0001354488-12-000997.txt : 20120306 0001354488-12-000997.hdr.sgml : 20120306 20120306104342 ACCESSION NUMBER: 0001354488-12-000997 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20120221 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20120306 DATE AS OF CHANGE: 20120306 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SIONIX CORP CENTRAL INDEX KEY: 0000764667 STANDARD INDUSTRIAL CLASSIFICATION: REFRIGERATION & SERVICE INDUSTRY MACHINERY [3580] IRS NUMBER: 870428526 STATE OF INCORPORATION: NV FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 002-95626-D FILM NUMBER: 12669067 BUSINESS ADDRESS: STREET 1: 914 WESTWOOD BLVD., BOX 801 CITY: LOS ANGELES STATE: CA ZIP: 90024 BUSINESS PHONE: (847) 235-4566 MAIL ADDRESS: STREET 1: 914 WESTWOOD BLVD., BOX 801 CITY: LOS ANGELES STATE: CA ZIP: 90024 FORMER COMPANY: FORMER CONFORMED NAME: SIONIX CORP /UT/ DATE OF NAME CHANGE: 19960515 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 8-K 1 sinx_8k.htm CURRENT REPORT sinx_8k.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): February 21, 2012
 
Sionix Corporation
(Exact name of registrant as specified in its charter)

Nevada
 
002-95626-D
 
87-0428526
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification No.)
 
914 Westwood Blvd., Box 801
Los Angeles, CA
 
 
90024
(Address of principal executive offices)
 
(Zip Code)
 
(704) 971-8400
Registrant’s telephone number, including area code
 
 
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 


 
 

 
Forward Looking Statements

This Form 8-K and other reports filed by Sionix Corporation (the “Company”) from time to time with the Securities and Exchange Commission (collectively the “Filings”) contain forward looking statements and information that are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by the Company’s management.  When used in the Filings the words “anticipate”, “believe”, “estimate”, “expect”, “future”, “intend”, “plan” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward looking statements.  Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions and other factors relating to the Company’s industry, operations and results of operations and any businesses that may be acquired by the Company.  Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.
 
Although the Company believes that the expectations reflected in the forward looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.
 
ITEM 1.01.
ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
 
On February 21, 2012 the Company entered into a Water Treatment Agreement with McFall Incorporated, a Carnation, WA-based construction and logistics firm (“McFall”) operating in the Williston Basin. Under the agreement, Sionix will deploy one of its Mobile Water Treatment Systems ("MWTS") to various locations in the Williston Basin to decontaminate water emitted from drilling operations.
 
The term of the agreement is for a period of 5 years from the original date of execution and will automatically renew for successive one-year periods thereafter unless either party terminates the agreement 90 days prior to the end of the original term or renewal term.  Under the agreement, Sionix will be paid not less than $8.00 per barrel and not more than $30.00 per barrel for water treated; with the actual amount dependent upon the site specific chemical, hydrological and geographical conditions.  Sionix will issue invoices weekly to McFall for water treated, and anticipates receiving payment within 90 days from the date of each invoice.
 
McFall agreed to provide Sionix with water samples from each new location before Sionix moves its MWTS into any new location.  Each drilling cycle is expected to take approximately 25 days.  Once a drilling cycle is completed, McFall will be relocate the MWTS to the next selected and tested drilling location as agreed by the parties.
 
McFall has agreed to use its best efforts to deploy and utilize the Sionix MWTS for a minimum of 200 and up to 275 days per year, subject to performance and weather conditions, and for the treatment of between 200,000 and 400,000 gallons (4,762 and 9,524 barrels) per operating day of contaminated water (or “influent”).  Should the influent from the drilling operations exceed 400,000 gallons per day, the excess will be stored in-ground temporarily in accordance with local regulations, or Sionix may deploy an additional MWTS.
 
 
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ITEM 9.01
FINANCIAL STATEMENTS AND EXHIBITS
 
Exhibit No.   Exhibit Name
     
10.1   Water Treatment Agreement dated September 21, 2012
     
99.1   Press Release dated March 5, 2012
 
 
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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this Current Report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Dated: March 7, 2012
 
 
SIONIX CORPORATION
 
       
 
By:
/s/ James R. Currier  
    James R. Currier  
    Chief Executive Officer  
 
 
 
 
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EX-10.1 2 sinx_ex101.htm AGREEMENT sinx_ex101.htm
EXHIBIT 10.1
 
 
Water Treatment Agreement
 
This Water Treatment Agreement (hereinafter, the “WTA”) between Sionix Corporation, a Nevada corporation domiciled at 914 Westwood Blvd., Box 801, Los Angeles, CA 90024 (“Sionix”) and McFall, Incorporated, a Washington corporation domiciled at 5050 326th Place, Carnation, WA 98014 (“McFall”) is entered into this 21st day of February, 2012 and endorsed by Mark Twogood contracted representative of Continental Resources, Inc. (hereinafter, the “Continental Representative”) as of the same date.
 
