-----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, PoEj0NdtInkk3sR1RM7E5F8JoQmHuJ3KBk2JWnVZBqvSzHLY/Ed+z9FWF1NKcwIH VIYXFUzNmQUqSZLEkVnBVg== 0000892569-98-002362.txt : 19980817 0000892569-98-002362.hdr.sgml : 19980817 ACCESSION NUMBER: 0000892569-98-002362 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SIONIX CORP /UT/ CENTRAL INDEX KEY: 0000764667 STANDARD INDUSTRIAL CLASSIFICATION: MACHINE TOOLS, METAL CUTTING TYPES [3541] STATE OF INCORPORATION: UT FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 002-95626-D FILM NUMBER: 98690297 BUSINESS ADDRESS: STREET 1: 26875 JASPER CITY: MISSION VIEJO STATE: CA ZIP: 92691 BUSINESS PHONE: 9493647171 MAIL ADDRESS: STREET 1: 26875 JASPER CITY: MISSION VIEJO STATE: CA ZIP: 92691 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 FORM 10QSB FOR THE PERIOD ENDED JUNE 30, 1998 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR QUARTER ENDED: JUNE 30, 1998; OR ------------- [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD _________ TO __________ COMMISSION FILE NUMBER: 2-95626-D SIONIX CORPORATION ------------------ (Exact name of Registrant as specified in its charter) UTAH 87-0428526 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5355 Mira Sorrento Pl., Suite 100, San Diego, California 92121 - -------------------------------------------------------- ------------- (Address of principal executive offices) (Zip Code) (619) 622-0200 ---------------------------------------------------- (Registrant's telephone number, including area code) N/A ------------------------------------------------------------- (Former name or former address, if changed since last report) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that a registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] On March 31, 1998, there were 23,910,020 shares of the registrant's Common Stock, $.001 par value, outstanding and subscribed. 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. The financial statements included herein have been prepared by the Company, without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. In the opinion of the Company, all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the financial position of the Company as of March 31, 1997 and the results of its operations and changes in its financial position from inception through March 31, 1997 have been made. The results of its operations for such interim period is not necessarily indicative of the results to be expected for the entire year. INDEX TO FINANCIAL STATEMENTS Page Independent Auditor's Report.................................... 3 Balance Sheets ................................................ 4 Statement of Operations......................................... 6 Statement of Stockholders' Equity............................... 7 Statement of Cash Flows......................................... 11 Notes to Financial Statements for Period........................ 13 All other schedules are not submitted because they are not applicable or not required or because the information is included in the financial statements or notes thereto. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 3 [JONES, JENSEN & COMPANY, LLC LETTERHEAD] INDEPENDENT ACCOUNTANT'S REPORT ------------------------------- To the Board of Directors Sionix Corporation (A Development Stage Company) San Diego, California The accompanying balance sheet of Sionix Corporation (a development stage company) as of June 30, 1998 and the related statements of operations, stockholders' equity, and cash flows for the three months ended June 30, 1998 and 1997 and for the nine months ended June 30, 1998 and 1997 and from inception on October 3, 1994 through June 30, 1998 were not audited by us and, accordingly, we do not express an opinion on them. The accompanying balance sheet of Sionix Corporation as of September 30, 1997 was audited by us and we expressed an unqualified opinion on it in our report dated February 2, 1998. /s/ JONES, JENSEN & COMPANY - --------------------------- Jones, Jensen & Company Salt Lake City, Utah August 12, 1998 3 4 SIONIX CORPORATION (A Development Stage Company) Balance Sheets ASSETS
June 30, September 30, 1998 1997 ----------- ------------- (Unaudited) CURRENT ASSETS Cash in banks $ 28,455 $ 271 Inventory (Note 2) 6,525 6,525 Advances - employees 17,254 -- ---------- ---------- Total Current Assets 52,234 6,796 ---------- ---------- PROPERTY AND EQUIPMENT - NET (Notes 2 and 3) 119,754 90,436 ---------- ---------- OTHER ASSETS Deposit 10,000 -- Intangibles - net (Notes 2 and 4) 1,179,814 1,216,574 ---------- ---------- Total Other Assets 1,189,814 1,216,574 ---------- ---------- TOTAL ASSETS $1,361,802 $1,313,806 ========== ==========
