10QSB 1 v084221_10qsb.htm Unassociated Document
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 June 30, 2007

Commission File Number 2-95626-D

Sionix Corporation
(Exact name of small business issuer as specified in its charter)
 
Nevada
87-0428526
 
 
State or other jurisdiction
(IRS Employer
of incorporation or organization)
Identification No.)
 
 2082 Michelson Drive, Suite 306, Irvine, CA 92612

(Address of principal executive offices)

949 752-7980
 
(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 Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file for such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x    No o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No x

As of July 31, 2007, there were 106,635,201 shares of Common Stock of the issuer outstanding.

Transitional Small Business Disclosure Format (check one) o Yes; x No

 
 
CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS

We desire to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. This Report on Form 10-QSB contains a number of forward-looking statements that reflect management's current views and expectations with respect to our business, strategies, products, future results and events and financial performance. All statements made in this Report other than statements of historical fact, including statements that address operating performance, events or developments that management expects or anticipates will or may occur in the future, including statements related to distributor channels, volume growth, revenues, profitability, new products, acquisitions, adequacy of funds from operations, statements expressing general optimism about future operating results and non-historical information, are forward-looking statements. In particular, the words "believe," "expect," "intend," "anticipate," "estimate," "may," "will," variations of such words, and similar expressions identify forward-looking statements, but are not the exclusive means of identifying such statements and their absence does not mean that the statement is not forward-looking. These forward-looking statements are subject to certain risks and uncertainties, including those discussed below. Our actual results, performance or achievements could differ materially from historical results as well as those expressed in, anticipated or implied by these statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Readers should not place undue reliance on these forward-looking statements, which are based on management's current expectations and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties and assumptions (including those described below) and apply only as of the date of this Report. Our actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below "Management's Discussion and Analysis and Plan of Operation," as well as those discussed elsewhere in this Report, and the risks discussed in our most recently filed Annual Report on Form 10-KSB and in the press releases and other communications to shareholders issued by us from time to time which attempt to advise interested parties of the risks and factors that may affect our business.
 
 
Part I. FINANCIAL INFORMATION

Item 1. Financial Statements
 
SIONIX CORPORATION
  
(A DEVELOPMENT STAGE COMPANY)
  
BALANCE SHEET
  
AS OF JUNE 30, 2007
  
(Unaudited)
  
        
ASSETS
  
         
CURRENT ASSETS:
        
Cash & cash equivalents
  
$
455,563
 
         
PROPERTY AND EQUIPMENT, net
    
46,399
 
DEPOSIT
    
4,600
 
         
Total assets
  
$
506,562
 
         
         
LIABILITIES AND STOCKHOLDERS' DEFICIT
         
CURRENT LIABILITIES:
        
Accounts payable
  
$
204,804
 
Accrued expenses
    
1,525,397
 
Notes payable-related parties
    
129,000
 
Note payable-officers
    
32,860
 
Convertible notes
    
792,314
 
Equity line of credit
    
102,336
 
Total current liabilities
    
2,786,712
 
         
STOCKHOLDERS' DEFICIT
        
Common stock, $0.001 par value ;150,000,000 shares authorized;
        
107,117,101 shares issued and 106,635,201 shares outstanding
    
106,635
 
Additional paid-in capital
    
13,969,888
 
Shares to be issued
    
43,900
 
Deficit accumulated during development stage
    
(16,400,573
)
Total stockholders' deficit
    
(2,280,150
)
Total liabilities & stockholders' deficit
  
$
506,562
 
 
The accompanying notes form an integral part of these unaudited financial statements
 
 
SIONIX CORPORATION
  
(A DEVELOPMENT STAGE COMPANY)
  
STATEMENTS OF OPERATIONS
  
(Unaudited)
  
 
   
Three Month Periods Ended
June 30,
  
Nine Month Periods
Ended
June 30,
  
Cumulative
from Inception
(October 3, 1994) to
 
   
2007
  
2006
  
2007
  
2006
  
June 30, 2007
  
                                 
Net sales
  
$
-
  
$
-
  
$
    
$
 -
  
$
-
  
                                 
Operating expenses:
                                
General and administrative
    
444,544
   
242,236
   
932,668
   
447,247
   
12,675,067
 
Research and development
    
-
   
-
   
-
   
-
   
1,449,474
 
Impairment of intangible assets
    
-
   
-
   
-
   
-
   
1,267,278
 
Inventory obsolescence
    
-
   
-
   
-
   
-
   
365,078
 
Depreciation and amortization
    
7,936
   
7,745
   
23,723
   
23,486
   
524,129
 
Total operating expenses
    
452,480
   
249,981
   
956,391
   
470,733
   
16,281,026
 
Loss from operations
    
(452,480
)
  
(249,981
)
  
(956,391
)
  
(470,733
)
  
(16,281,026
)
                                 
Other income (expenses)
                                
Interest income
    
56
   
-
   
666
   
-
   
54,324
 
Interest expense
    
(74,307
)
  
(2,406
)
  
(144,895
)
  
(7,218
)
  
(379,582
)
Loss on settlement of debts
    
-
   
-
   
-
   
(94,221
)
  
(230,268
)
Loss on legal settlement
    
-
   
-
   
-
   
-
   
434,603
 
Total other income (expenses)
    
(74,252
)
  
(2,406
)
  
(144,229
)
  
(101,439
)
  
(120,924
)
                                 
Loss before income taxes
   
(526,732
)
  
(252,387
)
  
(1,100,620
)
  
(572,172
)
  
(16,388,874
)
                                 