Preamble
 
Sionix designs, fabricates, assembles, installs, and operates proprietary, patent protected Mobile Water Treatment Systems (“MWTS”) for application in a number of vertical markets, including oil and gas operations in non-conventional shale plays in the continental United States as well as a number of other geographic locations worldwide.

McFall operates a logistics operation in the Williston Basin of North Dakota (hereinafter, the “Williston”) and performs such services as drilling rig placement, set-up and tear down; retention of operations personnel, general site maintenance and operations; and other tasks as may reasonably be assigned to McFall by Continental Resources, Inc. (“Continental”) in accordance with the Master Services Agreement (“MSA”) currently in effect between McFall and Continental.

McFall wishes to retain Sionix under the authority of their MSA with Continental to provide mobile water treatment services in conjunction with drilling activities undertaken by a specifically designated drilling rig to treat water contaminated by drilling activities in the Williston at the point of contamination.

Sionix wishes to undertake this engagement, as properly endorsed by the Continental Representative, and agrees to deploy a standard MWTS (flow rates of approximately 400,000 gallons/day) to the designated location in the Williston, properly configured to accept contaminated influent water from the onsite drilling activities, and to treat same in accordance with standards established by the Continental Representative at their sole and exclusive expense for a contracted price not less than $8/barrel or more than $30/barrel (standard oil industry barrel at 42 gallons/barrel), all dependent upon site specific chemical, hydrological and geographical conditions.

In order to memorialize the wishes of the parties to this WTA and fulfill the water treatment requirements imposed by the Continental Representative, the parties hereto have entered into the following:

 
 

 
 
Agreement

Conditions Precedent.  (1) McFall agrees to provide samples (consisting of five [5] gallon buckets in each location) of contaminated water from a like drilling activity in the Williston consisting of water from the first 2,200 feet of vertical drilling, the subsequent 10,000 feet of vertical drilling, and from at least one of any horizontal (or lateral) drilling off the vertical shaft at its earliest possible convenience after the execution of this WTA.  (2) Sionix, at its own expense, will test the provided samples for purposes of configuring the designated MWTS and providing guidelines and suggestions to the Continental Representative for testing standards and testing protocols that verify treatment results (an example of Influent/Effluent Standards is attached hereto as Annex “A”).  Results of said testing will be provided to McFall and the Continental Representative within twenty-four (24) hours after receipt from the independent testing laboratory, with a confirmation/attestation from Sionix that it will achieve treatment results based upon such testing compliant with standards established by the Continental Representative.

Contemplated Process.

McFall and/or the Continental Representative will issue a Notification to Proceed on a specified drilling project at a specified drilling site.

Prior to the initial installation and start-up, but not less than two (2) weeks prior to initial operation, a Sionix representative will visit a current drilling site to determine “hook-up” requirements for power, influent and effluent waters, as well as review any and all safety and operational procedures and guidelines promulgated by Continental, McFall, or the Continental Representative (as the case may be) for onsite operations, reporting and oversight to assure compliance and timely start-up of treatment operations.  Said Sionix representative will have authority to execute any site specific requirements that are consistent with this WTA or governmental health and safety oversight conditions.

Sionix will deploy its MWTS to the site and connect with 480/3 Phase/4 Wire power source, influent source, and effluent source.  Lab tests will be performed on influent water to determine consistency with initial test samples for adjustment of treatment regimen if required.

Influent water in excess of 300 gallons/minute (‘gpm”) will be temporarily contained in a retention pond (provided by Continental) until influent flow rates stabilize at or below 300 gpm.

All treated effluent will be returned for recycling to the driller or stored in a clear well until influent flow and effluent flow rates are equalized, which cycles shall be maintained during the anticipated twenty-five (25) day drilling cycle.

Periodic testing, as prescribed by the Continental Representative, will be conducted to assure maintenance of effluent quality.

After completion of each project, the MWTS will be removed with all the drilling equipment to a subsequent location and the steps listed above will be repeated.

