UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





**Form
      10-QSB**





Mark
      One


x
            Quarterly
                report pursuant to Section 13 or 15(d) of the Securities Exchange
                Act of
                1934 for the quarterly period ended December 31, 2007;
                oro
            Transition
                report pursuant to Section 13 or 15(d) of the Securities Exchange
                Act of
                1934 for the transition period from ________________ to ________
                ___________.





Commission
      File No. 002-95626-D





Sionix
      Corporation





(Exact
      name of registrant as specified in charter)





Nevada
            87-0428526(State
                or other juriesdiction of
              incorporation
                or organizeation)
            (I.R.S.
                Employer Identification No.)




2082
      Michelson Drive, Suite 304, Irvine, California 92612





(Address
      of principal executive offices)





(949)
      752-7980 1





(Registrant's
      telephone number, including area code)








(Former
      name, former address and former fiscal year if changed since last
      report)





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. x Yes oNo





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). x Yes  oNo





The
      number of shares of common stock outstanding at February 20, 2008 was
      107,117,101 shares.





Transitional
      Small Business Format  (Check
      one) Yes oNo  x












**SIONIX
      CORPORATION—FORM 10-QSB**


TABLE
      OF
      CONTENTS





**Part
      I - Financial Information**


Item
                1 - Financial Statements
              Page
                  NumberBalance
                  Sheet at December 31, 2007 (unaudited)
              1Statements
                  of Operations (unaudited) for the three month periodsended
                  December 31, 2007 and December 31, 2006 and from inception (October
                  3,
                  1994) to December 31, 2007
              2Statements
                  of Stockholders Equity (Deficit)for
                  the period from inception(October
                  3, 1994) to December 31, 2007
              3Statements
                  of Cash Flows (unaudited) for thethree
                  months ended December 31, 2007 andDecember
                  31, 2006 and from inception (October 3, 1994)to
                  December 31, 2007
              5Notes
                  to Unaudited Financial Statements
              6Forward-Looking
                Statements
              17Item
                2 - Management’s Discussion and AnalysisOr
                Plan of Operation
              18Item
                3 - Controls and Procedures
              22**Part
                II - Other Information**Item
                1 - Legal Proceeding
              23Item
                2 - Unregistered Sales of Equity Securities and Use of Proceeds
              23Item
                3 - Defaults upon Senior Securities
              23Item
                4 - Submission of Matters to a Vote of Security Holders
              23Item
                5 - Other Information
              23Item
                6- Exhibits
              23**Signatures**
              24**Certifications**
              25









**SIONIX
        CORPORATION**
 **(A
              DEVELOPMENT STAGE COMPANY)**
 **BALANCE
              SHEET**  **DECEMBER
              31, 2007**
 **(Unaudited)**
  **ASSETS**
 **CURRENT
                ASSET:**Cash
                  & cash equivalents
              
              $
              1,366Advance
                  to employee
              
              
              2,000**PROPERTY
                  AND EQUIPMENT, net**
              
              
              59,343**DEPOSIT**
              
              
              104,600Total
                  assets
              
              $
              167,309**LIABILITIES
                  AND STOCKHOLDERS' DEFICIT****CURRENT
                  LIABILITIES:**Accounts
                  payable
              
              $
              344,853Accrued
                  expenses
              
              
              1,777,077Liquidated
                  damage liability
              
              
              61,500Notes
                  payable-related parties
              
              
              124,000Convertible
                  notes, net
              
              
              1,229,817Total
                  current liabilities
              
              
              3,537,247**STOCKHOLDERS'
                  DEFICIT**Common
                  stock, $0.001 par value; 150,000,000 shares authorized;107,117,101
                  shares issued and 106,635,201 shares outstanding
              
              
              106,635Additional
                  paid-in capital
              
              
              15,643,156Shares
                  to be issued
              
              
              43,900Deferred
                  warrant expense
              
              
              (67,038
              )Deficit
                  accumulated during development stage
              
              
              (19,096,592
              )Total
                  stockholders' deficit
              
              
              (3,369,938
              )Total
                  liabilities & stockholders' deficit
              
              $
              167,309
  The
          accompanying notes form an integral part of these unaudited financial
          statements
  1
  **SIONIX
          CORPORATION**
 **(A
          DEVELOPMENT STAGE COMPANY)**
 **STATEMENTS
          OF OPERATIONS**
 **(Unaudited)**
 **For
                    theThree Month Periods**
                  **Ended
                    December 31,**
                
                
                **Cumulative**
                  **from
                    Inception**
                  **(October
                    3, 1994) to****2007**
                
                
                **2006**
                
                
                **Decembeer
                    31, 2007****Revenues**
                
                $
                -
                
                $
                -
                
                $
                -**Operating
                    expenses:**General
                    and administrative
                
                
                1,367,677
                
                
                202,938
                
                
                14,519,764Research
                    and development
                
                
                -
                
                
                -
                
                
                1,449,474Impairment
                    of intangible assets
                
                
                -
                
                
                -
                
                
                1,267,278Inventory
                    obsolescence
                
                
                -
                
                
                -
                
                
                365,078Depreciation
                    and amortization
                
                
                8,157
                
                
                7,793
                
                
                540,262Legal
                    settlement
                
                
                -
                
                
                -
                
                
                (434,603
                )Total
                    operating expenses
                
                
                1,375,834
                
                
                210,730
                
                
                17,707,253**Loss
                    from operations**
                
                
                (1,375,834
                )
                
                (210,730
                )
                
                (17,707,253
                )**Other
                    income (expenses)**Interest
                    income
                
                
                913
                
                
                106
                
                
                59,456Interest
                    expense
                
                
                (188,625
                )
                
                (19,242
                )
                
                (658,869
                )Beneficial
                    conversion feature expense
                
                
                (231,998
                )
                
                (1,482
                )
                
                (548,858
                )Loss
                    on settlement of debts
                
                
                -
                
                
                -
                
                
                (230,268
                )Total
                    other expenses
                
                
                (419,710
                )
                
                (20,618
                )
                
                (1,378,540
                )**Loss
                    before income taxes**
                
                
                (1,795,544
                )
                
                (231,348
                )
                
                (19,085,792
                )Income
                    taxes
                
                
                900
                
                
                900
                
                
                10,800**Net
                    loss**
                
                $
                (1,796,444
                )
                $
                (232,248
                )
                $
                (19,096,592
                )**Basic
                    and diluted loss per share**
                
                $
                (0.02
                )
                $
                (0.00
                )***Basic
                    and diluted weighted average number of common stock
                    outstanding**
                
                
                107,117,101
                
                
                105,459,175
  *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 unaudited financial
          statements
  2
 **SIONIX
          CORPORATION**
 **(A
            DEVELOPMENT STAGE COMPANY)**
 STATEMENTS
            OF STOCKHOLDERS' EQUITY
            (DEFICIT)
 **FOR
              THE PERIOD FROM INCEPTION (OCTOBER 3, 1994) TO DECEMBER 31,
              2007**
 **(Unaudited)**
 **Deficit**
                    
                    **Total****Common
                        stock**
                    
                    **Additional**
                    
                    **Stock**
                    
                    **Deferred**
                    
                    **Stock**
                    
                    **Stock**
                    
                    **Unamortized**
                    
                    **accumulated**
                    
                    **stockholders'****Number
                        of**
                    
                    
                    
                    **paid-In**
                    
                    **to
                        be**
                    
                    **Warrant**
                    
                    **subscription**
                    
                    **to
                        be**
                    
                    **consulting**
                    
                    **from**
                    
                    **equity****shares**
                    
                    **Amount**
                    
                    **capital**
                    
                    **issued**
                    
                    **Expense**
                    
                    **receivable**
                    
                    **cancelled**
                    
                    **fees**
                    
                    **inception**
                    
                    **(deficit)**Shares
                        issued for cash-Oct 1994
                    
                    
                    10,000
                    
                    $
                    10
                    
                    $
                    90
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    100Net
                        loss for period Oct 3, 1994 to Dec 31, 1994
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (1,521
                    )
                    
                    (1,521
                    )Balance
                        December 31, 1994
                    
                    
                    10,000
                    
                    
                    10
                    
                    
                    90
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (1,521
                    )
                    
                    (1,421
                    )Shares
                        issued for assignment right
                    
                    
                    1,990,000
                    
                    
                    1,990
                    
                    
                    (1,990
                    )
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -Issuance
                        of shares for service
                    
                    
                    572,473
                    
                    
                    572
                    
                    
                    135,046
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    135,618Issuance
                        of shares for debt
                    
