SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter Ended: December 31, 1996; 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 Identification No.)
incorporation or organization)
5405 Morehouse Drive, Suite 250, 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 December 31, 1996, there were 23,725,076 shares of the registrant's
Common Stock, $.001 par value, outstanding and subscribed.
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 December 31, 1996 and the results of its operations and changes in
its financial position from inception through December 31, 1996 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
Balance Sheets ....................................................... 3
Statement of Operations............................................... 5
Statement of Stockholders' Equity..................................... 6
Statement of Cash Flows .............................................. 9
Notes to Financial Statements for Period ............................ 11
Independent Auditor's Report ......................................... 17
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]
SIONIX CORPORATION
(Formerly Automatic Control Corporation)
(A Development Stage Company)
Balance Sheet
ASSETS
December 31, September 30,
1996 1996
------------ -------------
(Unaudited)
CURRENT ASSETS
Cash in banks $ 25,626 $ 36,041
Inventory (Note 2) $ 61,885 40,333
Prepaid expenses 2,981 2,981
------------- --------------
Total Current Assets 90,492 79,355
-------------- --------------
PROPERTY AND EQUIPMENT -
NET(Notes 2 and 3) 103,509 107,367
-------------- --------------
OTHER ASSETS
Intangibles - net (Notes 2 and 4) 1,254,728 1,210,622
Deposits 6,996 6,996
-------------- --------------
Total Other Assets 1,261,724 1,217,618
TOTAL ASSETS $ 1,455,725 $ 1,404,340
=============== ===============
The accompanying notes are an integral part of these financial statements.
Page 3
SIONIX CORPORATION
(Formerly Automatic Control Corporation)
(A Development Stage Company)
Balance Sheet (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, September 30,
1996 1996
------------ -------------
(Unaudited)
CURRENT LIABILITIES
Loan payable (Note 5) $ 50,000 $ 50,000
Lease payable, current portion
(Note 6) 7,847 7,847
Accrued expenses 173,456 112,272
------------ --------------
Total Current Liabilities 231,303 170,119
LONG-TERM DEBTS
Lease payable (Note 6) 13,533 16,021
Related party payables (Note 7) 168,369 72,200
Convertible debenture (Note 8) 30,000 10,000
------------ --------------
Total Long-Term Debts 211,902 98,221
------------ --------------
Total Liabilities 443,205 268,340
------------ --------------
COMMITMENTS AND CONTINGENCIES
(Notes 6 and 12) - -
------------ --------------
STOCKHOLDERS' EQUITY
Common stock $.001 par value,
100,000,000 shares authorized,
23,725,076 and 23,599,696 shares
issued and outstanding, respectively 23,725 23,600
Additional paid-in capital 5,407,972 5,282,717
Deficit accumulated during the
developmental stage (2,087,377) (1,838,517)
Subscription receivable (Note 10) (2,331,800) (2,331,800)
-------------- --------------
Total Stockholders' Equity 1,012,520 1,136,000
-------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 1,455,725 $ 1,404,340
============== ==============
The accompanying notes are an integral part of these financial statements.
Page 4
SIONIX CORPORATION
(Formerly Automatic Control Corporation)
(A Development Stage Company)
Statements of Operations
(Unaudited)
From Inception on
For the Three Months End October 3, 1994
December 31 Through December 31,
-------------------------- --------------------
1996 1995 1996
-------------------------- --------------------
REVENUE $ - $ - $ -
------------ ----------- --------------------
EXPENSES
Research and development 193,938 843,652
Depreciation and Amortization 27,600 25,948 187,556
Administrative and marketing 218,135 208,235 1,024,898
------------- ----------- -------------------
Total Expenses 245,735 428,121 2,056,106
------------- ----------- -------------------
(LOSS) FROM OPERATIONS (245,735) (428,121) (2,056,106)
------------- ----------- -------------------
OTHER INCOME (EXPENSE)
Interest (3,125) (12,533) (31,271)
------------- ----------- -------------------
Total Other Income (Expense) (3,125) (12,533) (31,271)
------------- ----------- ------------------
NET LOSS $ (248,860) $ (440,654) $ (2,087,377)
============= =========== ===================
LOSS PER SHARE $ (0.01) $ (0.10)
============= =========== ===================
The accompanying notes are an integral part of these financial statements.