During the course of the treatment operations by the Sionix MWTS, Sionix shall issue weekly invoices to McFall, but in any case, not more frequently the prescribed in the MSA between McFall and Continental.  It is understood by Sionix that Continental, as a general practice, issues payment in ninety (90) days.  To the extent that McFall marks-up the Sionix invoice to Continental, Sionix and McFall will discuss and agree on the extent and amount of such mark-up.  Sionix will not unreasonably withhold approval of the mark-up between McFall and Continental.
 
 
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Project Funding.  To the extent that Sionix may require financing to fund project cash flow, McFall shall agree to subrogate Sionix billing subsequently billed to Continental by McFall to a factoring source or asset based lender of Sionix’ choice, but in no event will a factored or collateralized amount be greater than the invoice value, less McFall markup times seventy-five percent (75%).
 
Capacity Utilization.  McFall (and/or the Continental Representative, as the case may be) shall make best efforts to provide the following:  (1) for so long as Sionix performs to the conditions of the WTA and maintains the agreed upon quality of treated effluent, McFall will use its best efforts under the circumstances to assist in the deployment the Sionix MWTS for operations in the Williston for target deployments between two hundred (200) days and two hundred and seventy-five (275) days per year, with the understanding that force majeure conditions could modify such target deployment days; and (2)  influent to the MWTS shall be not less than two hundred thousand (200,000) gallons/day and not more than four hundred thousand (400,000) gallons, except to the extent that influent to the MWTS is in excess of the maximum, either McFall (and/or Continental, as the case may be) shall provide appropriate in-ground storage in accordance with local regulations or Sionix may provide an additional MWTS, whichever is most appropriate under the circumstances.

Benefit and Assignment.  It is understood and specifically agreed that this WTA shall inure to the benefit of the parties hereto and that no assignment, conveyance, pledge or hypothecation of this WTA shall be made without the express prior written consent of the non-assigning party; provided, however, Sionix will assign and convey this WTA to an affiliate company, currently under formation, for purposes of operating this particular MWTS in the Williston and McFall consents to such assignment.  Sionix will furnish a notification to McFall, and/or the Continental Representative for information purposes, with all relevant details about the assignment.

Term and Termination.  This WTA shall be in full force and effect for five (5) years from the date of execution, which provisions for yearly automatic renewal after the initial term, unless notified ninety (90) days prior to expiration of the initial or any renewal term by either party to this WTA that they do not intend to renew.

This WTA may only be terminated for cause, which is defined as a willful and repeated violation of the terms and conditions of the WTA, gross negligence, or an inability to provide effluent water by Sionix in accordance with agreed upon treatment standards as defined in the clause “Capacity Utilization” above.  Defaults or violations of this WTA must be noticed to the violating party who will have ten (10) days to cure the default or violation; provided, however, any violation of the Confidentiality/Non-Disclosure Clause of this WTA below, shall permit immediate cancellation upon issuance of notice.

Termination “not-for-cause” is strictly prohibited by this WTA.

Moratorium.  During the course of the first full year of the WTA, Sionix and any permitted assigns (as disclosed under the Benefit and Assignment clause above), pledges and agrees that it (they) shall not solicit or accept any engagement, directly or indirectly, that will place additional MWTS products under control of any drilling or hydraulic fracturing operation of Continental in the Williston.  If McFall is able to place five (5) additional MWTS products in other Continental operations in the Williston during the course of the first year of this WTA, Sionix will convey exclusive representation rights to McFall for Continental operations in the Williston.  Other potential representation agreements will also be granted for clients other than Continental in the Williston with like conditions.
 
 
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Disclosure.  Sionix is a fully reporting public company (OTC: BB) and governed by the Securities Exchange Commission rules.  Certain events and transactions could require public disclosure under these rules.   To the extent disclosure is required, as determined by Sionix securities counsel, McFall acknowledges that these disclosures can occur without their prior consent.

Confidentiality/Non-Disclosure.  With the exception of mandatory disclosures described in the Disclosure section above, the Press Release(s) described below, disclosures between each party to this WTA and their legal and accounting representatives, and certain investors and/or investment banking engagements, the parties hereto are bound by the Mutual Confidentiality/Non-Disclosure Agreement attached to this Agreement as Annex “B,” and incorporated herein by reference.

Press Release(s).  To the extent legal or securities advisors believe advisable or necessary, the parties to this WTA hereby consent to a press release or releases announcing the execution of this WTA and a description of the events contemplated herein.