Income taxes
    
900
   
-
   
900
   
-
   
11,700
 
                                 
Net loss
 
$
(527,632
)
$
(252,387
)
$
(1,101,520
)
$
(572,172
)
$
(16,400,573
)
                                 
                                 
Basic and diluted loss per share
 
$
(0.00
)
$
(0.00
)
$
(0.01
)
$
(0.01
)
      
                                 
 
                                
*Basic and diluted weighted average number of common stock outstanding
    
106,431,387
   
102,524,186
   
105,901,243
   
102,524,186
       
 
*Weighted average number of shares used to compute basic and diluted loss per share is the same as the effect of dilutive
securities is anti-dilutive
 
The accompanying notes form an integral part of these unaudited financial statements
 
 
SIONIX CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)

     
For The Nine Month Periods Ended June 30,
    
Cumulative From Inception (October 3, 1994) to September 30,
   
Cumulative From Inception (October 3, 1994) to
June 30,
 
 
 
 
2007
 
 
2006
 
 
2006
    
2007
  
CASH FLOWS FROM OPERATING ACTIVITIES:
                          
Net loss
$
 
(1,101,520
)
$
  (572,172
)
$
  (15,299,053
)
$
(16,400,573
)
Adjustments to reconcile net loss to net cash used in
                         
operating activities:
                          
Depreciation and amortization
    
23,723
   
23,486
   
587,323
   
611,046
 
Amortizaton of consulting fees
    
-
   
-
   
13,075
   
13,075
 
Amortization of debt discount on convertible NP
    
75,827
   
-
   
75,827
       
Issuance of common stock for compensation
    
-
   
-
   
1,835,957
   
1,835,957
 
Issuance of common stock for services & prepaid consulting fees
    
84,929
   
-
   
2,096,557
   
2,181,486
 
Impairment of assets
    
-
   
-
   
514,755
   
514,755
 
Write-down of obsolete assets
    
-
   
-
   
38,862
   
38,862
 
Impairment of intangible assets
    
-
   
-
   
1,117,601
   
1,117,601
 
Loss on settlement of debts
    
-
   
94,221
   
130,268
   
130,268
 
Other
    
-
   
-
   
40,370
   
40,370
 
Changes in assets and liabilities:
                          
Increase in other current assets
    
-
   
-
   
(510,727
)
  
(510,727
)
Decrease in other receivable
    
-
   
-
   
3,000
   
3,000
 
Increase in deposits
    
(4,600
)
  
-
   
-
   
(4,600
)
Increase (decrease) in accounts payable
    
(67,806
)
  
7,713
   
342,610
   
274,804
 
Increase in accrued interest
    
69,068
   
7,218
   
68,681
   
137,749
 
Increase (decrease) in accrued expense
    
319,558
   
422,139
   
1,067,914
   
1,387,473
 
Total adjustments
    
500,700
   
554,777
   
7,346,247
   
7,846,947
 
Net cash used in operating activities
    
(600,821
)
  
(17,395
)
  
(7,952,807
)
  
(8,553,626
)
                           
CASH FLOWS FROM INVESTING ACTIVITIES
                          
Purchase of patents
    
-
   
-
   
(154,061
)
  
(154,061
)
Purchase of equipment
    
(25,361
)
  
-
   
(380,174
)
  
(405,535
)
Net cash used in investing activities
    
(25,361
)
  
-
   
(534,235
)
  
(559,596
)
                           
CASH FLOWS FROM FINANCING ACTIVITIES:
                          
Proceeds from issuance of notes
   
1,336,000
   
47,780
   
457,433
   
1,793,433
 
Proceeds from (payment for) notes payble under equity line of credit
    
(225,000
)
  
-
   
756,000
   
531,000
 
Payment of notes to officers
    
(33,800
)
  
(30,340
)
  
(151,842
)
  
(185,642
)
Issuance of common stock for cash
    
-
   
-
   
7,376,094
   
7,376,094
 
Receipt of cash for stock to be issued
    
-
   
-
   
53,900
   
53,900
 
Net cash provided by financing activities
    
1,077,201
   
17,440
   
8,491,585
   
9,568,785
 
                           
Net increase in cash & cash equivalents
    
451,019
   
45
   
4,544
   
455,563
 
                           
CASH & CASH EQUIVALENTS, BEGINNING
   
4,544
   
343
   
-
   
-
 
                           
CASH & CASH EQUIVALENTS, ENDING
   
455,563
 
$
388
  
 
4,544
 
$
455,563
  
                           
SUPPLEMENTAL INFORMATION:
    
 
                    
Taxes
  
$
-
  
$
-
        
 
 
  
Interest expense
  
$
-
  
$
-
        
 
  
 
The accompanying notes form an integral part of these unaudited financial statements
  
 
 
SIONIX CORPORATION
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FROM INCEPTION (OCTOBER 3,1994) TO JUNE 30, 2007
(Unaudited)
 
 
 
 
                          
Deficit
  
Total
 
   
Common stock
 
Additional
 
Stock
 
Stock
 
Stock
 
Unamortized
 
accumulated
 
stockholders'
  
   
Number of
 
 
 
paid-In
 
to be
 
subscription
 
to be
 
consulting
 
from
 
equity
  
   
shares
 
Amount
 
capital
 
issued
 
receivable
 
cancelled
 
 fees
 
inception
 
(deficit)
  
                                                         
Shares issued for cash-Oct 1994
   
10,000
 
$
10
  
$
90
  
$
-
  
$
-
  
$
-
  
$
-
  
$
-
  
$
100
  
                                                         
Net loss for period
Oct 3, 1994 to Dec 31, 1994
   
-
   
-
   
-
   
-
   
-
   
-
   
-
   
(1,521
)
  