Page 5
SIONIX CORPORATION
(Formerly Automatic Control Corporation)
(A Development Stage Company)
Statements of Stockholders' Equity
From Inception on October 3, 1994 through December 31, 1996
(Unaudited)
Additional
Common Stock 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.
Page 6
SIONIX CORPORATION
(Formerly Automatic Control Corporation)
(A Development Stage Company)
Statements of Stockholders' Equity (Continued)
From Inception on October 3, 1994 through December 31, 1996
(Unaudited)
Additional
Common Stock 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 112,500 113 647,887 - (676,000)
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 service
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)
========== ======= ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
Page 7
SIONIX CORPORATION
(Formerly Automatic Control Corporation)
(A Development Stage Company)
Statements of Stockholders' Equity (Continued)
From Inception on October 3, 1994 through December 31, 1996
(Unaudited)
Additional
Common Stock 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 125,380 125 125,255 - -
Net loss for the three
months ended December
31, 1996 - - - (248,860) -
------------ ---------- ---------- ------------ ---------
Balance
December 31,
1996 $23,725,076 $23,725 $5,407,972 $(2,087,377) $(2,331,800)
============ ========== =========== ============ ===========
The accompanying notes are an integral part of these financial statements.
Page 8
SIONIX CORPORATION
(Formerly Automatic Control Corporation)
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
From
Inception on
October 3 ,
For the Three Months Ended 1994 Through
December 30, September 30,
1996 1995 1996
------------- ------------ -------------
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $ (248,860) $ (440,654) $ (2,087,377)
Adjustment to Reconcile Net Loss
To Net Cash Used by Operating
Activities
Depreciation and amortization 27,600 25,948 187,556
Common stock issued for services - 135,618 159,925
Change in Assets and Liabilities
(Increase) decrease in inventory (21,552) - (61,885)
(Increase) decrease in
other current assets - (70,991) (2,981)
Increase (decrease)
In accrued expenses 61,184 14,491 134,057
------------- ------------- --------------
Net Cash Used by Operating
Activities (181,628) (335,588) (1,670,705)
------------- ------------- --------------
CASH FLOWS FROM
INVESTING ACTIVITIES
Payment of deposits - - (6,996)
Purchase of intangibles (66,207) (9,154) (140,624)
Purchase of fixed assets (1,642) (9,056) (76,724)
------------- -------------- --------------
Net Cash Used by
Investing Activities (67,849) (18,210) (224,344)
-------------- -------------- --------------
CASH FLOWS FROM
FINANCING ACTIVITIES
Repayment of notes payable and
contracts payable (2,487) - (10,652)
Proceeds from sale of stock 125,380 452,945 1,676,458
Proceeds from notes payable and
convertible debenture 116,169 - 254,869
--------------- ------------- --------------
Net Cash Provided by
Financing Activities $ 239,062 $ 452,945 $ 1,920,675
--------------- ------------- --------------
The accompanying notes are an integral part of these financial statements.
Page 9
SIONIX CORPORATION
(Formerly Automatic Control Corporation)
(A Development Stage Company)
Statements of Cash Flows (Continued)
(Unaudited)
From
Inception on
October 3 ,
For the Three Months Ended 1994 Through
December 30, September 30,
1996 1995 1996
------------- ------------ -------------
INCREASE (DECREASE) IN CASH $ (10,415) $ 99,147 $ 25,626
CASH AT BEGINNING OF PERIOD 36,041 130,260 -
-------------- ------------- --------------
CASH AT END OF PERIOD $ 25,626 $ 229,407 $ 25,626
============== ============= ==============
CASH PAID FOR:
Interest $ 3,125 $ - $ 9,259
Income taxes $ - $ - $ -
SUPPLEMENTAL DISCLOSURES
OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:
Increase in subscription notes
receivable and future production
costs receivable $ - $ - $ (2,331,800)
Addition to debt for acquisition
of intangibles $ - $ - $ 1,302,914
Common stock issued for
services $ - $ 135,618 $ 159,925
Equipment acquired under
lease payable $ - $ - $ 25,533
The accompanying notes are an integral part of these financial statements.
