<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
                  For the Fiscal Year Ended September 30, 2001

                          Commission File No.2-95626-D

                               SIONIX CORPORATION
                 (Name of small business issuer in its charter)

                UTAH                                         87-0428526
    (State or other jurisdiction of                     (I.R.S. Employer
    incorporation or organization)                    Identification Number)

    9272 JERONIMO ROAD, SUITE 108, IRVINE, CA                 92618
    (Address of principal executive offices)                (Zip Code)

        Issuer's Telephone Number:    (949) 454-9283

         Securities registered under Section 12(b) of the Exchange Act:

                                      NONE

         Securities registered under Section 12(g) of the Exchange Act:

                     COMMON STOCK, PAR VALUE $.001 PER SHARE
                                (Title of Class)

        Check whether the issuer (1) filed all reports required to be filed by
Section 12 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]

        Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is contained in this form, and no disclosure will be
contained to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

        The issuer's revenues for the year ended September 30, 2001 were $0.

        The aggregate market value of the voting stock held by non-affiliates as
of September 30, 2001, computed based on the average of the bid and ask prices
reported on the OTC Bulletin Board, was $9,035,630.

        As of September 30, 2001, there were 62,688,698 shares of Common Stock
of the issuer outstanding.

        Documents Incorporated by Reference:       NONE

        Transitional Small Business Disclosure Format (Check one):
Yes  [ ]  No  [X]

<PAGE>

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS.

         GENERAL. Sionix Corporation (the "Company") designs and plans to
manufacture and market equipment for improving the treatment of water for
commercial, industrial and public water treatment facilities. The Company's
principal activities have been in the areas of research, development and testing
of its products. The Company was incorporated in Utah in 1996, and its executive
offices and principal operations are located at 9272 Jeronimo Road, Irvine,
California 92618. Its telephone number is (949) 454-9283, and its website is
located at www.sionix.com.

         INDUSTRY BACKGROUND. The purification and treatment of municipal
drinking water and wastewater to eliminate contaminants injurious to health and
the environment is a worldwide concern. In 1995, the world spent an estimated
$335 billion for the purification of drinking water, wastewater treatment and
treatment of industrial process water and fluids. World spending for drinking
water purification and municipal wastewater treatment only is estimated to reach
$300 billion per year (plus another $200 billion for industrial treatment needs)
by year 2000.

         STRATEGY. The Company was formed to develop advanced water treatment
technology for public and private potable drinking water systems and wastewater
treatment systems, as well as industrial systems. In the United States alone
there are approximately 200,000 public rural water districts, the great majority
of which serve populations of less then 10,000, and are considered "small public
water systems". The Company believes that a substantial portion of these
districts operate in violation of the U.S. Safe Drinking Water Act, and those
numbers are expected to increase as more stringent Environmental Protection
Agency rules for small public water systems become effective. In addition,
urbanization in the third world and the spread of agricultural activities has
increased the demand for public water systems. The company has targeted (1)
small to medium public water districts that provide communities with drinking
water or sewage treatment service and (2) water reclamation systems of
commercial-industrial clients that create and dispose of contaminated
wastewater.

         PRODUCTS.

         Sionix Modular Solids Separator Filtration System. Dissolved Air
Flotation ("DAF") technology is an established method for water treatment. The
Company's DAF Particle Separator utilizes and refines this technology for a
highly efficient pre-treatment process using ordinary oxygen. In addition, it
helps ordinary filters meet new EPA Safe Drinking Water Act (SDWA) regulations
and eliminates potentially cancer-causing disinfection by-product precursors
while reducing the risk of bacterial or parasitic contamination, particularly
THM's, cryptosporidium and giardia. The Company's patented equipment systems are
designed for quick installation, easy access for simple maintenance and to be
cost-effective for even the smallest water utilities or commercial applications.

         A major problem facing the water treatment industry is the difficulty
in monitoring and disposing of microscopic parasites such as Cryptosporidium
(4-5 microns) and Giardia cysts (7-12 microns), common chlorine-resistant
organisms that have infected millions of people in the United States.
Sand-anthracite water filtration beds, in use in most of the nation's public
water districts, will not filter out these parasites and experience frequent
breakthroughs of Cryptosporidium sized particles.

<PAGE>

        The Company uses a more efficient method of saturating recirculated
post-filter water with excess dissolved air, and injecting this excess air in
the form of microscopic bubbles in a DAF particle separator. Pressurized water
can hold an excess amount of dissolved air and forms microscopic bubbles when
injected into water, which has a lower pressure. A booster pump recirculates a
small amount (approximately 10%) of the post-filtered water through the
dissolved air-saturation system. Oxygen and nitrogen molecules are transferred
directly into the recirculated high-pressure water without forming air bubbles.
This method of transferring air into water is 100% efficient, and reduces the
amount of energy required to saturate recirculated water with excess dissolved
air. The Sionix DAF separator provides a denser concentration of white water
bubbles. This process requires less energy than a conventional system, and a
fraction of the floor space.

        In general, water districts using sand-anthracite filters cannot meet
the new EPA Surface Water Treatment rules without a massive increase in on-site
chemical filter-aids, additional filtering and the installation of ozone or
other disinfection equipment. Plant operators must continually test raw influent
water to adjust chemical filter aid dosage properly. Chemical and metal (alum)
filter-aids increase sludge volume and landfill disposal problems.

        Each basic DAF module has a flow-through of 200 gallons per minute
(288,000 gallons per day), an amount necessary to supply all the drinking and
potable water requirements for approximately 2,400 people. And because modules
can be manifolded to meet any gallon per day requirement, many larger facilities
can benefit by this technology.

        The Company's systems include automatic computer controls to optimize
ozone concentration levels and reduces monthly energy costs. Higher ozone
contact concentration levels using smaller sized generators are possible if most
of the algae are removed first by DAF. Extended contact time increases collision
rate of ionized ozone molecules with negatively charged organic suspended
particles. By utilizing the Sionix DAF particle separator to pre-treat the
feedwater, less energy is required to create the appropriate amount of ozone. By
creating a turbulent flow of water and gas within the mixing chamber, the
Company has achieved a much higher saturation with less ozone (and a minimum of
excess ozone) than in other mixing methods. This equipment was designed to match
flow-throughs with the Sionix DAF particle separator, can also be manifolded to
create more flow-through, is installed, not constructed, and can be used with or
without the DAF system, depending on the quality of the feedwater.

         THE JOINT VENTURE. In October 2000 the Company entered into a joint
venture arrangement with the Environmental Products Division of Hoffinger
Industries ("Hoffinger"), through the development of a limited liability company
known as EPD/Sionix Joint Venture, LLC. Hoffinger is a privately held
corporation which develops and manufactures commercial water filtration systems
and equipment for pools, water parks, and drinking water systems, as well as
above ground swimming pools, pumps, filters, and accessories. Hoffinger has been
involved in the water industry for over 55 years.

         Under the joint venture arrangement, the Company and Hoffinger were to
jointly develop, manufacture and market water filtration products, with the
Company furnishing the technology and engineering expertise and Hoffinger
handling most of the manufacturing, marketing and distribution. However,
Hoffinger has filed for bankruptcy protection under Chapter 11 of the Federal
Bankruptcy Code, and the joint venture is inactive. The Company plans to conduct
its manufacturing through contract manufacturers.

<PAGE>

         MARKETING AND CUSTOMERS. The potable water market includes residential,
commercial, and food service customers throughout the world. According to
industry data, it is estimated that one billion people in the world do not have
safe drinking water. Demand is driven both by consumers' desire to improve the
taste and quality of their drinking water and by the expanded concern of
regulatory agencies. There is significant market potential in Asian, Pacific and
Latin American countries, where the quality of drinking water has been found to
be severely deficient in several regions. Outbreaks of cryptosporidium and
giardia cyst in the United States and Australia have also raised health concerns
in major developed countries. Water safety concerns have driven the growth of
the consumer bottled water market to over $2 billion in the United States, as
well as the growth in the water filtration market.