(1,521
)
                                                         
Balance December 31, 1994
    
10,000
   
10
   
90
   
-
   
-
   
-
   
-
   
(1,521
)
  
(1,421
)
                                                         
Shares issued for assignment right
    
1,990,000
   
1,990
   
(1,990
)
  
-
   
-
   
-
   
-
   
-
   
-
 
                                                         
Issuance of shares for service
    
572,473
   
572
   
135,046
   
-
   
-
   
-
   
-
   
-
   
135,618
 
                                                         
Issuance of shares for debt
    
1,038,640
   
1,038
   
1,164,915
   
-
   
-
   
-
   
-
   
-
   
1,165,953
 
                                                         
Issuance of shares for cash
    
232,557
   
233
   
1,119,027
   
-
   
-
   
-
   
-
   
-
   
1,119,260
 
                                                         
Issuance of shares for subscription
note receivable
    
414,200
   
414
   
1,652,658
   
-
   
(1,656,800
)
  
-
   
-
   
-
   
(3,728
)
                                                         
Issuance of shares for future
production cost
    
112,500
   
113
   
674,887
   
-
   
(675,000
)
  
-
   
-
   
-
   
-
 
                                                         
Net loss for the year
ended December 31, 1995
    
-
   
-
   
-
   
-
   
-
   
-
   
-
   
(914,279
)
  
(914,279
)
                                                         
Balance December 31, 1995
    
4,370,370
   
4,370
   
4,744,633
   
-
   
(2,331,800
)
  
-
   
-
   
(915,800
)
  
1,501,403
 
                                                         
Issuance of shares for reorganization
    
18,632,612
   
18,633
   
(58,033
)
  
-
   
-
   
-
   
-
   
-
   
(39,400
)
                                                         
Issuance of shares for cash
    
572,407
   
573
   
571,834
   
-
   
-
   
-
   
-
   
-
   
572,407
 
                                                         
Issuance of shares for service
    
24,307
   
24
   
24,283
   
-
   
-
   
-
   
-
   
-
   
24,307
 
                                                         
Net loss for the nine month ended
September 30, 1996
    
-
   
-
   
-
   
-
   
-
   
-
   
-
   
(922,717
)
  
(922,717
)
                                                         
Balance September 30, 1996
    
23,599,696
   
23,600
   
5,282,717
   
-
   
(2,331,800
)
  
-
   
-
   
(1,838,517
)
  
1,136,000
 
                                                         
Share issued for cash
   
722,733
   
723
   
365,857
   
-
   
-
   
-
   
-
   
-
   
366,580
 
                                                         
Share issued for service
   
274,299
   
274
   
54,586
   
-
   
-
   
-
   
-
   
-
   
54,860
 
                                                         
Cancellation of shares
    
(542,138
)
  
(542
)
  
(674,458
)
  
-
   
675,000
   
-
   
-
   
-
   
-
 
                                                         
Net loss for the year ended
September 30, 1997
    
-
   
-
   
-
   
-
   
-
   
-
   
-
   
(858,915
)
  
(858,915
)
                                                         
Balance September 30, 1997
    
24,054,590
   
24,055
   
5,028,702
   
-
   
(1,656,800
)
  
-
   
-
   
(2,697,432
)
  
698,525
 
                                                         
Balance September 30, 1997
    
24,054,590
   
24,055
   
5,028,702
   
-
   
(1,656,800
)
  
-
   
-
   
(2,697,432
)
  
698,525
 
                                                         
Share issued for cash
   
2,810,000
   
2,810
   
278,190
   
-
   
-
   
-
   
-
   
-
   
281,000
 
                                                         
Share issued for service
   
895,455
   
895
   
88,651
   
-
   
-
   
-
   
-
   
-
   
89,546
 
                                                         
Shares issued for compensation
    
2,200,000
   
2,200
   
217,800
   
-
   
-
   
-
   
-
   
-
   
220,000
 
                                                         
Cancellation of shares
    
(2,538,170
)
  
(2,538
)
  
(1,534,262
)
  
-
   
1,656,800
   
-
   
-
   
-
   
120,000
 
 
 
SIONIX CORPORATION
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FROM INCEPTION (OCTOBER 3,1994) TO JUNE 30, 2007
(Unaudited)
 
     
Common stock
                                  
Deficit
    
Total
 
     
Number
of 
    
 
    
Additional
paid-In
    
Stock
to be
   
Stock
subscription
    
Stock
to be
   
Unamortized
consulting
    
accumulated
from
    
stockholders'
equity
  
      
shares
    
Amount
    
capital
    
issued
    
receivable
    
cancelled
    
 fees
    
inception
    
(deficit)
  
Net loss for the year ended
September 30, 1998
    
-
   
-
   
-
   
-
   
-
   
-
   
-
   
(1,898,376
)
  
(1,898,376
)
                                                         
Balance September 30, 1998
    
27,421,875
   
27,422
   
4,079,081
   
-
   
-
   
-
   
-
   
(4,595,808
)
  
(489,305
)
Shares issued for compensation
    
3,847,742
   
3,847
   
389,078
   
-
   
-
   
-
   
-
   
-
   
392,925
 
                                                         
Share issued for service
   
705,746
   
706
   
215,329
   
-
   
-
   
-
   
-
   
-
   
216,035
 
                                                         
Share issued for cash
   
9,383,000
   
9,383
   
928,917
   
-
   
-
   
-
   
-
   
-
   
938,300
 
                                                         
Net loss for the year ended
September 30, 1999-Restated
    
-
   
-
   
-
   
-
   
-
   
-
   
-
   
(1,158,755
)
  