                    
                    1,038,640
                    
                    
                    1,038
                    
                    
                    1,164,915
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    1,165,953Issuance
                        of shares for cash
                    
                    
                    232,557
                    
                    
                    233
                    
                    
                    1,119,027
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    1,119,260Issuance
                        of shares for subscriptionnote
                        receivable
                    
                    
                    414,200
                    
                    
                    414
                    
                    
                    1,652,658
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (1,656,800
                    )
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (3,728
                    )production
                        cost
                    
                    
                    112,500
                    
                    
                    113
                    
                    
                    674,887
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (675,000
                    )
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -Net
                        loss for the year ended December 31, 1995
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (914,279
                    )
                    
                    (914,279
                    )Balance
                        December 31, 1995
                    
                    
                    4,370,370
                    
                    
                    4,370
                    
                    
                    4,744,633
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (2,331,800
                    )
                    
                    -
                    
                    
                    -
                    
                    
                    (915,800
                    )
                    
                    1,501,403Issuance
                        of shares for reorganization
                    
                    
                    18,632,612
                    
                    
                    18,633
                    
                    
                    (58,033
                    )
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (39,400
                    )Issuance
                        of shares for cash
                    
                    
                    572,407
                    
                    
                    573
                    
                    
                    571,834
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    572,407Issuance
                        of shares for service
                    
                    
                    24,307
                    
                    
                    24
                    
                    
                    24,283
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    24,307Net
                        loss for the nine month ended September 30, 1996
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (922,717
                    )
                    
                    (922,717
                    )Balance
                        September 30, 1996
                    
                    
                    23,599,696
                    
                    
                    23,600
                    
                    
                    5,282,717
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (2,331,800
                    )
                    
                    -
                    
                    
                    -
                    
                    
                    (1,838,517
                    )
                    
                    1,136,000Share
                        issued for cash
                    
                    
                    722,733
                    
                    
                    723
                    
                    
                    365,857
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    366,580Share
                        issued for service
                    
                    
                    274,299
                    
                    
                    274
                    
                    
                    54,586
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    54,860Cancellation
                        of shares
                    
                    
                    (542,138
                    )
                    
                    (542
                    )
                    
                    (674,458
                    )
                    
                    -
                    
                    
                    -
                    
                    
                    675,000
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -Net
                        loss for the year ended September 30, 1997
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (858,915
                    )
                    
                    (858,915
                    )Balance
                        September 30, 1997
                    
                    
                    24,054,590
                    
                    
                    24,055
                    
                    
                    5,028,702
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (1,656,800
                    )
                    
                    -
                    
                    
                    -
                    
                    
                    (2,697,432
                    )
                    
                    698,525Share
                        issued for cash
                    
                    
                    2,810,000
                    
                    
                    2,810
                    
                    
                    278,190
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    281,000Share
                        issued for service
                    
                    
                    895,455
                    
                    
                    895
                    
                    
                    88,651
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    89,546Shares
                        issued for compensation
                    
                    
                    2,200,000
                    
                    
                    2,200
                    
                    
                    217,800
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    220,000Cancellation
                        of shares
                    
                    
                    (2,538,170
                    )
                    
                    (2,538
                    )
                    
                    (1,534,262
                    )
                    
                    -
                    
                    
                    -
                    
                    
                    1,656,800
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    120,000Net
                        loss for the year ended September 30, 1998
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (1,898,376
                    )
                    
                    (1,898,376
                    )Balance
                        September 30, 1998
                    
                    
                    27,421,875
                    
                    
                    27,422
                    
                    
                    4,079,081
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (4,595,808
                    )
                    
                    (489,305
                    )Shares
                        issued for compensation
                    
                    
                    3,847,742
                    
                    
                    3,847
                    
                    
                    389,078
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    392,925Share
                        issued for service
                    
                    
                    705,746
                    
                    
                    706
                    
                    
                    215,329
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    216,035Share
                        issued for cash
                    
                    
                    9,383,000
                    
                    
                    9,383
                    
                    
                    928,917
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    938,300Net
                        loss for the year ended September 30, 1999-Restated
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (1,158,755
                    )
                    
                    (1,158,755
                    )Balance
                        September 30, 1999
                    
                    
                    41,358,363
                    
                    
                    41,358
                    
                    
                    5,612,405
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (5,754,563
                    )
                    
                    (100,800
                    )Share
                        issued for cash
                    
                    
                    10,303,500
                    
                    
                    10,304
                    
                    
                    1,020,046
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    1,030,350Shares
                        issued for compensation
                    
                    
                    1,517,615
                    
                    
                    1,518
                    
                    
                    1,218,598
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    1,220,116Shares
                        issued for service
                    
                    
                    986,844
                    
                    
                    986
                    
                    
                    253,301
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    254,287Net
                        loss for the year ended September 30, 2000
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (2,414,188
                    )
                    
                    (2,414,188
                    )Balance
                        September 30, 2000
                    
                    
                    54,166,322
                    
                    
                    54,166
                    
                    
                    8,104,350
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (8,168,751
                    )
                    
                    (10,235
                    )Shares
                        issued for service and prepaid expenses
                    
                    
                    2,517,376
                    
                    
                    2,517
                    
                    
                    530,368
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (141,318
                    )
                    
                    -
                    
                    
                    391,567Share
                        issued for cash
                    
                    
                    6,005,000
                    
                    
                    6,005
                    
                    
                    594,495
                    
                    
                    
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    600,500100,000
                        share to be issued for cash
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    10,000
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    10,000639,509
                        Shares to be issued for debt settlement in 2001
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    103,295
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    103,295Net
                        loss for the year ended September 30, 2001
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (1,353,429
                    )
                    
                    (1,353,429
                    )Balance
                        September 30, 2001
                    
                    
                    62,688,698
                    
                    
                    62,688
                    
                    
                    9,229,213
                    
                    
                    113,295
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (141,318
                    )
                    
                    (9,522,180
                    )
                    
                    (258,302
                    )Shares
                        issued for service and prepaid expenses
                    
                    
                    1,111,710
                    
                    
                    1,112
                    
                    
                    361,603
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    54,400
                    
                    
                    -
                    
                    
                    417,115Shares
                        issued as contribution
                    
                    
                    100,000
                    
                    
                    100
                    
                    
                    11,200
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    11,300Shares
                        issued for compensation
                    
                    
                    18,838
                    
                    
                    19
                    
                    
                    2,897
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    2,916Share
                        issued for cash
                    
                    
                    16,815,357
                    
                    
                    16,815
                    
                    
                    1,560,782
                    
                    
                    (10,000
                    )
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    1,567,597Shares
                        issued for debt settlement
                    
                    
                    1,339,509
                    
                    
                    1,340
                    
                    
                    208,639
                    
                    
                    (103,295
                    )
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    106,684Shares
                        to be issued for services related to
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    -equity
                        raising - 967,742 shares
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (300,000
                    )
                    
                    300,000
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -Cancellation
                        of shares
                    
                    
                    (7,533,701
                    )
                    
                    (7,534
                    )
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (7,534
                    )Net
                        loss for the year ended September 30, 2002
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (1,243,309
                    )
                    
                    (1,243,309
                    )Balance
                        September 30, 2002
                    
                    
                    74,540,411
                    
                    
                    74,540
                    
                    
                    11,074,334
                    
                    
                    300,000
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (86,918
                    )
                    
                    (10,765,489
                    )
                    
                    596,467Shares
                        issued for services
                    
                    
                    2,467,742
                    
                    
                    2,468
                    
                    
                    651,757
                    
                    
                    (300,000
                    )
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    354,225Shares
                        issued for capital equity line
                    
                    
                    8,154,317
                    
                    
                    8,154
                    
                    
                    891,846
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    900,000Amortization
                        of consulting fees
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    86,918
                    
                    
                    -
                    
                    
                    86,918Cancellation
                        of shares
                    
                    
                    (50,000
                    )
                    
                    (50
                    )
                    
                    50
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
  The
              accompanying notes form an integral part of these unaudited financial
              statements
 3
 **SIONIX
              CORPORATION**
 **(A
              DEVELOPMENT STAGE COMPANY)**
 STATEMENTS
              OF STOCKHOLDERS' EQUITY
              (DEFICIT)
 **FOR
                THE PERIOD FROM INCEPTION (OCTOBER 3, 1994) TO DECEMBER 31,
                2007**
 **(Unaudited)**
 **Common
                      stock****Number
                      of**
                    **shares**
                  
