-----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, TyYHGYGlejgMPijSHDU+sY4IS5/AVycBykL1fvJUGfAgY7SlmJayVUJYNwH62mLH XGqgdpKk6Izkg8PkhgaIdw== 0000892569-01-500318.txt : 20010522 0000892569-01-500318.hdr.sgml : 20010522 ACCESSION NUMBER: 0000892569-01-500318 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010521 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: 10QSB SEC ACT: SEC FILE NUMBER: 002-95626-D FILM NUMBER: 1644646 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 10QSB 1 a72915e10qsb.txt FORM 10-QSB 1 U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 Commission File Number 2-95626-D SIONIX CORPORATION - -------------------------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) Utah 87-0428526 State or other jurisdiction (IRS Employer of incorporation or organization) Identification No.) 7282 Jeronimo Road, Suite 108, Irvine, CA 92618 - -------------------------------------------------------------------------------- (Address of principal executive offices) 949 454-9283 - -------------------------------------------------------------------------------- (Issuer's telephone number) Not Applicable - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 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 --- --- As of April 24, 2001, the Company had 58,013,116 shares of its $.001 par value common stock issued and outstanding. Transitional Small Business Disclosure Format (check one): Yes No X -- --- 2 INDEX PART I FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheet at March 31, 2001 (unaudited) Statements of Operations for the Three Months And Six Months ended March 31, 2001 and March 31, 2000 (unaudited) Statements of Cash Flows for the Six Months ended March 31, 2001 and Six Months Ended March 31, 2000 (unaudited) Notes to Financial Statements (unaudited) Item 2. Management's Discussion and Analysis or Plan of Operation PART II OTHER INFORMATION Item 1. Legal Proceedings Item 2. Changes in Securities and Use of Proceeds Item 3. Defaults Upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K Signatures 2 3 Part I. FINANCIAL INFORMATION Item 1. Financial Statements SIONIX CORPORATION (A DEVELOPMENT STAGE COMPANY) BALANCE SHEET
MARCH 31, 2001 ----------- ASSETS CURRENT ASSETS Cash $ 5,762 Restricted cash 140,369 ----------- Total current assets 146,131 Equipment 31,616 Patents 90,239 Deposits 6,831 ----------- $ 274,817 =========== LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES Notes payable $ 50,000 Notes payable - related parties 342,720 Accrued interest 35,313 Accrued interest - related parties 93,655 Accounts payable 140,658 Accrued expenses 9,970 ----------- Total current liabilities 672,316 ----------- COMMITMENTS AND CONTENGENCIES -- STOCKHOLDERS' DEFICIT Common stock $0.001 par value; 100,000,000 shares authorized, 57,541,814 shares issued and outstanding 57,542 Additional paid-in capital 8,622,161 Deficit accumulated during the development stage (8,846,202) Unamortized consulting fees (231,000) ----------- Total stockholders' deficit (397,499) ----------- $ 274,817 ===========
The accompanying notes are an integral part of these financial statements. 3 4 SIONIX CORPORATION (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF OPERATIONS
CUMULATIVE THREE MONTHS ENDED SIX MONTHS ENDED FROM INCEPTION MARCH 31, MARCH 31, (OCTOBER 3, 1994) ------------------------------ ------------------------------ TO MARCH 31, 2001 2000 2001 2000 2001 ------------ ------------ ------------ ------------ ---------------- RESTATED RESTATED RESTATED COSTS AND EXPENSES General and administrative $ 243,001 $ 608,269 $ 490,507 $ 771,197 $ 6,090,844 Research and development 156,643 -- 160,408 -- 1,200,154 Write-off of obsolete intangibles -- -- -- -- 1,040,865 Depreciation and amortization 8,569 13,568 18,494 26,859 344,196 ------------ ------------ ------------ ------------ ----------- OPERATING LOSS (408,213) (621,837) (669,409) (798,056) (8,676,059) ------------ ------------ ------------ ------------ ----------- OTHER INCOME (EXPENSE) Interest income 1,596 5,644 4,710 6,803 37,433 Interest expense - related parties (4,698) (4,690) (10,752) (10,743) (94,653) Interest expense (1,000) (1,000) (2,000) (2,000) (112,923) ------------ ------------ ------------ ------------ ----------- (4,102) (46) (8,042) (5,940) (170,143) ------------ ------------ ------------ ------------ ----------- NET LOSS $ (412,315) $ (621,883) $ (677,451) $ (803,996) $(8,846,202) ============ ============ ============ ============ =========== BASIC AND DILUTED NET LOSS PER SHARE $ (0.01) $ (0.01) $ (0.01) $ (0.02) ------------ ------------ ------------ ----------- BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 55,938,006 52,151,303 55,043,752 50,209,776 ============ ============ ============ ============
The accompanying notes are an integral part of these financial statements. 4 5 SIONIX CORPORATION (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF OPERATIONS
CUMULATIVE SIX MONTHS ENDED FROM INCEPTION -------------------------- (OCTOBER 3, 1994) MARCH 31, MARCH 31, TO 2001 2000 MARCH 31, 2001 --------- ----------- -------------- RESTATED RESTATED CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(677,451) $ (970,860) $(8,846,202) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation and amortization 18,494 26,859 344,196 Common stock issued for compensation -- 423,214 1,833,041 Common stock issued for services 45,187 255,288 819,840 Amortization of consulting fees 77,000 77,000 Write-down of obsolete assets -- -- 38,862 Write-down of intangable assets -- -- 1,040,865 Other -- -- 57,351 Change in assets and liabilities Deposits -- (3,436) (6,831) Accounts payable 132,786 -- 140,658 Accrued interest - related parties 9,754 -- 93,655 Accrued interest 3,000 -- 35,313 Accrued expenses (14,963) (40,406) 9,970 --------- ----------- ----------- Net cash used by operating activities (406,193) (309,341) (4,362,282) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of patents -- -- (135,033) Purchase of equipment (11,044) (48,824) (225,271) --------- ----------- ----------- Net cash used by investing activities (11,044) (48,824) (360,304) --------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of notes -- -- 50,000 Proceeds from issuance of notes to related parties 40,369 -- 386,142 Payments of notes to related parties (25,000) -- (43,422) Issuance of common stock for cash 168,000 1,030,350 4,475,997 Purchase of certificate of deposit (40,369) -- (140,369) --------- ----------- ----------- Net cash provided by financing activities 143,000 1,030,350 4,728,348 --------- ----------- ----------- Net (decrease) increase in cash (274,237) 672,185 5,762 CASH, BEGINNING OF PERIOD 279,999 184,461 -- --------- ----------- ----------- CASH, END OF PERIOD $ 5,762 $ 856,646 $ 5,762 ========= =========== =========== SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Stock issued for consulting services $ 308,000 $ -- $ 510,000 ========= =========== =========== Acquisition of intangibles for debt $ -- $ -- $ 1,185,475 ========= =========== =========== Conversion of debt to equity $ -- $ -- $ 1,165,953 ========= =========== =========== Cash paid for Interest $ -- $ -- $ 2,134 ========= =========== =========== Income taxes $ -- $ -- $ -- ========= =========== ===========
