SECURITIES
      AND EXCHANGE COMMISSION


WASHINGTON,
      D.C. 20549





FORM
      10-KSB





ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
      ACT OF 1934


For
      the
      Fiscal Year Ended September 30, 2007


Commission
      File No. 2-95626-D





SIONIX
      CORPORATION


(Name
      of
      small business issuer in its charter)





Nevada
            87-0428526(State
                or other jurisdiction of
            (I.R.S.
                Employerincorporation
                or organization)
            Identification
                Number)2082
                Michelson Drive,
                Suite 304, Irvine, CA
            92612(Address
                of principal executive offices)
            (Zip
                Code)





Issuer’s
      Telephone Number:    (949) 752-7980





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 13
      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 xNo
o





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B is not 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





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





The
      issuer’s revenues for the year ended September 30, 2007 were $0.





The
      aggregate market value of the voting stock held by non-affiliates as of December
      31, 2007, computed based on the closing price reported on the OTC Bulletin
      Board, was $24,386,575





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





Documents
      Incorporated by Reference: NONE





Transitional
      Small Business Disclosure Format (Check one): Yes o   No x













PART
      I





ITEM
      1. DESCRIPTION OF BUSINESS.





We
      design
      and develop turn-key stand-alone water treatment systems for: municipalities
      (both potable and wastewater), industrial (both make-up water and wastewater),
      emergency response, military and small residential communities. Sionix was
      initially incorporated in Utah in 1996, and reincorporated in Nevada in 2003.
      Our executive offices and principal operations are located at 2082 Michelson
      Drive, Suite 306, Irvine, California 92612, and our manufacturing facilities
      are
      located at 14271 Corporate Drive, Garden Grove, California 92708. Our telephone
      number is (949) 752-7980, and our website is located at
      www.sionix.com.





The
      Water Purification Industry





INDUSTRY
      BACKGROUND. The
      water purification industry is highly fragmented, consisting of many companies
      involved in various capacities, including companies that design fully integrated
      systems for processing millions of gallons of water for municipal, industrial,
      and commercial applications. Demand for water purification has continued to
      grow
      due to economic expansion, population growth, scarcity of usable water, concerns
      about water quality and regulatory requirements. Drinking water, regardless
      of
      its source, may contain impurities that can affect the health of consumers.
      Although municipal agencies and water utilities in the United States are
      required to provide drinking water that complies with the U.S. Safe Drinking
      Water Act, the water supplied to homes and businesses from municipalities and
      utilities may contain high levels of bacteria, toxins, parasites and human
      and
      animal-health pharmaceuticals, as well as high levels of chlorine used to
      eliminate contaminants. The quality of drinking water outside the United States
      and other industrialized countries is generally much worse, with high levels
      of
      contaminants and often only rudimentary purification systems. In the
      industrialized world, water quality is often compromised by pollution, aging
      municipal water systems, and contaminated wells and surface water. In addition,
      the specter of terrorism directed at intentional contamination of water supplies
      has heightened awareness of the importance of reliable and secure water
      purification. The importance of effective water treatment is also critical
      from
      an economic standpoint, as health concerns and impure water can impair
      consumers' confidence in food products. Discharge of impaired waters to the
      environment can further degrade the earth's water and violate environmental
      laws, with the possibility of significant fines and penalties from regulatory
      agencies.





There
      are
      over 200,000 public rural water districts in the United States. The great
      majority of these are considered small to medium-sized public water systems,
      which support populations of fewer than 10,000 people. A substantial portion
      of
      these are in violation of the Safe Drinking Water Act at any given time. This
      problem is expected to worsen, as more stringent EPA rules are implemented
      for
      small public water systems. Substantial expenditures will be needed in coming
      years for repair, rehabilitation, operation, and maintenance of the water and
      wastewater treatment infrastructure. The Company believes that water districts
      using conventional sand-anthracite filters will be unable to comply with the
      Clean Water Act without massive installations of on-site chemical filter aids
      and disinfection equipment, such as ozone or ultraviolet. On a worldwide level,
      water supply issues are viewed by many as the next global crisis; while the
      quantity of available fresh water is relatively fixed, the world population
      and
      demand for clean water is increasing at a rapid pace.





The
      market for the treatment and purification of drinking water and the treatment,
      recycling and reuse of wastewater has shown significant growth as world demand
      for water of specified quality continues to increase and as regulations limiting
      waste discharges to the environment continue to mount. In addition, urbanization
      in the third world and the spread of agricultural activities has increased
      the
      demand for public water systems.





EXISTING
      PURIFICATION
      SYSTEMS. Until the early twentieth century, municipal water supplies
      consisted of flowing water directly from the source to the end user with little
      or no processing. In the late 19th and early 20th
      century, most large municipal water systems instituted a form of filtration
      called "slow sand
      filtration" to enhance the clarity and esthetics of delivered waters.
      These municipal water filtration systems however were extremely large plants
      that are typically excavated into the landscape of the facility. The surface
      area required for these filters could vary widely depending on the input quality
      of the water; generally, this involves extremely large areas or footprints.
      In a
      typical treatment facility, the first step adds to the raw incoming water a
      substance which causes tiny, sticky particles (called "floc") to form - these
      attract dirt and other particles suspended in the water. This process of
      coagulation results in the heavy particles of dirt and floc clumping together
      and falling to the bottom. These heavier particles form sediment which is
      siphoned off, leaving the clearer water, which passes on to filtration. The
      most
      common filtration method is known as "slow sand" or
      sand-anthracite, in which the water flows into large shallow beds and passes
      down through layers of sand, gravel and charcoal. The final process is
      disinfection, which is intended to kill bacteria or other microorganisms left
      in
      the water and leave a residual to keep the water safe through the delivery
      pipes
      to the customer. Chlorine is the most commonly employed disinfectant, although
      chloramine, ozone, and ultraviolet (UV) are also used.


1


The
      current trend in water filtration, due to the higher demands for water and
      the
      reduction in clean or relatively clean source waters, is to clarify and heavily
      filter all municipal water supplies. Smaller municipalities and water districts
      will also be required to meet the added water quality goals of the larger
      systems and will require the infrastructure to do so.





While
      "slow sand" filtration
      is by far the most common treatment method used in the United States, it has
      serious drawbacks. The treatment facilities themselves occupy large tracts
      of
      land. The filtration beds are large, shallow in-ground concrete structures,
      often hundreds of feet long to accommodate large volumes of water. The water
      being filtered must remain in these beds for a comparatively long-time (known
      as
"residence time") in
      order for low density materials to settle out. The sand and charcoal filtering
      medium rapidly becomes plugged and clogged. The bed must then be taken off-line
      and back-flushed, which uses large volumes of water - water which becomes
      contaminated and is therefore wasted. Additional settling ponds are necessary
      to
"de-water" this waste
      by evaporation so that the dried solids may be disposed of in an environmentally
      and expensive method.





The
      average life expectancy of a treatment plant is about 20 years, after which
      they
      must be extensively renovated. Population growth necessitates enlarging old
      facilities or building new ones, occupying still more valuable land. This
      process requires lengthy environmental impact studies, long design periods,
      and
      complex financing programs to fund costly construction budgets, as lead times
      usually stretch out for years.





Aside
      from cost and logistical issues, however, there are many pathogens resistant
      to
      chlorine or small enough to pass through these existing methods of filtration.
      Illnesses such as hepatitis, gastroenteritis, Legionnaire's Disease, as well
      as
      increasingly pervasive chemical contaminants, have become increasingly common.
      One of the more difficult of these problems is monitoring and providing a
      barrier against microscopic protozoan parasites such as cryptosporidium (3-4
      microns in size) and Giardia lamblia oocysts (5-7microns). These common
      organisms exist naturally in the digestive systems of livestock and wild
      animals, and end up in lakes and streams. They have caused severe illness in
      millions of people in the United States. Conventional "slow sand" water filtration
      beds, used in most of the nation's public water districts, will not filter
      out
      these parasites - the best treatment facilities are only able to remove
      particles larger than 10-15 microns.





In
      recent
      years, there have been several serious public health emergencies caused by
      microbes breaking through the filtration barrier in treatment facilities. When
      ingested, they can cause diarrhea, flu-like symptoms and dehydration. In persons
      with immune system impairment, the illness can be life-threatening. In 1993,
      over 400,000 people in Milwaukee, Wisconsin became ill and about 100 people
      died
      during a failure in the drinking water filtration system.





Most
      surface water bodies in the United States, many of which supply drinking water,
      are contaminated with these organisms. They are extremely resistant to
      disinfection, and increasing disinfectant levels in the attempt to kill them
      creates a new set of problems. Disinfectants such as chlorine can react with
      organic matter in the water to form new chemicals known as "disinfection byproducts".
      These byproducts, of which trihalomethanes (THM's) are the most common, are
      thought to be health-threatening and possibly cancer-causing. Recent
      modifications in the EPA-SDWA regulations have addressed minimum acceptable
      levels of THM's. Therefore, physical removal of the organisms from the water
      is
      vitally important to their control.





The
      challenge of removing organic matter from water has been at the crux of water
      treatment since antiquity. Organic matter causes water to be cloudy, or turbid.
      High levels of turbidity can indicate the presence of pathogens and signal
      that
      the filtration process is not working effectively. The presence of high levels
      of organic matter makes disinfection more difficult and clogs filter media,
      causing long back flush cycles, which in turn increases the volume of back
      flush
      waste-water. In a typical treatment plant, this back flush water can account
      for
      up to 20 percent of the raw water volume flowing through the
      facility.





Other
      filtration methods, such as reverse osmosis and activated charcoal, may be
      required to remove contaminants such as organic and inorganic chemicals, salts,
      color, odors, and viruses. However, they too are clogged quickly by organic
      particles in the water. These filter media are comparatively expensive, and
      frequent back flush cycles drastically shorten filter life, thereby increasing
      the cost of treatment.





Products
      and Technology





OUR
      BUSINESS STRATEGY. Sionix
      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 order to address these issues. We have initially targeted
      (1) small to medium public and private 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.


2


DISSOLVED
      AIR FLOTATION.
      Dissolved air flotation, or DAF, has been used in water and wastewater treatment
      for more than eighty years, primarily in Europe. Some of the first systems
      installed in the 1920's are still in operation in Scandinavia. The DAF method
      involves injecting microscopic bubbles of air under pressure into the water
      being treated. The air molecules bond with organic matter in the water, and
      because of their lightness, the clumps float to the surface, where they are
      skimmed away. Over the eight decades this technology has been utilized, various
      improvements have been made in the technology. Until recently, it has not been
      utilized widely in the United States, and then primarily for wastewater
      treatment.





SIONIX
      "ELIXIR" WATER TREATMENT
      SYSTEMS. The dissolved air flotation system developed by Sionix, which
      employs patented technology, removes more than 99.95+ percent of the organic
      particles in water, and provides a barrier against microbial contaminants such
      as cryptosporidium and Giardia lamblia. Each Elixir Water Treatment System
      is a
      self-contained water treatment system or pre-treatment process using ordinary
      air, with minimal chemical flocculent aids. Our goal is to provide effective,
      practical and economical solutions to problems caused by pollution and toxic
      chemicals that seriously threaten public health and our environment. Our systems
      significantly reduce the risk of bacterial or parasitic contamination,
      particularly cryptosporidium, giardia, and e-coli, with minimal disinfecting
      by-products. Our systems are designed for quick installation, easy access for
      simple maintenance and are cost-effective for even the smallest water utilities
      or commercial applications. This technology is designed to support public water
      treatment plants, sewage treatment plants, water reclamation facilities,
      commercial air conditioning cooling towers, emergency water systems for floods,
      earthquakes and other natural disasters. The Sionix system occupies a small
      footprint, is self-contained and portable.





Our
      Elixir system utilizes and refines this technology for a highly efficient
      pre-treatment process using ordinary oxygen. In addition, it helps ordinary
      filters meet EPA Safe Drinking Water Act regulations and eliminates potentially
      cancer-causing disinfection by-product precursors while reducing the risk of
      bacterial or parasitic contamination, particularly Trihalomethanes ("THM"), cryptosporidium
      and
      giardia. The Elixir system is designed for quick installation, easy access
      for
      simple maintenance and to be cost-effective for even the smallest water
      utilities or commercial applications.





By
      significantly reducing turbidity, the Elixir system remediates against
      disinfection byproducts such as THM. Used in conjunction with filtration or
      disinfection technology which may be required by specific raw water conditions,
      it reduces back-flushing cycle times, thereby lengthening the life of post-DAF
      equipment.





Completely
      modular, we plan to customize each system installation with filtration and
      disinfection options appropriate for the user. The entire unit is built into
      a
      standard thirty-foot or forty-foot ISO transportable container, making it easy
      to move by truck, train, plane, helicopter, or ship. Standard configuration
      includes a small control and testing laboratory located in the front of the
      container. The addition of a generator module makes the system self-powered.
      The
      customer can operate and control the entire system from a remote site via
      hardwired or wireless communications. A comprehensive service and maintenance
      program (which will be part of all equipment leases) includes a standard upgrade
      path.





A
      single
      unit should produce a minimum of 225 gallons of potable water per minute (about
      325,000 gallons, or one acre-foot, per day), enough for a community of 2,400
      people and its infrastructure - which is about 500-600 homes in the United
      States, based on U.S. Government guidelines. It is important to note that per
      capita usage of water in the U.S. is among the highest in the world. Two or
      more
      units can be ganged together for increased capacity.





Our
      systems are ideal for small to medium-sized potable water treatment utilities.
      They serve equally well in commercial/industrial uses where incoming process
      water must be treated to high levels of purity, or wastewater must be
      decontaminated before discharge to the environment. The products can also
      address water quality issues faced by commercial and industrial facilities
      that
      process water or produce toxic wastewater, such as food and beverage processing
      plants, dairy products facilities, and fresh water aquaculture installations,
      such as fish farms.





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.





Our
      system 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 Elixir provides a denser concentration
      of
      white water bubbles. This process requires less energy than a conventional
      system, and uses a fraction of the floor space.


3


In
      general, water districts using sand-anthracite filters
      cannot meet the 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.





Our
      systems include automatic computer controls to optimize ozone concentration
      levels and reduce 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 Elixir 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, we have achieved a much higher saturation
      with less ozone (and a minimum of excess ozone) than in other mixing
      methods.





The
      Elixir system is a sealed unit, thus preventing tampering or incursion by
      bio-terrorism or airborne contaminants due to the steel container in which
      the
      system is assembled. Should catastrophic damage be incurred, a replacement
      unit
      may be installed within a few days rather than many months or years with
      in-ground systems.





Pilot
      Program-Villa Park Dam





In
      November of 2006 we entered into an oral agreement with the Serrano Water
      District in Orange County, California to install an Elixir system at the Villa
      Park Dam (near Anaheim, California) for testing of the system by processing
      flood water residue behind the dam. Under our arrangement, scientists and
      engineers from California State University at Fullerton are coordinating
      with the Serrano Water District to trace and record the cleaning efficiency
      for
      the various contaminants in the water (thought to be iron, manganese and algae)
      against the flow rate capacity of the Elixir system. The system placed at the
      dam site was designed by Sionix for research purposes and contains a variety
      of
      sampling sites within the system to extract and test water outside the system,
      as well as a suite of internal water quality measurement instruments to monitor
      the cleaning process.





Villa
      Park Dam is operated by Orange County Flood Control and is designed to check
      the
      flow of flood waters from several small watersheds in the northern Santa Ana
      Mountains. The dam is capable of impounding up to 15,000 acre-feet of water
      (4.9
      billion gallons), although its purpose is to check and safely release the waters
      during periods of heavy rainfall into Santiago Creek, where it is diverted
      to
      groundwater recharge ponds or allowed to discharge to the ocean. Serrano Water
      District has rights to 3,000 acre-feet of water from the impoundment pool.
      Until
      now, impounded waters have been released to flow downstream during storms.
      However, under the project, rain and other water will flow down creeks and
      collect to form a useable pool of water behind the dam. This water slowly
      degrades during the summer and has been shown to be very septic and has
      exceptionally high values of iron and manganese. This water has been
      prohibitively expensive to treat for drinking water.





In
      May of
      2007 we placed an Elixir system at the dam and began processing runoff water.
      We
      began a thorough evaluation of every component in the system during this testing
      period. Data are being used to evaluate the baseline water quality to be
      treated, as part of an ongoing water collection and analysis study of the Elixir
      water treatment system. Several testing and research programs to evaluate the
      treatment system have been implemented and will continue throughout the
      remainder of  2008.