                  **Amount**
                  
                  **Additiona****l**
                    **paid-In**
                    **capital**
                  
                  **Stock
                      to****be**
                    **issued**
                  
                  **Deferred**
                    **Warrant**
                    **Expense**
                  
                  **Stock**
                    **subscription**
                    **receivable**
                  
                  **Stock**
                      **to
                          be**
                        **cancelled**
                  
                  **Unamortized**
                    **consulting****fees**
                  
                  **Deficit**
                    **acumulated**
                    **from**
                    **inception**
                  
                  **Total**
                    **stockholders'**
                    **equity**
                    **(deficit)**7,349,204
                      shares to be cancelled
                  
                  
                  -
                  
                  
                  -
                  
                  
                  7,349
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (7,349
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  -Net
                      loss for the year ended September 30, 2003
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (1,721,991
                  )
                  
                  (1,721,991
                  )Balance
                      September 30, 2003
                  
                  
                  85,112,470
                  
                  
                  85,112
                  
                  
                  12,625,336
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (7,349
                  )
                  
                  -
                  
                  
                  (12,487,480
                  )
                  
                  215,619Shares
                      issued for capital equity line
                  
                  
                  19,179,016
                  
                  
                  19,179
                  
                  
                  447,706
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  466,885Shares
                      issued for services
                  
                  
                  5,100,004
                  
                  
                  5,100
                  
                  
                  196,997
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (13,075
                  )
                  
                  -
                  
                  
                  189,022963,336
                      shares to be issued for cash
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  28,900
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  28,900500,000
                      shares to be issued for debt settlement
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  15,000
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  15,000Cancelled
                      shares
                  
                  
                  (7,349,204
                  )
                  
                  (7,349
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  7,349
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -Net
                      loss for the year ended September 30, 2004
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (1,568,770
                  )
                  
                  (1,568,770
                  )Balance
                      September 30, 2004
                  
                  
                  102,042,286
                  
                  
                  102,042
                  
                  
                  13,270,039
                  
                  
                  43,900
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (13,075
                  )
                  
                  (14,056,250
                  )
                  
                  (653,344
                  )Amortization
                      of consuting fees
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  13,075
                  
                  
                  -
                  
                  
                  13,075Net
                      loss for the year ended September 30, 2005
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (467,917
                  )
                  
                  (467,917
                  )Balance
                      September 30, 2005
                  
                  
                  102,042,286
                  
                  
                  102,042
                  
                  
                  13,270,039
                  
                  
                  43,900
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (14,524,167
                  )
                  
                  (1,108,186
                  )Net
                      loss for the year ended September 30, 2006
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (774,887
                  )
                  
                  (774,887
                  )Balance
                      September 30, 2006
                  
                  
                  102,042,286
                  
                  
                  102,042
                  
                  
                  13,270,039
                  
                  
                  43,900
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (15,299,053
                  )
                  
                  (1,883,072
                  )Stock
                      issued for consulting
                  
                  
                  4,592,915
                  
                  
                  4,593
                  
                  
                  80,336
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  84,929Warrants
                      issued on convertible notes
                  
                  
                  -
                  
                  
                  -
                  
                  
                  340,583
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  340,583Beneficial
                      conversion feature
                  
                  
                  -
                  
                  
                  -
                  
                  
                  1,021,569
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  1,021,569Net
                      loss for the year ended September 30, 2007
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (2,001,094
                  )
                  
                  (2,001,094
                  )Balance
                      September 30, 2007
                  
                  
                  106,635,201
                  
                  $
                  106,635
                  
                  $
                  14,712,527
                  
                  $
                  43,900
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (17,300,147
                  )
                  
                  (2,437,085
                  )Option
                      issued to employee
                  
                  
                  -
                  
                  
                  -
                  
                  
                  414,909
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  414,909Option
                      issued to consultant
                  
                  
                  -
                  
                  
                  -
                  
                  
                  414,909
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  414,909Warrants
                      issued for services
                  
                  
                  -
                  
                  
                  -
                  
                  
                  100,811
                  
                  
                  -
                  
                  
                  (67,038
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  33,773Net
                      loss for the three month period ended December 31, 2007
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (1,796,444
                  )
                  
                  (1,796,444
                  )Balance
                      December 31, 2007
                  
                  
                  106,635,201
                  
                  $
                  106,635
                  
                  $
                  15,643,156
                  
                  $
                  43,900
                  
                  $
                  (67,038
                  )
                  $
                  -
                  
                  $
                  -
                  
                  $
                  -
                  
                  $
                  (19,096,592
                  )
                  $
                  (3,369,938
                  )
  The
          accompanying notes form an integral part of these
          unaudited financial statements
  4
  **SIONIX
            CORPORATION**
 **STATEMENTS
            OF CASH FLOWS**
 (A
            DEVELOPMENT STAGE COMPANY)
 **(UNAUDITED)**
  **For
                      The Three Month Periods**
                    **Ended
                      December 31,**
                  
                  
                  **Cumulative**
                    **from
                      inception**
                    **(October
                      3, 1994)**
                    **to****2007**
                  
                  
                  **2006**
                  
                  
                  **December
                            31, 2007****CASH
                      FLOWS FROM OPERATING ACTIVITIES:**Net
                      loss
                  
                  $
                  (1,796,444
                  )
                  $
                  (232,248
                  )
                  $
                  (19,096,592
                  )Adjustments
                      to reconcile net loss to net cash used inoperating
                      activities:Depreciation
                      and amortization
                  
                  
                  8,157
                  
                  
                  7,793
                  
                  
                  627,180Amortizaton
                      of consulting fees
                  
                  
                  -
                  
                  
                  -
                  
                  
                  13,075Beneficial
                      conversion feature
                  
                  
                  231,998
                  
                  
                  1,842
                  
                  
                  547,375Stock
                      based compensation expense - employee
                  
                  
                  414,909
                  
                  
                  
                  
                  
                  414,909Stock
                      based compensation expense - consultant
                  
                  
                  414,909
                  
                  
                  
                  
                  
                  414,909Warrants
                      issued for consulting services
                  
                  
                  111,255
                  
                  
                  -
                  
                  
                  217,366Issuance
                      of common stock for compensation
                  
                  
                  -
                  
                  
                  -
                  
                  
                  1,835,957Issuance
                      of common stock for services
                  
                  
                  -
                  
                  
                  32,929
                  
                  
                  2,181,486Impairment
                      of assets
                  
                  
                  -
                  
                  
                  -
                  
                  
                  514,755Write-down
                      of obsolete assets
                  
                  
                  -
                  
                  
                  -
                  
                  
                  38,862Impairment
                      of intangible assets
                  
                  
                  -
                  
                  
                  -
                  
                  
                  1,117,601Loss
                      on settlement of debts
                  
                  
                  -
                  
                  
                  -
                  
                  
                  130,268Changes
                      in current assets and liabilities:Other
                      assets
                  
                  
                  -
                  
                  
                  -
                  
                  
                  40,372Advance
                      to employee
                  
                  
                  (650
                  )
                  
                  -
                  
                  
                  (512,727
                  )Other
                      receivable
                  
                  
                  -
                  
                  
                  -
                  
                  
                  3,000Deposits
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (104,600
                  )Accounts
                      payable
                  
                  
                  187,454
                  
                  
                  (59,576
                  )
                  
                  414,853Accrued
                      expense
                  
                  
                  135,529
                  
                  
                  87,084
                  
                  
                  1,838,402Total
                      adjustments
                  
                  
                  1,503,561
                  
                  
                  70,072
                  
                  
                  9,733,042Net
                      cash used in operating activities
                  
                  
                  (292,883
                  )
                  
                  (162,176
                  )
                  
                  (9,363,550
                  )**CASH
                      FLOWS FROM INVESTING ACTIVITIES**Purchase
                      of patents
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (154,061
                  )Purchase
                      of equipment
                  
                  
                  (26,666
                  )
                  
                  -
                  
                  
                  (434,612
                  )Net
                      cash used in investing activities
                  
                  
                  (26,666
                  )
                  
                  -
                  
                  
                  (588,673
                  )**CASH
                      FLOWS FROM FINANCING ACTIVITIES:**Receipts
                      from (payments to) note payable
                  
                  
                  (5,000
                  )
                  
                  622,500
                  
                  
                  2,313,433Receipts
                      from (payment to) notes payble under equity line of
                      credit
                  
                  
                  (27,336
                  )
                  
                  (75,000
                  )
                  
                  428,664Payment
                      of notes to officers
                  
                  
                  (19,260
                  )
                  