The accompanying notes are an integral part of these financial statements. 5 6 SIONIX CORPORATION, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO UNAUDITED FINANCIAL STATEMENTS MARCH 31, 2001 1. BASIS OF PRESENTATION The accompanying unaudited financial statements of Sionix Corporation (the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the six months ended March 31, 2001 are not necessarily indicative of the results for any future period. These statements should be read in conjunction with the Company's audited financial statements and notes thereto for the year ended September 30, 2000. 2. RESTATEMENT General and administrative expense has been restated to reflect the proper charge to operations for the fair value of common stock issued to employees for compensation and non-employees for services. For the three and six month periods ended March 31, 2000 general and administrative expense and net loss has been increased by $423,214 and $256,350. 3. COMMON STOCK The Company issued 1,680,000 shares of common stock for cash at a price of $.10 per share to private investors. In addition, 295,492 shares of common stock were issued to independent contractors for various services at prices of $.10 - $.28. Lastly, in connection with the Company's registration statements on Form S-8, 1,400,000 shares of common stock were issued to consultants at $.22 per share for services to be provided through December 2001. Consulting fees provided in exchange for common stock totaled $308,000 of which $77,000 has been amortized at March 31, 2001. 4. RECLASSIFICATIONS Certain prior year amounts have been reclassified to conform to the fiscal year 2001 presentation. 6 7 Item 2. Management's Discussion and Analysis or Plan of Operation General Results of Operations (Three Months Ended March 31, 2001 Compared to Three Months Ended March 31, 2000). For the three months ended March 31, 2001, general and administrative expenses decreased by $365,268, from $608,269 (as restated) to $243,001. The decrease is principally due to non-cash expenses for the prior period relating to stock compensation to officers and employees; no stock compensation was paid to officers or employees during the current period. Other general and administrative expenses increased slightly, due principally to higher litigation costs. Research and development costs for the quarter were $156,643, principally for production drawings and other expenses relating to manufacturing of a prototype unit; there were no such expenses in the March 31, 2000 period. Operating loss for the quarter decreased by $213,624, principally due to the lack of stock compensation in the current quarter. Liquidity and Capital Resources. On March 31, 2001, the Company had cash and cash equivalents of approximately $146,131, although $140,369 of that amount is restricted, as it secures a bond issued in a litigation matter. The principal source of liquidity of the Company 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 and other financing activities, plus expected cash flow from operations towards the end of the fiscal year, will be sufficient to finance the Company's operations. However, the Company has no commitments for financing, and there can be no assurance that such financing will be available; if the Company is unable to obtain additional financing, it may be unable to continue as a going concern. Also, the Company may not be able to generate revenues from operations during the fiscal year. As of March 31, 2001, the Company had an accumulated deficit of $8,846,202. 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. PART II - OTHER INFORMATION Item 1. 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. 7 8 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 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 latter discovery stage, and the parties are engaged in settlement discussions. 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, and is set for trial in August 2001. 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. The defendants in that action have filed a motion for summary judgment, which is curently pending.. 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. A settlement conference is scheduled for July 2001, and the matter is set for trial in September 2001. 8 9 Item 2. Changes in Securities and Use of Proceeds The following is a description of securities issued by the Company during the three months ended March 31, 2001 in transactions not registered under the Securities Act of 1933. The Company issued 1,680,000 shares of Common Stock for cash at a price of $.10 per share to private investors. In addition, the Company issued 295,492 shares to independent contractors for various services rendered to the Company. The Company believes all of such sales were exempt from the registration requirements of the Securities Act of 1933, as amended, by virtue of Section 4 (2) thereof and Regulation D thereunder. Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders None. Item 5. Other Information Not applicable. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 3.1 -- Amended and Restated Articles of Incorporation* 3.2 -- Certificate of Amendment to Articles of Incorporation* 3.3 -- Amended and Restated Bylaws* - ------------- * Incorporated by reference from Registration Statement on Form S-8 filed on July 26, 1996 (b) Reports on Form 8-K Not applicable. 9 10 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: May 18, 2001 SIONIX CORPORATION By: /s/ James J. Houtz ---------------------------- James J. Houtz, President By: /s/ Robert McCray ---------------------------- Robert McCray, Chief Financial Officer 10 -----END PRIVACY-ENHANCED MESSAGE-----