During
      the next twenty-four months we plan to continue our testing program and
      demonstrate the ELIXIR water treatment system to potential clients at the Villa
      Park Dam under our arrangement with the Serrano Water District. We believe
      that
      this operation will position us to aggressively market the ELIXIR product.
      We plan to use these demonstrations  as a model for operation and
      installation. Once we have sufficient financing, we plan to engage
      in  promotional activities in connection with the operation of the
      unit, including media exposure and access to other public agencies and potential
      private customers. With the successful operation of the ELIXIR, we believe
      we
      will begin to receive orders for  units. We
      have demonstrated this unit to over fifty prospective clients.





Marketing
      and Customers





THE
      MARKET. The potable water
      market includes residential, commercial, and food service customers. 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. 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.





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.


4


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, cruise ship operators, food and beverage
      processors, pharmaceuticals, cooling tower manufacturers and oil and gas
      producers) and disaster relief agencies with a need for a clean and consistent
      water supply. Outside the United States, the Company plans to market principally
      to local water systems and international relief organizations.





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.





Pilot
      study requirements and potential adverse environmental effects can generally
      be
      more easily addressed with Sionix' prepackaged plant approach. The company's
      initial approach to the market place is to supply the best of practice process
      for the largest number of water types encountered. The following is a brief
      description of the types of customers to be targeted:





DOMESTIC
      WATER UTILITIES.
      There are approximately 197,060 public rural water districts in the United
      States. The great majority of these are considered small to medium-sized public
      water systems, which support populations of fewer than 10,000 people. We believe
      that the Elixir system can provide a comprehensive solution for these utilities.
      It avoids most of the above problems, occupies a small footprint, is
      self-contained and portable. Equally important, in most cases, it does not
      require costly and time consuming environmental studies.





INDUSTRIAL
      WASTEWATER
      PURIFICATION. Many industries use water in their manufacturing process
      which results in contamination. This wastewater must be treated and purified
      before it can be reused or released into the ocean or streams. Principal markets
      are: pharmaceutical manufacturers, producers of paper products, the dairy
      industry, and silicon chip manufacturers. The small footprint, low cost, and
      predictably efficient output of the Elixir system make it an excellent choice
      for customers in these markets.





FOOD
      AND BEVERAGE INDUSTRY.
      The production of beer and wine, soft drinks, and food products require water
      of
      a specific purity that must be controlled and monitored as part of the
      production process. 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.





HEALTHCARE
      INDUSTRY.
      Hospitals require clean, uncontaminated water for their normal day-to-day
      operations. They also produce contaminated water that may require treatment
      before being reused or released. The Sionix Elixir system will process
      waste-water to a specific and controlled purity. The systems can be used to
      filter water going into or coming out of use. In such exacting situations,
      the
      customer may be able to reuse contaminated water or ensure decontamination
      before discharge.





WASTEWATER
      UTILITIES (SEWAGE
      TREATMENT). The Elixir system can treat any degree of contamination.
      Sewage overflows are a major problem in many communities. The unit can function
      as a cost-effective emergency alternative to mitigate the problem of
      overflows.





THIRD-WORLD
      MARKETS. In
      addition to the domestic market, fast spreading urbanization in third-world
      countries has created a growing demand for public water systems. Most of the
      fatal waterborne illnesses occur in these countries. Industrial and agricultural
      contamination of water supplies is epidemic because environmental controls
      are
      neither adequate nor well enforced.





EMERGENCIES
      AND NATURAL
      DISASTERS. During natural disasters such as earthquakes, floods,
      hurricanes, and tornadoes, it is the role of the National Guard and the Federal
      Emergency Management Agency (FEMA) to assist local authorities with emergency
      services. Damage to local utilities can disrupt the drinking water supply and
      cause the failure of wastewater (sewage) treatment plants. The Elixir system
      can
      help address both of these problems. The system is completely self-contained,
      can be easily transported from place to place, is highly efficient, and can
      be
      equipped with its own power package.





DESALINIZATION.
      Reverse
      osmosis (RO) is among the most efficient desalinization processes available
      today. An RO desalinization system requires prefiltration to reduce clogging
      of
      the filter membrane by organic matter. Placed in front of an RO filter unit
      in a
      desalinization system, the Elixir unit will greatly lengthen the time between
      costly back-flushes and prolong the life of the RO filters.


5


MARKETING
      METHODS. We plan to
      market our products through participation in industry groups, selected
      advertising in specialized publications, trade shows, and direct mail. Sionix
      initially will utilize in-house marketing in conjunction with outsourced
      marketing consultants and national and international
      distributorships.





Patents





We
      hold eight U.S. patents on
      technology incorporated into the Elixir system and related components, with
      an
      additional two patents pending. Our patents cover process, system and waste
      handling, an automatic backflushing system using air pressure to activate the
      valves, the ozone mixing system, and the inline wet-chemistry water quality
      monitoring system. The extent to which patents provide a commercial advantage,
      or inhibit the development of competing products, varies. We plan to be
      aggressive in securing additional patents to further protect and position Sionix
      for the future. We also rely on 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 our proprietary products.





Competition





Our
      products will compete with other producers of water filtration and purification
      equipment, such as USFilter and Cuno, Inc., many of which are more established
      and have significantly greater resources. We will also compete with large
      architectural/engineering firms that design and build water treatment plants
      and
      wastewater facilities. In addition to conventional methods such as chlorination
      and ozonation, our products may also compete with other new technologies for
      water filtration. Competitive factors include system effectiveness, operational
      cost and practicality of application, pilot study requirements and potential
      adverse environmental effects. In competing in this marketplace, we have to
      address the conservative nature of public water agencies and fiscal constraints
      on the installation of new systems and technologies.





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.





In
      1974,
      the Safe Drinking Water Act (SDWA) was passed. It empowered the EPA to set
      maximum levels of contamination allowable for health-threatening microbes,
      chemicals, and other substances which could find their way into drinking water
      systems, and gave the agency the power to delegate enforcement.





By
      1986,
      Congress was dissatisfied with the speed with which the EPA was regulating
      and
      enforcing contaminant limits. The SDWA revision that year set rigid timetables
      for establishing new standards and ordered water systems to monitor their
      supplies for many substances not yet regulated by EPA standards.





Additionally,
      it limited polluting activities near public groundwater wells used as drinking
      water sources - an acknowledgment of the growing threat to underground water
      supplies. It named 83 contaminants and set out a program for adding 25 more
      every three years, as well as specifying the "best available technology"
      for treating each contaminant.





The
      timetable for imposing these regulations was rigid and tended to treat all
      contaminants as equally dangerous, regardless of relative risk. The cost to
      water districts for monitoring compliance became a significant burden,
      especially to small or medium-sized districts. The 1986 law authorized the
      EPA
      to cover 75 percent of state administrative costs, but in actuality, only about
      35 percent was funded.





Congress
      updated the SDWA again in 1996, improving on the existing regulations in two
      significant ways. First, they changed the focus of contaminant regulations
      to
      reflect the risk of adverse health effects, the rate of occurrence of the
      contaminant in public water systems, and the estimated reduction in health
      risk
      resulting from regulation. Along with this, a thorough cost-benefit analysis
      must be performed by the EPA, with public health protection the primary basis
      for determining the level at which drinking water standards are set. Second,
      states were given greater flexibility to implement the standards while arriving
      at the same level of public health protection. In addition, a revolving loan
      fund was established to help districts build necessary improvements to their
      systems.


6


Research
      and Development





Research
      and development expenses for the year ended September 30, 2007 were
      $0.  Research and development consists of fine-tuning the Elixir
      system for customer requirements, and making adjustments based on testing
      results.  Our policy is to capitalize only the  direct costs
      associated with tooling for new products .  All other costs, including
      salaries and wages of employees included in research and development, are
      expensed as incurred.





Manufacturing
      and Raw Materials





We
      have
      established our initial manufacturing and research and development facility
      in
      Garden Grove, California to commence production of the ELIXIR water treatment
      systems.  In November 2007, we acquired substantially all of the
      machinery and inventory of raw materials  of RJ Metals, Inc. a
      manufacturer of specialty metal components. The machine shop operation of RJ
      Metals was moved into our manufacturing facility and will be used to fabricate
      parts and components for our systems at such time as we have sufficient
      financing. For those parts to be supplied by outside sources, we plan to specify
      parts from multiple sources for independence from manufacturers and
      distributors.  Raw materials to be used will include bronze, brass, cast
      iron, steel, PVC and plastic, and are available from multiple
      sources.




Employees





We
      have six full-time employees, none of whom are covered by any
      collective bargaining agreement. The Company considers its relationship with
      its
      employees to be good.





CAUTIONARY
      FACTORS THAT MAY AFFECT
      FUTURE RESULTS





The
      disclosure and analysis in this report and in our other reports, press releases
      and public statements of our officers contain some forward-looking statements.
      Forward-looking statements give our current expectations or forecasts of future
      events, and may be identified by the fact that they do not relate strictly
      to
      historical or current facts. In particular, forward-looking statements include
      statements relating to future actions, prospective products or new product
      acceptance in the marketplace, future performance or results of current and
      anticipated products, sales efforts, expenses, and the outcome of contingencies
      and financial results. Many factors discussed in Part I of this report will
      be important in determining future results. We will have little or no control
      over many of these factors and any of these factors could cause our operating
      results and gross margins, and consequently the price of our common stock,
      to
      fluctuate significantly.





Any
      or
      all forward-looking statements in this report or any other report, and in any
      other public statements may turn out to be wrong. They can be affected by
      inaccurate assumptions or by known or unknown uncertainties. No forward-looking
      statement can be guaranteed, and actual results may differ materially. We
      undertake no obligation to publicly update forward-looking statements, except
      as
      required by law. Shareholders are advised to consult further disclosures on
      related subjects on our other reports filed with the Securities and Exchange
      Commission. The following cautionary discussion of risks, uncertainties and
      possible inaccurate assumptions are factors that our management believes could
      cause actual results to differ materially from expected and historical results.
      Factors other than those included below could also adversely affect our business
      results. The following discussion is provided pursuant to the Private Securities
      Litigation Reform Act of 1995.





Prospective
      investors should carefully consider the following risk factors in evaluating
      our
      business. The factors listed below represent certain important factors that
      we
      believe could cause our business results to differ. These factors are not
      intended to represent a complete list of the general or specific risks that
      may
      affect us. It should be recognized that other risks may be significant,
      presently or in the future, and the risks set forth below may affect us to
      a
      greater extent than indicated.





Risks
      Related ToOur
      Company





We
      have never generated any revenues.





Although
      we have been in business for more than ten years, we have never generated any
      revenues from operations. We have been in a development stage since inception,
      and have yet to manufacture products for sale to customers. All of our working
      capital has been generated by sales of securities and loans.


7


We
      have a history of operating losses, which may continue.





We
      have a
      history of losses and may continue to incur operating and net losses for the
      foreseeable future. We incurred a net loss
      of  $2,001,094  for the year ended September 30, 2007 and a
      net loss of  $774,887  for the year ended September 30,
      2006. As of September 30, 2007 our accumulated deficit was $17,300,147 . We
      have
      not achieved profitability on a quarterly or on an annual basis. We may not
      be
      able to generate revenues or reach a level of revenue to achieve
      profitability.




Our
      future financial results, including our expected revenues, are unpredictable
      and
      difficult to forecast.





If
      we
      begin to generate revenues, it is likely that our revenues, expenses and
      operating results will fluctuate from quarter to quarter, which could increase
      the volatility of the price of our Common Stock. We expect that our operating
      results will continue to fluctuate in the future due to a number of factors,
      some of which are beyond our control. These factors include:




·
            Our
                ability, thus far unproven, to sell our
                products.


·
            If
                we receive orders for products, our ability to complete those orders
                in a
                timely fashion.


·
            The
                costs we will incur in manufacturing
                products.


·
            The
                costs of marketing our products, including customer relations and
                warranty
                repairs




Due
      to
      all of these factors, our operating results may fall below the expectations
      of
      investors, which could cause a decline in the price of our Common Stock.





We
      will need to raise additional capital to meet our business requirements in
      the
      future and such capital raising may be costly or difficult to obtain and could
      dilute current stockholders’ ownership interests.





We
      will
      need to raise additional capital in the future, which may not be available
      on
      reasonable terms or at all. The raising of additional capital may dilute our
      current stockholders’ ownership interests. Our income from operations will not
      be sufficient to achieve our business plan. We will need to raise additional
      funds through public or private debt or equity financings to meet various
      objectives including, but not limited to:





·
            pursuing
                growth opportunities, including more rapid expansion;


·
            acquiring
                complementary businesses;


·
            making
                capital improvements to improve our
                infrastructure;





·
            hiring
                qualified management and key
                employees;


·
            developing
                new products,
                accessories and
                services;


·
            responding
                to competitive pressures; and·
            complying
                with regulatory requirements.





8


Furthermore,
      any additional debt or
      equity financing that we may need may not be available on terms favorable to
      us,
      or at all. Registrationrights agreements we
      have entered into in
      connection with private placements of our securities provide that we will
      not, without the prior written consent of the majority of registered holders
      of
      such securities, file or request the acceleration of any other registration
      statement filed with the SEC, subject to certain exceptions, until the SEC
      has
      declared the registration statement contemplated by those registration rights
      agreements effective. In addition, negative covenants in the purchase agreements
      limit our ability to raise additional capital, including through the incurrence
      of debt or liens on our properties or the issuance of equity securities that
      include registration rights. These negative covenants may impair our ability
      to
      raise additional capital. If we are unable to obtain required additional
      capital, we may have to curtail our growth plans or cut back on existing
      business and, further, we may not be able to continue operating if we do not
      generate sufficient revenues from operations needed to stay in
      business.





We
      may
      incur substantial costs in pursuing future capital financing, including
      investment banking fees, legal fees, accounting fees, securities law compliance
      fees, printing and distribution expenses and other costs. We may also be
      required to recognize non-cash expenses in connection with certain securities
      we
      issue, such as convertible notes and warrants, which may adversely impact our
      financial condition.





We
      may be required to pay liquidated damages to certain of our investors under
      certain circumstances.





We
      entered into registration rights agreements in connection with private
      placements of our securities. These registration rights agreements require
      us to
      pay partial liquidated damages under certain circumstances if we do not satisfy
      our obligations under such registration rights agreements, including our
      obligations to file or obtain or maintain the effectiveness of registration
      statements as required under these registration rights agreements. If we are
      unable to satisfy our obligations under these registration rights agreements
      and
      we are obligated to pay partial liquidated damages, it may adversely impact
      our
      financial condition.





Our
      auditors have indicated that our inability to generate sufficient revenue raises
      substantial doubt as to our ability to continue as a going concern.





Our
      audited financial statements for
      the period endedSeptember
      30, 2007 were prepared on
      a going concern basis in accordance with United States generally accounting
      principles. The going concern basis of presentation assumes that we will
      continue in operation for the foreseeable future and will be able to realize
      our
      assets and discharge our liabilities and commitments in the normal course of
      business. However, our auditors have indicated that our inability to
      generate  revenue raises substantial doubt as to our ability to
      continue as a going concern. In the absence of  revenues, we are
      seeking to raise additional funds to meet our working capital needs principally
      through the additional sales of our securities or debt financings. However,
      we
      cannot guarantee that will be able to obtain sufficient additional funds when
      needed, or that such funds, if available, will be obtainable on terms
      satisfactory to us. In the event that these plans can not be effectively
      realized, there can be no assurance that we will be able to continue as a going
      concern.





We
      intend to expand our operations and increase our expenditures in an effort
      to
      grow our business. If we are unable to achieve or manage significant growth
      and
      expansion, or if our business does not grow as we expect, our operating results
      may suffer.




Our
      business plan anticipates continued additional expenditure on development,
      manufacturing and other growth initiatives. We may not achieve significant
      growth. If achieved, significant growth would place increased demands on our
      management, accounting systems, network infrastructure and systems of financial
      and internal controls. We may be unable to expand associated resources and
      refine associated systems fast enough to keep pace with expansion, especially
      to
      the extent we expand into multiple facilities at distant locations. If we fail
      to ensure that our management, control and other systems keep pace with growth,
      we may experience a decline in the effectiveness and focus of our management
      team, problems with timely or accurate reporting, issues with costs and quality
      controls and other problems associated with a failure to manage rapid growth,
      all of which would harm our results of operations.