(1,158,755
)
                                                         
Balance September 30, 1999
    
41,358,363
   
41,358
   
5,612,405
   
-
   
-
   
-
   
-
   
(5,754,563
)
  
(100,800
)
                                                         
Share issued for cash
   
10,303,500
   
10,304
   
1,020,046
   
-
   
-
   
-
   
-
   
-
   
1,030,350
 
                                                         
Shares issued for compensation
    
1,517,615
   
1,518
   
1,218,598
   
-
   
-
   
-
   
-
   
-
   
1,220,116
 
                                                         
Shares issued for service
   
986,844
   
986
   
253,301
   
-
   
-
   
-
   
-
   
-
   
254,287
 
                                                         
Net loss for the year ended
September 30, 2000
    
-
   
-
   
-
   
-
   
-
   
-
   
-
   
(2,414,188
)
  
(2,414,188
)
                                                         
Balance September 30, 2000
    
54,166,322
   
54,166
   
8,104,350
   
-
   
-
   
-
   
-
   
(8,168,751
)
  
(10,235
)
                                                         
Shares issued for service and
prepaid expenses
    
2,517,376
   
2,517
   
530,368
   
-
   
-
   
-
   
(141,318
)
  
-
   
391,567
 
                                                         
Share issued for cash
   
6,005,000
   
6,005
   
594,495
         
-
   
-
   
-
   
-
   
600,500
 
                                                         
100,000 share to be issued for cash
   
-
   
-
   
-
   
10,000
   
-
   
-
   
-
   
-
   
10,000
 
 
 
SIONIX CORPORATION
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FROM INCEPTION (OCTOBER 3,1994) TO JUNE 30, 2007
(Unaudited)
 
 
 
 
                          
Deficit
  
Total
 
   
Common stock
 
Additional
 
Stock
 
Stock
 
Stock
 
Unamortized
 
accumulated
 
stockholders'
  
   
Number of
 
 
 
paid-In
 
to be
 
subscription
 
to be
 
consulting
 
from
 
equity
  
   
shares
 
Amount
 
capital
 
issued
 
receivable
 
cancelled
 
 fees
 
inception
 
(deficit)
  
Net loss for the year ended
September 30, 2001
    
-
   
-
   
-
   
-
   
-
   
-
   
-
   
(1,353,429
)
  
(1,353,429
)
                                                         
639,509 Shares to be issued for debt
settlement in 2001
    
-
   
-
   
-
   
103,295
     -     -     -     -    
103,295
  
                                                         
Balance September 30, 2001
    
62,688,698
   
62,688
   
9,229,213
   
113,295
   
-
   
-
   
(141,318
)
  
(9,522,180
)
  
(258,302
)
                                                         
Balance September 30, 2001
    
62,688,698
   
62,688
   
9,229,213
   
113,295
   
-
   
-
   
(141,318
)
  
(9,522,180
)
  
(258,302
)
                                                         
Shares issued for service and
prepaid expenses
    
1,111,710
   
1,112
   
361,603
   
-
   
-
   
-
   
54,400
   
-
   
417,115
 
                                                         
Shares issued as contribution
    
100,000
   
100
   
11,200
   
-
   
-
   
-
   
-
   
-
   
11,300
 
                                                         
Shares issued for compensation
    
18,838
   
19
   
2,897
   
-
   
-
   
-
   
-
   
-
   
2,916
 
                                                         
Share issued for cash
   
16,815,357
   
16,815
   
1,560,782
   
(10,000
)
  
-
   
-
   
-
   
-
   
1,567,597
 
                                                         
Shares issued for debt settlement
   
1,339,509
   
1,340
   
208,639
   
(103,295
)
  
-
   
-
   
-
   
-
   
106,684
 
                                                         
Shares to be issued for services related to equity raising-
967,742 shares
    
-
   
-
   
(300,000
)
  
300,000
   
-
   
-
   
-
   
-
   
-
 
                                                         
Cancellation of shares
    
(7,533,701
)
  
(7,534
)
  
-
   
-
   
-
   
-
   
-
   
-
   
(7,534
)
                                                         
Net loss for the year ended
September 30, 2002
    
-
   
-
   
-
   
-
   
-
   
-
   
-
   
(1,243,309
)
  
(1,243,309
)
                                                         
Balance September 30, 2002
    
74,540,411
   
74,540
   
11,074,334
   
300,000
   
-
   
-
   
(86,918
)
  
(10,765,489
)
  
596,467
 
                                                         
Shares issued for services
   
2,467,742
   
2,468
   
651,757
   
(300,000
)
  
-
   
-
   
-
   
-
   
354,225
 
                                                         
Shares issued for capital equity line
    
8,154,317
   
8,154
   
891,846
   
-
   
-
   
-
   
-
   
-
   
900,000
 
                                                         
Amortization of consulting fees
    
-
   
-
   
-
   
-
   
-
   
-
   
86,918
   
-
   
86,918
 
                                                         
Cancellation of shares
    
(50,000
)
  
(50
)
  
50
   
-
   
-
   
-
   
-
   
-
   
-
 
                                                         
7,349,204 shares to be cancelled
    
-
   
-
   
7,349
   
-
   
-
   
(7,349
)
  
-
   
-
   
-
 
                                                         
 
 
SIONIX CORPORATION
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FROM INCEPTION (OCTOBER 3,1994) TO JUNE 30, 2007
(Unaudited)
 