Page 10
SIONIX CORPORATION
(Formerly Automatic Control Corporation)
(A Development Stage Company)
Notes to the Financial Statements
September 30, 1996
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 September 30,
1996 have been principally devoted to research and development, organizational
activities, and raising capital. As of September 30, 1996, the Company has not
yet had any 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. Accordingly, the accompanying statements of operations
and cash flows are for the nine months then ended.
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.
Page 11
SIONIX CORPORATION
(Formerly Automatic Control Corporation)
(A Development Stage Company)
Notes to the Financial Statements(Continued)
December 31,1996 and September 30, 1996
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 September 30, 1996 consisted of the following:
December 31, 1996 September 30, 1996
----------------- ---------------------
Work-in-progress $ 54,635 $ 33,083
Finished goods 7,250 7,250
------------------ ----------------------
Total $ 61,885 $ 40,333
================== ======================
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 $2,080,000 will expire by the year 2011.
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.
Page 12
SIONIX CORPORATION
(Formerly Automatic Control Corporation)
(A Development Stage Company)
Notes to the Financial Statements(Continued)
December 31,1996 and September 30, 1996
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1996 and September 30, 1996 consisted of
the following:
December 31, September 30,
1996 1996
------------ -------------
Computers and test equipment $ 127,245 $ 125,603
Furniture and fixtures 3,832 3,832
------------ -------------
Total 131,077 129,435
Less accumulated depreciation (27,568) (22,068)
------------- --------------
Property and Equipment - Net $ 103,509 $ 107,367
============= ==============
NOTE 4 - INTANGIBLE ASSETS
Intangible assets at December 31, 1996 and September 30, 1996 consisted of the
following:
December 31, September 30,
1996 1996
------------ -------------
Patents issued and pending $ 168,738 $ 102,531
Intellectual property 745,667 745,667
Marketing and development costs 500,312 500,312
Less accumulated amortization 159,989 (137,888)
------------- --------------
Intangible Assets - Net $ 1,254,728 $ 1,210,622
============= ==============
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 totaling
$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.
Page 13
SIONIX CORPORATION
(Formerly Automatic Control Corporation)
(A Development Stage Company)
Notes to the Financial Statements (Continued)
December 31,1996 and September 30, 1996
NOTE 6 - LEASE COMMITMENTS
The Company has entered into an operating lease for its office space. Under the
terms of the lease, the Company is obligated to pay the following for the fiscal
years ended September 30,
Year Amount
-------- ---------
1997 $ 83,460
1998 $ 83,460
1999 $ 20,865
---------
Total $187,785
==========
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:
Total $ 21,380
Less: current portion ( 7,847)
-----------
Long-term portion $ 13,533
===========
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
September 30, Amount
------------- ----------
1997 $ 7,103
1998 9,470
1999 7,892
2000 -
2001 and thereafter -
-----------
Total future minimum lease payments 24,465
Less, amount representing interest (3,085)
-----------
Present value of future minimum
lease payments $ 21,380
===========
Page 14
SIONIX CORPORATION
(Formerly Automatic Control Corporation)
(A Development Stage Company)
Notes to the Financial Statements (Continued)
December 31, 1996 and September 30, 1996
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 December 31, 1996, $168,369 was due by the Company as a result
of these promissory notes. The notes bear interest at 10% and 13% and mature
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.
NOTE 8 - CONVERTIBLE DEBENTURE
In September 1996 to December 1996, the Company raised $30,000 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 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 - ACQUISITION AGREEMENT AND PLAN OF REVERSE MERGER
On December 1, 1995, Automatic Control Corporation (ACC) entered into an
Acquisition Agreement and Plan of Reverse Merger with Coronado Capital
Corporation (Coronado). The shareholders of ACC and Coronado approved the merger
on December 21, 1995 and December 28, 1995, respectively. The merger was
effective on January 5, 1996. Under the terms of the merger agreement between
the two companies, the stock of Coronado was reverse-split on a 1-for-4 basis
effective as of January 16, 1996, and each pre-merger shareholder of ACC
received 4.819 new shares of the surviving corporation.
As a result of the merger, the pre-merger shareholders of ACC made up
approximately 95% of the total issued and outstanding shares of Coronado,
following the effective date of the merger.
Under the terms of the merger agreement, the name of Coronado was changed to
Automatic Control Corporation. On January 23, 1996, the shareholders approved
the change of the Company's name to Sionix Corporation.