Our
      ability to effectively recruit and retain qualified officers
      and directors could also be adversely affected if we experience difficulty
      in
      obtaining adequate directors’ and officers’ liability
      insurance.




We
      may be
      unable to maintain sufficient insurance as a public company to cover liability
      claims made against our officers and directors. If we are unable to adequately
      insure our officers and directors, we may not be able to retain or recruit
      qualified officers and directors to manage us.


9


Losing
      key personnel or failing to attract and retain other highly skilled personnel
      could affect our ability to successfully grow our business.




Our
      future performance depends substantially on the continued service of our senior
      management and other key personnel. We do not currently maintain key person
      life
      insurance. If our senior management were to resign or no longer be able to
      serve
      as our employees, it could impair our revenue growth, business and future
      prospects.





To
      meet
      our expected growth, we believe that our future success will depend upon our
      ability to hire, train and retain other highly skilled personnel.  We
      cannot be sure that we will be successful in hiring, assimilating or retaining
      the necessary personnel, and our failure to do so could cause our operating
      results to fall below our growth and profit targets.





Rules
      issued under the Sarbanes-Oxley Act of 2002 may make it difficult for us to
      retain or attract qualified officers and directors, which could adversely affect
      the management of our business and our ability to obtain or retain listing
      of
      our Common Stock.





We
      may be
      unable to attract and retain those qualified officers, directors and members
      of
      board committees required to provide for our effective management because of
      rules and regulations that govern publicly held companies, including, but not
      limited to, certifications by principal executive officers. The enactment of
      the
      Sarbanes-Oxley Act has resulted in the issuance of rules and regulations and
      the
      strengthening of existing rules and regulations by the SEC, as well as the
      adoption of new and more stringent rules by the stock exchanges and NASDAQ.
      The
      perceived increased personal risk associated with these recent changes may
      deter
      qualified individuals from accepting roles as directors and executive
      officers.





Further,
      some of these recent changes heighten the requirements for board or committee
      membership, particularly with respect to an individual’s independence from the
      corporation and level of experience in finance and accounting matters. We may
      have difficulty attracting and retaining directors with the requisite
      qualifications. If we are unable to attract and retain qualified officers and
      directors, the management of our business and our ability to obtain or retain
      listing of our shares of Common Stock on any stock exchange or NASDAQ (assuming
      we elect to seek and are successful in obtaining such listing) could be
      adversely affected.




RISKS
      RELATED TO OUR
      BUSINESS




We
      Expect Intense
      Competition In Our Industry.




Many
      of our competitors are large,
      diversified manufacturing companies with significant expertise in the water
      quality business and contacts with water utilities and industrial water
      consumers. These competitors have significantly greater name recognition and
      financial and other resources. We cannot assure you that we will succeed in
      the
      face of strong competition from other water treatment companies.





Certain
      Aspects of Our Industry Are Subject To Government Regulation





Treatment
      of domestic drinking water and wastewater is regulated by a number of federal
      state and local agencies, including the U.S. Environmental Protection Agency.
      The changing regulatory environment, including changes in water quality
      standards, could adversely affect our business or make our products
      obsolete.





The
      Operation of Our Products Could Result In Product Liability
      Claims





We,
      like
      any other manufacturer of products that are designed to treat food or water
      that
      will be ingested, face an inherent risk of exposure to product liability claims
      in the event that the use of our products results in injury. Such claims may
      include, among others, that our products fail to remove harmful contaminants
      or
      bacteria, or that our products introduce other contaminants into the water.
      While we intend to obtain product liability insurance, there can be no assurance
      that such insurance will continue to be available at a reasonable cost, or,
      if
      available, will be adequate to cover liabilities. We do not anticipate obtaining
      contractual indemnification from parties acquiring or using our products. In
      any
      event, any such indemnification if obtained will be limited by our terms and,
      as
      a practical matter, to the creditworthiness of the indemnifying party. In the
      event that we do not have adequate insurance or contractual indemnification,
      product liabilities relating to defective products could have a material adverse
      effect on our operations and financial conditions.


10


Our
      water treatment system and the related technology is unproven and may not
      achieve widespread market acceptance among our prospective
      customers.




Although
      we have installed a water treatment system on a pilot basis, our products have
      not been proven in a commercial context over any significant period of time.
      We
      have developed our proprietary technology and processes for water treatment
      based on dissolved air flotation technology, which competes with other forms
      of
      water treatment technologies that currently are in operation throughout the
      United States. Our water treatment system and the technology on which it is
      based may not achieve widespread market acceptance. Our success will depend
      on
      our ability to market our system and services to businesses and water providers
      on terms and conditions acceptable to us and to establish and maintain
      successful relationships with various water providers and state regulatory
      agencies.




We
      believe that market acceptance of our system and technology and our related
      success will depend on many factors including:




•
            
            the
                perceived advantages of our system over competing water treatment
                solutions;


•
            
            the
                actual and perceived safety and efficacy of our
                system;


•
            
            the
                availability and success of alternative water treatment
                solutions;


•
            
            the
                pricing and cost effectiveness of our
                system;


•
            
            our
                ability to access businesses and water providers that may use our
                system;


•
            
            the
                effectiveness of our sales and marketing
                efforts;





•
            
            publicity
                concerning our system and technology or competitive
                solutions;


•
            
            timeliness
                in assembling and installing our system on customer
                sites;


•
            
            our
                ability to respond to changes in the regulatory standards
                for  levels of various contaminants;
                and


•
            
            our
                ability to provide effective service and maintenance of our systems
                to our
                customers’ satisfaction.




If
      our
      system or technology fails to achieve or maintain market acceptance or if new
      technologies are introduced by others that are more favorably received than
      our
      technology, are more cost effective or otherwise render our technology obsolete,
      we may experience a decline in demand for our system. If we are unable to market
      and sell our system and services successfully, our revenues would decline and
      our operating results and prospects would suffer.




We
      have only recently leased a manufacturing facility for our
      products.




In
      September of 2007 we leased a 60,000
      square foot manufacturing facility in Garden Grove, California. We have yet
      to
      commence manufacturing at the facility, and will be unable to do so until we
      obtain sufficient financing. In addition, we may encounter unexpected problems
      and expenses in making the facility ready to commence
      manufacturing.




We
      must meet evolving customer requirements for water treatment and invest in
      the
      development of our water treatment technologies.




If
      we are
      unable to develop or enhance our system and services to satisfy evolving
      customer demands, our business, operating results, financial condition and
      prospects will be harmed significantly. The market for water treatment is
      characterized by changing technologies, periodic new product introductions
      and
      evolving customer and industry standards. For instance, competitors in the
      water
      treatment industry are continuously searching for methods of water treatment
      that are more cost-effective and more efficient. Our current and prospective
      customers may choose water treatment systems that are offered at a lower price
      than our system. To achieve market acceptance for our system, we must
      effectively and timely anticipate and adapt to customer requirements and offer
      products and services that meet customer demands. This may cause us to pursue
      other technologies or capabilities through acquisitions or strategic alliances.
      Our customers may require us to provide water treatment systems for many
      different contaminants or higher volumes of water or to decrease the presence
      of
      contaminants. We also may experience design, engineering and other difficulties
      that could delay or prevent the development, introduction or marketing of any
      modifications to our system or our new services. Our failure to develop
      successfully and offer a system or services that satisfy customer requirements
      would significantly weaken demand for our system or services, which would likely
      cause a decrease in our revenues and harm our operating results. In addition,
      if
      our competitors introduce solutions and/or services based on new or alternative
      water treatment technologies, our existing and future system and/or services
      could become obsolete, which would also weaken demand for our system, thereby
      decreasing our revenues and harming our operating results.


11


Failure
      to protect our intellectual property rights could impair our competitive
      position.




Our
      water
      treatment systems utilize a variety of proprietary rights that are important
      to
      our competitive position and success. Because the intellectual property
      associated with our technology is evolving and rapidly changing, our current
      intellectual property rights may not protect us adequately. We rely on a
      combination of patents, trademarks, trade secrets and contractual restrictions
      to protect the intellectual property we use in our business. In addition, we
      generally enter into confidentiality or license agreements, or have
      confidentiality provisions in agreements, with our employees, consultants,
      strategic partners and customers and control access to, and distribution of,
      our
      technology, documentation and other proprietary information.




Because
      legal standards relating to the validity, enforceability and scope of protection
      of patent and intellectual property rights in new technologies are uncertain
      and
      still evolving, the future viability or value of our intellectual property
      rights is uncertain. Furthermore, our competitors independently may develop
      similar technologies that limit the value of our intellectual property or design
      around patents issued to us. If competitors or third parties are able to use
      our
      intellectual property or are able to successfully challenge, circumvent,
      invalidate or render unenforceable our intellectual property, we likely would
      lose any competitive advantage we might develop. We may not be successful in
      securing or maintaining proprietary or patent protection for the technology
      used
      in our system or services, and protection that is secured may be challenged
      and
      possibly lost.




Risks
      Related to Our Industry




Changes
      in governmental regulation and other legal uncertainties could adversely affect
      our customers or decrease demand for our systems, and thus harm our business,
      operating results and prospects.




In
      the
      United States, many different federal, state and local laws and regulations
      govern the treatment and distribution of  water, as well as and
      disposal of attendant wastes. The increased interest in the treatment of
      contaminated water due to increased media attention on the adverse health
      effects from contaminated drinking water may result in intervention by the
      EPA
      or state regulatory agencies under existing or newly enacted legislation and
      in
      the imposition of restrictions, fees or charges on users and providers of
      products and services in this area. These restrictions, fees or charges could
      adversely affect our potential customers, which could negatively affect our
      revenues. Conversely, the failure of the EPA or state regulatory agencies to
      act
      on a timely basis to set interim or permanent standards for pollutants, or
      to
      delay effective dates for standards for pollutants, grant waivers of compliance
      with such standards or take other discretionary actions not to enforce these
      standards, may decrease demand for our system if water utilities and agencies
      are not required to bring their water into compliance with such regulatory
      standards. While we are not aware of any currently proposed federal regulation
      directly affecting our business, we cannot predict whether there will be future
      legislation regarding the treatment and distribution of water and the disposal
      of attendant wastes.




Water
      treatment systems in the United States must generally be permitted by a
      regulatory agency prior to its use by our customers, and changing drinking
      water
      standards and other factors could affect the approval process with respect
      to
      our systems by such regulatory agencies.




In
      general, water treatment systems must be permitted by applicable state or local
      regulatory agencies prior to commencement of operations. We cannot assure you
      when or whether the various regulatory agencies will approve our system for
      use
      by our customers. The application process can be time consuming and often
      involves several information requests by the regulatory agencies with respect
      to
      the system. Any long waiting periods or difficulties faced by our customers
      in
      the application process could cause some of our customers to use competing
      technologies, products, services or sources of drinking water, rather than
      use
      our technology.





Demand
      for our
      products could be adversely affected by a downturn in government spending
      related to water treatment, or in the cyclical residential or non-residential
      building markets.




Our
      business will be dependent upon spending on water treatment systems by
      utilities, municipalities and other organizations that supply water, which
      in
      turn is often dependent upon residential construction, population growth,
      continued contamination of water sources and regulatory responses to this
      contamination. As a result, demand for our water treatment systems could be
      impacted adversely by general budgetary constraints on governmental or regulated
      customers, including government spending cuts, the inability of government
      entities to issue debt to finance any necessary water treatment projects,
      difficulty of customers in obtaining necessary permits or changes in regulatory
      limits associated with the contaminants we seek to address with our water
      treatment system.  A slowdown of growth in residential and non-residential
      building would reduce demand for drinking water and for water treatment systems.
      The residential and non-residential building markets are generally cyclical,
      and, historically, down cycles have typically lasted a number of years. Any
      significant decline in the governmental spending on water treatment systems
      or
      residential or non-residential building markets could weaken demand for our
      systems.


12


We
      operate in a competitive market, and if we are unable to compete effectively,
      our business, operating results and prospects could suffer.




The
      market environment in which we operate is very dynamic and is characterized
      by
      evolving standards, the development of new technology, regulations which
      continually reduce the acceptable levels for contaminants and affect the means,
      methods and costs of disposing of wastes derived from water
      treatment.




We
      will
      compete with large water treatment companies, such as  USFilter
      Corporation, a subsidiary of Siemens AG. Our competition may vary according
      to
      the contaminant being removed. Many of our current and potential competitors
      have technical and financial resources, marketing and service organizations,
      and
      market expertise significantly greater than ours. Many of our competitors also
      have longer operating histories, greater name recognition and large customer
      bases. Moreover, our competitors may forecast the course of market developments
      more accurately and could in the future develop new technologies that compete
      with our system and/or services or even render our system and/or services
      obsolete. Due to the evolving markets in which we compete, additional
      competitors with significant market presence and financial resources may enter
      those markets, thereby further increasing competition. These competitors may
      be
      able to reduce our market share by adopting more aggressive pricing policies
      than we can or by developing technology and services that gain wider market
      acceptance than our system and/or services. Existing and potential competitors
      also may develop relationships with distributors of our system and services
      or
      third parties with whom we have strategic relationships in a manner that could
      harm our ability to sell, market and develop our system and services
      significantly. If we do not compete successfully we may never achieve
      significant market penetration and we may be unable to maintain or increase
      our
      business or revenues, causing our operating results and prospects to suffer.





RISKS
      RELATED TO OUR COMMON STOCK




You
      may have difficulty trading our Common Stock as there is a limited public market
      for shares of our Common Stock.





Our
      Common Stock is currently quoted on the NASD’s OTC Bulletin Board under the
      symbol “SINX.OB.” Our
      Common Stock is not actively traded and there is a limited public market for
      our
      Common Stock. As a result, a stockholder may find it difficult to dispose of,
      or
      to obtain accurate quotations of the price of, our Common Stock. This severely
      limits the liquidity of our Common Stock, and would likely have a material
      adverse effect on the market price for our Common Stock and on our ability
      to
      raise additional capital. An active public market for shares of our Common
      Stock
      may not develop, or if one should develop, it may not be sustained.





Applicable
      SEC rules governing the trading of “penny stocks” may limit the trading and
      liquidity of our Common Stock which may affect the trading price of our Common
      Stock.





Our
      Common Stock is currently quoted on the NASD’s OTC Bulletin
      Board.  Stocks such as ours which trade below $5.00 per share are
      considered “penny
      stocks” and subject to SEC rules and regulations which impose limitations
      upon the manner in which such shares may be publicly traded. These regulations
      require the delivery, prior to any transaction involving a penny stock, of
      a
      disclosure schedule explaining the penny stock market and the associated risks.
      Under these regulations, certain brokers who recommend such securities to
      persons other than established customers or certain accredited investors must
      make a special written suitability determination regarding such a purchaser
      and
      receive such purchaser’s written agreement to a transaction prior to sale. These
      regulations have the effect of limiting the trading activity of our Common
      Stock
      and reducing the liquidity of an investment in our Common Stock.





We
      do not anticipate dividends to be paid on our Common Stock, and
      stockholders may lose the entire amount of their investment.




A
      dividend has never been declared or paid in cash on our Common Stock, and we
      do
      not anticipate such a declaration or payment for the foreseeable future. We
      expect to use future earnings, if any, to fund business growth. Therefore,
      stockholders will not receive any funds absent a sale of their shares. We cannot
      assure stockholders of a positive return on their investment when they sell
      their shares, nor can we assure that stockholders will not lose the entire
      amount of their investment.


13


You
      may experience dilution of your ownership interests because of the
      future issuance of additional shares of our Common Stock.




In
      the
      future, we may issue our authorized but previously unissued equity securities,
      resulting in the dilution of the ownership interests of our present
      stockholders.  We are currently authorized to issue an aggregate of
      150,000,000 shares of Common Stock.  As of  December
      31,  2007, there were106,635,201 shares of Common Stock
      outstanding.  We may also issue additional shares of our Common Stock or
      other securities that are convertible into or exercisable for Common Stock
      in
      connection with hiring or retaining employees, future acquisitions, future
      sales
      of our securities for capital raising purposes, or for other business
      purposes.  The future issuance of any such additional shares of our Common
      Stock or other securities may create downward pressure on the trading price
      of
      our Common Stock.  There can be no assurance that we will not be required
      to issue additional shares, warrants or other convertible securities in the
      future in conjunction with any capital raising efforts, including at a price
      (or
      exercise prices) below the price at which shares of our Common Stock are
      currently quoted on the OTC Bulletin Board.