 
 
 
                          
Deficit
  
Total
 
   
Common stock
 
Additional
 
Stock
 
Stock
 
Stock
 
Unamortized
 
accumulated
 
stockholders'
  
   
Number of
 
 
 
paid-In
 
to be
 
subscription
 
to be
 
consulting
 
from
 
equity
  
   
shares
 
Amount
 
capital
 
issued
 
receivable
 
cancelled
 
 fees
 
inception
 
(deficit)
  
Net loss for the year ended
September 30, 2003
    
-
   
-
   
-
   
-
   
-
   
-
   
-
   
(1,721,991
)
  
(1,721,991
)
                                                         
Balance September 30, 2003
    
85,112,470
   
85,112
   
12,625,336
   
-
   
-
   
(7,349
)
  
-
   
(12,487,480
)
  
215,619
 
                                                         
Shares issued for capital equity line
    
19,179,016
   
19,179
   
447,706
   
-
   
-
   
-
   
-
   
-
   
466,885
 
                                                         
Shares issued for services
    
5,100,004
   
5,100
   
196,997
   
-
   
-
   
-
   
(13,075
)
  
-
   
189,022
 
                                                         
963,336 shares to be issued for cash
    
-
   
-
   
-
   
28,900
   
-
   
-
   
-
   
-
   
28,900
 
                                                         
500,000 shares to be issued for debt settlement
    
-
   
-
   
-
   
15,000
   
-
   
-
   
-
   
-
   
15,000
 
                                                         
Cancelled shares
    
(7,349,204
)
  
(7,349
)
  
-
   
-
   
-
   
7,349
   
-
   
-
   
-
 
                                                         
Net loss for the year ended
September 30, 2004
    
-
   
-
   
-
   
-
   
-
   
-
   
-
   
(1,568,770
)
  
(1,568,770
)
                                                         
Balance September 30, 2004
    
102,042,286
   
102,042
   
13,270,039
   
43,900
   
-
   
-
   
(13,075
)
  
(14,056,250
)
  
(653,344
)
                                                         
Amortization of consuting fees
    
-
   
-
   
-
   
-
   
-
   
-
   
13,075
   
-
   
13,075
 
                                                         
Net loss for the year ended
September 30, 2005
    
-
   
-
   
-
   
-
   
-
   
-
   
-
   
(467,917
)
  
(467,917
)
                                                         
Balance September 30, 2005
    
102,042,286
   
102,042
   
13,270,039
   
43,900
   
-
   
-
   
-
   
(14,524,167
)
  
(1,108,186
)
                                                         
Net loss for the year ended
September 30, 2006
    
-
   
-
   
-
   
-
   
-
   
-
   
-
   
(774,887
)
  
(774,887
)
                                                         
Balance September 30, 2006
    
102,042,286
   
102,042
   
13,270,039
   
43,900
   
-
   
-
   
-
   
(15,299,053
)
  
(1,883,072
)
                                                         
Stock issued for consulting
    
4,592,915
   
4,593
   
80,336
   
-
   
-
   
-
   
-
   
-
   
84,929
 
                                                         
Beneficial conversion feature
    
-
   
-
   
619,513
   
-
   
-
   
-
   
-
   
-
   
619,513
 
                                                         
Net loss for the period
June 30, 2007
    
-
   
-
   
-
   
-
   
-
   
-
   
-
   
(1,101,520
)
  
(1,101,520
)
                                                         
Balance June 30, 2007
    
106,635,201
 
$
106,635
  
$
13,969,888
  
$
43,900
  
$
-
  
$
-
  
$
-
  
$
(16,400,573
)
$
(2,280,150
)
 
The accompanying notes form an integral part of these unaudited financial statements
 
 
1. ORGANIZATION AND DESCRIPTION OF BUSINESS

Sionix Corporation (the "Company") was incorporated in Utah in 1985. The Company was formed to design, develop, and market automatic water filtration system primarily for small water districts.

The Company has completed its reincorporation as a Nevada corporation, effective July 1, 2003. The reincorporation was completed pursuant to an Agreement and Plan of Merger between Sionix Corporation, a Utah corporation ("Sionix Utah") and its wholly-owned Nevada subsidiary, Sionix Corporation ("Sionix Nevada"). Under the merger agreement, Sionix Utah merged with and into Sionix Nevada, and each share of Sionix Utah’s common stock was automatically converted into one share of common stock, par value $0.001 per share, of Sionix Nevada. The merger was effected by the filing of Articles of Merger, along with the Agreement and Plan of Merger, with the Secretary of State of Nevada.
 
 
The Company is a development stage company as defined in Statement of Financial Accounting Standards (“SFAS”) No. 7, “Accounting and Reporting by Development Stage Enterprises.” The Company is in the development stage and its efforts have been principally devoted to research and development, organizational activities, and raising capital. All losses accumulated since inception has been considered as part of the Company’s development stage activities.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
BASIS OF PRESENTATION
 
The unaudited financial statements have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission. The information furnished in these consolidated financial statements reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. The results of the nine month periods ended June 30, 2007 are not necessarily indicative of the results to be expected for the full year ending September 30, 2007.

REVENUE RECOGNITION

The Company’s policy to recognize revenues is in accordance with SEC Staff Accounting Bulletin No. 101, or other specific authoritative literature, as applicable. Accordingly, revenues from products sales are recorded when all four of the following criteria are met: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred or services have been rendered; ( iii) the Company’s price to the buyer is fixed or determinable; and (iv) collectibility is reasonably assured. The Company’s policy is to report its sales levels on a net revenue basis, with net revenues being computed by deducting from gross revenues the amount of actual sales returns and the amount of reserves established for anticipated sales returns.