Good Faith Negotiations.  The parties to this WTA acknowledge that the contemplated transaction involves complex scientific and technical issues and during the term of this WTA, many issues may need to be discussed and agreed upon prior to the completion of this WTA or prior to the execution and implementation of subsequent agreements.  To that end, both parties agree and unequivocally commit to deal fairly between them and in complete and total transparency.

Representations and Warranties.  Each party hereto represents and warrants that:  (1) it has the requisite corporate authority to enter into this WTA; (2) that it has entered into no other agreement that would prevent or preclude performance under this WTA; (3) Sionix owns all the proprietary and patented intellectual property associated with the construction and operation of the MWTS; and (4) McFall is party to a MSA with Continental that does not prohibit them from entering into this WTA or agreeing to any of the terms and conditions contained herein.

Insurance.  XYZ shall maintain casualty insurance (minimum of $2,000,000) on the Sionix MWTS for such amounts and against such hazards as Sionix may require, with losses under the policies payable to Sionix or its assigns and liability insurance (minimum of $1,000,000) for personal injuries, death and/or property damages on terms satisfactory to Sionix, in each case naming Sionix as an additional insured.
 
Site Visitation.  Subject to a twenty-four (24) hour notice, Sionix reserves the right to demonstrate the functionality and efficacy of the Sionix MWTS in operation at any current drilling site to potential clients for purposes of promoting the sale of Sionix Water Treatment Services to other potential users.
 
Indemnification.  Each party to this WTA shall indemnify, defend and hold harmless the other party from any claims, demands or damages, including reasonable attorneys’ fees, arising out of or connected with any act or omission attributable to the other party’s performance as contemplated by this WTA.

Survivability.  The clause herein related to Confidentiality/Non-Disclosure and Representations and Warranties shall survive the expiration or termination of this WTA for any reason, including lapse of time.

 
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Dispute Resolution.  In the event of any dispute between the parties hereto over any provision of this WTA, the parties agree to submit the matter to a third party mediator to resolve the dispute without recourse to legal action.

Governing Law/Venue.  The laws of the State of Delaware shall govern this WTA.  Exclusive personal jurisdiction of the federal court sitting in the immediate area of the non-complaining party will be the only venue available to the complaining party.

IN WITNESS WHEREOF, the authorized signatories of each party affixes their seal and signature hereto as of the date first written above.
 
SIONIX CORPORATION      MCFALL INCORPORATED  
         
/s/ James R. Currier
   
/s/ Steve McFall 
 
James R. Currier 
   
Steve McFall
 
Chairman/Chief Executive Officer 
   
President/Chief Executive Officer
 
 
 
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EX-99.1 3 sinx_ex991.htm PRESS RELEASE sinx_ex991.htm
EXHIBIT 99.1
 
 
Sionix Corporation Signs Water Treatment Agreement
in the Williston Basin of North Dakota
 
LOS ANGELES, March 6, 2012 (Marketwire) -- Sionix Corporation (OTCBB: SINX.OB - News) (“Sionix” or the “Company”), a designer of patented water treatment systems, announced today that it has entered into a Water Treatment Agreement (“WTA”) with McFall Incorporated, a Carnation, WA-based construction and logistics firm operating under a Master Service Agreement with a major oil and gas exploration and production company in the Williston Basin.  Sionix will deploy a fully-equipped Mobile Water Treatment System (“MWTS”) consisting of de-watering, DAF, filtration, and de-salination components for operation alongside a specific drilling rig.  The treatment train for this project is configured to treat drilling fluids flowing to the surface from an initial vertical bore through the water table and hydraulic conductivity zones (approximately 2,200 feet) where chloride concentrations are critical, through the final vertical bore (approximately 10,000 feet), and the horizontal (lateral) bores (approximately 10,000 feet), where salt concentrations are less critical than other contaminants.

Sionix expects to treat from 4,800 – 9,600 barrels of contaminated water per day at specific drill sites.  Drilling cycles run approximately 25 days, with 8 days allocated for teardown and set-up at the next drilling site, or approximately 11 drilling cycles per year.  The Sionix MWTS will be embedded with a specific drilling rig and will be transported to successive sites together.  The WTA defines a scale of treatment revenues dependent upon contaminant loading of influent water at each drilling site.  Configuration changes (if any) in the MWTS from site to site will be insignificant as conditions in the subterranean geologic strata are expected to remain consistent within the entire Williston Region.  The 8-day relocation time will give Sionix the opportunity to perform routine maintenance and system enhancements, if needed, without interrupting normal drilling cycles.  James Currier, Sionix Corp CEO stated “We are pleased and excited to provide our unique patented and proprietary technology to support large scale operations in a critical American oil field.”  The MWTS has the capability of providing turnkey, sustainable solutions which enable exploration and production companies to recycle and reuse large amounts of previously non-viable fluids.  This deployment confirms the early adoption of recycling capabilities in the Williston Basin.