         The food service industry has an increasing need for consistent global
product quality. Food service includes water used for fountain beverages, steam
ovens, coffee and tea. Specifically, restaurants have become increasingly aware
of the need for water filtration to control the taste and quality of the water
used in their businesses.

         In the United States, the Company plans to initially target the
established base of small to medium water providers, as well as industrial users
(such as the dairy industry, meat and poultry producers, food and beverage
processors, pharmaceuticals, cooling tower manufacturers and oil and gas
producers) with a need for a clean, consistent water supply. Outside the United
States, the Company plans to market to local water systems.

         The Company's marketing efforts emphasize that its products are easily
expandable and upgradable; for example, adding ozone and microfiltration
equipment to a DAF unit is similar to adding a new hard drive to a personal
computer. Each piece of equipment comes with state-of-the-art telemetry and
wet-chemistry monitoring that expands as the system does. The Company plans to
provide lease financing for all of its products, not only making it easy for a
customer to acquire the equipment, but also guaranteeing that the customer will
always have access to any refinements and improvements made to the Company's
products.

         The Company plans to market its products through its marketing and
sales department, their contacts and inquiries, direct mail, participation in
industry groups, trade shows, and through selected advertising in specialized
publications.

         PATENTS. The Company holds seven U.S. patents on technology
incorporated into the Sionix Particle Separator Treatment System and related
components. One patent covers an automatic backflushing system using air
pressure to activate the valves and another concerns the ozone mixing system.
The Company also holds several patents on the inline wet-chemistry water quality
monitoring system, and regularly processes new patent applications. The extent
to which patents provide a commercial advantage or inhibit the development of
competing products varies. To some extent, however, the Company is required to
rely upon common law concepts of confidentiality and trade secrets, as well as
economic barriers created by the required investments in tooling and technical
personnel and the development of customer relationships, to protect its
proprietary products.

         COMPETITION. The Company's products will compete with other producers
of water filtration and purification equipment, such as U.S. Filter and Cuno,
Inc., many of which are more established and have significantly greater
resources. In addition to conventional methods such as chlorination and
ozonation, the Company's products may also compete with other new technologies
for water filtration. Competitive factors include system effectiveness,
operational cost, practicality of application, pilot study requirements and
potential adverse environmental effects. In competing in this marketplace, the
Company will have to address the conservative nature of public water agencies
and fiscal constraints on the installation of new systems and technologies.

<PAGE>

         REGULATORY MATTERS. Process water treatment plants and wastewater
plants must comply with clean water standards set by the Environmental
Protection Agency under the authority of the Clean Water Act and standards set
by states and local communities. In many jurisdictions, including the United
States, because process water treatment facilities and wastewater treatment
systems require permits from environmental regulatory agencies, delays in
permitting could cause delays in construction or usage of the systems by
prospective customers.

         RESEARCH AND DEVELOPMENT. The Company invests significantly in the
development of products for new applications. Only direct costs associated with
tooling for new products are capitalized. All other costs, including salaries
and wages of employees included in research and development, are expensed as
incurred. Most of the Company's research and development efforts are in
connection with development and refinement of the DAF Particle Separator and
related components.

         RAW MATERIALS. Materials and components to be used by the Company for
manufacturing will be carefully selected based on stringent specifications for
usage and operating conditions. At the outset, the specification of parts and
raw materials will be jointly managed by Sionix and Hoffinger Industries through
the joint venture arrangement, utilizing many of Hoffinger's existing
procurement resources. Every effort will be made to specify parts from multiple
sources for independence from manufacturers and distributors. In developing its
products, the Company has avoided using hard-to-get special parts to further
minimize dependency from vendors. Simplicity in design and the use of common,
widely used and readily available components is emphasized.

         EMPLOYEES. At September 30, 2001, the Company had four full-time
employees, none of whom are covered by any collective bargaining agreement. The
Company considers its relationship with its employees to be good.

ITEM 2. DESCRIPTION OF PROPERTY.

        The Company's office/manufacturing facility is located in Irvine,
California and is leased pursuant to a lease expiring in July of 2004. The
facility consists of approximately 3,400 square feet, including office area and
adjoining manufacturing/ warehouse area. Management believes the Company's
facility will provide adequate space for its office, product assembly and
warehouse activities, although it may lease additional space for component
assembly and warehouse uses, depending on demand. The Company believes that
suitable additional space will be available to accommodate planned expansion.

ITEM 3. LEGAL PROCEEDINGS.

         The Company filed an action for professional negligence, malpractice,
breach of fiduciary duty and breach of contract against Gilliam, Duncan & Harms,
its previous patent counsel (San Diego County Superior Court, Case No. GIC
754391). The action alleged that the patent attorneys represented the Company
and Jack Moorehead, former President of the Company, contemporaneously and
failed to advise the corporation of the inherent conflict of interest in
representing both parties. The action further alleged the patent attorneys aided
Moorehead and others in misappropriating the Company's intellectual property and
trade secrets. The action went to trial, and in December 2001 a minute order was
issued announcing a judgment in favor of Sionix against the defendants in the
amount of $525,962. The judgment is still subject to appeal.

<PAGE>

         The Company also filed a separate action against two law firms that had
previously represented the Company, Wenthur & Chachas and Mitchell & Huston (San
Diego County Superior Court Case No. GIC 747267).

         On January 15, 2002, Sionix entered into a settlement agreement with
Wenthur & Chachas, Cris John Wenthur and George G. Chachas, prior corporate
counsel to the Company, providing for the reduced payment in full satisfaction
of the judgment against the Company obtained by Wenthur & Chachas, Cris John
Wenthur and George G. Chachas, in the matter entitled Sionix Corporation v.
Wenthur & Chachas, et. al.

         On August 3, 2001, the court in the above entitled case granted the
Summary Judgement Motion of Wenthur & Chachas, Cris John Wenthur and George G.
Chachas, against the Company and on September 5, 2001, entered judgment against
the Company and order that Wenthur & Chachas, Cris John Wenthur and George G.
Chachas shall recover from the Company costs of the suit in the amount of
$2,407.00 and attorneys fees in the amount of $69,074.10.

         The Company was precluded from proceeding to trial where Sionix
intended to present evidence to support the allegations against Wenthur &
Chachas. The Court granted a motion by Wenthur & Chachas which enforced a prior
settlement and release agreement entered into by prior Company management and
Wenthur & Chachas in January 1998.

         The Company believes that the Court of Appeal would reverse the court's
decision and would allow the case to proceed to trial on its merits. Wenthur &
Chachas believe that the Court of Appeal would uphold the lower court's decision
which prevented a trial. However, both parties recognizing the additional
expense and time of a lengthy appellate process have agreed to settle this
matter.

         Pursuant to the terms of the settlement agreement the judgment against
the Company has been satisfied for an undisclosed amount, the Company has
dismissed its appeal and the parties have released and waived any and all
respective claims against each other.

         The action against Mitchell and Huston alleges legal malpractice in
advising the Company on the settlement agreement with Wenthur & Chachas. The
case against Mitchell & Huston is expected to go to trial in early 2002.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         Inapplicable.

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         The Company's Common Stock is listed and traded on the OTC Bulletin
Board under the symbol "SINX". There has been relatively limited trading
activity in the Company's stock since inception. The following table represents
the high and low bid prices for the Company's common stock for each quarter of
the fiscal year ended September 30, 2001.

            Fiscal 2001              High            Low
            -----------              ----            ---
            First Quarter            $ .88           .23
            Second Quarter             .47           .19
            Third Quarter              .45           .12
            Fourth Quarter             .34           .19

            Fiscal 2000              High            Low
            -----------              ----            ---
            First Quarter           $ .375          .065
            Second Quarter           3.875          .203
            Third Quarter            1.781          .937
            Fourth Quarter           1.01           .66

         There were approximately 759 holders of record of the Company's common
stock as of September 30, 2001.

