<PAGE>

                       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, 2006

                          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. Employer
    incorporation 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 [ ] No [X]

     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 [ ] No [X]

     The issuer's revenues for the year ended September 30, 2006 were $0.

     The aggregate market value of the voting stock held by non-affiliates as of
June 6, 2007, computed based on the closing price reported on the "pink sheets",
was $37,771,876.

     As of May 15, 2007, there were 105,817,101 shares of Common Stock of the
issuer outstanding.

     Documents Incorporated by Reference: NONE

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


<PAGE>

             CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS

         We desire to take advantage of the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995. This Report on Form 10-KSB
contains a number of forward-looking statements that reflect management's
current views and expectations with respect to our business, strategies,
products, future results and events and financial performance. All statements
made in this Report other than statements of historical fact, including
statements that address operating performance, events or developments that
management expects or anticipates will or may occur in the future, including
statements related to distributor channels, volume growth, revenues,
profitability, new products, acquisitions, adequacy of funds from operations,
statements expressing general optimism about future operating results and
non-historical information, are forward-looking statements. In particular, the
words "believe," "expect," "intend," "anticipate," "estimate," "may," "will,"
variations of such words, and similar expressions identify forward-looking
statements, but are not the exclusive means of identifying such statements and
their absence does not mean that the statement is not forward-looking. These
forward-looking statements are subject to certain risks and uncertainties,
including those discussed below. Our actual results, performance or achievements
could differ materially from historical results as well as those expressed in,
anticipated or implied by these forward-looking statements. We undertake no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.

         Readers should not place undue reliance on these forward-looking
statements, which are based on management's current expectations and projections
about future events, are not guarantees of future performance, are subject to
risks, uncertainties and assumptions (including those described below) and apply
only as of the date of this Report. Our actual results, performance or
achievements could differ materially from the results expressed in, or implied
by, these forward-looking statements. Factors that could cause or contribute to
such differences include, but are not limited to, those discussed below
"Management's Discussion and Analysis and Plan of Operation," as well as those
discussed elsewhere in this Report, and in the press releases and other
communications to shareholders issued by us from time to time which attempt to
advise interested parties of the risks and factors that may affect our business.


<PAGE>

                                    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. 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.


                                       1

<PAGE>

         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.

         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.


                                       2

<PAGE>

         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 (5-7
microns). 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.


                                       3

<PAGE>

         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.

         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.


                                       4

<PAGE>

         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 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.


                                       5

<PAGE>

         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 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 the agreement, scientists and
engineers from California State University at Fullerton are to coordinate 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 plan, 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 have
exceptionally high values of iron and manganese. This water has been
prohibitively expensive to treat for drinking water.


                                       6

<PAGE>

         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 is 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 will be implemented and will
continue throughout the summer and fall of 2007.

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.

         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.


                                       7

<PAGE>

         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.


                                       8

<PAGE>

         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 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 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 U.S. Filter 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, 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.


                                       9

<PAGE>

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.

RESEARCH AND DEVELOPMENT

         We have made significant investments in the development of products for
new applications. Only direct costs associated with tooling for new products are
capitalized. All other costs, including salaries and wages of employees included
in research and development, are expensed as incurred.

RAW MATERIALS

         Materials and components to be used for manufacturing will be carefully
selected based on stringent specifications for usage and operating conditions.
Every effort will be made to specify parts from multiple sources for
independence from manufacturers and distributors.

EMPLOYEES

         Sionix has two full-time employees, neither of whom is covered by any
collective bargaining agreement. The Company considers its relationship with its
employees to be good.

ITEM 2. DESCRIPTION OF PROPERTY.

         Our office facility is located in Irvine, California and is leased
pursuant to a lease expiring in February 28, 2009. The facility consists of
approximately 1,994 square feet of office area. We plan to lease a separate
facility for manufacturing and warehouse space. 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.


                                       10

<PAGE>

ITEM 3.  LEGAL PROCEEDINGS.

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

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

         None.

                                     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 traded on the "pink sheets" under the symbol
"SINX". The following table represents the high and low closing prices for our
Common Stock for each quarter of the two fiscal years ended September 30, 2006.

         Fiscal 2006                                     High           Low
         -----------                                     ----           ---

         First Quarter                                  $.035          $.012
         Second Quarter                                  .02            .008
         Third Quarter                                   .014           .003
         Fourth Quarter                                  .06            .008

         Fiscal 2005                                     High           Low
         -----------                                     ----           ---

         First Quarter                                  $.09           $.01
         Second Quarter                                  .03            .05
         Third Quarter                                   .055           .025
         Fourth Quarter                                  .035           .015

HOLDERS

         There were approximately 2,870 holders of record of our common stock as
of September 30, 2006. Since many of the shares of our Common Stock are held by
brokers and other institutions on behalf of stockholders, it is impossible to
estimate the total number of beneficial holders represented by these record
holders.