Even
      though we are not a California corporation, our Common Stock could still be
      subject to a number of key provisions of the California General Corporation
      Law.




Under
      Section 2115 of the California General Corporation Law (the “CGCL”), corporations not
      organized under California law may still be subject to a number of key
      provisions of the CGCL. This determination is based on whether the corporation
      has significant business contacts with California and if more than 50% of its
      voting securities are held of record by persons having addresses in California.
      In the immediate future, we will continue the business and operations of Sionix
      in California, and a majority of our business operations, revenue and payroll
      will be conducted in, derived from, and paid to residents of California.
      Therefore, depending on our ownership, we could be subject to certain provisions
      of the CGCL. Among the more important provisions are those relating to the
      election and removal of directors, cumulative voting, standards of liability
      and
      indemnification of directors, distributions, dividends and repurchases of
      shares, shareholder meetings, approval of certain corporate transactions,
      dissenters' and appraisal rights, and inspection of corporate
      records.





ITEM
      2. DESCRIPTION OF PROPERTY.





Our
      corporate headquarters consists of approximately 1,994 square feet of office
      space  in Irvine, California. The lease covering this space expires in
      February 2009. Our manufacturing facilities, covering approximately 60,000
      square feet,  are located in Garden Grove, California pursuant to a
      lease expiring in 2012. Our management believes the facilities will provide
      adequate space for our office, product assembly and warehouse activities, and
      that suitable additional space will be available to accommodate planned
      expansion.





ITEM
      3.  LEGAL PROCEEDINGS.





From
      time
      to time we are involved in routine legal proceedings, none of which is material
      to our financial condition.





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





No
      matters were submitted to a vote of
      shareholders of the Company during the fourth quarter of the fiscal year ended
      September 30, 2007.




14


PART
      II





ITEM
      5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS
      ISSUER PURCHASES OF EQUITY SECURITIES





Market
      Prices





Our
      common stock is quoted on the OTC Bulletin Board under the symbol “SINX”. The high and low
      closing prices of the
      Company’s common stock were as follows for the periods below.The quotations below
      reflect inter-dealer bid prices without retail markup, markdown, or commission
      and may not represent actual transactions.




High
              
              LowFiscal
                  Year Ended September 30, 2007First
                  Quarter
              
              
              .11
              
              
              
              .04Second
                  Quarter
              
              
              .46
              
              
              
              .10Third
                  Quarter
              
              
              .40
              
              
              
              .25Fourth
                  Quarter
              
              
              .38
              
              
              
              .27
   High
              
              LowFiscal
                  Year Ended September 30, 2006First
                  Quarter
              
              
              .035
              
              
              
              .012Second
                  Quarter
              
              
              .02
              
              
              
              .008Third
                  Quarter
              
              
              .014
              
              
              
              .003Fourth
                  Quarter
              
              
              .06
              
              
              
              .008





Dividends





We
      have
      not paid any cash dividends on our common stock since our inception and do
      not
      anticipate paying any cash dividends in the foreseeable future. We plan to
      retain our earnings, if any, to provide funds for the expansion of our business.
      Our Board of Directors will determine future dividend policy based upon
      conditions at that time, including our earnings and financial condition, capital
      requirements and other relevant factors.





Securities
      Authorized for Issuance
      Under Equity Compensation Plans





The
      following table sets forth certain information regarding the Company’s equity
      compensation plans as of September 30, 2007.


No.
                  of securities
                  tobe
                  issuedupon
                  exercise
                  of
              
              Weighted
                  average
              
              No.
                  of
                  securitiesoutstanding
              
              exercise
                  price
                  of
              
              remaining
                  availableoptions,
              
              outstanding
              
              for
                  future
                  issuancewarrants
              
              options,
                  warrants
              
              under
                  equityPlan
                  category
              
              and
                  rights
              
              and
                  rights
              
              compensation
                  plansEquity
                  compensation plans approved by stockholders
              
              
              -0-
              
              
              
              -
              
              
              
              -0-Equity
                  compensation plans not approved by stockholders
              
              7,343,032
              
              
              
              .15
              
              
              
              233,648Total
              
              7,343,032
              
              
              
              .15
              
              
              
              233,648


15


Recent
      Issuances of Unregistered
      Securities





In
      July
      of 2007 we completed a private offering, principally to private investment
      funds, in the amount of $1,025,000. The investors received Subordinated
      Convertible Debentures that bear interest at 8% per annum, mature twelve
      months after issuance, and are convertible into our Common Stock at a conversion
      price of $ .22 per share.





We
      believe the sale of securities described above was exempt from the registration
      provisions of the Securities Act of 1933 by reason of Section 4(2) thereof
      and
      Regulation D thereunder.





ITEM
      6.MANAGEMENT’S DISCUSSION
      AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
      OPERATION




General.




The
      following discussion and analysis should be read in conjunction with our
      Consolidated Financial Statements and Notes thereto, included elsewhere in
      this
      report. Except for the historical information contained in this report, the
      following discussion contains certain forward-looking statements that involve
      risks and uncertainties, such as statements of our plans, objectives,
      expectations and intentions. Our actual results may differ materially from
      the results discussed in the forward-looking statements, as a result of certain
      factors including, but not limited to, those discussed elsewhere in this
      report.




Application
        of Critical Accounting Policies and Estimates
 
 The
        preparation of our consolidated financial statements in accordance with U.S.
        GAAP requires management to make judgments, assumptions and estimates that
        affect the amounts reported. A critical accounting estimate is an assumption
        about highly uncertain matters and could have a material effect on the
        consolidated financial statements if another, also reasonable, amount were
        used,
        or, a change in the estimate is reasonably likely from period to period.
        We base
        our assumptions on historical experience and on other estimates that we believe
        are reasonable under the circumstances. Actual results could differ
        significantly from these estimates. There were no changes in accounting policies
        or significant changes in accounting estimates during fiscal 2007. Management
        believes the following critical accounting policies reflect its more significant
        estimates and assumptions.
 
 Revenue
        Recognition.
        Although the Company has yet to generate sales, it plans to follow the guidance
        provided by SAB 104 for recognition of revenues. The Company does not plan
        to
        recognize revenue unless there is persuasive evidence of an arrangement,
        title
        and risk of loss has passed to the customer, delivery has occurred or the
        services have been rendered, the sales price is fixed or determinable and
        collection of the related receivable is reasonably assured. In general, the
        Company plans to require a deposit from a customer before a unit is fabricated
        and shipped.  It is the Company's policy to require an arrangement
        with its customers, either in the form of a written contract or purchase
        order
        containing all of the terms and conditions governing the arrangement, prior
        to
        the recognition of revenue. Title and risk of loss will generally pass to
        the
        customer at the time of delivery of the product to a common carrier. At the
        time
        of the transaction, the Company will assess whether the sale price is fixed
        or
        determinable and whether or not collection is reasonably assured. If the
        sales
        price is not deemed to be fixed or determinable, revenue will be recognized
        as
        the amounts become due from the customer. The Company does not plan to offer
        a
        right of return on its products and the products will generally not be subject
        to customer acceptance rights. The Company plans to assess collectibility
        based
        on a number of factors, including past transaction and collection history
        with a
        customer and the creditworthiness of the customer. The Company plans to perform
        ongoing credit evaluations of its customers' financial condition. If the
        Company
        determines that collectibility of the sales price is not reasonably assured,
        revenue recognition will be deferred until such time as collection becomes
        reasonably assured, which is generally upon receipt of payment from the
        customer. The Company plan to include shipping and handling costs in revenue
        and
        cost of sales.
 
 Support
        Services. The
        Company plans to provide support services to customers primarily through
        service
        contracts, and  it will recognize support service revenue ratably over
        the term of the service contract or as services are rendered.
  Warranties.The
        Company's products are
        generally subject to warranty, and related costs will be provided for in
        cost of
        sales when revenue is recognized. Once the Company has a history of sales,
        the
        Company's warranty obligation will be  based upon historical product
        failure rates and costs incurred in correcting a product failure. If actual
        product failure rates or the costs associated with fixing failures differ
        from
        historical rates, adjustments to the warranty liability may be required in
        the
        period in which determined.
 Allowance
          for Doubtful
          Accounts. The Company will evaluate the adequacy of its allowance for
          doubtful accounts on an  ongoing basis through detailed reviews of its
          accounts and notes receivables.    Estimates will be used in
          determining the Company's allowance for doubtful accounts  and will be
          based on historical collection experience,  trends including
          prevailing economic conditions and adverse events that may affect a customer's
          ability to repay, aging of accounts and notes receivable by category, and
          other
          factors such as the financial condition of customers. This evaluation is
          inherently subjective because estimates may be revised in the future as
          more
          information becomes available about outstanding
          accounts.




16




Inventory
        Valuation. Inventories will be stated at the lower
        of cost or market, with
        costs generally determined on a first-in first-out basis. We plan to utilize
        both specific product identification and historical product demand as the
        basis
        for determining excess or obsolete inventory reserve. Changes in market
        conditions, lower than expected customer demand or changes in technology
        or
        features could result in additional obsolete inventory that is not saleable
        and
        could require additional inventory reserve provisions.
 
 Goodwill
        and
        otherIntangibles.
        Goodwill
        and intangible assets with indefinite lives will be tested annually for
        impairment in accordance with the provisions of Financial Accounting Standards
        Board Statement No. 142 “Goodwill and Other Intangible Assets”
(FAS 142). We will use our judgment in assessing whether assets may have
        become impaired between annual impairment tests. We perform our annual test
        for
        indicators of goodwill and non-amortizable intangible assets impairment in
        the
        fourth quarter of our fiscal year or sooner if indicators of impairment
        exist.
 
 Legal
        Contingencies. From time to time we are a defendant in
        litigation. As required by
        Financial Accounting Standards Board Statement No. 5 “Accounting for
        Contingencies” (FAS 5), we determine whether an estimated loss from a
        loss contingency should be accrued by assessing whether a loss is deemed
        probable and the loss amount can be reasonably estimated, net of any applicable
        insurance proceeds. Estimates of potential outcomes of these contingencies
        are
        developed in consultation with outside counsel. While this assessment is
        based
        upon all available information, litigation is inherently uncertain and the
        actual liability to fully resolve this litigation cannot be predicted with
        any
        assurance of accuracy. Final settlement of these matters could possibly result
        in significant effects on our results of operations, cash flows and financial
        position.




Plan
      of
      Operation.




During
      the next twenty-four months we plan to test and continue demonstrating the
      ELIXIR water treatment system to potential clients at the Villa Park Dam under
      our arrangement with the Serrano Water District. We believe that the operation
      of the unit at this facility will position us to aggressively market the ELIXIR
      to public water utilities, private companies and other potential
      customers.  These demonstrations will serve as a sales tool and a
      model for possible applications and installations. Once we obtain sufficient
      financing, we plan to engage in substantial promotional activities in connection
      with the operation of the unit, including media exposure and access to other
      public agencies and potential private customers. If the unit continues to
      operate successfully, we believe we can receive orders for operating units.
      We
      have demonstrated the unit at the Villa Park Dam to over fifty prospective
      clients.





We
      have
      established our manufacturing facility in Garden Grove, California to
      commence production of the units, and we have installed the machinery and
      tooling acquired from RJ Metals, Inc. in the building. Once we have obtained
      financing we will commence the search and hiring of employees to serve at the
      facility. We anticipate that most of our capital needs will need to be funded
      by
      equity financing until such time that we have received orders for, and deposits
      with respect to, our products.




Once
      we receive orders, we intend to manufacture Elixir
      systems at our facility to fulfill the orders and ship them to
      customers.




Results
      of Operations (Year Ended September 30, 2007 Compared To Year Ended September
      30, 2006).




The
      Company was relatively inactive during most of the 2006 fiscal year due to
      lack
      of resources, although it reactivated operations in the last quarter. Revenues
      for both the 2006 and 2007 fiscal years were zero, as the Company had not yet
      commenced the sale of products. General and administrative expenses for the
      2007
      fiscal year totaled $1,423,346,, an increase of $784,087 over general and
      administrative expenses for the 2006 fiscal year, due to the maintenance of
      an
      office, financing activities, and costs associated with the establishment of
      the
      pilot project at the Villa Park Dam.. No research and development expenses
      were
      incurred in either year, due to the suspension of research and development
      activities in 2006 as a result of the lack of funds to finance such
      activities.





Interest
      expense for 2007 of  $235,557  represented an increase of
      $225,477, due largely to the issuance of convertible debt securities during
      the
      2007 year.. During 2006 the Company incurred an extraordinary loss on settlement
      of debts of $94,221, with no corresponding loss during 2007. As a result of
      these items, the loss for the 2007 fiscal was $2,001,094, an increase of
      $1,226,207 over the loss for the 2006 fiscal year.


17


Liquidity
      and Capital
      Resources.




On
      September 30, 2007, the Company had cash and cash equivalents of $372,511 .
      The
      sole source of liquidity has been the sale of securities. Management
      anticipates that additional capital will be required to finance the Company's
      operations. The Company believes that anticipated proceeds from sales of
      securities and other financing activities, plus possible cash flow from
      operations during the 2008 fiscal year, will be sufficient to finance the
      Company's operations. However, the Company has no commitments for financing,
      and
      there can be no assurance that such financing will be available or that the
      Company will not encounter unforeseen difficulties that may deplete its capital
      resources more rapidly than anticipated. Also, the Company may not be able
      to
      generate revenues from operations during the fiscal year.




As
      of
      September 30, 2007, the Company had an accumulated deficit of $17,300,147.
      It
      can be expected that the future operating results will continue to be subject
      to
      many of the problems, expenses, delays and risks inherent in the establishment
      of a developmental business enterprise, many of which the Company cannot
      control.




Recent
      Private Placements




In
      a
      private offering that commenced in October of 2006 and concluded in early 2007,
      we issued convertible bridge notes in the amount of $750,000 to a group of
      private investors. The notes bear interest at 10% per annum, expire eighteen
      months after issuance, and are convertible into our Common Stock at a conversion
      price of $ .04 per share. The holders have the option to convert accrued
      interest on these notes into Common Stock of the Company at the same conversion
      rate.




In
      June
      of 2007 we completed a private offering of 10% Convertible Promissory Notes
      of
      $86,000 to five private investors. The notes are convertible into Common Stock
      at a conversion price of $.01 per share: provided, however, that the right
      of
      the holders of these notes to convert is subject to the completion of certain
      financing milestones.




In
      July
      of 2007 we completed a private offering, principally to private investment
      funds, in the amount of $1,025,000. The investors received Subordinated
      Convertible Debentures that bear interest at 8% per annum, expire twelve months
      after issuance, and are convertible into our Common Stock at a conversion price
      of $ .22 per share. The investor also received warrants to purchase 1,693,179
      shares.




Going
      Concern
      Opinion.




We
      currently have insufficient assets to continue our operations, unless we secure
      additional financing. As a result of our ongoing losses, lack of revenues from
      operations, and accumulated deficits, there is considerable doubt about our
      ability to continue as a going concern.


18


ITEM
      7. FINANCIAL STATEMENTS





SIONIX
      CORPORATION


INDEX
      TO FINANCIAL STATEMENTS










Report
                of Independent Registered Public Accounting Firm
            F-2Balance
                Sheet as of  September 30, 2007
            F-3Statements
                of Operations for the years ended September 30, 2007 and September
                30,
                2006 and Cumulative From Inception (October 3, 1994) to September
                30,
                2007
            F-4Statements
                of Stockholders’ Equity (Deficit) from Inception (October 3, 1994) to
                September 30, 2007
            F-5Statements
                of Cash Flows for the years ended September 30, 2007 and September
                30,
                2006 and Cumulative From Inception (October 3, 1994) to September
                30,
                2007
            F-9Notes
                to Financial Statements
            F-10


F-1


REPORT
          OF INDEPENDENT
          REGISTERED PUBLIC ACCOUNTING FIRM
 
 To
          the
          Board of Directors and Stockholders
 Sionix
          Corporation
 
 We
          have
          audited the accompanying balance sheet of Sionix Corporation (a development
          stage entity) (a Nevada corporation) as of September 30, 2007 and the related
          statements of operations, stockholders' equity (deficit), and cash flows
          for the
          years ended September 30, 2007 and 2006 and for the period from October
          3, 1994
          (inception) to September 30, 2007. 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 audits.
 