         The Company has never declared or paid any cash dividend on its shares
of common stock.

         During the fiscal year ended September 30, 2001, the Company sold
6,105,000 shares of Common Stock to approximately 70 purchasers, with gross
proceeds of $610,500. The Company believes all such sales were exempt
from registration under the Securities Act of 1933 by reason of Section 4(2)
thereof and Regulation D thereunder.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

         GENERAL. As of September 30, 2001, the Company had an accumulated
deficit of $9,522,180. 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 new business enterprise, many of which the
Company cannot control.

<PAGE>

         The Company has formulated its business plans and strategies based on
certain assumptions of the Company's management regarding the size of the market
for the products the Company will be able to offer, the Company's anticipated
share of the market, and the estimated prices for and acceptance of the
Company's products. Although these plans and assumptions are based on the best
estimates of management, there can be no assurance that these assessments will
prove to be correct. No independent marketing studies have been conducted on
behalf of or otherwise obtained by the Company, nor are any such studies
planned. Any future success that the Company might enjoy will depend upon many
factors, including factors which may be beyond the control of the Company or
which cannot be predicted at this time. These factors may include product
obsolescence, increased levels of competition, including the entry of additional
competitors and increased success by existing competitors, changes in general
economic conditions, increases in operating costs including cost of supplies,
personnel and equipment, reduced margins caused by competitive pressures and
other factors, and changes in governmental regulation imposed under federal,
state or local laws.

         RESULTS OF OPERATIONS (YEAR ENDED SEPTEMBER 30, 2001 COMPARED TO YEAR
ENDED SEPTEMBER 30, 2000). During the 2001 fiscal year the focus of the
Company's efforts have been on preparation for commencement of manufacturing and
distribution of its products, including the DAF (Dissolved Air Flotation),
Automatic Back-Flush Filtration System, O-Zone Mixing Chamber and other related
products.

         The Company is continuing its engineering focus on hardware and water
filtration equipment. The Company has completed testing, and has previewed its
products with experienced treatment plant managers and certified operators to
gauge their level of acceptance. The Company has also been working with
Hoffinger Industries, its joint venture partner, to prepare for manufacturing of
the products. Also, the Company has arranged for lease and maintenance financing
for its product lines.

         For the year ended September 30, 2001, the Company reported a loss of
$1,353,429 or $.02 per share. This compares with a loss of $2,414,188, or $.07
per share for the year ending September 30, 2000. The decrease in the net loss
is principally due to non-cash expenses for the prior period relating to stock
compensation to officers and employees; no stock compensation was paid to
officers or employees during the current period, as they became subject to a
stock option plan. This was offset by increased legal fees due to increased
levels of activity in the pending litigation during the current period, as
compared with the prior year. Research and development costs for the year were
$176,847, a slight decrease from the prior year.

         LIQUIDITY AND CAPITAL RESOURCES. On September 30, 2001, the Company had
cash and cash equivalents of approximately $21,827, along with restricted cash
of $140,000. The principal source of liquidity has been sales 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, plus expected cash flow from operations towards the end of the
fiscal year, will be sufficient to finance the Company's operations at currently
anticipated levels for a period of at least twelve months. However, there can be
no assurance 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.

<PAGE>

ITEM 7. FINANCIAL STATEMENTS

                               SIONIX CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                              FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2001

                                 C O N T E N T S

Independent Auditors' Report.............................................F-1

Report of Independent Certified Public Accountants.......................F-2

Balance Sheet............................................................F-3

Statements of Operations.................................................F-4

Statements of Stockholders' Deficit......................................F-5

Statements of Cash Flows.................................................F-7

Notes to the Financial Statements........................................F-8



<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Stockholders and Board of Directors
Sionix Corporation
(A development stage company):

We have audited the accompanying balance sheet of Sionix Corporation, a Utah
Corporation (the "Company") as of September 30, 2001 and the related statements
of operations, stockholders' deficit and cash flows for the year then ended and
for the period from commencement of development stage on October 3, 1994 to
September 30, 2001. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Sionix Corporation as of
September 30, 2001 and the results of its operations and its cash flows for the
period from inception (October 3, 1994) to September 30, 2001 in conformity with
accounting principles generally accepted in the United States of America.

The Company's financial statements are prepared using the 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. The Company has accumulated deficit of $9,522,180 and negative working
capital of $377,146 on September 30, 2001. These factors as discussed in Note 13
to the financial statements, raises substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 13. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

/s/ KABANI & COMPANY, INC.
CERTIFIED PUBLIC ACCOUNTANTS

Fountain Valley, California
December 6, 2001

                                      F-1

<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
               --------------------------------------------------

Board of Directors and Stockholders
Sionix Corporation
(A Development Stage Company)

We have audited the accompanying statements of operations, stockholders' equity
(deficit) and cash flows of Sionix Corporation (a development stage company) for
the year ended September 30, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the statements of
operations, stockholders' equity (deficit) and cash flows are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the statements of operations, stockholders'
equity (deficit) and cash flows. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of statements of operations, stockholders'
equity (deficit) and cash flows. We believe that our audit provides a reasonable
basis for our opinion.

In our opinion, the statements of operations, stockholders' equity and cash
flows referred to above present fairly, in all material respects, the results of
operations and cash flows of Sionix Corporation (a development stage company)
for the year ended September 30, 2000 in conformity with accounting principles
generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 13 to the
financial statements, the Company has incurred significant losses since its
inception and lacks the capital necessary to pursue its operating plan. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans regarding these matters are also described in
Note 13. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

                                         /s/ CACCIAMATTA ACCOUNTANCY CORPORATION

Irvine, California
April 5, 2001

                                      F-2


<PAGE>
                               SIONIX CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                                  BALANCE SHEET
                               SEPTEMBER 30, 2001

                                     ASSETS
                                     ------

CURRENT ASSETS:
   Cash & cash equivalents                                          $    21,827
   Restricted cash                                                      140,000
   Prepaid expense                                                       30,000
   Other receivable                                                         118
                                                                    ------------
         Total current assets                                           191,945

PROPERTY AND EQUIPMENT, net                                              26,275

INTANGIBLE ASSETS, net                                                   85,738

DEPOSITS                                                                  6,831

                                                                    ------------
                                                                    $   310,789
                                                                    ============

                     LIABILITIES AND STOCKHOLDERS' DEFICIT
                     -------------------------------------

CURRENT LIABILITIES:
   Accounts payable                                                 $   213,555
   Accrued expenses                                                     110,819
   Accrued interest-related parties                                      20,454
   Notes payable-related parties                                        224,263
                                                                    ------------
         Total current liabilities                                      569,091

COMMITMENTS & CONTINGENCIES

STOCKHOLDERS' DEFICIT
   Common stock, $0.001 par value; 100,000,000 shares
       authorized; 62,688,698 shares issued and outstanding              62,688
   Additional paid-in capital                                         9,229,213
   Shares to be issued                                                  113,295
   Unamortized consulting fees                                         (141,318)
   Deficit accumulated from inception                                (9,522,180)
                                                                    ------------
         Total stockholders' deficit                                   (258,302)
                                                                    ------------
                                                                    $   310,789
                                                                    ============

   The accompanying notes are an integral part of these financial statements.