DIVIDENDS

         We have never paid any cash dividends on our Common Stock and we have
no present intention of paying cash dividends in the foreseeable future.


                                       11

<PAGE>

EQUITY COMPENSATION PLAN INFORMATION

         The following table gives information about our Common Stock that may
be issued upon the exercise of options, warrants or rights under our existing
equity compensation plans. The information in this table is as of September 30,
2006.

<TABLE>
<S>     <C>

                        Number of securities
                           issuable upon
                            exercise of            Weighted average
                            outstanding            exercise price of
                              options,            outstanding options,      Number of securities
PLAN CATEGORY            warrants and rights      warrants, and rights      remaining available
-------------            -------------------      --------------------      -------------------

Equity compensation
   plans approved by
   security holders            $ 0                         N/A                    N/A

Equity compensation
   plans not approved
   by security
   holders                  7,343,032                    $ .15                   233,648
                         -------------------      --------------------      -------------------

Total                       7,343,032                    $ .15                   233,648
                         -------------------      --------------------      -------------------
</TABLE>


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR 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 Annual Report on Form 10-KSB. 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. The cautionary statements made in this Annual Report on Form 10-KSB
should be read as being applicable to all related forward-looking statements
wherever they appear in this Annual Report on Form 10-KSB. 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 Annual Report on Form 10-KSB.

         PLAN OF OPERATION. During the next twelve months we plan to raise
sufficient capital to complete a test ELIXIR unit for installation at the Villa
Park Dam under our arrangement with the Serrano Water District, and commence
testing of the unit. We believe that if the unit operates successfully, we will
be in a position to aggressively market the ELIXIR product, using the Villa Park
Dam unit as a prototype for additional installations. We plan to engage in
substantial promotional activities in connection with the installation and
operation of the unit, including media exposure and access to other public
agencies and potential private customers. If the unit operates successfully, we
believe we will receive orders for additional units.


                                       12

<PAGE>

         Depending on the availability of financing, we plan to establish a
manufacturing facility in Southern California to commence production of the
units. Depending on the size of the planned facility, we believe it may require
capital expenditures in the range of $5 million to $20 million. In addition to
capital expenditures, this will require hiring of a substantial number of
additional employees. We anticipate that all of our capital needs will need to
be funded by equity financing.

         RESULTS OF OPERATIONS (YEAR ENDED SEPTEMBER 30, 2006 COMPARED TO YEAR
ENDED SEPTEMBER 30, 2005). 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 2005 and 2006 fiscal years
were zero, as the Company had not yet commenced the sale of products. General
and administrative expenses for the 2006 fiscal year totaled $639,259, an
increase of $229,121 over general and administrative expenses for the 2005
fiscal year. Research and development expenses decreased by $1,810, from $1,810
in 2005 to zero in 2006, 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 2006 of $10,080 represented an increase of $1,956,
due largely to interest accruals on unpaid interest. During 2006 the Company
incurred an extraordinary loss on settlement of debts of $94,221, with no
corresponding loss during 2005. As a result of these items, the loss for the
2006 fiscal was $774,887, an increase of $320,945 over the loss for the 2005
fiscal year.

         LIQUIDITY AND CAPITAL RESOURCES. On September 30, 2006, the Company had
cash and cash equivalents of approximately $4,544. The principal source of
liquidity has been borrowings from affiliates and 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 2007 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, 2006, the Company had an accumulated deficit of
$15,285,978. 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.

         GOING CONCERN OPINION. We currently have insufficient assets to
continue our operations, unless we secure additional financing. As a result of
our recent losses, negative cash flows from operations, and accumulated deficits
at September 30, 2006, there is doubt about our ability to continue as a going
concern.


                                       13

<PAGE>

ITEM 7.  FINANCIAL STATEMENTS

                               SIONIX CORPORATION
                          INDEX TO FINANCIAL STATEMENTS


Report of Independent Registered Public Accounting Firm.....................F-2

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

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

Statements of Stockholders' Equity (Deficit)................................F-5

Statements of Cash Flows....................................................F-6

Notes to the Financial Statements...........................................F-7


                                      F-1

<PAGE>

             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 Nevada
corporation) as of September 30, 2006 and the related statements of operations,
stockholders' equity (deficit), and cash flows for the years ended September 30,
2006 and 2005 and for the period from October 3, 1994 (inception) to September
30, 2006. 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, 2006 and the results of its operations and its cash flows for the
years ended September 30, 2006 and 2005 and for the period from October 3, 1994
(inception) to September 30, 2006, 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 to
$15,285,978 at September 30, 2006 including a net loss of $774,887 incurred in
the year ended September 30, 2006. 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.