 We
          conducted our audits in accordance with the standards of the Public Company
          Accounting Oversight Board (United States). 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 audits provide 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, 2007 and the results of its operations and its cash flows for the years
          ended September 30, 2007 and 2006 and for the period from October 3, 1994
          (inception) to September 30, 2007, 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 deficit accumulated from inception
          amounting $17,300,147 at September 30, 2007 including a net loss of $2,001,094
          incurred in the year ended September 30, 2007. These factors as discussed
          in
          Note 11 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 11.  The financial
          statements do not include any adjustments that might result from the outcome
          of
          this uncertainty.
   Kabani
          & Company, Inc.
 Certified
          Public Accountants
 
 Los
          Angeles, California.
 
 December
          7, 2007
 
 
  F-2
  
  
 SIONIX
                    CORPORATION(A
                    DEVELOPMENT STAGE COMPANY)BALANCE
                    SHEETSEPTEMBER
                    30, 2007ASSETSCURRENT
                    ASSETS:Cash
                    & cash equivalents
                
                $
                372,511Advance
                    to employee
                
                
                1,350PROPERTY
                    AND EQUIPMENT, net
                
                
                40,834DEPOSIT
                
                
                104,600Total
                    assets
                
                $
                519,295LIABILITIES
                    AND STOCKHOLDERS' DEFICITCURRENT
                    LIABILITIES:Accounts
                    payable
                
                $
                157,399Accrued
                    expenses
                
                
                1,687,673Liquidated
                    damage liability
                
                
                15,375Notes
                    payable-related parties
                
                
                129,000Note
                    payable-officers
                
                
                19,260Equity
                    line of credit
                
                
                27,336Convertible
                    notes, net
                
                
                920,337Total
                    current liabilities
                
                
                2,956,380STOCKHOLDERS'
                    DEFICITCommon
                    stock, $0.001 par value; 150,000,000 shares
                    authorized;107,117,101
                    shares issued and 106,635,201 shares
                    outstanding
                
                
                106,635Additional
                    paid-in capital
                
                
                14,712,527Shares
                    to be issued
                
                
                43,900Deficit
                    accumulated during development stage
                
                
                (17,300,147
                )Total
                    stockholders' deficit
                
                
                (2,437,085
                )Total
                    liabilities & stockholders' deficit
                
                $
                519,295The
                    accompanying notes form an integral part of these financial
                    statements
 
  F-3
  
 
 
 SIONIX
                    CORPORATION(A
                    DEVELOPMENT STAGE COMPANY)STATEMENTS
                    OF OPERATIONSCumulativefrom
                    InceptionFor
                    the years ended September 30,
                
                
                (October
                    3, 1994) to2007
                
                
                2006
                
                
                September
                    30, 2007Revenues
                
                $
                -
                
                
                $
                -
                
                
                $
                -Operating
                    expenses:General
                    and administrative
                
                
                1,423,346
                
                
                
                639,259
                
                
                
                13,153,569Research
                    and development
                
                
                -
                
                
                
                -
                
                
                
                1,449,474Impairment
                    of intangible assets
                
                
                -
                
                
                
                -
                
                
                
                1,267,278Inventory
                    obsolescence
                
                
                -
                
                
                
                -
                
                
                
                365,078Depreciation
                    and amortization
                
                
                31,699
                
                
                
                31,326
                
                
                
                532,105Legal
                    settlement
                
                
                -
                
                
                
                -
                
                
                
                (434,603
                )Total
                    operating expenses
                
                
                1,455,045
                
                
                
                670,585
                
                
                
                16,332,901Loss
                    from operations
                
                
                (1,455,045
                )
                
                
                (670,585
                )
                
                
                (16,332,901
                )Other
                    income (expenses)Interest
                    income
                
                
                4,886
                
                
                
                -
                
                
                
                58,543Interest
                    expense
                
                
                (235,557
                )
                
                
                (10,080
                )
                
                
                (470,244
                )Beneficial
                    conversion feature expense
                
                
                (315,378
                )
                
                
                -
                
                
                
                (315,378
                )Loss
                    on settlement of debts
                
                
                -
                
                
                
                (94,221
                )
                
                
                (230,268
                )Total
                    other expenses
                
                
                (546,049
                )
                
                
                (104,302
                )
                
                
                (957,347
                )Loss
                    before income taxes
                
                
                (2,001,094
                )
                
                
                (774,887
                )
                
                
                (17,290,248
                )Income
                    taxes
                
                
                -
                
                
                
                -
                
                
                
                9,900Net
                    loss
                
                $
                (2,001,094
                )
                
                $
                (774,887
                )
                
                $
                (17,300,147
                )Basic
                    and diluted loss per share
                
                $
                (0.02
                )
                
                $
                (0.01
                )*Basic  and
                    diluted weighted average number of common stock
                    outstanding106,207,706
                
                
                
                102,524,186
  *weighted
                    average diluted number of shares are the same as basic weighted
                    average
                    number of shares as the effect is anti-dilutiveThe
                    accompanying notes form an integral part of these financial
                    statements
 
   F-4
  
 SIONIX
                    CORPORATION(A
                    DEVELOPMENT STAGE COMPANY)STATEMENTS
                    OF STOCKHOLDERS' EQUITY (DEFICIT)FOR
                    THE YEARS ENDED SEPTEMBER 30, 2007 AND 2006 AND FOR THE PERIOD
                    FROM
                    INCEPTION (OCTOBER 3,1994) TO SEPTEMBER 30,2007Deficit
                
                
                TotalCommon
                    stock
                
                
                Additional
                
                
                Stock
                
                
                Stock
                
                
                Stock
                
                
                Unamortized
                
                
                accumulated
                
                
                stockholders'Number
                    of
                
                
                
                
                
                paid-In
                
                
                to
                    be
                
                
                subscription
                
                
                to
                    be
                
                
                consulting
                  fees
                
                
                from
                
                
                equityshares
                
                
                Amount
                
                
                capital
                
                
                issued
                
                
                receivable
                
                
                cancelled
                
                
                inception
                
                
                (deficit)Shares
                    issued for cash-Oct 1994
                
                
                10,000
                
                
                $
                10
                
                
                $
                90
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                100Net
                    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
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                135,618Issuance
                    of shares for debt
                
                
                1,038,640
                
                
                
                1,038
                
                
                
                1,164,915
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1,165,953Issuance
                    of shares for cash
                
                
                232,557
                
                
                
                233
                
                
                
                1,119,027
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1,119,260Issuance
                    of shares for subscriptionnote
                    receivable
                
                
                414,200
                
                
                
                414
                
                
                
                1,652,658
                
                
                
                -
                
                
                
                (1,656,800
                )
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (3,728
                )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
                )
                
                
                1,501,403Issuance
                    of shares for reorganization
                
                
                18,632,612
                
                
                
                18,633
                
                
                
                (58,033
                )
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (39,400
                )Issuance
                    of shares for cash
                
                
                572,407
                
                
                
                573
                
                
                
                571,834
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                572,407Issuance
                    of shares for service
                
                
                24,307
                
                
                
                24
                
                
                
                24,283
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                24,307Net
                    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
                )
                
                
                1,136,000Share
                    issued for cash
                
                
                722,733
                
                
                
                723
                
                
                
                365,857
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                366,580Share
                    issued for service
                
                
                274,299
                
                
                
                274
                
                
                
                54,586
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                54,860Cancellation
                    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
                )
                
                
                698,525Share
                    issued for cash
                
                
                2,810,000
                
                
                
                2,810
                
                
                
                278,190
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                281,000Share
                    issued for service
                
                
                895,455
                
                
                
                895
                
                
                
                88,651
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                89,546Shares
                    issued for compensation
                
                
                2,200,000
                
                
                
                2,200
                
                
                
                217,800
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                220,000Cancellation
                    of shares
                
                
                (2,538,170
                )
                
                
                (2,538
                )
                
                
                (1,534,262
                )
                
                
                -
                
                
                
                1,656,800
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                120,000Net
                    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
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                392,925Share
                    issued for service
                
                
                705,746
                
                
                
                706
                
                
                
                215,329
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                216,035Share
                    issued for cash
                
                
                9,383,000
                
                
                
                9,383
                
                
                
                928,917
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                938,300Net
                    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
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1,030,350Shares
                    issued for compensation
                
                
                1,517,615
                
                
                
                1,518
                
                
                
                1,218,598
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1,220,116Shares
                    issued for service
                
                
                986,844
                
                
                
                986
                
                
                
                253,301
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                254,287Net
                    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
                )
                
                
                -
                
                
                
                391,567Share
                    issued for cash
                
                
                6,005,000
                
                
                
                6,005
                
                
                
                594,495
                
                
                
                
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                600,500100,000
                    share to be issued for cash
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                10,000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                10,000639,509
                    Shares to be issued for debt  settlement in 2001
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                103,295
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                103,295Net
                    loss for the year ended September 30, 2001
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (1,353,429
                )
                
                
                (1,353,429
                )
  F-5
  SIONIX
                    CORPORATION(A
                    DEVELOPMENT STAGE COMPANY)STATEMENTS
                    OF STOCKHOLDERS' EQUITY (DEFICIT)FOR
                    THE YEARS ENDED SEPTEMBER 30, 2007 AND 2006 AND FOR THE PERIOD
                    FROM
                    INCEPTION (OCTOBER 3,1994) TO SEPTEMBER 30,2007-continued
   Balance
                    September 30, 2001
                
                
                62,688,698
                
                
                
                62,688
                
                
                
                9,229,213
                
                
                
                113,295
                
                
                
                -
                
                
                
                -
                
                
                
                (141,318
                )
                
                
                (9,522,180
                )
                
                
                (258,302
                )Shares
                    issued for service and prepaid expenses
                
                
                1,111,710
                
                
                
                1,112
                
                
                
                361,603
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                54,400
                
                
                
                -
                
                
                
                417,115Shares
                    issued as contribution
                
                
                100,000
                
                
                
                100
                
                
                
                11,200
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                11,300Shares
                    issued for compensation
                
                
                18,838
                
                
                
                19
                
                
                
                2,897
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                2,916Share
                    issued for cash
                
                
                16,815,357
                
                
                
                16,815
                
                
                
                1,560,782
                
                
                
                (10,000
                )
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1,567,597Shares
                    issued for debt settlement
                
                
                1,339,509
                
                
                
                1,340
                
                
                
                208,639
                
                
                
                (103,295
                )
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                106,684Shares
                    to be issued for services related toequity
                    raising - 967,742 shares
                
                
                -
                
                
                
                -
                
                
                
                (300,000
                )
                
                
                300,000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Cancellation
                    of shares
                
                
                (7,533,701
                )
                
                
                (7,534
                )
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (7,534
                )Net
                    loss for the year ended September 30, 2002
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (1,243,309
                )
                
                
                (1,243,309
                )Balance
                    September 30, 2002
                
                
                74,540,411
                
                
                
                74,540
                
                
                
                11,074,334
                
                
                
                300,000
                
                
                
                -
                
                
                
                -
                
                
                
                (86,918
                )
                
                
                (10,765,489
                )
                
                
                596,467Shares
                    issued for services
                
                
                2,467,742
                
                
                
                2,468
                
                
                
                651,757
                
                
                
                (300,000
                )
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                354,225Shares
                    issued for capital equity line
                
                
                8,154,317
                
                
                
                8,154
                
                
                
                891,846
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                900,000Amortization
                    of consulting fees
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                86,918
                
                
                
                -
                
                
                
                86,918Cancellation
                    of shares
                
                
                (50,000
                )
                
                
                (50
                )
                
                
                50
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -7,349,204
                    shares to be cancelled
                
                
                -
                
                
                
                -
                
                
                
                7,349
                
                
                
                -
                
                
                
                -
                
                
                
                (7,349
                )
                
                
                -
                
                
                
                -
                
                
                
                -Net
                    loss for the year ended September 30, 2003
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (1,721,991
                )
                
                
                (1,721,991
                )Balance
                    September 30, 2003
                
                
                85,112,470
                
                
                
                85,112
                
                
                
                12,625,336
                
                
                
                -
                
                
                
                -
                
                
                
                (7,349
                )
                
                
                -
                
                
                
                (12,487,480
                )
                
                
                215,619Shares
                    issued for capital equity line
                
                
                19,179,016
                
                
                
                19,179
                
                
                
                447,706
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                466,885Shares
                    issued for services
                
                
                5,100,004
                
                
                
                5,100
                
                
                
                196,997
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (13,075
                )
                
                
                -
                
                
                
                189,022963,336
                    shares to be issued for cash
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                28,900
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                28,900500,000
                    shares to be issued for debt settlement
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                15,000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                15,000Cancelled
                    shares
                
                
                (7,349,204
                )
                
                
                (7,349
                )
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                7,349
                
                
                
                -
                
                
                
                -
                
                
                
                -Net
                    loss for the year ended September 30, 2004
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (1,568,770
                )
                
                
                (1,568,770
                )Balance
                    September 30, 2004
                
                
                102,042,286
                
                
                
                102,042
                
                
                
                13,270,039
                
                
                
                43,900
                
                
                
                -
                
                
                
                -
                
                
                
                (13,075
                )
                
                
                (14,056,250
                )
                
                
                (653,344
                )Amortization
                    of consulting fees
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                13,075
                
                
                
                -
                
                
                
                13,075Net
                    loss for the year ended September 30, 2005
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (467,917
                )
                
                
                (467,917
                )Balance
                    September 30, 2005
                
                
                102,042,286
                
                
                
                102,042
                
                
                
                13,270,039
                
                
                
                43,900
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (14,524,167
                )
                
                
                (1,108,186
                )Net
                    loss for the year ended September 30, 2006
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (774,887
                )
                
                
                (774,887
                )Balance
                    September 30, 2006
                
                
                102,042,286
                
                
                
                102,042
                
                
                
                13,270,039
                
                
                
                43,900
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (15,299,053
                )
                
                
                (1,883,072
                )Stock
                    issued for consulting
                
                
                4,592,915
                
                
                
                4,593
                
                
                
                80,336
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                84,929Warrants
                    issued on convertible notes
                
                
                -
                
                
                
                -
                
                
                
                340,583
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                340,583Beneficial
                    conversion feature
                
                
                -
                
                
                
                -
                
                
                
                1,021,569
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1,021,569Net
                    loss for the year ended September 30, 2007
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (2,001,094
                )
                
                
                (2,001,094
                )Balance
                    September 30, 2007
                
                
                106,635,201
                
                
                $
                106,635
                
                
                $
                14,712,527
                
                
                $
                43,900
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                (17,300,147
                )
                
                $
                (2,437,085
                )The
                    accompanying notes form an integral part of these financial
                    statements
  F-6
  SIONIX
            CORPORATION
 (A
            DEVELOPMENT STAGE COMPANY)
 STATEMENTS
            OF CASH FLOWS
 Years
                      ended Septembert 30,
                  
                  
                  Cumulativefrom
                      inception(October 3,1994) to2007
                  
                  
                  2006
                  
                  
                  September
                      30, 2007CASH
                      FLOWS FROM OPERATING ACTIVITIES:Net
                      loss
                  
                  $
                  (2,001,094
                  )
                  
                  $
                  (774,887
                  )
                  
                  $
                  (17,300,147
                  )Adjustments
                      to reconcile net loss to net cash used inoperating
                      activities:Depreciation
                      and amortization
                  
                  
                  31,699
                  
                  
                  
                  31,326
                  
                  
                  
                  619,022Amortization
                      of consulting fees
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  13075Beneficial
                      conversion feature
                  
                  
                  315,378
                  
                  
                  
                  -
                  
                  
                  
                  315,378Warrants
                      issued for consulting services and convertible notes
                  
                  
                  106,111
                  
                  
                  
                  -
                  
                  
                  
                  106,111Issuance
                      of common stock for compensation
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,835,957Issuance
                      of common stock for services
                  
                  
                  84,929
                  
                  
                  
                  -
                  
                  
                  
                  2,181,486Impairment
                      of assets
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  514,755Write-down
                      of obsolete assets
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  38,862Impairment
                      of intangible assets
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,117,601Loss
                      on settlement of debts
                  
                  
                  -
                  
                  
                  
                  94,221
                  
                  
                  
                  130,268Changes
                      in current assets and liabilities:Decrease
                      in other assets
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  40,370Increase
                      in advance to employee
                  
                  
                  (1,350
                  )
                  
                  
                  -
                  
                  
                  