                                      F-3


<PAGE>
<TABLE>

                               SIONIX CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                            STATEMENTS OF OPERATIONS
<CAPTION>
                                                                       CUMULATIVE
                                                                     FROM INCEPTION
                                         YEAR ENDED SEPTEMBER 30,  (OCTOBER 3, 1994) TO
                                         2001            2000       SEPTEMBER 30, 2001
                                     -------------   -------------   -------------
<S>                                  <C>             <C>             <C>
REVENUES                             $          -    $          -    $          -

EXPENSES:

General and administrative              1,242,497       2,168,462       6,837,434
Research and development                  176,847         182,308       1,216,593
Write-off of obsolete intangibles               -               -       1,040,865
Depreciation and amortization              28,336          51,847         354,038
                                     -------------   -------------   -------------
                                        1,447,680       2,402,617       9,448,930
                                     -------------   -------------   -------------

OPERATING LOSS                         (1,447,680)     (2,402,617)     (9,448,930)

OTHER INCOME(EXPENSE)
Interest income                             9,596          24,440          42,319
Interest expense                                -          (4,000)       (110,923)
Interest expense-related parties           (7,950)        (31,111)        (91,851)
Other expense                             (16,981)              -         (16,981)
Legal settlement                          110,486               -         110,486
                                     -------------   -------------   -------------
                                           95,151         (10,671)        (66,950)
                                     -------------   -------------   -------------

LOSS BEFORE INCOME TAXES               (1,352,529)     (2,413,288)     (9,515,880)

Income taxes                                  900             900           6,300
                                     -------------   -------------   -------------

NET LOSS                             $ (1,353,429)   $ (2,414,188)   $ (9,522,180)
                                     =============   =============   =============

BASIC WEIGHTED AVERAGE NUMBER
   OF COMMON STOCK OUTSTANDING         55,603,611      49,861,728
                                     =============   =============

BASIC NET LOSS PER SHARE             $      (0.02)   $      (0.05)
                                     =============   =============

DILUTED WEIGHTED AVERAGE NUMBER OF
    COMMON STOCK OUTSTANDING           55,603,611      49,861,728
                                     =============   =============

DILUTED NET LOSS PER SHARE           $      (0.02)   $      (0.05)
                                     ============    ============

   The accompanying notes are an integral part of these financial statements.
</TABLE>

                                      F-4



<PAGE>
<TABLE>
                                                                  SIONIX CORPORATION
                                                             (A DEVELOPMENT STAGE COMPANY)
                                                         STATEMENTS OF STOCKHOLDERS' DEFICIT
                                                FROM INCEPTION (OCTOBER 3, 1994) TO SEPTEMBER 30, 2001
<CAPTION>
                                    Common Stock                                                            Deficit       Total
                               ----------------------  Additional   Stock       Stock        Unamortized  accumulated Stockholders'
                                 Number of              Paid-In     to be    subscription    consulting      from         Equity
                                  Shares      Amount    Capital     issued    receivable        fees       inception    (Deficit)
                               ------------ --------- ------------ --------  ------------   ------------  ------------ ------------
<S>                            <C>          <C>       <C>          <C>       <C>            <C>           <C>          <C>
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

                                      The accompanying notes are an integral part of these financial statements.

                                                                         F-5


<PAGE>
                                                                  SIONIX CORPORATION
                                                             (A DEVELOPMENT STAGE COMPANY)
                                                         STATEMENTS OF STOCKHOLDERS' DEFICIT
                                                FROM INCEPTION (OCTOBER 3, 1994) TO SEPTEMBER 30, 2001

                                    Common Stock                                                            Deficit       Total
                               ----------------------  Additional   Stock       Stock        Unamortized  accumulated Stockholders'
                                 Number of              Paid-In     to be    subscription    consulting      from         Equity
                                  Shares      Amount    Capital     issued    receivable        fees       inception    (Deficit)
                               ------------ --------- ------------ --------  ------------   ------------  ------------ ------------

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

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

639,509 Shares to be issued for
debt settlement in 2001                  -         -    103,295          -             -              -       103,295

Net loss for the period ended
September 30, 2001                       -         -            -        -             -              -    (1,353,429) $(1,353,429)
                               ------------ --------- ------------ --------  ------------   ------------  ------------ ------------

Balance September 30, 2001      62,688,698  $ 62,688 $  9,229,213  $113,295  $         -    $  (141,318)  $(9,522,180) $  (258,302)
                               ============ ========= ============ ========  ============   ============  ============ ============

                                      The accompanying notes are an integral part of these financial statements.

                                                               F-6
</TABLE>
<PAGE>
<TABLE>

                                                        SIONIX CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                     STATEMENTS OF CASH FLOWS
<CAPTION>
                                                                                          Cumulative
                                                                                         from inception
                                                              Year Ended September 30, (October 3, 1994) to
                                                                2001           2000     September 30, 2001
                                                            ------------   ------------   ------------
<S>                                                         <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net Loss                                                   $(1,353,429)   $(2,414,188)   $(9,522,180)
 Adjustments to reconcile net loss to net
 cash used in operating activities:
    Depreciation and amortization                                28,336         51,847        354,038
    Issuance of common stock for compensation                         -      1,220,116      1,833,041
    Issuance of common stock for services                       391,567        254,287      1,166,220
    Write-down of obsolete assets                                     -         38,862         38,862
    Write-down of intangible assets                                   -              -      1,040,865
    Other                                                             -              -         57,351
    (Increase) decrease of other assets                         (30,118)         1,164        (30,118)
    (Increase) decrease of deposits                                   -         30,400         (6,831)
    Increase (decrease) in accounts payable                     205,683        (11,023)       213,555
    Increase (decrease) in accrued interest-related party       (63,447)        31,110         20,454
    Increase (decrease) in accrued interest                     (15,331)         4,000         16,982
    Increase (decrease) in accrued expense                       85,887        (28,752)       110,820
                                                            ------------   ------------   ------------
                  Total adjustments                             602,577      1,592,011      4,815,239
                                                            ------------   ------------   ------------
    Net cash used in operating activities                      (750,852)      (822,177)    (4,706,941)
                                                            ------------   ------------   ------------

CASH FLOWS FROM INVESTING ACTIVITIES
    Purchase of certificate of deposit                          (40,000)      (100,000)      (140,000)
    Purchase of patents                                               -              -       (135,033)
    Purchase of equipment                                       (11,045)        (3,635)      (225,272)
                                                            ------------   ------------   ------------
    Net cash used in investing activities                       (51,045)      (103,635)      (500,305)
                                                            ------------   ------------   ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from issuance of notes to related party                  -              -        345,773
    Proceeds from (repayment of) notes                          (50,000)             -              -
    Proceeds from (repayments of) notes to related party        (16,775)        (9,000)       (35,197)
    Issuance of common stock for cash                           600,500      1,030,350      4,908,497
    Receipt of cash for stock to be issued                       10,000              -         10,000
                                                            ------------   ------------   ------------
    Net cash provided by financing activities                   543,725      1,021,350      5,229,073
                                                            ------------   ------------   ------------

Net inrease (decrease) in cash & cash equivalents              (258,172)        95,538         21,827

CASH & CASH EQUIVALENTS, BEGINNING                              279,999        184,461              -
                                                            ------------   ------------   ------------

CASH & CASH EQUIVALENTS, ENDING                             $    21,827    $   279,999    $    21,827
                                                            ============   ============   ============

SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
    Stock issued for consulting services & prepaid          $   530,368    $         -    $   530,368
                                                            ============   ============   ============
    Acquisition of intangible for debt                      $         -    $         -    $ 1,185,475
                                                            ============   ============   ============
    Settlement of debt with equity                          $   103,294    $         -    $ 1,269,247
                                                            ============   ============   ============
CASH PAID FOR:
    Interest                                                $         -    $         -    $     2,134
                                                            ============   ============   ============
    Income taxes                                            $       900    $       900    $     6,300
                                                            ============   ============   ============

   The accompanying notes are an integral part of these financial statements.