/s/ Kabani & Company, Inc.
--------------------------
Certified Public Accountants

Los Angeles, California.
January 2, 2007


                                      F-2

<PAGE>

<TABLE>
<S>     <C>
                                     SIONIX CORPORATION
                               (A DEVELOPMENT STAGE COMPANY)
                                       BALANCE SHEET
                                  AS OF SEPTEMBER 30, 2006


                                           ASSETS
                                           ------

CURRENT ASSETS:
            Cash & cash equivalents                                            $      4,544

PROPERTY AND EQUIPMENT, NET                                                          44,761
                                                                               ------------
                        Total assets                                           $     49,306
                                                                               ============

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

CURRENT LIABILITIES:
            Accounts payable                                                   $    272,610
            Accrued expenses                                                      1,136,771
            Notes payable-related parties                                           129,000
            Note payable-officers                                                    66,660
            Shares to be issued                                                      43,900
            Equity line of credit                                                   327,336
                                                                               ------------
                        Total current liabilities                                 1,976,277
                                                                               ------------

COMMITMENTS & CONTINGENCIES                                                              --

STOCKHOLDERS' DEFICIT
            Common stock, $0.001 par value; 150,000,000 shares authorized;
             102,524,186 shares issued and 102,042,286 shares outstanding           102,042
            Additional paid-in capital                                           13,270,039
            Prepaid consulting fees                                                 (13,075)
            Deficit accumulated during development stage                        (15,285,978)
                                                                               ------------
                        Total stockholders' deficit                              (1,926,972)
                                                                               ------------
                        Total liabilities & stockholders' deficit              $     49,306
                                                                               ============


         The accompanying notes form an integral part of these financial statements

                                            F-3

<PAGE>

                                              SIONIX CORPORATION
                                        (A DEVELOPMENT STAGE COMPANY)
                                           STATEMENTS OF OPERATIONS


                                                                                                 CUMULATIVE
                                                                FOR THE YEARS ENDED            FROM INCEPTION
                                                                    SEPTEMBER 30,            (OCTOBER 3, 1994) TO
                                                          -------------------------------       SEPTEMBER 30,
                                                               2006              2005               2006
                                                          -------------      -------------      -------------

REVENUES                                                  $          --      $          --      $          --

OPERATING EXPENSES:
General and administrative                                      639,259            410,138         11,717,148
Research and development                                             --              1,810          1,449,474
Impairment of intangible assets                                      --                 --          1,267,278
Inventory obsolescence                                               --                 --            365,078
Depreciation and amortization                                    31,326             33,931            500,406
                                                          -------------      -------------      -------------
      Total operating expenses                                  670,585            445,878         15,299,384
                                                          -------------      -------------      -------------

LOSS FROM OPERATIONS                                           (670,585)          (445,878)       (15,299,384)

OTHER INCOME (EXPENSES)
Interest income                                                      --                 60             53,657
Interest expense                                                (10,080)            (8,124)          (234,686)
Loss on settlement of debts                                     (94,221)                --           (230,268)
Legal settlement                                                     --                 --            434,603
                                                          -------------      -------------      -------------
   Total other income (expenses)                               (104,302)            (8,064)            23,305

LOSS BEFORE INCOME TAXES                                       (774,887)          (453,942)       (15,276,079)

  Income taxes                                                       --                900              9,900
                                                          -------------      -------------      -------------
NET LOSS                                                  $    (774,887)     $    (454,842)     $ (15,285,978)
                                                          =============      =============      =============


BASIC AND DILUTED LOSS PER SHARE                          $       (0.01)     $       (0.00)
                                                          =============      =============

*BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF COMMON
   STOCK OUTSTANDING                                        102,524,186        102,524,186
                                                          =============      =============

*weighted average diluted number of shares are the same as basic weighted
average number of shares as the effect is anti-dilutive.