                  (512,077
                  )Decrease
                      in other receivable
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  3,000Increase
                      in deposits
                  
                  
                  (104,600
                  )
                  
                  
                  -
                  
                  
                  
                  (104,600
                  )Increase
                      (decrease) in accounts payable
                  
                  
                  (115,211
                  )
                  
                  
                  50,147
                  
                  
                  
                  227,399Increase
                      (decrease) in accrued expense
                  
                  
                  566,277
                  
                  
                  
                  553,953
                  
                  
                  
                  1,702,873Total
                      adjustments
                  
                  
                  883,233
                  
                  
                  
                  729,647
                  
                  
                  
                  8,229,479Net
                      cash used in operating activities
                  
                  
                  (1,117,861
                  )
                  
                  
                  (45,240
                  )
                  
                  
                  (9,070,667
                  )CASH
                      FLOWS FROM INVESTING ACTIVITIESPurchase
                      of patents
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (154,061
                  )Purchase
                      of equipment
                  
                  
                  (27,772
                  )
                  
                  
                  -
                  
                  
                  
                  (407,946
                  )Net
                      cash used in investing activities
                  
                  
                  (27,772
                  )
                  
                  
                  -
                  
                  
                  
                  (562,007
                  )CASH
                      FLOWS FROM FINANCING ACTIVITIES:Proceeds
                      from issuance of notes
                  
                  
                  1,861,000
                  
                  
                  
                  49,440
                  
                  
                  
                  2,318,433Proceeds
                      from/(payment for) notes payable under equity line of
                      credit
                  
                  
                  (300,000
                  )
                  
                  
                  -
                  
                  
                  
                  456,000Payment
                      of notes to officers
                  
                  
                  (47,400
                  )
                  
                  
                  -
                  
                  
                  
                  (199,242
                  )Issuance
                      of common stock for cash
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  7,376,094Receipt
                      of cash for stock to be issued
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  53,900Net
                      cash provided by financing activities
                  
                  
                  1,513,600
                  
                  
                  
                  49,440
                  
                  
                  
                  10,005,185Net
                      increase  in cash & cash equivalents
                  
                  
                  367,967
                  
                  
                  
                  4,201
                  
                  
                  
                  372,511CASH
                      & CASH EQUIVALENTS, BEGINNING OF PERIOD
                  
                  
                  4,544
                  
                  
                  
                  343
                  
                  
                  
                  -CASH
                    & CASH EQUIVALENTS, END OF PERIOD$
                  
                  $
                  372,511
                  
                  
                  $
                  4,544
                  
                  
                  $
                  372,511SUPPLEMENTAL
                      CASH FLOW INFORMATION:CASH
                      PAID
                      FOR:Interest
                  
                  $
                  -
                  
                  
                  $
                  -Income
                      taxes
                  
                  $
                  -
                  
                  
                  $
                  -
  The
                      accompanying notes form an integral part of these financial
                      statements
  
  F-7
   
 Note
          1.     ORGANIZATION AND DESCRIPTION OF
          BUSINESS
 
 Sionix
          Corporation (the "Company") was incorporated in Utah in 1985.The Company
          was
          formed to design, develop, and market automatic water filtration system
          primarily for small water districts.
 
 The
          Company has completed its reincorporation as a Nevada Corporation, effective
          July 1, 2003. The reincorporation was completed pursuant to an Agreement
          and
          Plan of Merger between Sionix Corporation, a Utah corporation ("Sionix
          Utah")
          and its wholly-owned Nevada subsidiary, Sionix Corporation ("Sionix Nevada").
          Under the merger agreement, Sionix Utah merged with and into Sionix Nevada,
          and
          each share of Sionix Utah’s common stock was automatically converted into one
          share of common stock, par value $0.001 per share, of Sionix Nevada. The
          merger
          was effected by the filing of Articles of Merger, along with the Agreement
          and
          Plan of Merger, with the Secretary of State of Nevada.
 
 The
          Company is a development stage company as defined in Statement of Financial
          Accounting Standards (“SFAS”) No. 7, “Accounting and Reporting by Development
          Stage Enterprises.” The Company is in the development stage and its efforts have
          been principally devoted to research and development, organizational activities,
          and raising capital. All losses accumulated since inception has been considered
          as part of the Company’s development stage activities.
 
 Note
          2.
          SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 USE
          OF
          ESTIMATES
 
 The
          preparation of financial statements in conformity with generally accepted
          accounting principles in the United States (“GAAP”) requires management to make
          certain 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.  Significant estimates include collectibility of accounts
          receivable, accounts payable, sales returns and recoverability of long-term
          assets.
 
 CASH
          AND
          CASH EQUIVALENTS
 
 Cash
          and cash equivalents represent cash and short-term highly liquid investments
          with original maturities of three months or less.
 
 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.
  F-8
  
 PROVISION
          FOR INCOME TAXES
 
 The
          Company utilizes SFAS No. 109, “Accounting for Income Taxes,” which requires the
          recognition of deferred tax assets and liabilities for the expected future
          tax
          consequences of events that have been included in the financial statements
          or
          tax returns. Under this method, deferred income taxes are recognized for
          the tax
          consequences in future years of differences between the tax bases of assets
          and
          liabilities and their financial reporting amounts at each period end based
          on
          enacted tax laws and statutory tax rates applicable to the periods in which
          the
          differences are expected to affect taxable income. Valuation allowances
          are
          established, when necessary, to reduce deferred tax assets to the amount
          expected to be realized.
 
 ADVERTISING
 
 The
          cost of advertising is expensed as incurred. Total advertising costs were
          $4,555
          and $3,355 for the years ended September 30, 2007 and
          2006,respectively.
 
 STOCK
          BASED COMPENSATION
 
 Effective October 1, 2006, the Company adopted
          Statement of Financial Accounting Standards (SFAS) No. 123-R, “Share-Based
          Payment”   (“SFAS 123-R”), which requires the measurement and recognition
          of compensation expense for all share-based payment awards made to employees
          and
          directors, including stock options based on their fair values. SFAS 123-R
          supersedes Accounting Principles Board Opinion No. 25, “Accounting for
          Stock Issued to Employees”   (“APB 25”), which the Company previously
          followed in accounting for stock-based awards. In March 2005, the SEC issued
          Staff Accounting Bulletin No. 107 (SAB 107) to provide guidance on SFAS
          123-R. The Company has applied SAB 107 in its adoption of SFAS
          123-R.
  EARNINGS
          PER SHARE
 
 Statement
          of Financial Accounting Standards No. 128, “Earnings per share” requires the
          presentation of basic earnings per share and diluted earnings per
          share.  Basic and diluted earnings per share computations are
          presented by the Company conform to the standard and are based on the weighted
          average number of shares of Common Stock outstanding during the
          year.
 
 Basic
          earnings per share is computed by dividing net income or loss by the weighted
          average number of shares outstanding for the year.  “Diluted” earnings
          per share is computed by dividing net income or loss by the total of the
          weighted average number of shares outstanding, and the dilutive effect
          of
          outstanding stock options (applying the treasury stock method).
 
 The
          Company had 7,343,032 of granted stock options and 2,159,088 of granted
          stock
          warrants that were exercisable as of September 30, 2007.
 
 The
          following is a reconciliation of the numerators and denominators of the
          basic
          and diluted earnings per share computations:
 
 Year
                    ended September  30,
                
                2007
                
                
                2006Basic
                    earnings per shares:
                
                Net
                    loss
                
                
                Shares
                
                
                Per
                    Share
                
                
                Net
                    loss
                
                
                Shares
                
                
                Per
                    ShareNet
                    loss available to common stockholders
                
                $
                (2,001,094
                )
                
                
                106,207,706
                
                
                $
                (0.02
                )
                
                $
                (774,887
                )
                
                
                102,524,186
                
                
                $
                (0.01
                )Effect
                    of dilutive securitiesNone
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Diluted
                    earnings per share:
                
                $
                (2,001,094
                )
                
                
                106,207,706
                
                
                $
                (0.02
                )
                
                $
                (774,887
                )
                
                
                102,524,186
                
                
                $
                (0.01
                )
 
  F-9
  
 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 assets and liabilities qualifying as financial
          instruments are a reasonable estimate of fair value.
  RECLASSIFICATIONS
 
 Certain
          items in the prior year financial statements have been reclassified to
          conform
          to current period’s presentation. These reclassifications have no effect on the
          previously reported income (loss).
 
 RECENT
          PRONOUNCEMENTS
 In
          September 2006, FASB issued SFAS 157 ‘Fair Value Measurements’. This Statement
          defines fair value, establishes a framework for measuring fair value in
          generally accepted accounting principles (GAAP), and expands disclosures
          about
          fair value measurements. This Statement applies under other accounting
          pronouncements that require or permit fair value measurements, the Board
          having
          previously concluded in those accounting pronouncements that fair value
          is the
          relevant measurement attribute. Accordingly, this Statement does not require
          any
          new fair value measurements. However, for some entities, the application
          of this
          Statement will change current practice. This Statement is effective for
          financial statements issued for fiscal years beginning after November 15,
          2007,
          and interim periods within those fiscal years. The management is currently
          evaluating the effect of this pronouncement on financial statements.
 
 In
          September 2006, FASB issued SFAS 158 ‘Employers’ Accounting for Defined Benefit
          Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87,
          88, 106, and 132(R)’ This Statement improves financial reporting by requiring an
          employer to recognize the over funded or under funded status of a defined
          benefit postretirement plan (other than a multiemployer plan) as an asset
          or
          liability in its statement of financial position and to recognize changes
          in
          that funded status in the year in which the changes occur through comprehensive
          income of a business entity or changes in unrestricted net assets of a
          not-for-profit organization. This Statement also improves financial reporting
          by
          requiring an employer to measure the funded status of a plan as of the
          date of
          its year-end statement of financial position, with limited exceptions.
          An
          employer with publicly traded equity securities is required to initially
          recognize the funded status of a defined benefit postretirement plan and
          to
          provide the required disclosures as of the end of the fiscal year ending
          after
          December 15, 2006. An employer without publicly traded equity securities
          is
          required to recognize the funded status of a defined benefit postretirement
          plan
          and to provide the required disclosures as of the end of the fiscal year
          ending
          after June 15, 2007. However, an employer without publicly traded equity
          securities is required to disclose the following information in the notes
          to
          financial statements for a fiscal year ending after December 15, 2006,
          but
          before June 16, 2007, unless it has applied the recognition provisions
          of this
          Statement in preparing those financial statements:
  a.  A
          brief description of the provisions of this Statement
  b.  The
          date that adoption is required
  c.  The
          date the employer plans to adopt the recognition provisions of this Statement,
          if earlier.
   F-10
  The
          requirement to measure plan assets and benefit obligations as of the date
          of the
          employer’s fiscal year-end statement of financial position is effective for
          fiscal years ending after December 15, 2008. The management is currently
          evaluating the effect of this pronouncement on financial statements.
 
 In
          February 2007, FASB issued FASB Statement No. 159, The Fair Value Option
          for
          Financial Assets and Financial Liabilities. FAS159 is effective for fiscal
          years
          beginning after November 15, 2007. Early adoption is permitted subject
          to
          specific requirements outlined in the new Statement. Therefore, calendar-year
          companies may be able to adopt FAS 159 for their first quarter 2007 financial
          statements.
 
 The
          new
          Statement allows entities to choose, at specified election dates, to measure
          eligible financial assets and liabilities at fair value that are not otherwise
          required to be measured at fair value. If a company elects the fair value
          option
          for an eligible item, changes in that item's fair value in subsequent reporting
          periods must be recognized in current earnings. FAS 159 also establishes
          presentation and disclosure requirements designed to draw comparison between
          entities that elect different measurement attributes for similar assets
          and
          liabilities. The management is currently evaluating the effect of this
          pronouncement on financial statements.
 
 In
          December 2007, FASB issued FASB Statement No. 160, Noncontrolling Interests
          in
          Consolidated Financial Statements—an amendment of ARB No. 51. This Statement
          applies to all entities that prepare consolidated financial statements,
          except
          not-for-profit organizations, but will affect only those entities that
          have an
          outstanding non-controlling interest in one or more subsidiaries or that
          deconsolidate a subsidiary. Not-for-profit organizations should continue
          to
          apply the guidance in Accounting Research Bulletin No. 51, Consolidated
          Financial Statements, before the amendments made by this Statement, and
          any
          other applicable standards, until the Board issues interpretative guidance.
          This
          Statement is effective for fiscal years, and interim periods within those
          fiscal
          years, beginning on or after December 15, 2008 (that is, January 1, 2009,
          for
          entities with calendar year-ends). Earlier adoption is prohibited. The
          effective
          date of this Statement is the same as that of the related Statement 141(R).
          This
          Statement shall be applied prospectively as of the beginning of the fiscal
          year
          in which this Statement is initially applied, except for the presentation
          and
          disclosure requirements. The presentation and disclosure requirements shall
          be
          applied retrospectively for all periods presented. This is statement has
          no
          effect on the financial statements as the does not have any outstanding
          non-controlling interest.
  3.  PROPERTY
          AND
          EQUIPMENT
  Property
          and equipment consist of the following at September 30, 2007.
 
 Equipment
                    and Machinery
                
                $
                213,166Furniture
                    and Fixtures
                
                
                24,594237,760Less
                    accumulated depreciation
                
                
                (196,926
                )$
                40,834
 
  Depreciation
          expenses for fiscal year ended September 30, 2007 and 2006 were $31,699
          and
          $31,326, respectively.
 
  F-11
  4.  ACCRUED
          EXPENSES
   Accrued
          expenses comprised of the following at September 30, 2007:
 
 Accrued
                    wages
                
                $
                1,381,981Auto
                    allowance accruals
                
                
                71,768Interest
                    payable
                
                
                165,770Other
                    accruals
                
                
                68,154Total
                
                $
                1,687,673
 
 5.   NOTES
          PAYABLE
          - RELATED PARTIES
 
 The
          Company has received advances in the form of unsecured promissory notes
          from
          stockholders in order to pay ongoing operating expenses. These notes are
          at
          interest rates up to 13% and are due on demand. As of September 30, 2007,notes
          payable amounted to $129,000. Accrued interest on the notes amounted to
          $78,408
          at September 30, 2007. Interest expenses on these notes for the years ended
          September 30, 2007 and 2006 amounted to $12,850 and $10,080
          respectively.
 
 6.  NOTES
          PAYABLE-OFFICERS
 
 Notes
          payables to officers are unsecured, interest free and due on demand. Proceeds
          from these notes payable were used to pay ongoing operating expense. The
          balances at September 30, 2007 and 2006 were $19,260 and $66,660,
          respectively.
 
 7.   NOTES
          PAYABLE
          UNDER EQUITY LINE OF CREDIT
 
 During
          the year ended September 30,
          2003, the Company received $1,307,500 proceeds from promissory notes to
          Cornell
          Capital Partners, LP, net of 4% fee of $56,000 and $36,500 for escrow and
          other
          fees. The Company has settled $900,000 by issuing shares of common stock
          during
          the year ended September 30, 2003 (note 7). The notes payable outstanding
          at
          September 30, 2003, amounted to $500,000. The balance for the note payable
          outstanding at September 30, 2004 and 2005 were $ 233,115 and $ 233,115,
          respectively.  In 2006, Company has entered into a settlement
          agreement with Cornell Capital Partner to pay the total amount of $327,336;
          $50,000 shall be paid on or before November 15, 2006, $25,000 payable per
          month
          on the 15th day of each month commencing December 15, 2006, with the balance
          of
          $27,336 due and payable on or before October 15, 2007. The Company recorded
          loss
          on settlement on debt of $94,221 for the year ended September 30, 2006.
          The
          balance as of September 30, 2007 is $27,336, which was subsequently paid
          in
          October 2007 (See note 13).
  F-12
  8.  CONVERTIBLE
          NOTES
 
 BRIDGE
          NOTES:
 
 As
          of
          September 30, 2007, the Company entered into various debenture agreements
          (the
“Bridge Notes”) with several investors. Under the terms of the agreements, the
          notes bear interest at the rate of 10% per annum. The notes will automatically
          mature and the entire outstanding principal amount, together with all unpaid
          and
          accrued interest, shall become due and payable after the earlier of (i)
          the
          eighteen (18) month anniversary of the date of issuance (ii) an event of
          default
          or (iii) the closing of any equity related financing by the Company in
          which the
          gross proceeds to the Company are at least $2,500,000, unless, prior to
          such
          time, the notes have been converted into shares of the Company’s common
          stock.
 In
          the
          first two closing of bridge note which took place in the last quarter of
          2006
          and first quarter of 2007 the Company received $750,000. These notes are
          convertible into shares of Common stock of the Company at $0.05 per share
          or
          shares of any equity security issued by the Company at a conversion price
          equal
          to the price at which such security is sold to any other party.
 