The accompanying notes are an integral part of these financial statements. 4 5 SIONIX CORPORATION (A Development Stage Company) Balance Sheets (Continued) LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, September 30, 1998 1997 ----------- ------------- (Unaudited) CURRENT LIABILITIES Accounts payable $ 142,701 $ 209,448 Convertible debenture, current portion 20,000 10,000 Loan payable (Note 5) 50,000 50,000 Lease payable, current portion (Note 6) 8,609 7,847 Accrued expenses 43,918 38,934 ----------- ----------- Total Current Liabilities 265,228 316,229 ----------- ----------- LONG-TERM DEBTS Lease payable (Note 6) 3,577 4,279 Related party payables (Note 7) 356,106 274,774 Convertible debenture (Note 8) -- 20,000 ----------- ----------- Total Long-Term Debts 359,683 299,053 ----------- ----------- Total Liabilities 624,911 615,282 ----------- ----------- COMMITMENTS AND CONTINGENCIES (Notes 6 and 11) -- -- ----------- ----------- STOCKHOLDERS' EQUITY Common stock, $0.001 par value, 100,000,000 shares authorized, 25,445,020 and 24,054,090 shares issued and outstanding, respectively 25,445 24,055 Additional paid-in capital 5,060,812 5,028,702 Deficit accumulated during the developmental stage (2,812,566) (2,697,433) Subscription receivable (Note 10) (1,536,800) (1,656,800) ----------- ----------- Total Stockholders' Equity 736,891 698,524 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,361,802 $ 1,313,806 =========== ===========
The accompanying notes are an integral part of these financial statements. 5 6 SIONIX CORPORATION (A Development Stage Company) Statements of Operations (Unaudited)
From Inception on For the Nine Months Ended For the Three Months Ended October 3, June 30, June 30, 1994 Through -------------------------- -------------------------- June 30, 1998 1997 1998 1997 1998 ----------- ----------- ----------- ----------- ----------- REVENUE $- $ 15,500 $ -- $ -- $ 15,500 COST OF SALES -- 6,540 -- -- 6,540 ----------- ----------- ----------- ----------- ----------- GROSS PROFIT -- 8,960 -- -- 8,960 ----------- ----------- ----------- ----------- ----------- EXPENSES Research and development -- -- -- -- 850,353 Depreciation and amortization 69,900 82,830 23,300 27,630 323,276 Administrative and marketing 30,781 529,062 14,340 126,387 1,510,618 ----------- ----------- ----------- ----------- ----------- Total Expenses 100,681 611,892 37,640 154,017 2,684,247 ----------- ----------- ----------- ----------- ----------- LOSS FROM OPERATIONS (100,681) (602,932) (37,640) (154,017) (2,675,287) ----------- ----------- ----------- ----------- ----------- OTHER INCOME (EXPENSE) Write down of obsolete software -- -- -- -- (53,614) Settlement costs -- -- -- -- (25,125) Interest (14,452) (9,766) -- (3,300) (58,540) ----------- ----------- ----------- ----------- ----------- Total Other Income (Expense) (14,452) (9,766) -- (3,300) (137,279) ----------- ----------- ----------- ----------- ----------- NET LOSS $ (115,133) $ (612,698) $ (37,640) $ (157,317) $(2,812,566) =========== =========== =========== =========== =========== LOSS PER SHARE $ (0.00) $ (0.03) $ (0.00) $ (0.01) =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 6 7 SIONIX CORPORATION (A Development Stage Company) Statements of Stockholders' Equity From Inception on October 3, 1994 through June 30, 1998 (Unaudited)
Common Stock Additional ------------------------- Paid-in Accumulated Subscription Shares Amount Capital Deficit Receivable ----------- -------- ----------- ----------- ------------ Balance, October 3, 1994 -- $ -- $ -- $ -- $ -- Shares issued to initial stockholders in October 1994 at $0.01 per share 10,000 10 90 -- -- Net loss from October 3, 1994 through December 31, 1994 -- -- -- (1,521) -- ----------- ----------- ----------- ----------- ---- Balance, December 31, 1994 10,000 10 90 (1,521) -- Issuance of common stock for assignment of rights recorded at predecessor cost at $0.00 per share 1,990,000 1,990 (1,990) -- -- Issuance of common stock for services at $0.25 per share 572,473 572 135,046 -- -- Issuance of common stock for debt at $0.25 per share 188,561 188 47,347 -- -- Issuance of common stock for debt at $0.50 per share 595,860 596 297,334 -- -- Issuance of common stock for debt at $2.00 per share 98,194 98 196,290 -- -- Issuance of common stock for debt at $4.00 per share 156,025 156 623,944 -- -- ----------- ----------- ----------- ----------- ---- Balance forward 3,611,113 $ 3,610 $ 1,298,061 $ (1,521) $ -- ----------- ----------- ----------- ----------- ----