                  (18,800
                  )
                  
                  (218,502
                  )Issuance
                      of common stock for cash
                  
                  
                  -
                  
                  
                  -
                  
                  
                  7,376,094Receipt
                      of cash for stock to be issued
                  
                  
                  -
                  
                  
                  -
                  
                  
                  53,900Net
                      cash provided by (used in) financing activities
                  
                  
                  (51,596
                  )
                  
                  528,700
                  
                  
                  9,953,589Net
                      increase (decrease) in cash & cash equivalents
                  
                  
                  (371,145
                  )
                  
                  366,524
                  
                  
                  1,366**CASH
                      & CASH EQUIVALENTS, BEGINNING OF PERIOD**
                  
                  
                  372,511
                  
                  
                  4,544
                  
                  
                  -**CASH
                      & CASH EQUIVALENTS, END OF PERIOD**
                  
                  $
                  1,366
                  
                  $
                  371,068
                  
                  $
                  1,366**SUPPLEMENTAL
                      CASH FLOW INFORMATION:****CASH
                      PAID FOR:**Interest
                  
                  $
                  -
                  
                  $
                  -Income
                      taxes
                  
                  $
                  -
                  
                  $
                  -
  The
          accompanying notes form an integral part of these unaudited financial
          statements




5




SINOIX
          CORPORATION
 NOTES
          TO
          FINANCIAL STATEMENTS
 (Unaudited)






**NOTE 1.**
            **ORGANIZATION AND DESCRIPTION
              OF
              BUSINESS**




Sionix
      Corporation (the "Company") was incorporated in Utah in 1985. The Company was
      formed to design, develop, and market automatic water filtration systems
      primarily for small water districts.





The
      Company reincorporated in Nevada effective July 1, 2003 pursuant to an Agreement
      and Plan of Merger between Sionix Corporation, a Utah corporation ("Sionix
      Utah") and its wholly-owned Nevada subsidiary, Sionix Corporation ("Sionix
      Nevada"). Under the merger agreement, Sionix Utah merged with and into Sionix
      Nevada, and each share of Sionix Utah’s common stock was automatically converted
      into one share of common stock, par value $0.001 per share, of Sionix Nevada.
      The merger was effected by the filing of Articles of Merger, along with the
      Agreement and Plan of Merger, with the Secretary of State of
      Nevada.





The
      Company is a development stage company as defined in Statement of Financial
      Accounting Standards (“SFAS”) No. 7, “Accounting and Reporting by Development
      Stage Enterprises.” The Company is in the development stage and its efforts have
      been principally devoted to research and development, organizational activities,
      and raising capital. All losses accumulated since inception have been considered
      as part of the Company’s development stage activities.




**NOTE 2.**
            **SUMMARY OF SIGNIFICANT ACCOUNTING
              POLICIES**




BASIS
      OF
      PRESENTATION




The
      unaudited financial statements have been prepared by the Company, pursuant
      to
      the rules and regulations of the Securities and Exchange Commission. The
      information furnished in these financial statements reflects all adjustments
      (consisting of normal recurring accruals and adjustments) which are, in the
      opinion of management, necessary to fairly present the operating results for
      the
      respective periods. Certain information and footnote disclosures normally
      present in annual financial statements prepared in accordance with accounting
      principles generally accepted in the United States of America have been omitted
      pursuant to such rules and regulations.The
      results of the three month period ended December 31, 2007 are not necessarily
      indicative of the results to be expected for the full year ending September
      30,
      2008 and should be read in conjunction with the audited financial statements
      for
      the year ended September 30, 2007.




REVENUE
      RECOGNITION




Although
      the Company has yet to generate sales, it plans to follow the guidance provided
      by SAB 104 for recognition of revenues. The Company does not plan to recognize
      revenue unless there is persuasive evidence of an arrangement, title and risk
      of
      loss has passed to the customer, delivery has occurred or the services have
      been
      rendered, the sales price is fixed or determinable and collection of the related
      receivable is reasonably assured. In general, the Company plans to require
      a
      deposit from a customer before a unit is fabricated and shipped. It is the
      Company's policy to require an arrangement with its customers, either in the
      form of a written contract or purchase order containing all of the terms and
      conditions governing the arrangement, prior to the recognition of revenue.
      Title
      and risk of loss will generally pass to the customer at the time of delivery
      of
      the product to a common carrier. At the time of the transaction,
      the Company will assess whether the sale price is fixed or determinable and
      whether or not collection is reasonably assured. If the sales price is not
      deemed to be fixed or determinable, revenue will be recognized as the amounts
      become due from the customer. The Company does not plan to offer a right of
      return on its products and the products will generally not be subject to
      customer acceptance rights. The Company plans to assess collectibility based
      on
      a number of factors, including past transaction and collection history with
      a
      customer and the creditworthiness of the customer. The Company plans to perform
      ongoing credit evaluations of its customers' financial condition. If the Company
      determines that collectibility of the sales price is not reasonably assured,
      revenue recognition will be deferred until such time as collection becomes
      reasonably assured, which is generally upon receipt of payment from the
      customer. The Company plans to include shipping and handling costs in revenue
      and cost of sales.




6




**NOTE 2.**
            **SUMMARY OF SIGNIFICANT ACCOUNTING
              POLICIES (continued)**





SUPPORT
      SERVICES




The
      Company plans to provide support services to customers primarily through service
      contracts, and it will recognize support service revenue ratably over the term
      of the service contract or as services are rendered.




WARRANTIES




The
      Company's products are generally subject to warranty, and related costs will
      be
      provided for in cost of sales when revenue is recognized. Once the Company
      has a
      history of sales, the Company's warranty obligation will be based upon
      historical product failure rates and costs incurred in correcting a product
      failure. If actual product failure rates or the costs associated with fixing
      failures differ from historical rates, adjustments to the warranty liability
      may
      be required in the period in which determined.




ALLOWANCE
      FOR DOUBTFUL ACCOUNTS




The
      Company will evaluate the adequacy of its allowance for doubtful accounts on
      an
      ongoing basis through detailed reviews of its accounts and notes receivables.
      Estimates will be used in determining the Company's allowance for doubtful
      accounts and will be based on historical collection experience, trends including
      prevailing economic conditions and adverse events that may affect a customer's
      ability to repay, aging of accounts and notes receivable by category, and other
      factors such as the financial condition of customers. This evaluation is
      inherently subjective because estimates may be revised in the future as more
      information becomes available about outstanding accounts.




INVENTORY
      VALUATION




Inventories
      will be stated at the lower of cost or market, with costs generally determined
      on a first-in first-out basis. We plan to utilize both specific product
      identification and historical product demand as the basis for determining excess
      or obsolete inventory reserve. Changes in market
      conditions, lower than expected customer demand or changes in technology or
      features could result in additional obsolete inventory that is not saleable
      and
      could require additional inventory reserve provisions.




7


**SIONIX
          CORPORATION**
 **NOTES
          TO FINANCIAL STATEMENTS**
 **(UNAUDITED)**




**NOTE 2.**
            **SUMMARY
              OF SIGNIFICANT ACCOUNTING POLICIES
              (continued)**




GOODWILL
      AND OTHER INTANGIBLES




Goodwill
      and intangible assets with indefinite lives will be tested annually for
      impairment in accordance with the provisions of Financial Accounting Standards
      Board Statement No. 142 "Goodwill and Other Intangible Assets" (FAS 142). We
      will use our judgment in assessing whether assets may have become impaired
      between annual impairment tests. We perform our annual test for indicators
      of
      goodwill and non-amortizable intangible assets impairment in the fourth quarter
      of our fiscal year or sooner if indicators of impairment exist.




LEGAL
      CONTINGENCIES




From
      time
      to time we are a defendant in litigation. As required by Financial Accounting
      Standards Board Statement No. 5 "Accounting for Contingencies" (FAS 5), we
      determine whether an estimated loss from a loss contingency should be accrued
      by
      assessing whether a loss is deemed probable and the loss amount can be
      reasonably estimated, net of any applicable insurance proceeds. Estimates of
      potential outcomes of these contingencies are developed in consultation with
      outside counsel. While this assessment is based upon all available information,
      litigation is inherently uncertain and the actual liability to fully resolve
      this litigation cannot be predicted with any assurance of accuracy. Final
      settlement of these matters could possibly result in significant effects on
      our
      results of operations, cash flows and financial position.