 The
          conversion price is adjustable as per the terms of the agreement for the
          subsequent issuances of equity security at a price different than the conversion
          price.
 
 In
          the
          event that the registration statement covering the underlying shares is
          not
          declared effective within 180 days after the closing, the conversion price
          shall
          be reduced by $0.0025 per share for each 30 day period that the effectiveness
          of
          the registration statement is delayed but in no case the conversion price
          to be
          reduced below $0.04 per share.
 
 The
          conversion feature on the first two closings of bridge note is recorded
          on the
          effective conversion price as per the terms of the issue. The Company did
          not
          recorded any derivative liability on Bridge note as the maximum number
          of shares
          to be issued if converted are determinable and the Company has sufficient
          authorized capital to issue shares if converted.
 
 In
          the
          third closing of bridge note which took place in second quarter of 2007
          the
          Company received $86,000. These notes are convertible into shares of common
          stock of the Company at $0.01 per share or shares of any equity security
          issued
          by the Company at a conversion price equal to the price at which such security
          is sold to any other party. There are no registration rights provision
          associated with the third closing of bridge note and the note is convertible
          into shares at a fixed rate of $0.01 per share.
 
 As
          of
          September 30, 2007 the Company had received $836,000 under the Bridge Notes.
          Calico Capital Management, LLC acted as an agent for Sionix in arranging
          the
          transaction with the placement fee of $75,000 for the above proceeds. The
          Company recorded Calico fees as an expense during the period.
 
 No
          warrants have been issued as part of Bridge notes.
 
 CONVERTIBLE
          NOTE
          1:
 
 On
          July
          18, 2007 Sionix completed an offering of $1,025,000 of Subordinated Convertible
          Debentures to a group of institutional and accredited investors. The
          Subordinated Convertible Debentures are convertible into shares of Common
          Stock
          of Sionix at an initial conversion rate of $0.22 per share, subject to
          anti-dilution adjustments. The notes matures on various dates up to July
          2008
          and bears an interest at the rate of 8% per annum.
  F-13
  
 Under
          the
          terms of the Registration Rights Agreement, Sionix is required to file
          a
          registration statement under the Securities Act of 1933 Act in order to
          register
          the resale of the shares of Common Stock issuable upon conversion of the
          Subordinated Convertible Debentures and the Warrant Shares (collectively,
          the
          "Registrable Securities"). If Sionix does not file a registration statement
          with
          respect to the Registrable Securities within forty-five days following
          the
          closing of the Offering, or if the Registration Statement is not declared
          effective by the Securities and Exchange Commission within 90 days, then
          Sionix
          must pay to each purchaser damages equal to 1.5% of the purchase price
          paid by
          the purchaser for its Subordinated Convertible Debentures, for each 30
          days that
          transpires after these deadlines. The amount of the aggregate damages payable
          by
          Sionix is limited to 15% of the purchase price. The Company had until August
          31,
          2007 to file the registration statement. The Company filed registration
          statement on November 14, 2007 after the expiration of 45 days and recorded
          $15,375 as liquidated damages for a period of one month as of September
          30,
          2007. No derivative liability is recorded as the amount of liquidated damage
          is
          fixed with a maximum ceiling.
 
 Southridge
          Investment Group LLC, Ridgefield, Connecticut (“Southridge”) acted as agent for
          Sionix in arranging the transaction, and received a placement fee of $102,500.
          Southridge also received warrants to purchase 465,909 shares of Common
          Stock of
          Sionix, on the same terms and conditions as the Warrants issued to the
          purchasers. The Company recorded placement fees as an expense. The grant
          date
          fair value of the warrants amounted to $133,992 was calculated using the
          Black-Scholes option pricing model, using the following assumptions: risk
          free
          rate of return of 6%, volatility in the range of 122.67 and 195.97%, and
          dividend yield of 0% and expected life of five years. The Company recorded
          $33,180 as interest expense related to these warrants as of September 30,
          2007.
 
 As
          part
          of the above offering the Company issued 1,693,179 warrants to purchasers
          as of
          September 30, 2007. The grant date fair value of the warrants amounted
          to
          $307,403 was calculated using the Black-Scholes option pricing model, using
          the
          following assumptions: risk free rate of return of 6%, volatility of 122.67
          and
          195.97%, and dividend yield of 0% and expected life of five years. The
          Company
          recorded $72,926 as interest expense related to these warrants as of September
          30, 2007.
 
 
 As
          of
          September 30, 2007, the Company recorded beneficial conversion feature
          expense
          of $315,378 and the unamortized beneficial conversion feature amount of
          $706,186
          and unamortized warrant discount of $234,477 showing as net of the note
          payable
          amount of $920,337 on convertible notes. The Company also recorded an interest
          expense of $86,899 on the notes.
 
 9. INCOME
          TAXES
 
 Through
          September 30, 2007, the Company incurred net operating losses for tax purposes
          of approximately $11,415,000.  The net operating loss carry forward
          for federal and state purposes may be used to reduce taxable income through
          the
          year 2027. The availability of the Company's net operating loss carry forward
          is
          subject to limitation if there is a 50% or more positive change in the
          ownership
          of the Company's stock.
 
 The
          gross
          deferred tax asset balance as of September 30, 2007 is $4,008,000. A 100%
          valuation allowance has been established against the deferred tax assets,
          as the
          utilization of the loss carry forward cannot reasonably be assured. Components
          of deferred tax asset at September 30, 2007 are as follows:
 
 
 2007
                
                
                2006Deferred
                    tax asset
                
                $
                4,008,000
                
                
                $
                3,344,000Less
                    valuation allowance
                
                
                (4,008,000
                )
                
                
                (3,344,000
                )$
                -
                
                
                $
                -
 
 
  F-14
  
 Differences
          between the benefit from income taxes and income taxes at the statutory
          federal
          income tax rate for years ended September 30, 2007 and 2006 are as
          follows:
  September 30,
                  2007
                
                
                September 30,
                  2006Amount
                
                
                Percent
                
                
                Amount
                
                
                PercentIncome
                    tax expense/(benefit) at statutory federal rate
                
                $
                (569,000
                )
                
                
                (34.0
                )%
                
                $
                (279,000
                )
                
                
                (34.0
                )%State
                    income taxes expense (benefit), net of federal incometax
                
                
                (95,000
                )
                
                
                (6
                )%
                
                
                (46,000
                )
                
                
                (6
                )Valuation
                    allowance
                
                
                664,000
                
                
                
                40
                
                
                
                325,000
                
                
                
                40$
                0
                
                
                
                0
                
                
                $
                0
                
                
                
                0
                %
  A
          detail
          of the Company’s deferred tax assets and liabilities as of September 30, 2007
          follows:
  Warrants
                    expense
                
                $
                42,000Beneficial
                    conversion feature expense
                
                126,000Net
                    operating loss carry-forwards
                
                3,840,000Valuation
                    allowance
                
                (4,008,000
                )$
                0
 
 
 10. STOCKHOLDERS’
          EQUITY
  COMMON
          STOCK
 
 The
          Company has 150,000,000 authorized shares, par value $ .001 per share.
          As of
          September 30, 2007, the Company had 107,117,101 shares issued and 106,635,201
          shares outstanding.
 
 During
          the year ended September 30, 2007, the company issued 3,292,915 shares,
          valued
          at $0.01 per share, and 1,300,000 shares valued at $0.04 per share for
          consulting services recorded at the fair market value.
 
 STOCK
          OPTIONS
 
 2001
          Executive Officers Stock Option Plan
 
 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.
  F-15
  
 Options
          outstanding:
  Weighted
                  Average
                  Exercise
                  Price
                
                
                Number
                  of
                  Options
                
                
                Aggregate
                  intrinsic
                  valueOutstanding
                    at September 30, 2006
                
                $
                0.15
                
                
                
                7,343,032
                
                
                $
                -Granted
                
                
                -
                
                
                
                -Forfeited
                
                
                -
                
                
                
                -Exercised
                
                
                -
                
                
                
                -Outstanding
                    at September 30, 2007
                
                $
                0.15
                
                
                
                7,343,032
                
                
                $
                1,248,315
 
 
 A
          summary of the Company’s option activity is listed below:
 
 
 Exercise
                  Price
                Stock
                  Options
                  Outstanding
                Stock
                  Options
                  Exercisable
                Weighted-Average
                  Remaining
                  Contractual
                  Life
                Weighted-Average
                  Exercise
                    Price
                  of
                    Options
                  Outstanding
                Weighted-Average
                  Exercise
                    Price
                  of
                    Options
                  Exercisable$0.15
                7,343,032
                7,343,032
                2.5
                    years
                $0.15
                $0.15
 
 
 The
          fair value of the options was calculated using the Black-Scholes option
          valuation model with the following weighted-average assumptions for the
          years
          ended September 30, 2007 and 2006: dividend yields of 0%; risk free interest
          rates of 6%; expected volatility of 100% and expected lives of 4.9
          years.
 
 During
          the year ended September 30, 2007 the Company did not issue any new
          options.
 
 STOCK
          WARRANTS
 
 Warrants
          outstanding:
 
 Aggregate
                  Intrinsic
                    Value
                
                
                Number
                    of
                  WarrantsOutstanding
                    at September 30, 2006
                
                $
                --
                
                
                
                -Granted
                
                
                
                
                
                
                2,159,088Exercised
                
                
                
                
                
                
                -Cancelled
                
                
                
                
                
                
                -Outstanding
                    at September 30, 2007
                
                $
                -
                
                
                
                2,159,088
  F-16
  Outstanding
          Warrants
 
 Exercise
                    Price
                
                
                Number
                
                
                Weighted
                  Average
                  Remaining
                  Contractual
                  Life
                
                
                Weighted
                  Average
                  Exercise
                    Price$0.50
                
                
                2,159,088
                
                
                4.8
                    years
                
                
                $0.50
 
 All
          outstanding warrants were exercisable as of September 30, 2007.
   11. 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, 2007, the Company has
          incurred
          cumulative losses of $17,300,147, including a  loss for the year ended
          September 30, 2007 of $2,001,094. As the Company has no cash flow from
          operations,  its  ability to transition from a development
          stage company to an operating company  is entirely dependent upon
          obtaining adequate financing to finance its overhead, research and
          development activities, and acquisition of production s equipment. It is
          unknown
          when, if ever, the Company will achieve a level of revenues adequate to
          support
          its cost structure. In order for the Company to meet its basic financial
          obligations, including rent, salaries, debt service and operations, it
          plans to
          seek additional equity debt financing. Because of the Company’s history and
          current debt levels, there is considerable doubt that the Company will
          be able
          to obtain financing. Its ability to meet  its cash requirements for
          the next twelve months depends on its ability to obtain such financing.
          Even if
          obtained, any such financing will likely involve additional fees and debt
          service requirements. Accordingly, there is no assurance that the Company
          will
          be able to implement its plans.
 
 The
          Company expects to continue to incur substantial operating losses for the
          foreseeable future, and it cannot predict the extent of the future losses
          or
          when it may become profitable. It expects to incur increasing sales and
          marketing, research and development and general and administrative expenses.
          Also, the Company has substantial amount of short-term debt, which will
          need to
          be repaid or refinanced, unless converted into equity. As a result, if
          it begins
          to generate revenues from operations, those revenues will need to be significant
          in order to cover current and anticipated expenses. These factors have
          raised
          substantial doubt about the Company's ability to continue as a going concern
          unless it is able to obtain substantial additional financing in the short
          term
          and the ability to generate revenues over the long term. If the Company
          is
          unable to obtain financing, it would likely discontinue operations.
 
 12. COMMITMENT
 
 On
          February 19, 2007 the Company
          entered into a two year lease agreement beginning March 1, 2007. According
          to
          the terms of the agreement, at the beginning of each lease year, the then
          most
          recently published Consumer Price Index (CPI) figure shall be determined
          and the
          monthly rental payable for the succeeding lease year will be calculated.
          The
          future aggregate minimum annual lease payments arising from these lease
          agreements are as follows.
 
 During
                    the year ended September 30,2008
                
                $
                55,2002009
                
                $
                23,000Thereafter
                
                
                -Total
                
                
                78,200
 
 Total
          rent expense under these operating lease was approximately $32,200 for
          the year
          ended September 30, 2007.
  F-17
  
 
 13. SUBSEQUENT
          EVENTS
 
 The
          Company paid $27,336 plus interest of $13,859 against note payable under
          equity
          line of credit in October 2007 (See note 7).
 
 Agreements
          with Richard Papalian
 
 On
          December 19, 2007, the Registrant entered into a one year Employment Agreement
          with Richard H. Papalian (the “Employment Agreement”), pursuant to which Mr.
          Papalian has been appointed as the Chief Executive Officer of the Registrant
          and
          elected to fill a vacancy on the Registrant’s board of directors. Mr. Papalian
          will not receive a cash salary or any fringe benefits under the Employment
          Agreement. Instead, pursuant to a Notice of Grant of Stock Option and a
          Stock
          Option Agreement dated December 19, 2007, the Registrant has granted Mr.
          Papalian a five year option to purchase up to 8,539,312 shares of common
          stock
          of the Registrant, at an exercise price of $0.25 per share (the “Papalian
          Option”), which represents 5% of the currently outstanding shares of common
          stock of the Registrant on a fully diluted basis.
 
 Agreements
          with Mark Maron
  On
          December 19, 2007, the Registrant entered into a one year Consulting Agreement
          with Mark Maron (the “Consulting Agreement”), pursuant to which Mr. Maron has
          been appointed as Special Adviser to the Registrant. Mr. Maron will not
          receive
          cash remuneration under the Consulting Agreement. Instead, pursuant to
          and
          Notice of Grant of Stock Option and a Stock Option Agreement dated December
          19,
          2007, the Registrant has granted Mr. Maron a five year option to purchase
          up to
          8,539,312 shares of common stock of the Registrant, at an exercise price
          of
          $0.25 per share (the “Maron Option”), which represents 5% of the currently
          outstanding shares of common stock of the Registrant on a fully diluted
          basis.
 
 
  F-18


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




None.





ITEM
      8A. CONTROLS AND PROCEDURES





EVALUATION
      OF DISCLOSURE CONTROLS AND PROCEDURES





We
      maintain "disclosure controls and procedures," as such term is defined in Rule
      13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"), that
      are designed to ensure that information required to be disclosed in our Exchange
      Act reports is recorded, processed, summarized and reported within the time
      periods specified in the Securities and Exchange Commission rules and forms,
      and
      that such information is accumulated and communicated to our management,
      including our Chief Executive Officer and Chief Financial Officer, as
      appropriate, to allow timely decisions regarding required disclosure.
      We conducted an evaluation (the "Evaluation"), under the supervision and with
      the participation of our Chief Executive Officer ("CEO") and Chief Financial
      Officer ("CFO"), of the effectiveness of the design and operation of our
      disclosure controls and procedures ("Disclosure Controls") as of the end of
      the
      period covered by this report pursuant to Rule 13a-15 of the Exchange Act.
      Based
      on this Evaluation, our CEO and CFO concluded that our Disclosure
      Controls


were
      effective as of the end of the period covered by this report.





CHANGES
      IN INTERNAL CONTROLS





We
      have
      also evaluated our internal controls for financial reporting, and there have
      been no significant changes in our internal controls or in other factors that
      could significantly affect those controls subsequent to the date of their last
      evaluation.








ITEM
      8B. OTHER INFORMATION





None.





PART
      III




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





Set
      forth
      below is certain information regarding our directors, executive officers and
      key
      personnel.