                  The accompanying notes form an integral part of these financial statements

                                                     F-4

<PAGE>

                                                         SIONIX CORPORATION
                                                    (A DEVELOPMENT STAGE COMPANY)
                                            STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                                        FROM INCEPTION (OCTOBER 3, 1994) TO SEPTEMBER 30, 2006


                                                                                                           DEFICIT
                                         COMMON STOCK                     STOCK      STOCK               ACCUMULATED       TOTAL
                                  ------------------------   ADDITIONAL  SUBSCRIP-   TO BE                  DURING     STOCKHOLDERS'
                                    NUMBER OF                 PAID-IN      TION     CANCEL- UNAMORTIZED  DEVELOPMENT      EQUITY
                                     SHARES        AMOUNT     CAPITAL    RECEIVABLE   LED    CONSULTING     STAGE        (DEFICIT)
                                  ------------   ---------   -----------  --------  -------   --------   ------------   -----------

Balance September 30, 2002          74,540,411   $  74,540   $11,074,334  $     --  $    --   $(86,918)  $(10,765,489)  $   596,467

Shares issued for services           2,467,742       2,468       651,757        --       --         --             --       654,225

Shares issued for capital
  equity line                        8,154,317       8,154       891,846        --       --         --             --       900,000

Amortization of consulting fees             --          --            --        --       --     86,918             --        86,918

Cancellation 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)      515,619

Shares issued for capital
  equity line                       19,179,016      19,179       447,706        --       --         --             --       466,885

Shares issued for services           5,100,004       5,100       196,997        --       --    (13,075)            --       189,022

963,336 shares to be issued
  for cash                                  --          --            --        --       --         --             --            --

500,000 shares to be issued
  for debt settlement                       --          --            --        --       --         --             --            --

Cancelled 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        --       --    (13,075)   (14,056,250)     (697,244)

Net loss for the year ended
  September 30, 2005                        --          --            --        --       --         --       (454,842)  (454,841.90)
                                  ------------   ---------   -----------  --------  -------   --------   ------------   -----------

Balance September 30, 2005         102,042,286     102,042    13,270,039        --       --    (13,075)   (14,511,092)   (1,152,085)

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  $     --  $    --   $(13,075)  $(15,285,978)  $(1,926,972)
                                  ============   =========   ===========  ========  =======   ========   ============   ===========


                             The accompanying notes form an integral part of these financial statements

                                                                F-5

<PAGE>

                                                   SIONIX CORPORATION
                                              (A DEVELOPMENT STAGE COMPANY)
                                                STATEMENTS OF CASH FLOWS


                                                                                                        CUMULATIVE
                                                                         FOR THE YEARS ENDED           FROM INCEPTION
                                                                             SEPTEMBER 30,           (OCTOBER 3, 1994) TO
                                                                    ------------------------------      SEPTEMBER 30,
                                                                        2006              2005              2006
                                                                    ------------      ------------      ------------
          CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                            $   (774,887)     $   (454,842)     $(15,285,978)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization                                             31,326            33,931           587,324
Issuance of common stock for compensation                                     --                --         1,835,957
Issuance of common stock for services & prepaid consulting fees               --                --         2,096,557
Impairment of assets                                                          --                --           514,755
Write-down of obsolete assets                                                 --                --            38,862
Impairment of intangible assets                                               --                --         1,117,601
Loss on settlement of debts                                               94,221                --           130,268
Other                                                                         --                --            40,370
Increase in other current assets                                              --                --          (510,727)
Decrease in other receivable                                                  --                --             3,000
Increase in deposits                                                          --             6,831                (0)
Increase (decrease) in accounts payable                                   50,147            38,545           342,610
Increase in accrued interest                                              10,080             8,124            68,681
Increase (decrease) in accrued expense                                   544,823           305,086         1,068,864
              Total adjustments                                          730,597           392,516         7,334,122
                                                                    ------------      ------------      ------------
    Net cash used in operating activities                                (44,290)          (62,326)       (7,951,856)
                                                                    ------------      ------------      ------------

       CASH FLOWS FROM INVESTING ACTIVITIES
Decrease (increase) of certificate of deposit                                 --                --                --
Purchase of patents                                                           --                --          (154,061)
Purchase of equipment                                                       (950)               --          (381,124)
                                                                    ------------      ------------      ------------
    Net cash used in investing activities                                   (950)               --          (535,185)
                                                                    ------------      ------------      ------------

       CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes to related party                          49,440            62,220           457,433
Proceeds from notes payable under equity line of credit                       --                --           756,000
Payment of notes                                                              --                --          (151,842)
Issuance of common stock for cash                                             --                --         7,376,094
Receipt of cash for stock to be issued                                        --                --            53,900
                                                                    ------------      ------------      ------------
    Net cash provided by financing activities                             49,440            62,220         8,491,585
                                                                    ------------      ------------      ------------

       Net increase (decrease) in cash & cash equivalents                  4,200              (106)            4,544

       CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD                          343               450                --
       CASH & CASH EQUIVALENTS, END OF PERIOD                       $      4,544      $        343      $      4,544
                                                                    ============      ============      ============

SUPPLEMENTAL CASH FLOW DISCLOSURES:

Interest paid                                                       $         --      $         --
                                                                    ============      ============
Income tax paid                                                     $         --      $         --
                                                                    ============      ============


                       The accompanying notes form an integral part of these financial statements

                                                          F-6
</TABLE>

<PAGE>

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


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 an automatic water
filtration system primarily for small water districts. The Company
reincorporated in Nevada in 2003.