STOCK-BASED
      COMPENSATION





Effective
      October 1, 2006, the Company adopted Statement of Financial Accounting
      Standards (SFAS) No. 123-R, “Share-Based Payment”   (“SFAS 123-R”),
      which requires the measurement and recognition of compensation expense for
      all
      share-based payment awards made to employees and directors, including stock
      options, to be based on their fair values. SFAS 123-R supersedes Accounting
      Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”
(“APB 25”), which the Company previously followed in accounting for stock-based
      awards. In March 2005, the SEC issued Staff Accounting Bulletin No. 107
      (SAB 107) to provide guidance on SFAS 123-R. The Company has applied SAB 107
      in
      its adoption of SFAS 123-R.




8




**SIONIX
        CORPORATION**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **(UNAUDITED)**
  **NOTE 2.**
              **SUMMARY OF SIGNIFICANT ACCOUNTING
                POLICIES (continued)**


NET
      LOSS
      PER SHARE




Net
      loss
      per share is calculated in accordance with Statement of Financial Accounting
      Standards No. 128, Earnings Per Share (“SFAS 128”). Basic net loss per
      share is based upon the weighted average number of common shares outstanding.
      Diluted net loss per share is based on the assumption that all dilutive
      convertible shares and stock options were converted or exercised. Dilution
      is
      computed by applying the treasury stock method. Under this method, options
      and
      warrants are assumed to be exercised at the beginning of the period (or at
      the
      time of issuance, if later), and as if funds obtained thereby were used to
      purchase common stock at the average market price during the
      period.




ESTIMATES




The
      preparation of financial statements requires management to make estimates and
      assumptions that affect the reported amounts of assets and liabilities and
      disclosure of contingent assets and liabilities at the date of the financial
      statements and the reported amounts of revenue and expenses during the reporting
      period. Actual results could differ from those estimates





ADVERTISING





The
      cost
      of advertising is expensed as incurred. Total advertising costs were $2,474
      and
      $1,410 for the three month periods ended December 31, 2007 and 2006,
      respectively.




RECLASSIFICATION





For
      comparative purposes, the prior period’s financial statements have been
      reclassified to conform to report classifications of the current
      period.




RECENTLY
      ISSUED ACCOUNTING PRONOUNCEMENTS





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value
      Measurements.” This statement clarifies the definition of fair value,
      establishes a framework for measuring fair value and expands the disclosures
      on
      fair value measurements. SFAS No. 157 is effective for fiscal years
      beginning after November 15, 2007. Company
      management is currently evaluating the effect of this pronouncement on its
      financial statements.





In
      February 2007, FASB issued FASB Statement No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities”. FAS 159 is effective for fiscal
      years beginning after November 15, 2007. Early adoption is permitted subject
      to
      specific requirements outlined in the new Statement. Therefore, calendar-year
      companies may be able to adopt FAS 159 for their first quarter 2007 financial
      statements. The new Statement allows entities to choose, at specified election
      dates, to measure eligible financial assets and liabilities at fair value that
      are not otherwise required to be measured at fair value. If a company elects
      the
      fair value option for an eligible item, changes in that item's fair value in
      subsequent reporting periods must be recognized in current earnings. FAS 159
      also establishes presentation and disclosure requirements designed to draw
      comparison between entities that elect different measurement attributes for
      similar assets and liabilities. Management is currently evaluating the effect
      of
      this pronouncement on the Company's financial statements.




9


**SIONIX
          CORPORATION**
 **NOTES
          TO FINANCIAL STATEMENTS**
 **(UNAUDITED)**




**NOTE 2.**
            **SUMMARY OF SIGNIFICANT ACCOUNTING
              POLICIES (continued)**




In
      December 2007, the FASB issued SFAS No. 141 (Revised 2007), “Business
      Combinations”. The objective of this statement will significantly change the
      accounting for business combinations. Under Statement 141R, an acquiring entity
      will be required to recognize all the assets acquired and liabilities assumed
      in
      a transaction at the acquisition-date fair value with limited exceptions.
      Statement 141 applies prospectively to business combinations for which the
      acquisition date is on or after the beginning of the first annual reporting
      period beginning on or after December 15, 2008. The Company does not expect
      the
      adoption of SFAS No. 141R to have a material impact on the Company's financial
      statements.





In
      December 2007, FASB issued FASB Statement No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements—an amendment of ARB No. 51”. This Statement
      applies to all entities that prepare consolidated financial statements, except
      not-for-profit organizations, but will affect only those entities that have
      an
      outstanding non-controlling interest in one or more subsidiaries or that
      deconsolidate a subsidiary. Not-for-profit organizations should continue to
      apply the guidance in Accounting
      Research Bulletin No. 51, “Consolidated Financial Statements”, before the
      amendments made by this Statement, and any other applicable standards, until
      the
      Board issues interpretative guidance. This Statement is effective for fiscal
      years, and interim periods within those fiscal years, beginning on or after
      December 15, 2008 (that is, January 1, 2009, for entities with calendar
      year-ends). Earlier adoption is prohibited. The effective date of this Statement
      is the same as that of the related Statement 141(R). This Statement shall be
      applied prospectively as of the beginning of the fiscal year in which this
      Statement is initially applied, except for the presentation and disclosure
      requirements. The presentation and disclosure requirements shall be applied
      retrospectively for all periods presented. This statement has no effect on
      the
      financial statements as the Company does not have any outstanding
      non-controlling interest.




**NOTE 3.**
            **PROPERTY AND
              EQUIPMENT**




Property
      and equipment consist of the following as of December 31, 2007.





Equipment
                and machinery
            
            $
            213,166Furniture
                and fixtures
            
            
            24,594Leasehold
                improvements
            
            
            26,666264,426Less
                accumulated depreciation
            
            
            (205,083
            )$
            59,343





Depreciation
      expenses for the three month periods ended December 31, 2007 and 2006 were
      $8,157 and $7,793, respectively.




10




**SIONIX
        CORPORATION**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **(UNAUDITED)**
  **NOTE 4.**
                **ACCRUED
                  EXPENSES**


Accrued
      expenses were comprised of the following at December 31, 2007:





Payroll
                taxes
            
            $
            202,496Accrued
                salaries
            
            
            1,236,853Interest
                payable
            
            
            183,156Other
                accruals
            
            
            154,572Total
            
            $
            1,777,077




**NOTE 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 December 31, 2007, notes
      payable amounted to $124,000. The Company recorded $3,239 of interest expense
      on
      those notes during the three month period ended December 31, 2007.




**NOTE 6.**
            **CONVERTIBLE
              NOTES**




BRIDGE
      NOTES:





During
      the year ended September 30, 2007, the Company entered into various debenture
      agreements (the “Bridge Notes”) with several investors. Under the terms of the
      agreements, the Bridge Notes bear interest at the rate of 10% per annum. The
      Bridge Notes will automatically mature and the entire outstanding principal
      amount, together with all unpaid and accrued interest, shall become due and
      payable after the earlier of (i) the eighteen (18) month anniversary of the
      date
      of issuance (ii) an event of default or (iii) the closing of any equity related
      financing by the Company in which the gross proceeds to the Company are at
      least
      $2,500,000, unless, prior to such time, the Bridge Notes have been converted
      into shares of the Company’s common stock.





In
      the
      first two closings of the Bridge Notes which took place in the last quarter
      of
      2006 and first quarter of 2007 the Company received $750,000. The Bridge Notes
      are convertible into shares of the Company’s common stock at $0.05 per share or
      shares of any equity security issued by the Company at a conversion price equal
      to the price at which such security is sold to any other party.





The
      conversion price is adjustable as per the terms of the agreement for the
      subsequent issuances of equity securities at a price different than the
      conversion price.





The
      Company was required to file a registration statement covering the underlying
      shares within 90 days from the closing of the offering. If the registration
      statement was not declared effective within 180 days after the closing, the
      conversion price is to be reduced by $0.0025 per share for each 30 day period
      that the effectiveness of the registration statement is delayed but in no case
      is the conversion price to be reduced below $0.04 per share. The Company filed
      the registration statement on November 14, 2007. The registration statement
      has
      not yet been declared effective.




11


**SIONIX
        CORPORATION**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **(UNAUDITED)**




**NOTE 6.**
            **CONVERTIBLE NOTES
              (continued)**




The
      conversion feature of the Bridge Notes is recorded on the effective conversion
      price as per the terms of the issue. The Company did not record any derivative
      liability on the Bridge Notes as the maximum number of shares to be issued
      if
      converted is determinable and the Company had sufficient authorized capital
      to
      issue shares if converted.