                                       F-7
</TABLE>
<PAGE>

                               SIONIX CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                        NOTES TO THE FINANCIAL STATEMENTS

1.   ORGANIZATIONS AND DESCRIPTION OF BUSINESS

     Sionix Corporation (the "Company") was incorporated in Utah in 1985. 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 have been
     principally devoted to research and development, organizational activities,
     and raising capital.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     CASH AND CASH EQUIVALENTS

     Cash and cash equivalents represent cash and short-term highly liquid
     investments with original maturities of three months or less.

     RESTRICTED CASH

     Restricted cash represents two certificates of deposit which mature one
     year for one and 180 days for the other from the purchase dates. The
     certificates of deposit are recorded at cost which approximates market. At
     September 30, 2001, the certificates of deposit were pledged as collateral
     under a compensating balance arrangement associated with a line of credit
     and surety bond required by court for nonresident corporation.

     PROPERTY AND EQUIPMENT

     Property and equipment is stated at cost. The cost of additions and
     improvements are capitalized while maintenance and repairs are expensed as
     incurred. Depreciation of property and equipment is provided on a
     straight-line basis over the estimated five year useful lives of the
     assets.

     RESEARCH AND DEVELOPMENT

     Research and development costs are expensed as incurred.

     PATENTS

     Patents are stated at cost and are being amortized using the straight-line
     method over their estimated useful lives of 15 years.

     PROVISION FOR INCOME TAXES

     Deferred taxes are provided for on a liability method for temporary
     differences between the financial reporting and tax basis of assets and
     liabilities that will result in taxable or deductible amounts in the
     future. Deferred tax assets and liabilities are adjusted for the effects of
     changes in tax laws and rates on the date of enactment. Deferred tax assets
     are reduced by a valuation allowance when, in the opinion of management, it
     is more likely than not that some portion or all of the deferred tax assets
     will be realized.

                                      F-8
<PAGE>

                               SIONIX CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                        NOTES TO THE FINANCIAL STATEMENTS

     ADVERTISING

     The cost of advertising is expensed as incurred. Total advertising costs
     were $12,663 and $72,726 for the years ended September 30, 2001 and 2000,
     respectively.

     STOCK BASED COMPENSATION

     The Company has adopted the disclosure provisions only of SFAS 123 and
     continues to account for stock based compensation using the intrinsic value
     method prescribed in accordance with the provisions of APB No. 25,
     Accounting for Stock Issued to Employees, and related interpretations.
     Common stock issued to employees for compensation is accounted for based on
     the market price of the underlying stock, generally the average low bid
     price.

     The Company accounts for stock-based compensation issued to non-employees
     and consultants in accordance with the provisions of SFAS 123 and the
     Emerging Issues Task Force consensus in Issue No. 96-18 ("EITF 96-18"),
     "Accounting for Equity Instruments that are Issued to Other Than Employees
     for Acquiring or in Conjunction with Selling, Goods or Services". Common
     stock issued to non-employees in exchange for services is accounted for
     based on the fair value of the services received.

     BASIC AND DILUTED NET LOSS PER SHARE

     Net loss per share is calculated in accordance with Statement of Financial
     Accounting Standards 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.

     FAIR VALUE OF FINANCIAL INSTRUMENTS

     Statement of financial accounting standard No. 107, Disclosures about fair
     value of financial instruments, requires that the company disclose
     estimated fair values of financial instruments. The carrying amounts
     reported in the statements of financial position for current assets and
     current liabilities qualifying as financial instruments are a reasonable
     estimate of fair value.

     USE OF 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.

                                      F-9
<PAGE>

     RECLASSIFICATIONS

     Certain items in the prior year financial statements have been
     reclassified for comparative purposes to conform with the presentation in
     the current period's presentation. These reclassifications have no effect
     on the previously reported income (loss).

     REPORTING SEGMENTS

     Statement of financial accounting standards No. 131, Disclosures about
     segments of am enterprise and related information (SFAS No. 131), which
     superceded statement of financial accounting standards No. 14, Financial
     reporting for segments of a business enterprise, establishes standards for
     the way that public enterprises report information about operating segments
     in annual financial statements and requires reporting of selected
     information about operating segments in interim financial statements
     regarding products and services, geographic areas and major customers. SFAS
     No. 131 defines operating segments as components of an enterprise about
     which separate financial information is available that is evaluated
     regularly by the chief operating decision maker in deciding how to allocate
     resources and in assessing performances. The company adopted this standard
     in 1998 and the implementation of this standard did not have a material
     impact on its financial statements.

     REVENUE RECOGNITION

     The Company recognizes revenues 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 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.

     ACCOUNTING DEVELOPMENTS

     In September 2000, the FASB issued FINANCIAL ACCOUNTING STANDARDS SFAS NO.
     140, "ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND
     EXTINGUISHMENTS OF LIABILITIES, AND A REPLACEMENT OF FASB STATEMENT NO.
     125." This statement is not applicable to the Company.

                                      F-10
<PAGE>

                               SIONIX CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                        NOTES TO THE FINANCIAL STATEMENTS

     On July 20, 2001, the FASB issued SFAS NO. 141, "BUSINESS COMBINATIONS,"
     and SFAS NO. 142, "GOODWILL AND OTHER INTANGIBLE ASSETS." These statements
     make significant changes to the accounting for business combinations,
     goodwill, and intangible assets.

     SFAS NO. 141 establishes new standards for accounting and reporting
     requirements for business combinations and will require that the purchase
     method of accounting be used for all business combinations initiated after
     June 30, 2001. Use of the pooling-of-interests method will be prohibited.
     This statement is effective for business combinations completed after June
     30, 2001.

     SFAS NO. 142 establishes new standards for goodwill acquired in a business
     combination and eliminates amortization of goodwill and instead sets forth
     methods to periodically evaluate goodwill for impairment. Intangible assets
     with a determinable useful life will continue to be amortized over that
     period. This statement becomes effective January 1, 2002.

     Management is in the process of evaluating the requirements of SFAS No. 141
     and 142, but does not expect these pronouncements will materially impact
     the Company's financial position or results of operations.

     In June 2001, the Financial Accounting Standards Board ("FASB") issued
     Statement of FINANCIAL ACCOUNTING STANDARDS ("SFAS") NO. 143, "ACCOUNTING
     FOR ASSET RETIREMENT OBLIGATIONS". SFAS 143 addresses financial accounting
     and reporting for obligations associated with the retirement of tangible
     long-lived assets and the associated asset retirement costs. This Statement
     is effective for financial statements issued for fiscal years beginning
     after June 15, 2002. The impact of the adoption of SFAS 143 on the
     Company's reported operating results, financial position and existing
     financial statement disclosure is not expected to be material.

     In August 2001, Statement of FINANCIAL ACCOUNTING STANDARDS NO. 144,
     "ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS" ("SFAS
     144"), was issued. This statement addresses financial accounting and
     reporting for the impairment or disposal of long-lived assets and broadens
     the definition of what constitutes a discontinued operation and how the
     results of a discontinued operation are to be measured and presented. The
     provisions of SFAS 144 are effective for financial statements issued for
     fiscal years beginning after December 15, 2001. The impact of the adoption
     of SFAS 144 on the Company's reported operating results, financial position
     and existing financial statement disclosure is not expected to be material.

     In January 2001, the FINANCIAL ACCOUNTING STANDARDS BOARD EMERGING ISSUES
     TASK FORCE issued EITF 00-27 effective for convertible debt instruments
     issued after November 16, 2000. This pronouncement requires the use of the
     intrinsic value method for recognition of the detachable and imbedded
     equity features included with indebtedness, and requires amortization of
     the amount associated with the convertibility feature over the life of the
     debt instrument rather than the period for which the instrument first
     becomes convertible. Management is in the process of evaluating the
     requirements of EITF 00-27, but does not expect this pronouncement will
     materially impact the Company's financial position or results of
     operations.