         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 have been considered as part of the Company's development stage
activities.

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.

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.


                                      F-7

<PAGE>

ADVERTISING

         The cost of advertising is expensed as incurred. Total advertising
costs were $3,355 and $9,170 for the years ended September 30, 2006 and 2005,
respectively.

STOCK BASED COMPENSATION

         SFAS No. 123 prescribes accounting and reporting standards for all
stock-based compensation plans, including employee stock options, restricted
stock, employee stock purchase plans and stock appreciation rights. SFAS No. 123
requires compensation expense to be recorded (i) using the new fair value method
or (ii) using the existing accounting rules prescribed by Accounting Principles
Board Opinion No. 25, "Accounting for stock issued to employees" (APB 25) and
related interpretations with pro forma disclosure of what net income and
earnings per share would have been had the Company adopted the new fair value
method. The Company has chosen to account for stock-based compensation using
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" and has adopted the disclosure only provisions of SFAS 123.
Accordingly, compensation cost for stock options is measured as the excess, if
any, of the quoted market price of the Company's stock at the date of the grant
over the amount an employee is required to pay for the stock.

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

BASIC AND DILUTED NET LOSS PER SHARE

         Net loss per share is calculated in accordance with the Statement of
financial accounting standards No. 128 (SFAS No. 128), "Earnings per share".
SFAS No. 128 superseded Accounting Principles Board Opinion No.15 (APB 15). Net
loss per share for all periods presented has been restated to reflect the
adoption of SFAS No. 128. Basic net loss per share is based upon the weighted
average number of common shares outstanding. Diluted net loss per share is based
on the assumption that all dilutive convertible shares and stock options were
converted or exercised. Dilution is computed by applying the treasury stock
method. Under this method, options and warrants are assumed to be exercised at
the beginning of the period (or at the time of issuance, if later), and as if
funds obtained thereby were used to purchase common stock at the average market
price during the period.

FAIR VALUE OF FINANCIAL INSTRUMENTS

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


                                      F-8

<PAGE>

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).

REPORTING SEGMENTS

         Statement of Financial Accounting Standards No. 131, Disclosures about
Segments of an Enterprise and Related Information (SFAS No. 131), which
superseded Statement of Financial Accounting Standard No. 14, Financial
Reporting for Segments of a Business Enterprise, establishes standards for the
way that public enterprises report information about operating segments in
annual financial statements and requires reporting of selected information about
operating segments in interim financial statements regarding products and
services, geographic areas and major customers. SFAS No. 131 defines operating
segments as components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performances. The company adopted this standard in 1998 and the implementation
of this standard did not have a material impact on its financial statements.
During the years ended September 30, 2006 and 2005, the Company only operated in
one segment; therefore segment disclosure has not been presented.

REVENUE RECOGNITION

         The Company's policy is to recognize revenues is in accordance with SEC
Staff Accounting Bulletin No. 101, or other specific authoritative literature,
as applicable. Accordingly, revenues from products sales are recorded when all
four of the following criteria are met: (i) persuasive evidence of an
arrangement exists; (ii) delivery has occurred or services have been rendered;
(iii) the Company's price to the buyer is fixed or determinable; and (iv)
collectibility is reasonably assured. The Company's policy is to report its
sales levels on a net revenue basis, with net revenues being computed by
deducting from gross revenues the amount of actual sales returns and the amount
of reserves established for anticipated sales returns.

         The Company's policy for shipping and handling costs, billed to
customers, is to include it in revenue in accordance with Emerging Issues Task
Force ("EITF") issue No. 00-10, "Accounting for Shipping and Handling Revenues
and Costs." The purpose of this issue was to clarify the classification of
shipping and handling revenues and costs. The consensus reached was that all
shipping and handling billed to customers should be recorded as revenue.
Accordingly, the Company records its shipping and handling amounts within net
sales and operating expenses.

         The Company has not generated any revenue since its inception.