In
      the
      second quarter of the 2007 fiscal year, the Company sold other notes pursuant
      to
      which it received proceeds of $86,000. These notes are convertible into shares
      of the Company’s common stock at $0.01 per share or shares of any equity
      security issued by the Company at a conversion price equal to the price at
      which
      such security is sold to any other party. There are no registration rights
      associated with these notes. The notes are convertible into shares at a fixed
      rate of $0.01 per share.





During
      the year ended September 30, 2007 the Company had received $836,000 under these
      financings. Calico Capital Management, LLC acted as an agent for the Company
      in
      arranging the above transactions.





No
      warrants have been issued as part of Bridge Notes or the notes issued in the
      second quarter of the 2007 fiscal year.





CONVERTIBLE
      NOTE 1:





On
      July
      18, 2007 the Company completed an offering of $1,025,000 of Subordinated
      Convertible Debentures to a group of institutional and accredited investors.
      The
      Subordinated Convertible Debentures are convertible into shares of the Company’s
      common stock at an initial conversion rate of $0.22 per share, subject to
      anti-dilution adjustments. The notes mature on various dates up to July 2008
      and
      bear interest at the rate of 8% per annum.





Under
      the
      terms of the Registration Rights Agreement, the Company is required to file
      a
      registration statement under the Securities Act of 1933 in order to register
      the
      resale of the shares of common stock issuable upon conversion of the
      Subordinated Convertible Debentures and the Warrant Shares (collectively, the
      "Registrable Securities"). If the Company does not file a registration statement
      with respect to the Registrable Securities within forty-five days following
      the
      closing of the Offering, or if the Registration Statement is not declared
      effective by the Securities and Exchange Commission within 90 days, then Sionix
      must pay to each purchaser damages equal to 1.5% of the purchase price paid
      by
      the purchaser for its Subordinated Convertible Debentures for each 30 days
      that
      transpires after these deadlines. The amount of the aggregate damages payable
      by
      the Company is limited to 15% of the purchase price. The Company had until
      August 31, 2007 to file the registration statement. The Company filed the
      registration statement on November 14, 2007 after the expiration of 45 days
      and
      recorded $61,500 as liquidated damages as at December 31, 2007 (Sep 30, 2007:
      $15,375). No derivative liability is recorded as the amount of liquidated damage
      is fixed with a maximum ceiling.





Southridge
      Investment Group LLC, Ridgefield, Connecticut (“Southridge”) acted as agent for
      the Company in arranging the above transaction. Southridge also received
      warrants to purchase 465,909 shares of the Company’s common stock on the same
      terms and conditions as the warrants issued to the purchasers. The Company
      recorded placement fees as an expense. The grant date fair value of the warrants
      amounted to $133,992 which was calculated using the Black-Scholes option pricing
      model, using the following assumptions: risk free rate of return of 6%,
      volatility




12


**SIONIX
        CORPORATION**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **(UNAUDITED)**




**NOTE 6.**
            **CONVERTIBLE NOTES
              (continued)**




in
      the
      range of 122.67% and 195.97%, and dividend yield of 0% and expected life of
      five
      years. The Company recorded $33,773 as interest expense related to these
      warrants for the period ended December 31, 2007.





As
      part
      of the above offering the Company issued 1,693,179 warrants to purchasers as
      of
      December 31, 2007. The grant date fair value of the warrants amounted to
      $307,403 which was calculated using the Black-Scholes option pricing model,
      using the following assumptions: risk free rate of return of 6 % volatility
      of
      122.67% and 195.97%, and dividend yield of 0% and expected life of five years.
      The Company recorded $77,851 as interest expense related to these warrants
      for
      the period ended December 31, 2007.





As
      of
      December 31, 2007, the Company recorded a beneficial conversion feature expense
      and warrant amortization of $309,479 and an unamortized beneficial conversion
      feature amount of $474,188 and unamortized warrant discount of $156,995 showing
      as net of the note payable amount of $1,229,817 on convertible notes. The
      Company also recorded an interest expense of $41,864 on the notes.




**NOTE 7.**
            **STOCKHOLDERS’
              EQUITY**




COMMON
      STOCK





The
      Company has 150,000,000 authorized shares with $0.001 par value. As of December
      31, 2007, the Company had 107,117,101 shares issued and 106,635,201 shares
      outstanding.





The
      Company did not issue shares of common stock during the three months ended
      December 31, 2007.





STOCK
      OPTIONS





In
      October 2000, the Company entered into amendments to the employment agreements
      of each of the executive officers eliminating the provisions of stock bonuses.
      In lieu of the bonus provision, the Company adopted the 2001 Executive Officers
      Stock Option Plan. The Company reserved 7,576,680 shares for issuance under
      the
      plan.





On
      December 19, 2007, the Company entered into a one year Employment Agreement
      with
      Richard H. Papalian pursuant to which Mr. Papalian has been appointed as the
      Company’s Chief Executive Officer. In terms of compensation, the Company granted
      Mr. Papalian a five year option to purchase up to 8,539,312 shares of the
      Company’s common stock at an exercise price of $0.25 per share. As per the terms
      of the stock option agreements, initially the options shall not be exercisable
      as to 340,000 shares of common stock. These options were issued outside of
      the
      2001 Executive Officers Stock Option Plan.





On
      December 19, 2007, the Company entered into a one year Consulting Agreement
      with
      Mark Maron pursuant to which Mr. Maron has been appointed as Special Adviser
      to
      the Company. In terms of compensation, the Company granted Mr. Maron a five
      year
      option to purchase up to 8,539,312 shares of the Company’s common stock at an
      exercise price of $0.25 per. As per the terms of the stock option agreements,
      initially the options shall not be exercisable as to 340,000 shares of common
      stock. These options were issued outside of the 2001 Executive Officers Stock
      Option Plan.





During
      the three month period ended December 31, 2007 the Company recorded $829,818
      as
      stock based compensation expense relating to the options granted.




13




**SIONIX
        CORPORATION**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **(UNAUDITED)**
  **NOTE 7.**
                **STOCKHOLDERS’ EQUITY
                  (continued)**


Options
      outstanding:


Weighted
                  average
                    exercise
                  price
                
                
                Number
                    of
                  outstanding
                  options
                
                
                Aggregate
                  intrinsic
                    valueOutstanding
                    as of September 30, 2007
                
                $
                0.15
                
                
                7,343,032
                
                $
                -Granted
                
                
                0.25
                
                
                17,078,624ForfeitedExercisedOutstanding
                    as of December 31, 2007
                
                $
                0.22
                
                
                24,421,656
                
                $
                660,873




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





Exercise
                Price
            Stock
                Options
              Outstanding
            Stock
                Options
              Exercisable
            Weighted-
              Average
              Remaining
              Contractual
              Life
            Weighted-
              Average
              ExercisePrice
              of
                Options
              Outstanding
            Weighted-
              Average
              Exercise
                Price
              of
                Options
              Exercisable$0.15
            7,343,032
            7,343,032
            2.3
                years
            $0.15
            $0.15$0.25
            17,078624
            4,919,587
            4.9
                years
            $0.25
            $0.25





The
      fair
      value of the options granted in 2008 was calculated using the Black-Scholes
      option valuation model with the following assumptions: risk free rate of return
      of 2.875%, volatility of 116.23%, and dividend yield of 0% and expected life
      of
      five years. The grant date fair value of these options is $0.19 per option
      granted.




14




**SIONIX
        CORPORATION**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **(UNAUDITED)**
  **NOTE 7.**
              **STOCKHOLDERS’ EQUITY
                (continued)**


STOCK
      WARRANTS





Warrants
      outstanding:




Aggregate
              Intrinsic
                Value
            
            
            Number
                of
              WarrantsOutstanding
                at September 30, 2007
            
            $
            --
            
            
            -Granted
            
            
            
            
            
            2,159,088Exercised
            
            
            
            
            
            -Cancelled
            
            
            
            
            
            -Outstanding
                at December 31, 2007
            
            $
            -
            
            
            2,159,088




Exercise
                Price
            
            
            Number
            
            
            Weighted
              Average
              Remaining
              Contractual
              Life
            
            
            Weighted
              Average
              Exercise
                Price$0.50
            
            
            2,159,088
            
            
            4.6
                years
            
            $
            0.50




All
      outstanding warrants were exercisable as of December 31, 2007.




**NOTE 8.**
              **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 December 31, 2007, the Company had incurred
      cumulative losses of $19,096,592 including a current loss of $1,796,444. 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.