The Company’s policy for shipping and handling costs, billed to customers, is to include it in revenue in accordance with Emerging Issues Task Force ("EITF") issue No. 00-10, "Accounting for Shipping and Handling Revenues and Costs." The purpose of this issue was to clarify the classification of shipping and handling revenues and costs. The consensus reached was that all shipping and handling billed to customers should be recorded as revenue. Accordingly, the Company records its shipping and handling amounts within net sales and operating expenses.

The Company has not earned any revenue since its inception to the date of this report.
 
STOCK-BASED COMPENSATION
 

Effective October 1, 2006, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 123-R, “Share-Based Payment”   (“SFAS 123-R”), which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors, including stock options based on their fair values. SFAS 123-R supersedes Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”   (“APB 25”), which the Company previously followed in accounting for stock-based awards. In March 2005, the SEC issued Staff Accounting Bulletin No. 107 (SAB 107) to provide guidance on SFAS 123-R. The Company has applied SAB 107 in its adoption of SFAS 123-R.
 
NET LOSS PER SHARE
 
Net loss per share is calculated in accordance with Statement of Financial Accounting Standards No. 128, Earnings Per Share (“SFAS 128”). Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.
 
ESTIMATES
 
The preparation of financial statements 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 revenue and expenses during the reporting period. Actual results could differ from those estimates
 
ADVERTISING

The cost of advertising is expensed as incurred. Total advertising costs were $3,385 and $3,310 for the nine month periods ended June 30, 2007 and 2006, respectively.
 
RECLASSIFICATION
 
For comparative purposes, prior period’s consolidated financial statements have been reclassified to conform to report classifications of the current period.
 
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This statement clarifies the definition of fair value, establishes a framework for measuring fair value and expands the disclosures on fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. Company management is currently evaluating the effect of this pronouncement on financial statements.
 
 
In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans−−an amendment of FASB Statements No. 87, 88, 106, and 132(R)". One objective of this standard is to make it easier for investors, employees, retirees and other parties to understand and assess an employer's financial position and its ability to fulfill the obligations under its benefit plans. SFAS No. 158 requires employers to fully recognize in their financial statements the obligations associated with single−employer defined benefit pension plans, retiree healthcare plans, and other postretirement plans. SFAS No. 158 requires an employer to fully recognize in its statement of financial position the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. This Statement also requires an employer to measure the funded status of a plan as of the date of its year−end statement of financial position, with limited exceptions. SFAS No. 158 requires an entity to recognize as a component of other comprehensive income, net of tax, the gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic benefit cost pursuant to SFAS No. 87. This Statement requires an entity to disclose in the notes to financial statements additional information about certain effects on net periodic benefit cost for the next fiscal year that arise from delayed recognition of the gains or losses, prior service costs or credits, and transition asset or obligation. The Company is required to initially recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures for fiscal years ending after December 15, 2006. Company management is currently evaluating the effect of this pronouncement on financial statements.

In February 2007, FASB issued FASB Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. FAS 159 is effective for fiscal years beginning after November 15, 2007. Early adoption is permitted subject to specific requirements outlined in the new Statement. Therefore, calendar-year companies may be able to adopt FAS 159 for their first quarter 2007 financial statements.

The new Statement allows entities to choose, at specified election dates, to measure eligible financial assets and liabilities at fair value that are not otherwise required to be measured at fair value. If a company elects the fair value option for an eligible item, changes in that item's fair value in subsequent reporting periods must be recognized in current earnings. FAS 159 also establishes presentation and disclosure requirements designed to draw comparison between entities that elect different measurement attributes for similar assets and liabilities.
 
Note 3. PROPERTY AND EQUIPMENT
 
Equipment and machinery
 
$
213,166
  
Furniture and fixtures
   
22,183
  
 
        
 
    
235,349
  
Less accumulated depreciation
   
(188,950
)
 
        
 
  
$
46,399
  
 
Depreciation expenses for the nine month periods ended June 30, 2007 and 2006 were $23,723 and $23,486, respectively.
 
Note 4. ACCRUED EXPENSES
 

 Accrued expenses comprised of the following at June 30, 2007:
 
Payroll taxes
  
$
142,672
  
Accrued salaries
    
1,098,182
  
Interest payable
    
120,767
  
Other accruals
    
163,776
  
         
Total
  
$
1,525,397
  

Note 5. NOTES PAYABLE

RELATED PARTIES

The Company has received advances in the form of unsecured promissory notes from stockholders in order to pay ongoing operating expenses. These notes are at interest rates up to 13% and are due on demand. As of June 30, 2007, notes payable amounted to $129,000. The Company recorded $27,315 interest expense for the nine month period ended June 30, 2007.

OFFICERS

Notes payables to officers are unsecured, interest free and due on demand. Proceeds from these notes payable were used to pay ongoing operating expense. The balance at June 30, 2007 was $32,860.
 
Note 6. NOTES PAYABLE UNDER EQUITY LINE OF CREDIT

During the year ended September 30, 2003, the Company received $1,307,500 proceeds from promissory notes to Cornell Capital Partners, LP, net of 4% fee of $56,000 and $36,500 for escrow and other fees. The Company has settled $900,000 by issuing shares of common stock during the year ended September 30, 2003 (note 7). The notes payable outstanding at September 30, 2003, amounted to $500,000. The balance for the notes payable outstanding at September 30, 2004 and 2005 were $ 233,115 and $233,115, respectively. In 2006, Company has entered into a settlement agreement with Cornell Capital Partner to pay the total amount of $327,336; $50,000 shall be paid on or before November 15, 2006, $25,000 payable per month on the 15th day of each month commencing December 15, 2006, with the balance of $27,336 due and payable on or before October 15, 2007. The Company recorded loss on settlement of debt of $94,221 for the year ended September 30, 2006.