The accompanying notes are an integral part of these financial statements. 7 8 SIONIX CORPORATION (A Development Stage Company) Statements of Stockholders' Equity (Continued) From Inception on October 3, 1994 through June 30, 1998 (Unaudited)
Common Stock Additional ------------------------- Paid-in Accumulated Subscription Shares Amount Capital Deficit Receivable ----------- -------- ----------- ----------- ------------ Balance forward 3,611,113 $ 3,610 $ 1,298,061 $ (1,521) $ -- Issuance of common stock for cash at $4.00 per share 138,040 138 552,022 -- -- Issuance of common stock for subscription note receivable at $4.00 per share 414,200 414 1,652,658 -- (1,656,800) Issuance of common stock for future production costs at $6.00 per share 112,500 113 674,887 -- (675,000) Issuance of common stock for cash at $6.00 per share 94,517 95 567,005 -- -- Net loss for the year ended December 31, 1995 -- -- -- (914,279) -- ---------- ------------ ------------ ----------- ----------- Balance, December 31, 1995 4,370,370 4,370 4,744,633 (915,800) (2,331,800) Issuance of common stock in reorganization 18,632,612 18,633 (58,033) -- -- Issuance of common stock for cash at $1.00 per share 572,407 573 571,834 -- -- Issuance of common stock for services at $1.00 per share 24,307 24 24,283 -- -- Net loss for the nine months ended September 30, 1996 -- -- -- (922,717) -- ---------- ------------ ------------ ----------- ----------- Balance, September 30, 1996 23,599,696 $ 23,600 $ 5,282,717 $(1,838,517) $(2,331,800) ---------- ------------ ------------ ----------- -----------
8 9 SIONIX CORPORATION (A Development Stage Company) Statements of Stockholders' Equity (Continued) From Inception on October 3, 1994 through June 30, 1998 (Unaudited)
Common Stock Additional ------------------------- Paid-in Accumulated Subscription Shares Amount Capital Deficit Receivable ----------- ----------- ----------- ----------- ------------ Balance, September 30, 1996 23,599,696 $ 23,600 $ 5,282,717 $(1,838,517) $(2,331,800) Issuance of common stock for cash at $1.00 per share 80,880 81 80,799 -- -- Issuance of common stock for cash at $0.69 per share 14,545 15 9,985 -- -- Issuance of common stock for cash at $0.67 per share 60,000 60 39,940 -- -- Issuance of common stock for cash at $0.56 per share 4,444 4 2,496 -- -- Issuance of common stock for cash at $0.50 per share 368,000 368 183,632 -- -- Issuance of common stock for cash at $0.31 per share 8,064 8 2,492 -- -- Issuance of common stock for cash at $0.25 per share 186,800 187 46,513 -- -- Issuance of common stock for services at $0.20 per share 274,299 274 54,586 -- -- Cancellation of shares issued for agreement for future production costs and other shares (542,138) (542) (674,458) -- 675,000 Net loss for the year ended September 30, 1997 -- -- -- (858,916) -- ---------- -------- ----------- ------------ ------------ Balance, September 30, 1997 24,054,590 $ 24,055 $ 5,028,702 $ (2,697,433) $ (1,656,800) ---------- -------- ----------- ------------ ------------
The accompanying nots are an integral part of these financial statements. 9 10 SIONIX CORPORATION (A Development Stage Company) Statements of Stockholders' Equity (Continued) From Inception on October 3, 1994 through June 30, 1998 (Unaudited)
Common Stock Additional ------------------------- Paid-in Accumulated Subscription Shares Amount Capital Deficit Receivable ----------- ----------- ----------- ----------- ------------ Balance, September 30, 1997 24,054,590 $ 24,055 $ 5,028,702 $(2,697,433) $(1,656,800) Expiration of subscription notes (144,570) (145) (119,855) -- 120,000 Issuance of common stock for cash at $0.10 per share 1,535,000 1,535 151,965 -- -- Net loss for the nine months ended June 30, 1998 -- -- -- (115,133) -- ---------- ----------- ------------ ----------- ----------- Balance, June 30, 1998 25,445,020 $ 25,445 $ 5,060,812 $(2,812,566) $(1,536,800) ========== =========== ============ =========== ===========
The accompanying nots are an integral part of these financial statements. 10 11 SIONIX CORPORATION (A Development Stage Company) Statements of Cash Flows (Unaudited)