NOTE 10 - STOCKHOLDERS' EQUITY
During the year ended December 31, 1995, 414,200 shares of common stock were
issued in return for notes receivable in the amount of $1,656,800. 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.
In addition to the above mentioned notes, the Company entered into an agreement
for future production costs. Under this agreement, the Company issued 112,500
shares at $6.00 per share for production costs valued at $675,000.
Page 15
NOTE 11 - COMMITMENTS AND CONTINGENCIES
The Company is a defendant in a lawsuit in San Diego County Superior Court filed
by an ex-employee. The ex-employee alleges that the Company breached his
employment contract and personally defamed him. The Company has filed its cross
claims and intends to vigorously defend the lawsuit. The ultimate outcome of the
case is uncertain but management believes an unfavorable outcome is unlikely.
Therefore, no accrual has been recorded in the accompanying financial
statements.
NOTE 13 - COMMON STOCK PURCHASE WARRANTS
The Company's Board of Directors has authorized and approved 638,445 common
stock purchase warrants as of September 30, 1996 as follows:
Number Exercise Price Expiration
of Warrants Per Share Date(s)
- ----------- --------------- -----------------------------
570,100 $ 1.00 May 15, 1998 - Sept. 30, 1998
104,445 $ 10.00 January 4, 1998
7,813 $ 5.50 May 15, 1998
NOTE 14 - 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. Sales of the software product began in October, 1996 and
hardware sales are scheduled to begin in January, 1997. Additionally, the
Company is in the process of filing a registration statement for a public
offering with the Securities and Exchange Commission. In the opinion of
management, sales of the Company's products, together with the proceeds of an
offering, will be sufficient to fund the Company's operating expenses and
capital requirements for at least the next twelve months. However, the outcome
of these events is currently uncertain.
Page 16
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Sionix Corporation
(Formerly Automatic Control Corporation)
(A Development Stage Company)
San Diego, California
The accompanying balance sheet of Sionix Corporation (formerly Automatic Control
Corporation) (a development stage company) as of December 31, 1996, and the
related statements of operations, stockholders' equity and cash flows for the
three months then ended, and for the three months ended December 31, 1995 and
from inception on October 3, 1994 through December 31, 1996 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, 1996 was audited by us
and we expressed an unqualified opinion on it in our report dated October 17,
1996.
/s/ JONES, JENSEN & COMPANY
Jones, Jensen & Company
February 8, 1997
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Page 17
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Liquidity and Capital Resources
During the quarter ended December 31, 1996, the Company had to correct
incapabilities between the Company's automation software and certain computer
systems. This delayed the release of the retail version until January 1997.
Although this put a strain on the Company's cash reserves, additional
investments by the officers and shareholder's allowed the Company to continue
operations. Management is continuing discussions with a number of individuals
and groups considering an investment in the Company and is continuing
discussions with possible underwriters for a secondary offering.
Results of Operations
For the 1st quarter ended December 31, 1996, the Company is reporting a loss of
$249,000 or $0.01 per share. During the quarter the Company shipped in excess of
1,000 preview copies of it's automation software to members of the water
treatment industry nationwide. Sales of the Company's automation software began
in January 1997.
The Company maintains an Internet home page at http://www.sionix.com where
additional up to date information about the Company can be found from time to
time.
PART II - OTHER INFORMATION.
Item 1. Legal Proceedings.
The Company is a defendant in a lawsuit in San Diego County Superior Court filed
by an ex-employee. The ex-employee alleges that the Company breached his
employment contract and personally defamed him. The Company has filed its cross
claims and intends to vigorously defend the lawsuit. The ultimate outcome of the
case is uncertain but management believes an unfavorable outcome is unlikely
With the exception of the above referenced matter, there are no other 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
Page 18
Item 5. Other Information.
Not required.
Item 6. Exhibits and Reports on Form 8-K.
(a) There are no exhibits filed with this Form 10-Q.
(b) There were no other reports on Form 8-K filed during the quarter of the
period covered.
Page 19
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: February 13, 1997 /s/ Jack F. Moorehead
------------------------
By: Jack F. Moorehead
Its: President
Dated: February 13, 1997 /s/ Michael A. Taylor
-----------------------------
By: Michael A. Taylor
Its: Chief Executive Officer
Page 20