This major end user is an independent oil and natural gas exploration and production company and a proven leader in the Williston Formation.  Sionix Corporation will be the owner/operator of this MWTS and will be compensated on a per gallon basis.  “This is an addition to our previous business model of ‘selling’ a piece of equipment where Sionix would incur a one-time revenue event”, Currier stated.  By establishing a services revenue model that will own and operate the remediation equipment we will start to generate monthly recurring revenue for every gallon of water we process. “This ‘fee per barrel’ model will create substantial value for our shareholder base both in the short and long term”, said President and CFO David R. Wells.

Sionix expects to deploy the MWTS to the worksite in 4 - 6 weeks.
 
Bakken Shale Formation of the Williston Basin
 
The Bakken Shale Formation can be found in the Williston Basin, which stretches across North Dakota, Montana, South Dakota, Manitoba and Saskatchewan. In total, the basin covers roughly 300,000 square miles.  The basin will become the second largest oil producing area as a direct result of hydraulic fracking, horizontal drilling, and artificial permeability practices.  These technologies, using an average of 5 million gallons of water per well has created opportunities of water treatment and recycling that would ordinarily be disposed of in deep injection wells.  Many industry experts believe these processes will liberate energy resources in 30 + shale formations across the United States and make the country substantially more energy efficient.  Remediation of the large amounts of water necessary to support the energy harvesting activities are mission critical to the industry’s sustainability and future expansion and success.  Sionix is poised to be a key player in this water remediation process.
 
 
 

 
 
About McFall Incorporated
 
McFall operates a logistics division in the Williston Basin of North Dakota and performs such services as drilling rig placement, set-up and tear down, retention of operations personnel, general site maintenance and operations; hiring of subcontractors, and other tasks as may reasonably be assigned to McFall by the energy and production Company in accordance with the Master Service Agreement (MSA) currently in effect between McFall Inc. and the Energy and Production company.  For more information about McFall, go to www.mcfallinc.com.
 
About Sionix Corporation
 
Sionix designs innovative and advanced MWTS intended for use in energy, government facilities, healthcare facilities, emergency water supplies during natural disasters, housing development projects, and various industrial processes including subterranean fracturing used in oil and gas drilling. These systems can be located adjacent to contaminated water sites or as a pre-treatment for reverse osmosis and other membrane applications.  Industries involved in dairy, agribusiness, meat processing, mining, poultry operations, and many others can benefit from Sionix' cost-effective, easily maintained, portable water treatment systems. For more information about the company, go to www.sionix.com.

About Sionix Technology
 
Using a patented dissolved air flotation (DAF) technology packaged in a mobile shipping container, air bubbles between the size of 1 and 2 microns are injected and float organic contaminants to the surface where 99.95% are skimmed off, and a majority of inorganic contaminants are also captured and removed. This compares to standard DAF units which historically have been limited to using bubble sizes of 50 microns or larger. The size of these bubbles is important because the smaller the bubble, the greater the surface tension. They can then hold together longer and elevate more organic contaminants to the surface for removal.

Forward Looking Statements
 
All statements in this press release that are not statements of historical fact are forward-looking statements, including any projections of earnings, revenue, or other financial items, any statements of the plans, strategies, and objectives of management for future operations, any statements concerning proposed new products, services or developments, any statements regarding future economic conditions or performance, statements of belief and any statements of assumptions underlying any of the foregoing. These statements are based on expectations and assumptions as of the date of this press release and are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. The risks and uncertainties include, but are not limited to, whether Sionix Corporation can raise capital as and when it needs to, whether the water purification systems will generate significant sales, whether it can compete successfully in its market and industry, and other factors beyond the control of Sionix Corporation, including those detailed from time to time in the reports filed with the Securities and Exchange Commission. Sionix Corporation assumes no obligation and does not intend to update these forward-looking statements.

Company Contact:
 
Melissa Pagen
Director, Sales and Marketing
T: 704-971-8409
mpagen@sionix.com
 
 
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