RECENT PRONOUNCEMENTS

         In February 2006, FASB issued SFAS No. 155, "Accounting for Certain
Hybrid Financial Instruments". SFAS No. 155 amends SFAS No 133, "Accounting for
Derivative Instruments and Hedging Activities", and SFAF No. 140, "Accounting


                                      F-9

<PAGE>

for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities". SFAS No. 155, permits fair value remeasurement for any hybrid
financial instrument that contains an embedded derivative that otherwise would
require bifurcation, clarifies which interest-only strips and principal-only
strips are not subject to the requirements of SFAS No. 133, establishes a
requirement to evaluate interest in securitized financial assets to identify
interests that are freestanding derivatives or that are hybrid financial
instruments that contain an embedded derivative requiring bifurcation, clarifies
that concentrations of credit risk in the form of subordination are not embedded
derivatives, and amends SFAS No. 140 to eliminate the prohibition on the
qualifying special-purpose entity from holding a derivative financial instrument
that pertains to a beneficial interest other than another derivative financial
instrument. This statement is effective for all financial instruments acquired
or issued after the beginning of the Company's first fiscal year that begins
after September 15, 2006. The management is currently evaluating the effect of
this pronouncement on financial statements.

         In March 2006 FASB issued SFAS 156 `Accounting for Servicing of
Financial Assets' this Statement amends FASB Statement No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,
with respect to the accounting for separately recognized servicing assets and
servicing liabilities. This Statement:

         1.       Requires an entity to recognize a servicing asset or servicing
                  liability each time it undertakes an obligation to service a
                  financial asset by entering into a servicing contract.
         2.       Requires all separately recognized servicing assets and
                  servicing liabilities to be initially measured at fair value,
                  if practicable.
         3.       Permits an entity to choose `Amortization method' or Fair
                  value measurement method' for each class of separately
                  recognized servicing assets and servicing liabilities:
         4.       At its initial adoption, permits a one-time reclassification
                  of available-for-sale securities to trading securities by
                  entities with recognized servicing rights, without calling
                  into question the treatment of other available-for-sale
                  securities under Statement 115, provided that the
                  available-for-sale securities are identified in some manner as
                  offsetting the entity's exposure to changes in fair value of
                  servicing assets or servicing liabilities that a servicer
                  elects to subsequently measure at fair value.
         5.       Requires separate presentation of servicing assets and
                  servicing liabilities subsequently measured at fair value in
                  the statement of financial position and additional disclosures
                  for all separately recognized servicing assets and servicing
                  liabilities.

         This Statement is effective as of the beginning of the Company's first
fiscal year that begins after September 15, 2006. Management believes that this
statement will not have a significant impact on the consolidated financial
statements.

         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


                                      F-10

<PAGE>

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.

         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


                                      F-11

<PAGE>

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.

3. PROPERTY AND EQUIPMENT

             Equipment and machinery                $  187,805
             Furniture and fixtures                     22,183
                                                    -----------
                                                       209,988
             Less accumulated depreciation            (165,227)
                                                    -----------
                                                    $   44,761
                                                    ===========

         Depreciation expenses for the fiscal years ended September 30, 2006 and
2005 were $31,326 and $33,931, respectively.

4. ACCRUED EXPENSES

          Accrued expenses comprised of the following at September 30, 2006:

                     Payroll taxes                                $   143,572
                          Wages                                       853,115
                          Professional fees                            30,000
                          Interest payable                             51,699
                          Other accruals                               58,385
                                                                  -----------

                   Total                                          $ 1,136,771
                                                                  ===========

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, 2006,
notes payable amounted to $129,000. Accrued interest on the notes amounted to
$51,699 at September 30, 2006. Interest expenses on the notes for the year ended
September 30, 2006 and 2005 amounted to $10,080 and $8,134 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, 2006 and 2005 were $66,660 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 issued to Cornell Capital Partners,
LP, net of a 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 9). The notes payable outstanding at September


                                      F-12

<PAGE>

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 entered into a settlement agreement with Cornell Capital Partner to pay
the total amount of $327,336; $50,000 payable by 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 a loss on settlement on debt of $94,221 for the year ended
September 30, 2006.

8. INCOME TAXES

         Through September 30, 2006, the Company incurred net operating losses
for tax purposes of approximately $9,835,000. The net operating loss
carryforward for federal and state purposes may be used to reduce taxable income
through the year 2025. The availability of the Company's net operating loss
carryforward is subject to limitation if there is a 50% or more positive change
in the ownership of the Company's stock.

         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 December 31, 2006 are as follows:

                                               2006               2005
                                           -----------        -----------
         Net operating loss                $ 3,344,000        $ 3,318,000
         Less Valuation allowance           (3,344,000)        (3,318,000)
                                           -----------        -----------
                                           $         -        $         -
                                           ===========        ===========

         The following is a reconciliation of the provision for income taxes at
the U.S. federal income tax rate to the income taxes reflected in the Statements
of Operations:

                                                          2006         2005
                                                         -----        -----
Tax expense (credit) at statutory rate-federal           (34)%         (34%)

State tax expense net of federal tax                      (6)%          (6%)
Changes in valuation allowance                            40 %          40%
                                                         -----        -----
Tax expense at actual rate                                 -             -
                                                         =====        =====

9. STOCKHOLDERS' EQUITY

      COMMON STOCK

         The Company has 150,000,000 authorized shares, with 0.001 par value per
share. As of September 30, 2006, the Company had 102,524,186 shares issued and
outstanding.