                                      F-11
<PAGE>

                               SIONIX CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                        NOTES TO THE FINANCIAL STATEMENTS

3.   INTANGIBLES

     During fiscal 1998 The Company wrote-off obsolete intangibles of $1,040,865
     resulting from new managements decision not to pursue a product line
     relating to these intangibles.

     At September 30, 2001, patents were as follows:

                Patents issued and pending                      $   135,033
                Less accumulated amortization                       (49,295)
                                                                ------------
                                                                $    85,738
                                                                ============

     Annual amortization expense for fiscal 2001 and 2000 was $9,002.

4.   PROPERTY AND EQUIPMENT

                Equipment                                       $   175,700
                Furniture and fixtures                               10,710
                                                                ------------
                                                                    186,410
                Less accumulated depreciation                      (160,135)
                                                                ------------
                                                                $    26,275
                                                                ============

     Depreciation expense for fiscal year ended September 30, 2001 and 2000 was
     $19,334 and $42,846, respectively.

5.   NOTES PAYABLE - RELATED PARTIES

     The Company has received advances in the form of unsecured promissory notes
     from stockholders and other related parties in order to pay ongoing
     operating expenses. These notes are at interest rates up to 13% and are due
     on demand. As of September 30, 2001, amounts due to related parties
     included $224,263 of principal and $20,454 of unpaid interest.

6.   LINE OF CREDIT

     On March 1, 2000, the Company obtained a $100,000 line of credit with a
     bank which was renewed with the maturity date of March 1, 2002. The line of
     credit bears interest at 11.5% and is secured by a $100,000 certificate of
     deposit. At September 30, 2001, no amounts were outstanding under this
     line.

7.   INCOME TAXES

     Since the Company has not generated taxable income since inception, no
     provision for income taxes has been provided (other than minimum franchise
     taxes paid to the States). Differences between income tax benefits computed
     at the federal statutory rate and reported income taxes for 2000 and 1999
     are primarily attributable to the valuation allowance for net operating
     losses (NOL) and other permanent differences.

                                      F-12

PAGE>

                               SIONIX CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                        NOTES TO THE FINANCIAL STATEMENTS

     At September 30, 2001, the Company has a net operating loss carryforward
     for federal tax purposes of $6,170,000, which, if unused to offset future
     taxable income, will expire beginning in 2007 through 2016.

     The Company has deferred tax assets of $ 2,470,000 at September 30, 2001
     relating to its net operating losses. The Company provided a 100% valuation
     allowance for these deferred tax assets. The Company recorded no benefit
     for income taxes during the periods presented. During the periods ended
     September 30, 2001 and 2000, the Company's total valuation allowance
     increased approximately $54,000 and $218,000, respectively.

8.   STOCKHOLDERS' EQUITY

     COMMON STOCK

     During fiscal year 2000, the Company issued shares of its common stock in
     exchange for compensation under the terms of certain employment contracts.
     The employment contracts expire between November 30, 2000 and September 30,
     2003 and call for quarterly issuances of common stock to four employees.
     The contract was subsequently amended to terminate bonus clause and include
     an option plan for the employees.

     On August 14, 2000, the Company entered into an agreement with a firm (the
     "Firm") to obtain investment capital. Under the terms of the agreement, the
     company employed the services of the Firm to obtain investment capital of
     no less than $1,000,000 for the acquisition, restructuring, marketing and
     procurement of new management relating to a water bottling and distribution
     venture. During fiscal 2000, the Firm received cash of $2,500 and 100,000
     shares of the Company's restricted common stock upon execution of the
     agreement. The shares of common stock issued were recorded at fair value
     (low bid price).

     The Company issued 6,005,000 shares of its common stock for cash in
     connection with a private placement during fiscal years 2001 at $.10 per
     share amounting $600,500.

     The Company issued 617,376 shares of its common stock for various services
     at prices from $0.16 to $0.28 per share for total amount of $158,711. In
     connection with the Company's registration statements on Form S-8,
     1,900,000 shares of common stock were issued to consultants at $.19 to $.22
     per share for a total amount of $374,174 for the services to be provided
     through June 2002. The Company has amortized $232,856 of consulting fees
     through September 30, 2001.

     SHARES TO BE ISSUED

     The Company received cash of $10,000 for 100,000 shares of common stock to
     be issued subsequent to the period ended September 30, 2001. In addition,
     the Company settled the outstanding notes and the accrued interest for
     639,509 shares of common stock valued at $103,294, to be issued subsequent
     to the period ended September 30, 2001. The valuation of shares was based
     upon market value of the shares at the time of the consummation of the
     transaction

                                      F-13


<PAGE>

                               SIONIX CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                        NOTES TO THE FINANCIAL STATEMENTS

     COMMON STOCK OPTIONS

     In April 2001, the Company granted options to an employee to purchase
     244,892 shares at an exercise price of $0.15. The market price of the
     shares at the grant date was $0.15 per share. The options vested as
     follows: 29,434 immediately, and on each of May 31, August 31 and November
     30, 2001; 31,789 on each of Feb 28; May 31, Aug 31 and November 30, 2002,
     31,789 each respectively. The options expire in April 2010.

     2001 EXECUTIVE OFFICERS STOCK OPTION PLAN
     -----------------------------------------

     On October of 2000, the company entered into amendments to the employment
     agreement 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.

     In April 2001, the Company granted options to purchase 7,034,140 shares to
     three of the officers vesting at various dates through March 31, 2006. The
     exercise price of the options is $0.25 15 per share and the market value at
     the date of the grant was $.0.15

     A summary of the Company's option activity is listed below:
<TABLE>
<CAPTION>

                                                                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
        --------------  -----------  -----------  -----------  -----------  -----------
<S>       <C>            <C>           <C>         <C>           <C>          <C>
          $ 0.15         7,279,032     762,282     4.44 years    $ 0.15       $ 0.15
</TABLE>

     The fair value of the warrants was calculated using the Black-Scholes
     option valuation model with the following weighted-average assumptions for
     the year ended September 30, 2001: dividend yields of 0%; risk free
     interest rates of 6%; expected volatility of 100% and expected lives of 4.9
     years.

     The weighted-average fair value of the options issued during the years
     ended September 30, 2000 was $ 0.11.

                                      F-14

<PAGE>

                               SIONIX CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                        NOTES TO THE FINANCIAL STATEMENTS

     The Company has adopted the disclosure-only provisions of SFAS No. 123.
     Because the exercise price of the options granted was greater than the fair
     value of the common stock at the grant date, no compensation cost has been
     recognized. Had compensation cost for the Company's stock option plan been
     determined based on the fair value at the grant date for awards consistent
     with the provisions of SFAS No. 123, the Company's net loss and loss per
     share for the years ended September 30, 2001 would have been as follows:

                                                                     2001
                                                                -------------
                  Net loss as reported                          $ (1,283,429)
                  Net loss, pro forma                           $ (1,364,337)
                  Basic loss per share as reported              $      (0.02)
                  Basic loss per share, pro forma               $      (0.02)

9.   EARNING (LOSS) PER SHARE

     Earnings (loss) per share were determined by dividing net income for the
     periods by the weighted average number of both basic and diluted shares of
     common stock and common stock equivalents outstanding. Stocks to be issued
     are regarded as common stock equivalents and are considered in diluted
     earnings per share calculations.

     Weighted average number of shares used to compute basic and diluted loss
     per share is the same since the effect of dilutive securities is
     antidilutive.

