ (765,830) 31,186,275 $(0.02) ============ =========== ====== For the Year Ended September 30, 1999 --------------------------------------------- (Denominator) (Numerator) Weighted Income Average Net Income (Loss) Number of (Loss) Per Amounts Shares Share ------------ ------------- ------ Loss before extraordinary income $ (1,898,376) 22,649,816 $(0.08) Gain on settlement of debt -- 22,649,816 -- ------------ ----------- ------ $ (1,898,376) 22,649,816 $(0.08) ============ =========== ======
The computation of basic loss per share of common stock is based on the weighted average number of shares outstanding at the date of the financial statements. Stock warrants and stock options have not been included as they are antidilutive. f. 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 $4,000,000 will expire by the year 2014. 22 23 SIONIX CORPORATION (A Development Stage Company) Notes to the Financial Statements September 30, 1999 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) g. 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. h. New Accounting Pronouncements The Financial Accounting Standards Board has also issued SFAS No. 130, "Reporting Comprehensive Income" and SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." SFAS No. 130 establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, SFAS No. 130 requires that all items that are required to be recognized under current accounting standards as components of comprehensive income be reported in a financial statement that displays with the same prominence as other financial statements. SFAS No. 131 supersedes SFAS No. 14 "Financial Reporting for Segments of a Business Enterprise." SFAS No. 131 establishes standards on the way that public companies report financial information about operating segments in annual financial statements and requires reporting of selected information about operating segments in interim financial statements issued to the public. It also establishes standards for disclosure regarding products and services, geographic areas and major customers. SFAS No. 131 defines operating segments as components of a company about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. SFAS No. 130 and 131 are effective for financial statements for periods beginning after December 15, 1997 and requires comparative information for earlier years to be restated. Because of the recent issuance of the standard, management has been unable to fully evaluate the impact, if any, the standard may have on future financial statement disclosures. Results of operations and financial position, however, will be unaffected by implementation of these standards. 23 24 SIONIX CORPORATION (A Development Stage Company) Notes to the Financial Statements September 30, 1999 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) h. New Accounting Pronouncements (Continued) In February 1998, the Financial Accounting Standards Board ("FASB") has issued Statement of Financial Accounting Standard ("SFAS") No 132. "Employers' Disclosures about Pensions and other Postretirement Benefits" which standardizes the disclosure requirements for pensions and other Postretirement benefits and requires additional information on changes in the benefit obligations and fair values of plan assets that will facilitate financial analysis. SFAS No. 132 is effective for years beginning after December 15, 1997 and requires comparative information for earlier years to be restated, unless such information is not readily available. Management believes the adoption of this statement will have no material impact on the Company's financial statement. In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" which requires companies to record derivatives as assets or liabilities, measured at fair market value. Gains or losses resulting from changes in the values of those derivatives would be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. The key criterion for hedge accounting is that the hedging relationship must be highly effective in achieving offsetting changes in fair value or cash flows. SFAS No. 133 is effective for all fiscal quarters of fiscal years beginning after June 15, 1999. Management believes the adoption of this statement will have no material impact on the Company's financial statements. i. Advertising The Company follows the policy of charging the costs of advertising to expense as incurred. NOTE 3 - PROPERTY AND EQUIPMENT Property and equipment at September 30, 1999 consisted of the following: Computers and test equipment $ 155,022 Furniture and fixtures 74,943 --------- Total 229,965 Less accumulated depreciation (117,328) --------- Property and Equipment - Net $ 112,637 ========= Depreciation expense for the years ended September 30, 1999 and 1998 was $40,093 and $31,565, respectively. 24 25 SIONIX CORPORATION (A Development Stage Company) Notes to the Financial Statements September 30, 1999 NOTE 4 - INTANGIBLE ASSETS Intangible assets at September 30, 1999 consisted of the following: Patents issued and pending $ 135,033 Less accumulated amortization (31,291) --------- Intangible Assets - Net $ 103,742 ========= Amortization expense for the years ended September 30, 1999 and 1998 was $9,002 and $99,154, respectively. NOTE 5 - RELATED PARTY PAYABLES 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 liabilities. 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. The liability is included in the related party payables. The Company has received other advances in the form of promissory notes from various shareholders and other related parties in order to pay ongoing operating expenses. As of September 30, 1999, $377,351 was due by the Company as a result of these promissory notes and the liability is considered to be current. Some of the notes bear interest at rates of 7% to 13.5%. All notes are due on demand and are unsecured. NOTE 6 - 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 were secured by the shares issued and were non-recourse. They had a stated interest rate of 6% and had maturity dates ranging from March 1, 1998 to September 7, 1998. During the year ended September 30, 1998, the shares originally issued in conjunction with the receivable were cancelled along with the corresponding subscription receivable. NOTE 7 - 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. In the opinion of management, sales of the Company's products, together with the proceeds of an offering of its common stock, will be sufficient for it to continue as a going concern. 