Note 8 - Equity Line of Credit

9 Months Ended

Jun. 30, 2012

Text Block [Abstract]

Note 8 - Equity Line of Credit

On May 8, 2012, the Company entered into a Securities Purchase Agreement (the “Agreement”) with Ascendiant Capital Group, LLC (“Ascendiant”) in order to establish a source of funding. The Agreement establishes an equity drawdown facility.

Under the Agreement, Ascendiant has agreed to provide the Company with up to $5,000,000 of funding for a period of 24 months after the date that the registration statement required in conjunction with the funding is declared effective. During this period, the Company may request a drawdown under the equity line of credit by selling shares of its common stock to Ascendiant and Ascendiant will be obligated to purchase the shares. The Company may request a drawdown once every five trading days although it is under no obligation to request any drawdowns under the equity line of credit. There must be a minimum of three trading days between each drawdown request.

Sionix is allowed to sell up to 20% of the total trading volume of its common stock during the ten-day trading period that immediately precedes its drawdown request. With respect to the shares of common stock purchased, the purchase price will be the lesser of (i) 100% of the volume weighted average price on the date of purchase and (ii) the price that is $0.01 below the market price, as defined in the Agreement.

No drawdowns on the line of credit will occur until the SEC approves the registration statement covering the shares. The Company has agreed to pay Ascendiant a fee in connection with this facility, payable in common stock in four installments, as follows:

●   500,000 shares of common stock upon the execution of the Agreement and the initial closing;

●   250,000 shares of common stock upon the filing of the Form S-1 to register the shares for the facility;

●   350,000 shares of common stock upon notice from the SEC that the registration statement has been declared effective; and

●   250,000 shares of common stock on the 60th day past the date that the registration statement has been declared effective.

Pursuant to a Registration Rights Agreement entered into between the Company and Ascendiant in connection with the equity line of credit, the Company is required to file a registration statement with the Securities and Exchange Commission (the “SEC”) within 30 days of the agreement date. The registration statement will register shares of common stock to be purchased under the equity line of credit and the shares of common stock issued to Ascendiant for their commitment to the equity line of credit. There are no penalties assessed to us in connection with the filing and effectiveness deadlines associated with the registration statement. As of August 10, 2012 the Company had not yet filed the registration statement related to the Agreement.