10.  LEASES

     On August 6, 1998, the Company entered into a three-year noncancelable
     operating lease relating to its office facility expiring on August 30,
     2001. On November 16, 2001, the Company extended the lease to October 31,
     2004. Rent expense totaled $46,300 and $41,098 during fiscal year 2001 and
     2000, respectively. Future minimum rental payments are as follows for the
     fiscal year ended September 30:

                             2002                      $  41,293
                             2003                         42,813
                             2004                         44,854
                                                       ----------
                             Total                     $ 128,960
                                                       ==========

11.  LITIGATION

     In February 1999 the Company filed an action against its former President,
     Dascore, LLC, an entity controlled by the former President and in a
     business related to that of the Company; and a former officer and director
     of the Company (the "Defendants"). The Company alleges, that the Defendants
     have (1) infringed on certain patents owned by the Company, through
     knowledge gained in their former positions; (2) sold or attempted to sell
     technology owned by the Company and covered by patents; (3) conspired to
     convert technology, money and equipment owned by the Company to pay
     personal expenses, and (4) defrauded the Company and breached their
     fiduciary duties in connection with their departure by retention of
     property owned by the Company.

                                      F-15


<PAGE>

                               SIONIX CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                        NOTES TO THE FINANCIAL STATEMENTS

     In June 1999, the United States District Court issued a preliminary
     injunction enjoining the Defendants from selling or transferring shares of
     the Company's stock in excess of 10,000,000 shares. The Defendants twice
     sought to have that injunction dissolved and both attempts were
     unsuccessful. The Defendants filed a cross-complaint against the Company
     based on a breach of contract cause of action and to collect loans
     allegedly made by them to the Company.

     On December 7, 2001, the court dismissed the Company's claim against its
     former President, Dascore, LLC, an entity controlled by the former
     President and in a business related to that of the Company; and a former
     officer and director of the Company. The security posted by the Company was
     released.

     The Company has filed an action for professional negligence, malpractice,
     breach of fiduciary duty and breach of contract against its previous patent
     counsel and a separate action against its previous corporate counsel. The
     action against the patent attorneys alleges that the patent attorneys
     represented the Company and its former President contemporaneously and
     failed to advise the corporation of the inherent conflict of interest in
     representing both parties. The action further alleges the patent attorneys
     aided the former President and others in misappropriating the Company's
     intellectual property and trade secrets. The action seeks monetary damages,
     attorneys' fees and interest. The action against the former corporate
     counsel seeks damages arising out of the alleged creation of false
     documents to defraud the Company with respect to certain intellectual
     property rights and securities transactions. Both actions are in the
     discovery stage.

     The case of Barnett v. Sionix Corporation was settled in Orange County
     Superior Court on July 20, 2001. The complaint sought repayment of
     approximately $150,000 in alleged loans. The plaintiff is the mother-in-law
     of the former Chief Executive Officer of the Company. As a result of the
     settlement, the Company reversed accruals of $180,486 which the Company had
     recorded in the prior years.

     A malpractice case was brought by the Company against its former counsels,
     Wenthur and Chachas and also, Huston and Mitchell. The defendants motion
     for summary judgment was granted by the court. The court granted the
     attorneys fees and costs in the amount of apx. $70,000 to the defendants.
     The Company is appealing the summary judgment. The Company has accrued a
     liability of $70,000 in the financial statement to cover any possible final
     judgment.

     Subsequent to the year end, the Company's counsel was served with a motion
     in the Federal case by the attorneys of Mr. Wade Cowart. The motion seek to
     have the Company pay damages of up to $100,000 in connection with a
     restraining order that the Federal court previously issued against Mr.
     Cowart. The Company's counsel and the management believe that the case is
     without merit and will be denied by the court.

                                      F-16


<PAGE>

                               SIONIX CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                        NOTES TO THE FINANCIAL STATEMENTS

12.  OTHER COMMITMENT

     In October 2000, the Company and the Environmental Products Division of
     Hoffinger Industries, Inc. ("EPD") entered into a Joint Venture Agreement
     to form Sionix/EDP (the "Joint Venture"), a limited liability corporation,
     to develop, market, sell and manufacture water filtration technology
     products. Pursuant to the terms of the Joint Venture Agreement, the
     Company's initial contribution was to be consisted of cash of $12,500 and
     licensing of its intellectual property in exchange for 51% of all shares of
     the Joint Venture. EDP's initial contribution included cash of $12,500 and
     services consisting of manufacturing, assembly, advertising and marketing
     in exchange for 49% of all shares of the Joint Venture. Any capital
     contributions beyond the initial contributions were to be borne equally by
     the Company and EDP. Net profits and losses of the Joint Venture are to be
     allocated based on the ownership interests. The Board of Directors consists
     of five directors comprising two members appointed by the Company and two
     members appointed by EDP. The Company's President had been appointed, as
     the Chairman of the Board of Directors. The Joint Venture will
     automatically dissolve two years from the date of incorporation, unless
     otherwise directed by resolution of the Board of Directors and a concurring
     vote of the stockholders. Upon dissolution of the Joint Venture, all
     assets, property and intellectual rights shall become the sole and
     exclusive property of the Company. EDP will retain the right to obtain a
     non-exclusive written license to distribute and sell Joint Venture products
     at a 10% discount. As of September 30, 2001, the Company has not
     contributed any amount for its share of initial contribution. There was no
     activity by the joint venture through September 30, 2001.

13.  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 September 30,
     2001, the Company had incurred cumulative losses of $9,522,180 and negative
     working capital of $377,146. 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.

                                      F-17


<PAGE>

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

         Not applicable.

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT.

         See Item 11 for information on beneficial ownership of the Company's
securities.

         The directors and executive officers of the Company are as follows:

   Name           Age   Position
   ----           ---   --------

James J. Houtz    62    President, Chief Operating Officer and a Director

Robert E. McCray  65    Chief Financial Officer and a Director

Joan C. Horowitz  59    Secretary/Treasurer and a Director

         Mr. Houtz has been President and Chief Operating Officer of the Company
since March 1998. For more than five years prior to that time he was a
self-employed consultant in the areas of engineering and new product
development. Mr. Houtz is married to Joan C. Horowitz, Secretary/Treasure of the
Company.

         Mr. McCray has been Chief Financial Officer of the Company since July
1998. Prior to that time he was employed by San Clemente Hospital and Medical
Center, as Supervisor-Accounts Payable and Supervisor-Data Processing.

         Ms. Horowitz has been Secretary/Treasurer and Office Manager of the
Company since April 1998. Prior to that time she was employed by Coldwell Banker
in office management. Ms. Horowitz is married to James J. Houtz, President of
the Company.

         The term of office of each director is one year or until his successor
is elected at the Company's annual meeting. Each officer is appointed by the
Board of Directors and serves at the pleasure of the Board.

         In 1988 the Company entered into a five-year employment agreement with
James J. Houtz, which was amended and restated in October 2000.The amended
agreement calls for salary to Mr. Houtz of $85,000 per year, which amount is
increased by 10% each year.

         In 1998 the Company entered into an employment agreement with Robert E.
McCray, which was amended and restated in October 2000, and which expires in
September 2001. The amended agreement calls for salary to Mr. McCray of $50,000
per year, which amount is increased by 8% each year.

         In 1998 the Company entered into an employment agreement with Joan C.
Horowitz, which was amended and restated in October 2000, and which expires in
September 2001. The amended agreement calls for salary to Ms. Horowitz of
$32,000 per year, which amount is increased by 8% each year.



<PAGE>

ITEM 10. EXECUTIVE COMPENSATION.