         The Company did not issue any shares for the fiscal years ended
September 30, 2006 and 2005.


                                      F-13

<PAGE>

      STOCK OPTIONS

2001 Executive Officers Stock Option Plan

         In October of 2000, the Company entered into amendments to the
employment agreement with each of the executive officers, eliminating
theprovisions 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.

         Options outstanding:

                                                    Weighted
                                                    Average           Number of
                                                 Exercise Price        Options

Outstanding at September 30, 2005                    $0.15            7,343,032

Granted                                                  -                    -
Forfeited                                                -                    -
Exercised                                                -                    -
---------------------------------                --------------      -----------
Outstanding at September 30, 2006                    $0.15            7,343,032


         A summary of the Company's option activity is listed below:

                                                      Weighted-     Weighted-
                                        Weighted-     Average        Average
                                         Average      Exercise       Exercise
              Stock        Stock        Remaining     Price of       Price of
Exercise     Options      Options      Contractual     Options        Options
  Price     Outstanding   Exercisable      Life       Outstanding   Exercisable
--------    -----------   -----------      ----       -----------   -----------
 $ 0.15     7,343,032     7,343,032    3.5 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, 2006 and 2005: dividend yields of 0%; risk free
interest rates of 6%; expected volatility of 100% and expected lives of 4.9
years.

         The Company has adopted the disclosure-only provisions of SFAS No. 123.
Because the exercise price of the options granted was greater than the fair
value of the common stock at the grant date, no compensation cost has been
recognized. Had compensation cost for the Company's stock option plan been
determined based on the fair value at the grant date for awards consistent with
the provisions of SFAS No. 123, the Company's net loss and loss per share for
the year ended September 30, 2006 and 2005 would have been as follows:

                                                     2006               2005
                                                 ------------       ------------

Net loss as reported                             $  (774,887)       $  (454,842)
Net loss, pro forma                              $  (906,442)       $  (598,379)
Basic loss per share as reported                 $     (0.01)       $     (0.00)
Basic loss per share, pro forma                  $     (0.01)       $     (0.01)


                                      F-14

<PAGE>

10. EARNING (LOSS) PER SHARE

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

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

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, 2006, the
Company had incurred cumulative losses of $15,282,979, including current loss of
$774,887. The Company's successful transition from a development stage company
to attaining profitable operations is dependent upon obtaining financing
adequate to fulfill its research and development activities, production of its
equipment and achieving a level of revenues adequate to support the Company's
cost structure. Management's plan of operations anticipates that the cash
requirements for the next twelve months will be met by obtaining capital
contributions through the sale of common stock and cash flow from operations.
However, there is no assurance that the Company will be able to implement its
plan.

12. SUBSEQUENT EVENT

         The Company paid $50,000 against a note payable under an equity line of
credit in November 2006(See note 7).


                                      F-15

<PAGE>

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.

LIMITATIONS ON THE EFFECTIVENESS OF CONTROLS

         Our management, including our CEO and CFO, does not expect that our
disclosure controls and internal controls will prevent all errors and all fraud.
A control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met. Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within AcuNetx have been
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of a simple
error or mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people, or by management or
board override of the control.

         The design of any system of controls also is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions; over time, controls may become inadequate because of changes
in conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be detected.


                                       14

<PAGE>

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.

         The Company's directors, executive officers and key employees are as
follows:

         Name                    Age     Positions
         ----                    ---     ---------

         James J. Houtz          68      Chairman, CEO, President and a Director

         Dr. John H. Foster      60      Vice-Chairman and a Director

         Robert E. McCray        71      Chief Financial Officer, Secretary
                                           and a Director

         Rodney Anderson         80      Director

         David Ross              68      Director

         Dr. W. Richard Laton    42      Director

         Mr. Houtz has been President, Chief Executive Officer and a director of
the Company since March 1998.

         Dr. Foster has been a consultant to Sionix since early 2004, and has
served as Vice-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. McCray has been Chief Financial Officer and a director of the
Company since July 1998.

         Mr. Anderson has been 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. He has served on the Company's Board of Directors since 2001.


                                       15

<PAGE>

         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.

         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.

ITEM 10. EXECUTIVE COMPENSATION.