The balance payable was $102,336 as of June 30, 2007.

Note 7. CONVERTIBLE NOTES

During the nine month period ended June 30, 2007, the Company entered into various debenture agreements (the “Bridge Notes”) with several investors. Under the terms of the agreements, the notes bear interest at the rate of 10% per annum. The notes will automatically mature and the entire outstanding principal amount, together with all unpaid and accrued interest, shall become due and payable after the earlier of (i) the eighteen (18) month anniversary of the date of issuance (ii) an event of default or (iii) the closing of any equity related financing by the Company in which the gross proceeds to the Company are at least $2,500,000, unless, prior to such time, the notes have been converted into shares of the Company’s common stock.
 
 
The notes are convertible into shares of Common stock of the Company at $0.05 per share or shares of any equity security issued by the Company at a conversion price equal to the price at which such security is sold to any other party.

The conversion price is adjustable as per the terms of the agreement for the subsequent issuances of equity security at a price different than the conversion price.

The conversion price is also adjustable if a registration statement covering the underlying shares is not declared effective within 180 days after the closing, but in no case the conversion price to be reduced below $0.04 per share.

As of June 30, 2007 the Company had received $836,000 under the Bridge Notes.

On July 18, 2007 Sionix completed an offering of $1,025,000 of Subordinated Convertible Debentures to a group of institutional and accredited investors. The Subordinated Convertible Debentures are convertible into shares of Common Stock of Sionix at an initial conversion rate of $ .22 per share, subject to anti-dilution adjustments. For each $100,000 of Convertible Debentures purchased, the investor received Warrants to purchase 227,272 shares of Common Stock. Each Warrant entitles the holder to purchase one share of common stock of Sionix (the "Warrant Shares") for a period of five years at a price of $0.50 per Warrant Share.

Under the terms of the Registration Rights Agreement, Sionix is required to file a registration statement under the Securities Act of 1933 Act in order to register the resale of the shares of Common Stock issuable upon conversion of the Subordinated Convertible Debentures and the Warrant Shares (collectively, the "Registrable Securities"). If Sionix does not file a registration statement with respect to the Registrable Securities within forty-five days following the closing of the Offering, or if the Registration Statement is not declared effective by the Securities and Exchange Commission within 90 days, then Sionix must pay to each purchaser damages equal to 1.5% of the purchase price paid by the purchaser for its Subordinated Convertible Debentures, for each 30 days that transpires after these deadlines. The amount of the aggregate damages payable by Sionix is limited to 15% of the purchase price.

Southridge Investment Group LLC, Ridgefield, Connecticut (“Southridge”) acted as agent for Sionix in arranging the transaction, and received a placement fee of $102,500. Southridge also received warrants to purchase 698,863 shares of Common Stock of Sionix, on the same terms and conditions as the Warrants issued to the purchasers.

As part of the above offering the Company received $500,000 of financing under the convertible debenture and issued 1,136,364 warrants as of June 30, 2007. The grant date fair value of the warrants amounted to $318,939 was calculated using the Black-Scholes option pricing model, using the following assumptions: risk free rate of return of 6%, volatility of 195.97%, and dividend yield of 0% and expected life of five years.

As of June 30, 2007, the Company recorded beneficial conversion feature expense of $75,827 and the unamortized beneficial conversion feature amount of $353,082 and unamortized warrant discount of 190,604 showing as net of the note payable amount of $1,336,000. The Company recorded an interest expense of $46,464 on the notes.

 
Note 8. STOCKHOLDERS’ EQUITY

COMMON STOCK

The Company has 150,000,000 authorized shares, par value $ .001 per share. As of June 30, 2007, the Company had 107,117,101 shares issued and 106,635,201 shares outstanding.

During the nine month period ended June 30, 2007, the company issued 3,292,915 shares, valued at $0.01 per share, and 1,300,000 shares valued at $0.04 per share for consulting services recorded at the fair market value.

STOCK OPTIONS

2001 Executive Officers Stock Option Plan

In October of 2000, the company entered into amendments to the employment agreements with each of the executive officers, eliminating the provisions of stock bonuses. In lieu of the bonus provision, the Company adopted the 2001 Executive Officers Stock option Plan. The Company reserved 7,576,680 shares for issuance under the plan.
 
Options outstanding:
 
 
Weighted average exercise price
Number of outstanding options
Aggregate intrinsic value
Outstanding as of
September 30, 2006
$0.15
7,343,032
$-
Granted
      
Forfeited
      
Exercised
      
Outstanding as of
June 30, 2007
$0.15
7,343,032
$881,165
 
A summary of the Company’s option activity is listed below:
 
               
Weighted-
  
Weighted-
  
           
Weighted-
  
Average
 
Average
  
           
Average
  
Exercise
 
Exercise
  
 
  
Stock
  
Stock
  
Remaining
  
Price of
  
Price of
  
Exercise
 
Options
 
Options
 
Contractual
 
Options
 
Options
  
Price
 
Outstanding
 
Exercisable
 
Life
 
Outstanding
  Exercisable  
$0.15
   7,343,032    7,343,032    3 years  
$0.15
  
$0.15
  
 
The fair value of the options was calculated using the Black-Scholes option valuation model with the following weighted-average assumptions: Dividend yields of 0%; risk free interest rates of 6%; expected volatility of 100% and expected lives of 4.9 years.
 