SUMMARY COMPENSATION TABLE

         The following table sets forth certain compensation awarded or paid by
the Company to its three highest paid persons who are executive officers or
directors during the fiscal years ended September 30, 2001, 2000, and 1999,
respectively.
<TABLE>
<CAPTION>

                                                                              LONG-TERM COMPENSATION
                                                                  ----------------------------------------------
                                         ANNUAL COMPENSATION             AWARDS                   PAYOUTS
                                      --------------------------- -----------------------   --------------------
                                                          OTHER                SECURITIES                 ALL
                                                          ANNUAL  RESTRICTED   UNDERLYING                OTHER
     NAME AND                   FISCAL                    COMPEN-  STOCK        OPTIONS/        LTIP     COMPEN-
PRINCIPAL POSITION              YEAR   SALARY     BONUS   SATION   AWARDS         SARs        PAYOUTS    SATION

<S>                             <C>    <C>         <C>      <C>   <C>        <C>                 <C>       <C>
James J. Houtz, President...    1999   $107,667    -0-      -0-   $ 344,272       -0-            -0-       -0-
                                2000   $115,679    -0-      -0-   $ 989,352       -0-            -0-       -0-
                                2001   $101,136    -0-      -0-       -0-    6,171,000 shares    -0-       -0-

Robert McCray, Chief........    1999   $ 44,713    -0-      -0-   $  16,191       -0-            -0-       -0-
  Financial Officer             2000   $ 55,080    -0-      -0-   $  88,895       -0-            -0-       -0-
                                2001   $ 54,238    -0-      -0-       -0-      583,200 shares    -0-       -0-

Joan Horowitz, Secretary....    1999   $ 25,000    -0-      -0-   $  18,406       -0-            -0-       -0-
                                2000   $ 21,565    -0-      -0-   $  54,739       -0-            -0-       -0-
                                2001   $ 21,275    -0-      -0-       -0-      279,940 shares    -0-       -0-
</TABLE>

         OPTION GRANTS DURING THE YEAR ENDED SEPTEMBER 30, 2001. The following
table sets forth certain information regarding stock options granted to the
Named Executive Officers during the twelve months ended September 30, 2001:
<TABLE>
<CAPTION>

                                 % OF TOTAL
                                  NUMBER OF       OPTIONS
                                  SECURITIES    GRANTED TO
                                  UNDERLYING    EMPLOYEES
                                  OPTIONS       IN FISCAL     EXERCISE
      NAME              YEAR      GRANTED          YEAR         PRICE     EXPIRATION DATE
      ----              ----      -------          ----         -----     ---------------
<S>                     <C>      <C>               <C>           <C>       <C>
James J. Houtz.....     2001     6,171,000         87.7%         $.15      April 19, 2010
Robert McCray......     2001       583,200           28%          .15      April 19, 2010
Joan Horowitz......     2001       279,940            0%          .15      April 19, 2010

</TABLE>



<PAGE>

The following table sets forth certain information as of September 30, 2001 with
respect to options held by the Named Executive Officers. The Company has no
outstanding stock appreciation rights, either freestanding or in tandem with
options.
<TABLE>
<CAPTION>

                                                                  OPTION VALUES AS OF SEPTEMBER 30, 2001
                                                          -------------------------------------------------------
                          SHARES                            NUMBER OF UNEXERCISED          VALUE OF UNEXERCISED
                        ACQUIRED ON          VALUE                 OPTIONS AT              IN-THE-MONEY OPTIONS AT
                         EXERCISE          REALIZED           SEPTEMBER 30, 2001           SEPTEMBER 30, 2001(1)
      NAME                 (#)               ($)          EXERCISABLE/UNEXERCISABLE     EXERCISABLE/UNEXERCISABLE
-------------------        ---               ---          --------------------------    -------------------------
<S>                        <S>               <C>              <C>     <C>                   <C>      <C>
James J. Houtz.....        N/A               -0-               617,100/5,553,900             $24,684 /$222,156
Robert McCray......        N/A               -0-                58,320 /524,880               $23,333 /$20,995
Joan Horowitz......        N/A               -0-                27,994/251,946                $1,120 /$10,078

</TABLE>

(1)  Assumes that a share of Common Stock was valued at $.19 per share on
     September 30, 2001. Amounts reflected are based on this assumed price minus
     the exercise price and do not indicate that shares were sold.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

        The following table sets forth ownership information as of September 30,
2001 with respect to all officers and directors and promoters, and each
shareholder who beneficially owns more than 5% of the outstanding shares:

   Name and Address                        No. of Shares        Percentage
   ----------------                        -------------        ----------

   S. Donna Friedman Trust                    7,618,000              12%
      4120 Porte De Merano #80
      San Diego, CA. 92122

   James J. Houtz                             7,613,917 (1)          12%
         9272 Jeronimo Road, Suite 108
         Irvine, CA 92618

   Robert E. McCray                             315,193 (2)           *
         9272 Jeronimo Road, Suite 108
         Irvine, CA 92618

   Joan C. Horowitz                             289,055 (3)           *
         9272 Jeronimo Road, Suite 108
         Irvine, CA 92618

   All Directors and Officers                 8,218,165              13%
   as a Group (3 Persons)

*        Less than 1%

(1)      Includes 617,100 shares issuable upon exercise of options that become
         exercisable within 60 days.

(2)      Includes 58,320 shares issuable upon exercise of options that become
         exercisable within 60 days.

(3)      Includes 27,994 shares issuable upon exercise of options that become
         exercisable within 60 days.



<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Inapplicable

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K.

(a) The following exhibits are filed herewith or incorporated by reference:

Exhibit 3.1   Amended and Restated Articles of Incorporation of the Company (1)

Exhibit 3.2   Amended and Restated Bylaws of the Company (1)

Exhibit 10.1  Amended and Restated Employment Agreement with James J. Houtz,
              dated October 1, 2000 (2).

Exhibit 10.2  Amended and Restated Employment Agreement with Robert E. McCray,
              dated October 1, 2000 (2)

Exhibit 10.3  Amended and Restated Employment Agreement with Joan C. Horowitz,
              dated October 1, 2000 (2)

Exhibit 10.4  Industrial Lease between the Company and The Irvine Company, dated
              August 6, 1998 (3).

-------------

(1) Incorporated by reference from Registrant's Registration Statement on Form
S-8, filed with the Commission on July 26, 1996, and incorporated herein by
reference.

(2) Incorporated by reference from the Company's Annual Report on Form 10-KSB
for the fiscal year ending September 30, 2000, filed on January 14, 2001.

(3)Incorporated by reference from the Company's Annual Report on Form 10-KSB for
the fiscal year ending September 30, 1999, filed on January 14, 2000.

(b) Reports on Form 8-K

        None.



<PAGE>

                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                      Sionix Corporation

Date: January 14, 2001                By: /s/ James J. Houtz
                                          ------------------------------------
                                          James J. Houtz, President

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

SIGNATURE                           TITLE                       DATE
---------                           -----                       ----

(1) Principal Executive Officer

/S/ JAMES J. HOUTZ           President and a Director       January 14, 2002
---------------------
James J. Houtz

(2) Principal Financial and Accounting Officer

/S/ ROBERT MCCRAY            Chief Financial Officer        January 14, 2002
---------------------        and a Director
Robert McCray

(3) Directors

/S/ JOAN HOROWITZ            Director                       January 14, 2002
---------------------
Joan Horowitz



<PAGE>

                                  EXHIBIT INDEX

Exhibit 3.1    Amended and Restated Articles of Incorporation of the Company (1)

Exhibit 3.2    Amended and Restated Bylaws of the Company (1)

Exhibit 10.1   Amended and Restated Employment Agreement with James J. Houtz,
               dated October 1, 2000 (2)

Exhibit 10.2   Amended and Restated Employment Agreement with Robert E. McCray,
               dated October 1, 2000(2)

Exhibit 10.3   Amended and Restated Employment Agreement with Joan C. Horowitz,
               dated October 1, 2000 (2).

Exhibit 10.4   Industrial Lease between the Company and The Irvine Company,
               dated August 6, 1998 (3).

-------------

(1) Incorporated by reference from Registrant's Registration Statement on Form
S-8, filed with the Commission on July 26, 1996, and incorporated herein by
reference.

(2) Incorporated by reference from the Company's Annual Report on Form 10-KSB
for the fiscal year ending September 30, 2000, filed on January 14, 2001.

(3)Incorporated by reference from the Company's Annual Report on Form 10-KSB for
the fiscal year ending September 30, 1999, filed on January 14, 2000.