        The following table sets forth certain information concerning the
compensation of the four most highly compensated officers of the Company for the
past three fiscal years:

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


James J. Houtz, President...     2006   $  -0-     -0-      -0-      -0-          -0-           -0-       -0-
                                 2005   $  -0-     -0-      -0-      -0-          -0-           -0-       -0-
                                 2004   $  -0-     -0-      -0-      -0-          -0-           -0-       -0-


Robert McCray, CFO..........     2006   $  -0-     -0-      -0-      -0-          -0-           -0-       -0-
                                 2005   $  -0-     -0-      -0-      -0-          -0-           -0-       -0-
                                 2004   $  -0-     -0-      -0-      -0-          -0-           -0-       -0-
</TABLE>


                                       16

<PAGE>

         The following table sets forth certain information as of September 30,
2006 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.

<TABLE>
<S>     <C>
                     SHARES                 NUMBER OF UNEXERCISED       VALUE OF UNEXERCISED
                  ACQUIRED ON    VALUE           OPTIONS AT           IN-THE-MONEY OPTIONS AT
                    EXERCISE    REALIZED     SEPTEMBER 30, 2006        SEPTEMBER 30, 2006 (1)
      NAME            (#)         ($)     EXERCISABLE/UNEXERCISABLE   EXERCISABLE/UNEXERCISABLE
      ----            ---         ---     -------------------------   -------------------------

James J. Houtz....    N/A         -0-           6,171,000/-0-                -0-/ -0-
Robert McCray.....    N/A         -0-             583,200/-0-                -0-/ -0-
</TABLE>

(1) Assumes that a share of Common Stock was valued at $ .06 per share on
September 30, 2006 (the closing price of the Common Stock on that date as
reported by the OTC Bulletin Board). Values are reflected as zero as the
exercise prices of all options exceeded the market price.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.

         The following table sets forth ownership information as of September
30, 2006 with respect to all officers and directors and promoters, and each
shareholder who beneficially owns more than 5% of the outstanding shares:

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

E. David Kailbourne                           7,223,044                 7.0 %

James J. Houtz                                6,268,167 (1)             6.1

Robert E. McCray                                933,200 (1)             0.9

Rodney Anderson                                 300,901                 0.2

Dr. John H. Foster                              150,000                 0.1

David Ross                                      115,000                 0.1

Dr. W. Richard Laton                             50,000                   -

All Directors and Officers as a               7,817,268                 7.6
    Group (6 Persons)

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


                                       17

<PAGE>

         The Company believes that all persons named in the table have sole
voting and investment power with respect to all shares of common stock
beneficially owned by them. For purposes hereof, a person is considered to be
the beneficial owner of securities that can be acquired by such person within 60
days from the date hereof upon the exercise of warrants or options or the
conversion of convertible securities. Each beneficial owner's percentage
ownership is determined by assuming that any such warrants, options or
convertible securities that are held by such person (but not those held by any
other person) and which are exercisable within 60 days from the date hereof,
have been exercised.

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

         Inapplicable

ITEM 13.  EXHIBITS

         The following exhibits are filed herewith or incorporated by reference:

 No.     Description
 ---     -----------

3.1      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

10.2     Employment Agreement, dated September 30, 2003, between the Registrant
         and James J. Houtz

10.3     Employment Agreement, dated October 1, 2005 between the Registrant and
         Robert E. McCray

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.


                                       18

<PAGE>

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, 2006 and 2005:

Fee Category                        Fiscal 2006 Fees            Fiscal 2005 Fees
--------------                      ----------------           -----------------

Audit Fees                             $   30,000                  $       0

Audit-Related Fees                              0                          0

Tax Fees                                        0                          0

All Other Fees                                  0                          0

Total Fees                             $   30,000                 $        0

         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.


                                       19

<PAGE>

                                   SIGNATURES

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

                                        Sionix Corporation

Date: June 8, 2007                      By: /s/ James J. Houtz
                                            --------------------------------
                                            James J. Houtz, President

         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/ James J. Houtz           Chairman, CEO, President
-------------------            and a Director                  June 8, 2007
James J. Houtz

(2) Principal Financial and Accounting Officer

/s/ Robert McCray            Chief Financial Officer,          June 8, 2007
-----------------              Secretary and a Director
Robert McCray

(3) Directors

/s/ John Foster              Vice-Chairman of the Board        June 8, 2007
---------------                of Directors
John Foster

/s/ Rodney Anderson          Director                          June 8, 2007
--------------------
Rodney Anderson

/s/ David Ross               Director                          June 8, 2007
--------------------
David Ross

/s/ W. Richard Laton         Director                          June 8, 2007
---------------------
W. Richard Laton


                                       20