**NOTE 9**
            **COMMITMENT**




On
      February 19, 2007 the Company entered into a two year lease agreement beginning
      March 1, 2007. According to the terms of the agreement, at the beginning of
      each
      lease year, the then most recently published Consumer Price Index (CPI) figure
      shall be determined and the monthly rental payable for the succeeding lease
      year
      will be calculated





On
      August
      30, 2007 the Company entered into a five year lease agreement beginning October
      1, 2007. According to the terms of the agreement the monthly rent increases
      on
      an annual basis from $35,925 in year one to $40,434 in the fifth year of the
      lease.




15




**SIONIX
        CORPORATION**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **(UNAUDITED)**


**NOTE 9**
            **COMMITMENT****(continued)**




The
      future aggregate minimum annual lease payments arising from these lease
      agreements are as follows.




During
                the year ended December 31,2008
            
            $
            432,5252009
            
            
            444,0362010
            
            
            457,3562011
            
            
            471,0722012
            
            $
            404,340Thereafter
            
            
            -Total
            
            
            2,218,529





Total
      rent expense under these operating lease was approximately $67,800 for the
      quarter ended December 31, 2007.





**NOTE
      10.**  **SUBSEQUENT
      EVENT**





During
      February 2008, the Company has approved the Advisory Board compensation for
      past
      services performed by the outside advisors. According to the plan, each advisor
      will be compensated $5,000 per month for a total of 28.8 months. The total
      compensation of $576,000 is approved by the Board of Directors. The compensation
      is convertible into shares of the Company’s common stock at the rate of $0.05
      per share.




16


FORWARD-LOOKING
      STATEMENTS





This
      Quarterly Report on Form 10-QSB filed by Sionix Corporation contains
      forward-looking statements. These are statements regarding financial and
      operating performance and results and other statements that are not historical
      facts. The words “expect,” “project,” “estimate,” “believe,” “anticipate,”
“intend,” “plan,” “forecast,” and similar expressions are intended to identify
      forward-looking statements. These statements, and any other statements that
      are
      not historical facts, are forward looking statements. Certain important risks
      could cause results to differ materially from those anticipated by some of
      the
      forward-looking statements. Some, but not all, of these risks include, among
      other things:




·
            whether
                we will be able to find financing to continue our
                operations;





·
            whether
                there are changes in regulatory requirements that adversely affect
                our
                business;





·
            the
                ability of management to execute its plans to meet its
                goals;





·
            general
                economic conditions, whether nationally or in the regional and local
                markets in which we operate, which may be less favorable than
                expected;





·
            the
                ability to retain key members of management and key employees;
                and





·
            other
                uncertainties, all of which are difficult to predict and many of
                which are
                beyond our control.





We
      do not
      intend to update forward-looking statements. You should refer to and carefully
      review the information in the documents we file with the Securities and Exchange
      Commission.




17




**ITEM 2.**
            **MANAGEMENT'S DISCUSSION AND
              ANALYSIS
              OR PLAN OF****OPERATION**





DEVELOPMENT
      STAGE COMPANY. Sionix
      Corporation (referred to as “the Company”, “we”, “us” or “our”) 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
      designs and develops turn-key stand-alone water treatment systems for
      municipalities (both potable and wastewater), industry (both make-up water
      and
      wastewater), emergency response, military and small residential communities.
      To
      date, the Company’s efforts have been principally devoted to research and
      development, organizational activities, and raising capital. Development of
      our
      ELIXIR water treatment system was completed in 2002. We are currently engaged
      in
      testing the product, as discussed below. We have earned no revenues from sales
      of our product and we do not expect our product to be available for sale during
      the next few months. Because we earn no revenues, our operations are, and have
      been in the past, dependent on our ability to borrow money or to raise capital
      by selling our equity or debt securities.





Our
      lack
      of operating capital has slowed the pace of the development and testing of
      our
      product. However, during the 2007 fiscal year we began raising working capital
      through sales of debt securities, which has allowed us to complete installation
      of the ELIXIR water treatment system at the Villa Park Dam, Villa Park,
      California.





Our
      plan
      for the next 12 months is to continue to raise capital, interview and hire
      an
      independent consulting firm to verify equipment production standards and test
      data, and continue the introduction of the ELIXIR water treatment system to
      the
      market place which we anticipate will result in initial sales in the near
      future. There is no guarantee, however, that we will be able to accomplish
      these
      goals or that the introduction of our water treatment system will produce
      revenues for us. If our production standards and test data are confirmed by
      the
      independent consultants and if we are able to raise sufficient capital then
      the
      Company plans to hire competent production support and administrative staff
      to
      effectively run the Company.





If
      we are
      not able to raise funds as and when we need them, we may be required to severely
      curtail, or even to cease, our operations. ****





MANAGEMENT.
      On December 19, 2007, the Company entered into a one year Employment Agreement
      with Richard H. Papalian and a one year Consulting Agreement with Mark Maron
      pursuant to which Mr. Papalian has been appointed as the Company’s Chief
      Executive Officer and Mr. Maron has been appointed as Special Adviser to the
      Company. As compensation for these services, the Company granted each person
      a
      five year option to purchase up to 8,539,312 shares of the Company’s common
      stock at an exercise price of $0.25 per share which represents 5% of the
      currently outstanding shares of the Company’s common stock on a fully diluted
      basis.





PLAN
      OF
      OPERATION. As stated above, during the next twelve months we plan to
      continue to raise capital, interview and hire an independent consulting firm
      to
      verify equipment production standards and test data and continue the
      introduction of the ELIXIR water treatment system to the market place. If our
      production standards and test data are confirmed by the independent consultants
      and if we are able to raise sufficient capital, then we intend to hire competent
      production support and administrative staff. 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 continues
      to
      operate successfully, we believe we will receive orders for additional
      units.




18




NEW
      CORPORATE FACILITIES. Effective November 1, 2007, the Company leased a 60,000
      square foot research and development, production, engineering and administrative
      office facility in Garden Grove, California. As soon as we obtain additional
      funding we will be adding a substantial number of additional employees. We
      anticipate that all of our capital needs will need to be funded by equity or
      debt financing.




ENGAGEMENT
      OF THIRD PARTY TECHNICAL CONSULTANTS. The Company is in the process of
      interviewing third party consulting firms to assist in verifying operational
      efficiencies of the system and to establish testing protocols.




SIGNIFICANT
      ACCOUNTING POLICIES AND **** ESTIMATES.




The
      preparation of our consolidated financial statements in accordance with U.S.
      GAAP requires management to make judgments, assumptions and estimates that
      affect the amounts reported. A critical accounting estimate is an assumption
      about highly uncertain matters and could have a material effect on the
      consolidated financial statements if another, also reasonable, amount were
      used,
      or, a change in the estimate is reasonably likely from period to period. We
      base
      our assumptions on historical experience and on other estimates that we believe
      are reasonable under the circumstances. Actual results could differ
      significantly from these estimates. There were no changes in accounting policies
      or significant changes in accounting estimates during first quarter of fiscal
      2008 ended December 31, 2007. Management believes the following critical
      accounting policies reflect its more significant estimates and assumptions.




*Revenue
      Recognition.* Although
      the Company has yet to generate sales, it plans to follow the guidance provided
      by SAB 104 for recognition of revenues. The Company does not plan to recognize
      revenue unless there is persuasive evidence of an arrangement, title and risk
      of
      loss has passed to the customer, delivery has occurred or the services have
      been
      rendered, the sales price is fixed or determinable and collection of the related
      receivable is reasonably assured. In general, the Company plans to require
      a
      deposit from a customer before a unit is fabricated and shipped. It is the
      Company's policy to require an arrangement with its customers, either in the
      form of a written contract or purchase order containing all of the terms and
      conditions governing the arrangement, prior to the recognition of revenue.
      Title
      and risk of loss will generally pass to the customer at the time of delivery
      of
      the product to a common carrier. At the time of the transaction, the Company
      will assess whether the sale price is fixed or determinable and whether or
      not
      collection is reasonably assured. If the sales price is not deemed to be fixed
      or determinable, revenue will be recognized as the amounts become due from
      the
      customer. The Company does not plan to offer a right of return on its products
      and the products will generally not be subject to customer acceptance rights.
      The Company plans to assess collectibility based on a number of factors,
      including past transaction and collection history with a customer and the
      creditworthiness of the customer. The Company plans to perform ongoing credit
      evaluations of its customers' financial condition. If the Company determines
      that collectibility of the sales price is not reasonably assured, revenue
      recognition will be deferred until such time as collection becomes reasonably
      assured, which is generally upon receipt of payment from the customer. The
      Company plans to include shipping and handling costs in revenue and cost of
      sales.