 
All options were vested prior to September 30, 2006. No options are vested during the nine month period ended June 30, 2007.
 

Note 9. GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of its liabilities in the normal course of business. Through June 30, 2007, the Company had incurred cumulative losses of $16,400,573, including a current loss of $1,101,520. The Company’s successful transition from a development stage company to attaining profitable operations is dependent upon obtaining financing adequate to fulfill its research and development activities, production of its equipment and achieving a level of revenues adequate to support the Company’s cost structure. Management’s plan of operations anticipates that the cash requirements for the next twelve months will be met by obtaining capital contributions through the sale of common stock and cash flow from operations. However, there is no assurance that the Company will be able to implement its plan.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
 
GENERAL. The following discussion and analysis should be read in conjunction with our Financial Statements and Notes thereto, included elsewhere in this Quarterly Report on Form 10-QSB. Except for the historical information contained in this report, the following discussion contains certain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. The cautionary statements made in our most recent Annual Report on Form 10-KSB should be read as being applicable to all related forward-looking statements wherever they appear in this Report. Our actual results may differ materially from the results discussed in the forward-looking statements, as a result of certain factors including, but not limited to, those discussed elsewhere herein and in our most recent Annual Report on Form 10-KSB.

PLAN OF OPERATION. During the next twelve months we plan to continue testing of the ELIXIR unit at the Villa Park Dam under our arrangement with the Serrano Water District. We believe that if the unit operates successfully, we will be in a position to aggressively market the ELIXIR product, using the Villa Park Dam unit as a prototype for additional installations. We plan to engage in substantial promotional activities in connection with the installation and operation of the unit, including media exposure and access to other public agencies and potential private customers. If the unit continues to operate successfully, we believe we will receive orders for additional units.
 
Depending on the availability of financing, we plan to establish a manufacturing facility in Southern California to commence production of the units. Depending on the size of the planned facility, we believe it may require capital expenditures in the range of $5 million to $20 million. In addition to capital expenditures, this will require hiring of a substantial number of additional employees. We anticipate that all of our capital needs will need to be funded by equity financing.
 
 
RESULTS OF OPERATIONS (THREE MONTHS ENDED JUNE 30, 2007 COMPARED TO THREE MONTHS ENDED JUNE 30, 2006). The Company was relatively inactive during the quarter ended June 30, 2006 due to lack of resources. During the first nine months of fiscal 2007, the Company raised capital through the sale of Convertible Debentures, and was able to resume activities in the first quarter of fiscal 2007. Revenues for both the three month period ended June 30, 2006 and the three month period ended June 30, 2007 were zero, as the Company has not yet commenced the sale of products. General and administrative expenses for the period of three months ended June 30, 2007 totaled $444,544, an increase of $202,308 over the $242,236 incurred in the corresponding period in 2006, due to the resumption of development and capital-raising activities. Interest expense increased to $74,307 from $2,406 in the 2006 quarter, representing interest on Convertible Debentures issued during the past nine months.
 
As a result of these items, the loss for the three months ended June 30, 2007 was $527,732, an increase of $275,245 over the loss of $252,387 for the corresponding period in the 2006 fiscal year.
 
LIQUIDITY AND CAPITAL RESOURCES. On June 30, 2007, the Company had cash and cash equivalents of $455,563. The sole source of liquidity has been borrowings from affiliates and the sale 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 possible cash flow from operations during the 2007 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 or that the Company will not encounter unforeseen difficulties that may deplete its capital resources more rapidly than anticipated. Also, the Company may not be able to generate revenues from operations during the fiscal year.
 
As of June 30, 2007, the Company had an accumulated deficit of $16,400,573. 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 developmental business enterprise, many of which the Company cannot control.
 
GOING CONCERN OPINION. We currently have insufficient assets to continue our operations, unless we secure additional financing. As a result of our ongoing losses, lack of revenues from operations, and accumulated deficits, there is doubt about our ability to continue as a going concern.
 
ITEM 3. CONTROLS AND PROCEDURES.
 
At the end of the period covered by this Form 10-QSB, the Company's management, including its Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the Company's disclosure controls and procedures. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer determined that such controls and procedures are effective to ensure that information relating to the Company required to be disclosed in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.
 
There have been no changes in the Company's internal controls over financial reporting that were identified during the evaluation that occurred during the Company's last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
 
 
PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is not a party to any material pending legal proceedings.
 
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the period of three months ended June 30, 2007 the Company issued Convertible Debentures in the amount of $569,000 to three accredited investors.

The Company believes 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

None

ITEM 6. EXHIBITS

10.1 Form of Securities Purchase Agreement, dated as of June 18, 2007, between Sionix Corporation and certain investors.

10.2 Form of Convertible Debenture, dated as of June 18, 2007, issued by Sionix Corporation to certain investors.

10.3 Form of Registration Rights Agreement, dated as of June 18, 2007, between Sionix Corporation and certain investors.

10.4 Form of Warrant, dated as of June 18, 2007, issued by Sionix Corporation to certain investors.

31.1 Certificate of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Certificate of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Certificate of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2 Certificate of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

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.
 
     
 
SIONIX CORPORATION
Date: August 14, 2007
 		  
 		  
 
 
By:  
 /s/ James J. Houtz
 
James J. Houtz, President
   
 
By:  
 /s/ Robert McCray
 
Robert McCray, Chief Financial Officer