From Inception on For the Nine Months Ended For the Three Months Ended October 3, June 30, June 30, 1994 Through ---------------------------- ---------------------------- June 30, 1998 1997 1998 1997 1998 ------------ ----------- ----------- ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (115,133) $ (612,698) $ (37,640) $ (157,317) $(2,812,566) Adjustments to Reconcile Net Loss to Net Cash Used by Operating Activities: Depreciation and amortization 69,900 82,830 23,300 27,630 323,276 Common stock issued for services -- -- -- -- 214,785 Change in Assets and Liabilities (Increase) decrease in accounts receivable -- -- -- -- -- (Increase) decrease in advances (17,254) -- (17,254) -- (17,254) (Increase) in deposits (10,000) (35,000) (10,000) -- (10,000) (Increase) decrease in inventory -- (12,269) -- -- (6,525) Increase (decrease) in accounts payable and accrued expenses (61,763) 79,287 (22,954) 36,187 147,221 ----------- ----------- ----------- ----------- ----------- Net Cash Used by Operating Activities (134,250) (497,850) (64,548) (93,500) (2,161,063) ----------- ----------- ----------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of intangibles (10,448) (69,954) -- -- (160,636) Purchase of fixed assets (52,010) (2,007) (52,010) -- (133,763) ----------- ----------- ----------- ----------- ----------- Net Cash Used by Investing Activities (62,458) (71,961) (52,010) -- (294,399) ----------- ----------- ----------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Repayment of notes payable and contracts payable (9,877) (7,058) (9,937) (2,575) (29,784) Proceeds from sale of common stock 153,500 359,080 153,500 41,700 2,071,158 Proceeds from notes payable and convertible debenture 81,269 195,909 -- 46,257 442,543 ----------- ----------- ----------- ----------- ----------- Net Cash Provided by Financing Activities $ 224,892 $ 547,931 $ 143,563 $ 85,382 $ 2,483,917 ----------- ----------- ----------- ----------- -----------
The accompanying nots are an integral part of these financial statements. 11 12 SIONIX CORPORATION (A Development Stage Company) Statements of Cash Flows (Unaudited)
From Inception on For the Nine Months Ended For the Three Months Ended October 3, June 30, June 30, 1994 through --------------------------- --------------------------- June 30, 1998 1997 1998 1997 1998 ----------- ----------- ----------- ----------- ----------- INCREASE (DECREASE) IN CASH $ 28,184 $ (21,880) $ 27,005 $ (8,118) $ 28,455 CASH AT BEGINNING OF PERIOD 271 36,041 1,450 22,279 -- ----------- ----------- ----------- ----------- ----------- CASH AT END OF PERIOD $ 28,455 $ 14,161 $ 28,455 $ 14,161 $ 28,455 =========== =========== =========== =========== =========== CASH PAID FOR: Interest $ 20,140 $ 9,766 $ 5,688 $ 3,300 $ 32,760 Income taxes $ -- $ -- $ -- $ -- $ -- SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Decrease (Increase) in subscription notes receivable and future production costs receivable $ 120,000 $ -- $ -- $ -- $(1,536,800) Addition to debt for acquisition of intangibles $ -- $ -- $ -- $ -- $ 1,302,914 Common stock issued for services $ -- $ -- $ -- $ -- $ 214,785 Equipment acquired under lease payable $ -- $ -- $ -- $ -- $ 25,533
The accompanying nots are an integral part of these financial statements. 12 13 SIONIX CORPORATION (A Development Stage Company) Notes to the Financial Statements June 30, 1998 and September 30, 1997 NOTE 1 - COMPANY ORGANIZATION AND BUSINESS ACTIVITY Sionix Corporation (formerly Automatic Control Corporation) (the "Company") was incorporated in Nevada on October 3, 1994. The Company was formed to design, develop, and market an automatic water filtration system primarily for small water districts. The Company is in the development stage and its efforts through March 31, 1998 have been principally devoted to research and development, organizational activities, and raising capital. As of June 30, 1998, the Company has $15,500 of revenues. The ultimate recovery of investments and costs is dependent on future profitable operations, which presently cannot be determined. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Accounting Method The Company's financial statements are prepared using the accrual method of accounting. The Company has elected to change its year end to September 30, subject to IRS approval. 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. Intangible Assets Intangible assets are recorded at cost. Amortization of the costs are determined using the straight-line method over the expected useful life of 15 years. 13 14 SIONIX CORPORATION (A Development Stage Company) Notes to the Financial Statements (Continued) June 30, 1998 and September 30, 1997 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) e. Inventory Work-in-process and finished goods are stated at the lower of average cost or market. Inventories at June 30, 1998 and September 30, 1997 consisted of the following: June 30, September 30, 1998 1997 ------- ------------- Finished goods $6,525 $ 6,525 ------ ------- Total $6,525 $ 6,525 ====== ======= f. Research and Development Research and development costs are expensed as incurred. g. Net Loss Per Share The computation of net loss per share of common stock is based on the weighted average number of shares outstanding at the date of the financial statements. h. Provision for Income Taxes No provision for 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 carryovers of approximately $2,800,000 will expire by the year 2013. i. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 14 15 SIONIX CORPORATION (A Development Stage Company) Notes to the Financial Statements (Continued) June 30, 1998 and September 30, 1997 NOTE 3 - PROPERTY AND EQUIPMENT Property and equipment at June 30, 1998 and September 30, 1997 consisted of the following:
June 30, September 30, 1998 1997 ----------- ---------- Computers and test equipment $ 154,921 $ 125,603 Furniture and fixtures 10,503 10,503 ----------- ---------- Total 165,424 136,106 Less accumulated depreciation (45,670) (22,068) ----------- ---------- Property and Equipment - Net $ 119,754 $ 90,436 =========== ==========
NOTE 4 - INTANGIBLE ASSETS Intangible assets at June 30, 1998 and September 30, 1997 consisted of the following: June 30, September 30, 1998 1996 ------------ ----------- Patents issued and pending $ 112,340 $ 112,465 Intellectual property 1,227,264 1,227,138 Marketing and development costs 95,123 84,676 Less accumulated amortization (254,913) (207,705) ------------ ----------- Intangible Assets - Net $ 1,179,814 $ 1,216,574 ============ =========== NOTE 5 - LOAN PAYABLE Pursuant to the acquisition agreement as explained in Note 9, the Company assumed various promissory notes originally signed in 1992 and 1993 totalling $50,000. The notes bear interest at 8% and were originally due in 1994. Management of the Company currently cannot locate the holder of the notes and consequently has not been able to settle the liability. The amount is being included as a current liability in the accompanying financial statements until management can locate the note holder and settle the debt. 15 16 SIONIX CORPORATION (A Development Stage Company) Notes to the Financial Statements (Continued) June 30, 1998 and September 30, 1997 NOTE 6 - LEASE COMMITMENTS The Company leases equipment with a lease term through July of 1999. Obligations under this capital lease have been recorded in the accompanying financial statements at the present value of future minimum lease payments. The capitalized cost of $25,533 less accumulated depreciation of $2,553 is included in property and equipment in the accompanying financial statements. Obligations under this capital lease consist of the following: June 30, September 30, 1998 1997 --------- ------------ Total $ 12,186 $ 12,126 Less: current portion (8,609) (7,847) --------- -------- Long-term portion $ 3,577 $ 4,279 ========= ======== The future minimum lease payments under this capital lease and the net present value of the future minimum lease payments are as follows: Year Ending June 30, September 30, September 30, 1998 1997 --------------- ------------ ------------- 1998 $ 7,650 $ 9,470 1999 7,346 4,735 2000 -- -- 2001 and thereafter -- -- -------- -------- Total future minimum lease payments 14,996 14,205 Less, amount representing interest (2,810) (2,079) -------- -------- Present value of future minimum lease payments $ 12,186 $ 12,126 ======== ======== NOTE 7 - RELATED PARTY PAYABLES The Company has received advances in the form of promissory notes from various shareholders and other related parties in order to pay minimal ongoing operating expenses. As of June 30, 1998, $356,043 was due from the Company as a result of these promissory notes. The notes bear interest at 7% to 13% and originally matured during November and December 1996. The related parties and shareholders currently intend to extend the promissory notes at least another year and thus the corresponding liability has been classified as long-term in the accompanying financial statements. 16 17 SIONIX CORPORATION (A Development Stage Company) Notes to the Financial Statements (Continued) June 30, 1998 and September 30, 1997 NOTE 8 - CONVERTIBLE DEBENTURE As of June 30, 1998, the Company has $20,000 in 10% redeemable, convertible debentures. Interest accrues at a rate of 10% and is payable on a quarterly basis. The principle and unpaid interest are due during September, October, and November 1998. The principal amount is convertible at the option of the holder at any time prior to maturity into shares of the Company's common stock at a rate of $1.00 per common share. NOTE 9 - STOCKHOLDERS' EQUITY During the year ended March 31, 1995, 414,200 shares of common stock were issued in return for notes receivable in the amount of $1,656,800. The total number of post-merger shares represented by these notes is 1,996,032 shares. These notes are secured by the shares issued and are non-recourse. They have a stated interest rate of 6% and have maturity dates ranging from March 1, 1998 to September 7, 1998. During the nine months ended June 30, 1998, two notes receivable totaling $120,000 and representing 144,570 shares of common stock were not paid when due and the corresponding stock certificates were presented to the transfer agent for cancellation. NOTE 10 - COMMON STOCK PURCHASE WARRANTS The Company's Board of Directors has authorized and approved 1,443,328 common stock purchase warrants as of March 31, 1997 as follows: Number Exercise Price of Warrants Per Share Expiration Date(s) ----------- --------------- ------------------ 570,100 $ 1.00 May 15, 1998 - Sept. 30, 1998 81,400 $ 0.50 January 2, 1997 - March 31, 1999 NOTE 11 - GOING CONCERN The Company's financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash or other material assets, nor does it have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. It is the intent of the Company to generate revenue through the sales of its software and hardware products. During the later part of the Fiscal 1996, the Company focused its energies on raising capital to begin the manufacturing and marketing of its equipment products. Toward these ends, the Company engaged a public relations firm to aid in the raising of capital and presented seminars on its technology in areas where water quality is a serious problem. Management believes, with successful completion of a financial package, that delivered sales of the Company's equipment products will occur. In the opinion of management, sales of the Company's products, together with the proceeds of an offering, will be sufficient for it to continue as a going concern. 17 18 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. LIQUIDITY AND CAPITAL RESOURCES New management has arranged for the necessary capital needed for the Company to complete engineering, design and procure machine tooling, manufacture and test "beta" units, and begin limited production. RESULTS OF OPERATIONS For the quarter the Company is reporting a loss of $37,640 or $0.00 per share on no revenues. The Company is continuing to meet with many potential foreign and domestic customers that require immediate solutions to water problems. The Company maintains an Internet home page at http://www.sionix.com. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 18 19 PART II - OTHER INFORMATION. ITEM 1. LEGAL PROCEEDINGS. The Company is a defendant in a lawsuit in San Diego Superior Courts filed at the end of December of 1997 by a disgruntled stockholder. The stockholder alleges that he was improperly informed of the risks of his investment in the Company. The ultimate outcome of the case is uncertain but management believes that an unfavorable outcome is unlikely. Therefore, no accrual has been recorded in the accompanying financial statements. The Company has been declared a judgement creditor in three lawsuits. The amounts due on these judgements were previously recorded liabilities in the accompanying financial statements. With the exception of the above referenced matters, there are no legal proceedings against the Company and the Company is unaware of any unasserted claim or assessment which will have a material effect on the financial position or future operations of the Company. ITEM 2. CHANGES IN SECURITIES. Not required. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. Not required. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not Required ITEM 5. OTHER INFORMATION. Not required. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) 27. Financial Data Schedule. (b) There were no other reports on Form 8-K filed during the quarter of the period covered. 19 20 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the Undersigned, thereunto duly authorized. SIONIX CORPORATION A UTAH CORPORATION Dated: August 13, 1998 /s/ James J. Houtz ------------------------------ By: James Houtz Its: President Dated: August 13, 1998 /s/ Joan Horowitz ------------------------------ By: Joan Horowitz Its: Secretary 20 21 EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION - ------- ----------- 27 Financial Data Schedule. EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS SEP-30-1998 APR-01-1998 JUN-30-1998 28,455 0 17,254 0 6,525 52,234 165,424 45,670 1,361,802 265,228 0 0 0 25,445 711,446 1,361,802 0 0 0 0 37,640 (37,640) 0 (37,640) 0 (37,640) 0 0 0 (37,640) (0.00) (0.00)
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