25 26 SIONIX CORPORATION (A Development Stage Company) Notes to the Financial Statements September 30, 1999 NOTE 8 - COMMITMENTS Employment Agreement On January 1, 1998, the Company entered into an employment contract with an officer and director. The employment contract calls for payments of $7,083 per month to the officer through September 30, 2003. As a signing bonus, the officer was given the option to purchase 2,200,000 shares of the Company's common stock at $0.001 per share. Accordingly, compensation expense of $220,000 has been recorded to reflect the discount from fair market value. Accounts Payable At September 30, 1999, the Company owed vendors amounts totaling $18,894 that are more than one year past due. One of the affected vendors has a judgment against the Company for the amount owed. As of September 30, 1999, the Company was making monthly payments on the amount owed to that vendor. It is the Company's intention to pay off all amounts owed as stated above by the end of fiscal 2000. Contingent Liabilities A certain company has asserted a claim against the Company for fees related to the hiring of an employee through that Company. According to the Company's legal counsel, the maximum exposure from this claim is $6,000. It is the Company's contention that it previously negotiated a settlement of this claim in which the Company was released of any related liability. The Company intends to vigorously fight this claim and expects no negative outcome as a result of this claim. Accordingly, the Company has made no provision in the financial statements relative to this claim. 26 27 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 60 President, Chief Operating Officer and a Director Robert E. McCray 63 Chief Financial Officer and a Director Joan C. Horowitz 57 Secretary/Treasurer and a Director
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. 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. 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 January 1998 the Company entered into a five-year employment agreement with James J. Houtz. The agreement calls for salary to Mr. Houtz of $85,000 per year, which amount is increased by 10% each year. In addition, after the first year of the Employment Agreement, during each calendar quarter for the term of the Agreement Mr. Houtz is to receive options to purchase 255,000 shares of the Company's Common Stock, at an exercise price of $.001 per share. Upon execution of the Employment Agreement, Mr. Houtz received an option to purchase 2,200,000 shares at an exercise price of $.001 per share. The Employment Agreement also provides that Mr. Houtz is to receive options to purchase an additional 1,650,000 shares of Common Stock, also exercisable at $.001 per share, at such time as he negotiates and 27 28 completes the private placement of Common Stock of the Company with gross proceeds of at least $800,000. Finally, Mr. Houtz may receive options to purchase up to an additional 13,250,000 shares over the next five years based on the gross revenues of the Company. In July 1998 the Company entered into an employment agreement with Robert E. McCray, which expires in September 2001. The agreement calls for salary to Mr. McCray of $50,000 per year, which amount is increased by 8% each year. In addition, during each calendar quarter for the term of the Agreement Mr. McCray is to receive options to purchase 25,000 shares of the Company's Common Stock, at an exercise price of $.001 per share. In April 1998 the Company entered into an employment agreement with Joan C. Horowitz, which expires in September 2001. The agreement calls for salary to Ms. Horowitz of $32,000 per year, which amount is increased by 8% each year. In addition, during each calendar quarter for the term of the Agreement Ms. Horowitz is to receive options to purchase 20,000 shares of the Company's Common Stock, at an exercise price of $.001 per share. ITEM 10. EXECUTIVE COMPENSATION. The aggregate annual remuneration, during the fiscal year ending September 30, 1999, of the three highest paid persons who are officers or directors was as follows:
Aggregate Capacities in which Name remuneration remuneration was received ---- ------------ ------------------------- James J. Houtz $107,667 President and Chief Operating Officer Robert E. McCray $ 52,000 Chief Financial Officer Joan C. Horowitz $ 23,390 Secretary
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The following table sets forth ownership information as of September 30, 1999 with respect to all officers and directors and promoters, and each shareholder who beneficially owns more than 5% of the outstanding shares:
Name and Address No. of Shares Percentage ---------------- ------------- ---------- S. Donna Friedman Trust 5,968,000 16.7% 4120 Porte De Merano #80 San Diego, CA. 92122 James J. Houtz 6,065,667(1) 16.9% Robert E. McCray 44,713 .1% Joan C. Horowitz 25,000 .07% All Directors and Officers as a Group (3 Persons) 6,135,380(1) 17.1%
- ------------- (1) Includes 5,711,500 shares issuable upon exercise of currently exercisable options. 28 29 ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. See the description of Employment Agreements with members of management described above. ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K. (a) The following exhibits are filed herewith or incorporated by reference: Exhibit 10.1* Employment Agreement with James J. Houtz, dated January 1, 1998. Exhibit 10.2* Employment Agreement with Robert E. McCray, dated July 1, 1998. Exhibit 10.3* Employment Agreement with Joan C. Horowitz, dated April 1, 1998. Exhibit 10.4* Industrial Lease between the Company and The Irvine Company, dated August 6, 1998. Exhibit 27 Financial Data Schedule (b) Reports on Form 8-K None. *Incorporated by reference from the Company's Annual Report on Form 10-KSB for the fiscal year ending September 30, 1998, filed on January 14, 1999. 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 14, 2000 By /s/ James J. Houtz ------------------------------------ James J. Houtz, President 29 30 EXHIBIT INDEX Exhibit 10.1* Employment Agreement with James J. Houtz, dated January 1, 1998. Exhibit 10.2* Employment Agreement with Robert E. McCray, dated July 1, 1998. Exhibit 10.3* Employment Agreement with Joan C. Horowitz, dated April 1, 1998. Exhibit 10.4* Industrial Lease between the Company and The Irvine Company, dated August 6, 1998. 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, 1998, filed on January 14, 1999. EX-27 2 FINANCIAL DATA
5 12-MOS SEP-30-1999 OCT-01-1998 SEP-30-1999 0 0 0 0 0 185,625 229,965 117,328 439,235 540,036 0 0 0 35,311 (100,801) 439,235 0 0 0 755,496 0 0 29,856 (785,532) 0 (785,532) 0 19,522 0 (765,830) (.02) (.02)
-----END PRIVACY-ENHANCED MESSAGE-----