Name
              
              Age
              
              Position
              
              Director
                  SinceDr.
                  John H. Foster
              
              
              60
              
              Chairman
                  of the Board of Directors
              
              
              2007Richard
                  H. Papalian
              
              
              52
              
              Chief
                  Executive Officer and a Director
              
              
              2007James
                  J. Houtz
              
              
              69
              
              President
                  and a Director
              
              
              1998Robert
                  McCray
              
              
              72
              
              Chief
                  Financial Officer and a Director
              
              
              1998Rodney
                  Anderson
              
              
              81
              
              Director
              
              
              2001David
                  Ross
              
              
              69
              
              Director
              
              
              2007Dr.
                  W. Richard Laton
              
              
              43
              
              Director
              
              
              2007Mark
                  S. Maron
              
              
              51
              
              Special
                  Advisor
              
              
              N/A




Dr.
      Foster has been a consultant to Sionix since early 2004, and has served as
      Chairman of the Board of Directors since 2007. He is a Professor at California
      State University, Fullerton where he has taught for over 15 years. Prior to
      teaching he was employed as a senior geologist for the Irvine Consulting Group
      and Schaefer Dixon Associates, where he supervised the environmental
      division.





Mr.
      Papalian became Chief Executive Officer in December 2007. He founded Papalian
      Capital Partners, Inc., a real estate investment and development firm, in
      January 2007 and has served as its CEO since then. Prior to founding Papalian
      Capital Partners, Mr. Papalian was Co-President and COO of JRK Asset Management
      Inc., a privately held owner and operator of hotels and multi-family housing
      complexes throughout the United States. Prior to joining JRK, Mr. Papalian
      was
      COO and co-founder of Waybid Technologies LLC, a business-to-business Internet
      multi-listing service that utilized dynamic pricing models to optimize pricing
      for its clients. Previously, from 1977 to 1994, Mr. Papalian was founder CEO
      of
      The Promotion Agency, Inc., a marketing consulting/sales promotion agency with
      international clients.


19


Mr.
      Houtz
      has been President and a director of the Company since March 1998.





Mr.
      McCray has been Chief Financial Officer and a director of the Company since
      July
      1998.





Mr.
      Anderson was President of R.J. Metal Products, Anaheim, California, a high
      technology research and development machine shop operation focused on commercial
      and military aircraft and aerospace projects, for more than 20 years. Sionix
      acquired RJ Metal Products in November of 2007. He has served on the Company's
      Board of Directors since 2001.





Mr.
      Ross
      has consulted with the Company since 2004, and has served on the Board of
      Directors since 2007. He is a principal of Ross/Katagiri and Associates, a
      management consulting practice, specializing in early stage technology-driven
      organizations. He is a board member and former chairman of the Orange County
      Taxpayers Association, a member of the Water Advisory Committee of Orange
      County, a former member of the Orange County Sanitation District Bio-solids
      Advisory Committee and sits on the boards of several Orange County charitable
      organizations. He is a graduate of the University of Colorado with a B. S.
      in
      Finance and brings over 40 years of widely diversified national and
      international business experience.





Dr.
      Laton has served on the Board of Directors since 2007. He brings over 15 years
      of water related experience, including consulting, sales and education. Dr.
      Laton is an Associate Professor of Hydrogeology at California State University,
      Fullerton. He has served as a director of the National Ground Water Association
      and has published, presented and taught water- related research throughout
      the
      world.





Mr.
      Maron
      was appointed as Special Advisor to the Board of Directors in December of 2007.
      He is a principal with Birchmont Capital Advisors, LLC, a real estate private
      equity firm founded in September 2005. Prior to joining Birchmont, Mr. Maron
      served as a Managing Director of investment banking in the Los Angeles office
      of
      Lehman Brothers, Inc. from 2000 to 2005. Previously, Mr. Maron was with Credit
      Suisse First Boston Corporation from 1983 to 2000 where he was responsible
      for
      managing the firm's western region investment banking effort and coverage of
      CSFB's financial institution clients in the western United States. Mr. Maron
      is
      a member of the Board of Directors of True Religion Apparel, Inc., a company
      whose securities are traded on Nasdaq.





Directors
      serve for one year and until their successors are duly elected and qualified.
      The Company has not established an executive committee of the Board of Directors
      or any committee that would serve similar functions such as an audit, incentive
      compensation or nominating committee.




SECTION
      16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE





Section
      16(a) of the Securities Exchange Act of 1934, as amended, and the rules
      thereunder require the Company’s officers and directors, and persons who own
      more than 10% of a registered class of the Company’s equity securities, to file
      reports of ownership and changes in ownership with the Securities and Exchange
      Commission and to furnish the Company with copies. Based solely on its review
      of
      the copies of the Section 16(a) forms received by it, or written representations
      from certain reporting persons, the Company believes that, during the last
      fiscal year, all Section 16(a) filing requirements applicable
      to its officers, directors and greater than 10% beneficial owners were complied
      with.


20


ITEM
      10. EXECUTIVE
      COMPENSATION.





Summary
        Compensation
        Table


The
        following table sets forth the
        information required by Securities and Exchange Commission Regulation S-B
        Item 402 as to the compensation paid or accrued by us for the years ended
        September 30, 2007and2006for
        services rendered in all capacities,
        by all persons who served as our Chief Executive Officer or Chief Financial
        Officer and the other most highly compensated executive officer during the
        fiscal year ended September 30, 2007 (the “NamedExecutive
        Officers”).


NAME
                  AND PRINCIPAL POSITION
              
              FISCAL
                  YEAR
              
              SALARY
                  (1)
              
              BONUS
              
              STOCK
                  AWARDS
              
              OPTION
                  AWARDS
              
              NON-EQUITY
                  INCENTIVE PLAN COMPENSATION
              
              NONQUALIFIED
                  DEFERRED COMPENSATION EARNINGS
              
              ALL
                  OTHER COMPENSATION
              
              TOTALJames
                  J. Houtz,
              
              2007
              
              $86,220
              
              -0-
              
              -0-
              
              -0-
              
              -0-
              
              -0-
              
              -0-
              
              $86,220President
              
              2006
              
              $79,836
              
              -0-
              
              -0-
              
              -0-
              
              -0-
              
              -0-
              
              -0-
              
              $79,836Robert
                  McCray,
              
              2007
              
              $75,600
              
              -0-
              
              -0-
              
              -0-
              
              -0-
              
              -0-
              
              $15,000
              
              $90,600Chief
                  Financial
                Officer
              
              2006
              
              $72,000
              
              -0-
              
              -0-
              
              -0-
              
              -0-
              
              -0-
              
              -0-
              
              $72,000




(1) 
All
      amounts
      shown represent accrued salary.  None of the amounts shown have been
      paid.




The
      following table sets forth certain information as of September 30, 2007 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. No options were issued during the past fiscal year.




Outstanding
        Equity Awards at Fiscal Year-End
  The
        following table sets forth for each named executive officer certain information
        concerning the outstanding equity awards as of September 30 , 2007.
  Option
                  Awards
              Stock
                  AwardsName
              Number
                  of
                Securities
                Underlying
                Unexercised
                Options
                Exercisable
              Number
                of
                Securities
                Underlying
                Unexercised
                Options
                Unexercisable
              Equity
                Incentive
                Plan
                  Awards:
                Number
                  of
                Securities
                Underlying
                Unexercised
                Unearned
                Options
              Option
                Exercise
                Price
              Option
                Expiration
                Date
              Number
                of
                Shares
                or
                  Units
                of
                  Stock
                that
                Have
                  Not
                Vested
              Market
                Value
                of
                Shares
                  or
                Units
                  of
                Stock
                that
                Have
                  Not
                Vested
              Equity
                Incentive
                Plan
                Awards:
                Number
                  of
                Unearned
                Shares,
                Units
                  or
                Other
                Rights
                  that
                Have
                  Not
                Vested
              Equity
                Incentive
                Plan
                Awards:
                Market
                  or
                Payout
                  Value
                of
                  Unearned
                Shares,
                  Units
                or
                  Other
                Rights
                  that
                Have
                  Not
                VestedJames
                  J. Houtz
              6,171,000
              -0-
              -0-
              .15
              April
                  20, 2011
              -0-
              -0-
              -0-
              -0-Robert
                  E. McCray
              583,200
              -0-
              -0-
              .15
              April
                  20, 2011
              -0-
              -0-
              -0-
              -0-






Compensation
      of Directors




No director received any
      compensation during the fiscal year, except for consulting fees of $15,000
      paid
      to Dr. W. Richard Laton for hydrogeology consulting.





21


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


RELATED
      STOCKHOLDER MATTERS.





The
      following table sets forth certain information regarding the beneficial
      ownership of our Common Stock as of September 30, 2007. The table sets forth
      the
      beneficial ownership of each person who, to our knowledge, beneficially owns
      more than 5% of the outstanding shares of Common Stock, each of our directors
      and executive officers, and all of our directors and executive officers as
      a
      group.




Name
                and Address
            
            No.
                of Shares
            
            PercentageE.
                David Kailbourne
            
            8,473,044
            
            7.9
                %3830
                Highcrest Dr
              Brighton
                Mi 48116James
                J. Houtz
            
            6,268,167
                (1)
            
            6.12082
                Michelson, Suite 306Irvine
                , CA   92612Robert
                E. McCray
            
            933,200
                (1)
            
            0.92082
                Michelson, Suite 306Irvine
                , CA   92612Rodney
                Anderson
            
            300,901
            
            0.22082
                Michelson, Suite 306Irvine
                , CA   92612Dr.
                John H. Foster
            
            150,000
            
            0.12082
                Michelson, Suite 306Irvine
                , CA   92612David
                Ross
            
            115,000
            
            0.12082
                Michelson, Suite 306Irvine
                , CA   92612Dr.
                W. Richard Laton
            
            50,000
            
            -2082
                Michelson, Suite 306Irvine
                , CA   92612All
                Directors and Officers as a
            
            7,817,268
                (1)
            
            7.6Group
                (6 Persons)





*
      Less
      than 1%


____________________


(1)
      Consists principally of shares
      issuable upon exercise of currently exercisable options.





Beneficial
      ownership percentages are calculated based on Common Stock issued and
      outstanding as of September 30, 2007. Beneficial ownership is determined in
      accordance with Rule 13d-3 of the Exchange Act. The number of shares
      beneficially owned by a person includes shares of Common Stock underlying
      options or warrants held by that person that are currently exercisable or
      exercisable within 60 days of September 30, 2007. The shares issuable pursuant
      to the exercise of those options or warrants are deemed outstanding for
      computing the percentage ownership of the person holding those options and
      warrants but are not deemed outstanding for the purposes of computing the
      percentage ownership of any other person. The persons and entities named in
      the
      table have sole voting and sole investment power with respect to the shares
      set
      forth opposite that person’s name, subject to community property laws, where
      applicable, unless otherwise noted in the applicable footnote.


22


ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE.





On
      November 7, 2007, we acquired substantially all of the assets of RJ Metals,
      Inc.
      a manufacturer of specialty metal components, for 3,400,000 shares of our Common
      Stock. Rodney L. Anderson, a member of our Board of Directors, was a director,
      officer and shareholder of RJ Metals and received 1,224,000 shares of Sionix
      Common Stock in the transaction, and is entitled to certain registration rights
      in connection therewith.





ITEM
      13.  EXHIBITS





The
      following exhibits are filed herewith or incorporated by reference:




No.
              Description3.1
              Amended
                  and Restated Articles of Incorporation of the Company
                  (1)3.2
              Amended
                  and Restated Bylaws of the Company (1)10.1
              Lease
                  between the Company and J. C. Brown Enterprises, dated February
                  19, 2007
                  (2)10.2
              Employment
                  Agreement, dated September 30, 2003, between the Registrant and
                  James J.
                  Houtz (2)10.3
              Employment
                  Agreement, dated October 1, 2005 between the Registrant and Robert
                  E.
                  McCray (2)10.4
              Form
                  of Securities Purchase Agreement, dated as of June 18, 2007, between the Company and
                  certain investors (3)10.5
              Form
                  of Convertible Debenture, dated as of June
                  18, 2007, issued by the Company to certain investors.
                  (3)10.6
              Form
                  of Registration Rights Agreement,
                  dated as of June 18, 2007, between
                  the Company and certain investors (3).10.7
              Form
                  of Warrant, dated as of June 18,
                  2007, issued by Sionix Corporation to certain investors.
                  (3)10.8
              Lease
                  between the Company and   Klein Investments Family Limited
                  Partnership, dated August 30, 2007 (4)10.9
              Share
                  Exchange Agreement, dated November 7, 2007, between the Company
                  and the
                  shareholders of RJ Metals, Inc. (4)10.10
              Employment
                  Agreement, dated   December 19, 2007 between the Registrant
                  and Richard H. Papalian (5)31.1
              Certification
                  of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 2002.31.2
              Certification
                  of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 2002.32.1
              Certification
                  of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley
                  Act of 2002.32.2
              Certification
                  of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
                  Act of 2002.


(1)
      Incorporated by reference from Registrant’s Current Report on Form 8-K, filed
      with the Commission on July 15, 2003, and incorporated herein by
      reference.




(2)
      Incorporated by reference from Registrant's Annual Report on Form 10-KSB, filed
      with the Commission on June 8, 2007, and incorporated herein by
      reference.




(3)
      Incorporated by reference from Registrant's Current Report on Form 8-K, filed
      with the Commission on August 14, 2007, and incorporated herein by
      reference.




(4)  Incorporated
      by reference from Registrant's Registration Statement on Form SB-2, filed with
      the Commission on November 14, 2007, and incorporated herein by
      reference.





(5)  Incorporated
      by reference from Registrant’s Current Report on Form 8-K, filed with the
      Commission on December 20, 2007, and incorporated herein by
      reference.




23


ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES




The
      following is a summary of the fees billed to the Company by Kabani &
Company, Inc. for professional services rendered for the fiscal years ended
      September 30, 2007 and 2006:




Fee
                Category
            
            Fiscal
                2007 Fees
            
            
            Fiscal
                2006 FeesAudit
                Fees
            
            
            $50,000
            
            
            
            $30,000Audit-Related
                Fees
            
            
            0
            
            
            
            0Tax
                Fees
            
            
            0
            
            
            
            0All
                Other Fees
            
            
            0
            
            
            
            0Total
                Fees
            
            
            $50,000
            
            
            
            $30,000







Audit
      Fees. Consists of fees billed for professional services rendered for the audit
      of the Company’s consolidated financial statements and review of the interim
      consolidated financial statements included in quarterly reports and services
      that are normally provided by Kabani & Company, Inc. in connection with
      statutory and regulatory filings or engagements.





Audit-Related
      Fees. Consists of fees billed for assurance and related services that are
      reasonably related to the performance of the audit or review of the Company’s
      consolidated financial statements and are not reported under "Audit
      Fees." There were no Audit-Related services provided in fiscal 2006 or
      2005.





Tax
      Fees.
      Consists of fees billed for professional services for tax compliance, tax advice
      and tax planning.





All
      Other
      Fees. Consists of fees for products and services other than the services
      reported above. There were no management consulting services provided in fiscal
      2006 or 2005.





Policy
      On
      Audit Committee Pre-Approval Of Audit And Permissible Non-Audit Services Of
      Independent Auditors





The
      Company has no audit committee. The Board of Directors’ policy is to pre-approve
      all audit and permissible non-audit services provided by the independent
      auditors. These services may include audit services, audit-related services,
      tax
      services and other services. Pre-approval would generally be provided for up
      to
      one year and any pre-approval would be detailed as to the particular service
      or
      category of services, and would be subject to a specific budget. The independent
      auditors and management are required to periodically report to the Board of
      Directors regarding the extent of services provided by the
      independent auditors in accordance with this pre-approval, and the fees for
      the
      services performed to date. The Board of Directors may also pre-approve
      particular services on a case-by-case basis.




24





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.





Date:
              January 15, 2008
            Sionix
                Corporation
              
              By:
                /s/ Richard
                H.
                Papalian
              Richard H. Papalian,
              Chief Executive Officer




In
      accordance with the Exchange Act,
      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/
Richard
                H.
                Papalian
            Chief
                Executive Officer and a Director
            January
                15, 2008Richard
                H. Papalian(2)
                Principal Financial and Accounting Officer/s/
                Robert
                McCray
            Chief
                Financial Officer, Secretary and a Director
            January
                15, 2008Robert
                McCray(3)
                Directors/s/
                James R.
                Houtz
            President
                and a Director
            January
                15, 2008James
                R. Houtz/s/
                John
                Foster
            Vice-Chairman
                of the Board of Directors
            January
                15, 2008John
                Foster/s/
                Rodney L.
                Anderson
            Director
            January
                15, 2008Rodney
                L. Anderson/s/
                David
                Ross
            Director
            January
                15, 2008David
                Ross/s/
                W. Richard
                Laton
            Director
            January
                15, 2008W.
                Richard Laton




25