19




*Support
      Services.* The
      Company plans to provide support services to customers primarily through service
      contracts, and it will recognize support service revenue ratably over the term
      of the service contract or as services are rendered.




*Warranties.* The
      Company's products are generally subject to warranty, and related costs will
      be
      provided for in cost of sales when revenue is recognized. Once the Company
      has a
      history of sales, the Company's warranty obligation will be based upon
      historical product failure rates and costs incurred in correcting a product
      failure. If actual product failure rates or the costs associated with fixing
      failures differ from historical rates, adjustments to the warranty liability
      may
      be required in the period in which determined.




*Allowance
      for Doubtful Accounts.* The
      Company will evaluate the adequacy of its allowance for doubtful accounts on
      an
      ongoing basis through detailed reviews of its accounts and notes receivables.
      Estimates will be used in determining the Company's allowance for doubtful
      accounts and will be based on historical collection experience, trends including
      prevailing economic conditions and adverse events that may affect a customer's
      ability to repay, aging of accounts and notes receivable by category, and other
      factors such as the financial condition of customers. This evaluation is
      inherently subjective because estimates may be revised in the future as more
      information becomes available about outstanding accounts.




*Inventory
      Valuation.* Inventories will be stated at the lower of cost or market, with costs generally
      determined on a first-in first-out basis. We plan to utilize both specific
      product identification and historical product demand as the basis for
      determining excess or obsolete inventory reserve. Changes in market conditions,
      lower than expected customer demand or changes in technology or features could
      result in additional obsolete inventory that is not saleable and could require
      additional inventory reserve provisions.




*Goodwill
      and other Intangibles.* Goodwill
      and intangible assets with indefinite lives will be tested annually for
      impairment in accordance with the provisions of Financial Accounting Standards
      Board Statement No. 142 "Goodwill and Other Intangible Assets" (FAS 142). We
      will use our judgment in assessing whether assets may have become impaired
      between annual impairment tests. We perform our annual test for indicators
      of
      goodwill and non-amortizable intangible assets impairment in the fourth quarter
      of our fiscal year or sooner if indicators of impairment exist.




*Legal
      Contingencies.* From
      time to time we are a defendant in litigation. As required by Financial
      Accounting Standards Board Statement No. 5 "Accounting for Contingencies" (FAS
      5), we determine whether an estimated loss from a loss contingency should be
      accrued by assessing whether a loss is deemed probable and the loss amount
      can
      be reasonably estimated, net of any applicable insurance proceeds. Estimates
      of
      potential outcomes of these contingencies are developed in consultation with
      outside counsel. While this assessment is based upon all available information,
      litigation is inherently uncertain and the actual liability to fully resolve
      this litigation cannot be predicted with any assurance of accuracy. Final
      settlement of these matters could possibly result in significant effects on
      our
      results of operations, cash flows and financial position.




20




*Share
      Based Payments.* Effective October 1, 2006, the Company adopted Statement of Financial Accounting
      Standards (SFAS) No. 123-R, “Share-Based Payment” (“SFAS 123-R”), which requires
      the measurement and recognition of compensation expense for all share-based
      payment awards made to employees and directors, including stock options, to
      be
      based on their fair values. SFAS 123-R supersedes Accounting Principles Board
      Opinion No.25, “Accounting for Stock Issued to Employees” (“APB 25”), which the
      Company previously followed in accounting for stock-based awards. In March
      2005,
      the SEC issued Staff Accounting Bulletin No.107 (SAB 107) to provide guidance
      on
      SFAS 123-R. The Company has applied SAB 107 in its adoption of SFAS
      123-R.




OFF-BALANCE
      SHEET ARRANGEMENTS. We
      have
      no off-balance sheet arrangements, special purpose entities or financing
      partnerships.





CAPITAL
      EXPENDITURES. The Company currently has no commitments for capital
      expenditures.





MATERIAL
      TRENDS, EVENTS OR UNCERTAINTIES. Other
      than as discussed herein, the Company does not know of any material trends,
      events or uncertainties that may impact its operations in the
      future.




CONTRACTUAL
      OBLIGATIONS. The Company is committed under the following contractual
      obligations




**Contractual
                Obligations**
            
            
            **Payments
                Due By Period**Long-term
                debt obligations
            
            
            Total
            
            
            Less
                than 1 year
            
            
            1
                to 3 Years
            
            
            3
                to 5 Years
            
            
            Over
                5 YearsCapital
                lease obligationsOperating
                lease obligations
            
            
            2,218,529
            
            
            432,525
            
            
            910,920
            
            
            875,412Purchase
                obligationsOther
                long-term liabilities





RESULTS
      OF OPERATIONS (THREE MONTHS ENDED DECEMBER 31, 2007 COMPARED TO THREE MONTHS
      ENDED DECEMBER 31, 2006). We had minimal operations during the 2006 fiscal
      year
      due to a lack of working capital. During the 2007 fiscal year, we began to
      raise
      money for our operations by selling debentures. As a result of these offerings,
      we were able to resume our operating activities, finalize the beta unit and
      begin testing of the process.





Revenues
      for the three months ended December 31, 2007 and the three months ended December
      31, 2006 were zero, as the Company has not yet commenced the sale of its
      product. General and administrative expenses for the three months ended December
      31, 2007 totaled $1,367,677, an increase of $1,164,739 over the $202,938
      incurred in the corresponding period in 2006, due to the resumption of
      development and capital-raising activities and the hiring of Richard H. Papalian
      as the Company’s Chief Executive Office and Mark Maron as a Special Advisor.
      Interest expense increased to $188,625 during the three months ended December
      31, 2007 from $19,242 in the three months ended December 31, 2006, representing
      interest on the convertible debentures we issued during the quarter ended
      December 31, 2007.




As
      a
      result of these items, the loss for the three months ended December 31, 2007
      was
      $1,796,444, an increase of $1,564,196 over the loss of $232,248 for the
      corresponding period in the prior year.




21




LIQUIDITY
      AND CAPITAL RESOURCES. During the three months ended December 31,
      2007 ,
      net
      cash flows used in our operating activities were $292,883, as compared to
      $162,176 of net cash flows used in our operating activities during the three
      months ended December 31, 2006. This increase in cash flows used in operating
      activities is primarily attributable to the fact that our net loss for the
      three
      months ended December 31, 2007 included $1,173,071 in warrants granted in
      exchange for services and a beneficial conversion feature related to the sale
      of
      our convertible debentures as compared to $34,771 for non cash costs in the
      three months ended December 31, 2006. During the three months ended December
      31,
      2007 we used cash of $26,666 for the purchase of equipment, as compared to
      no
      use of cash for investing activities during the three months ended December
      31,
      2006. Net cash used in financing activities for the three months ended December
      31, 2007 included a payment of $5,000 toward a note payable, payments of $27,336
      toward notes payable under an equity line of credit, and payments totaling
      $19,206 to officers for loans made to us. On
      December 31, 2007, the Company had cash and cash equivalents of $1,366. The
      sole
      source of liquidity has been borrowings from affiliates and the sale of our
      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 anticipated cash
      flow from operations during the 2008 fiscal year, will be sufficient to finance
      the Company's operations. **** However,
      the Company has no commitments for financing or sales, 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 and, while there are anticipated sources
      of revenue, none of these sources have progressed to the stage where we can
      rely
      on any revenues.




As
      of
      December 31, 2007, the Company had an accumulated deficit of $19,096,592. 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 ongoing
      losses, lack of revenues from operations, and accumulated deficits, there is
      doubt about our ability to continue as a going concern.




**ITEM 3.**
            **CONTROLS AND PROCEDURES.**




At
      the
      end of the period covered by this report, the Company's management, including
      its Chief Executive Officer and Chief Financial Officer, conducted an evaluation
      of the effectiveness of the Company's disclosure controls and procedures. Based
      on this evaluation, the Chief Executive Officer and Chief Financial Officer
      have
      determined that such controls and procedures are effective to ensure that
      information relating to the Company required to be disclosed in reports that
      it
      files or submits under the Securities Exchange Act of 1934 is recorded,
      processed, summarized and reported within the time periods specified in the
      rules and forms of the Securities and Exchange Commission.




There
      have been no changes in the Company's internal controls over financial reporting
      that were identified during the evaluation that occurred during the Company's
      last fiscal quarter that have materially affected, or are reasonably likely
      to
      materially affect, the Company's internal control over financial reporting.




22





**PART
      II - OTHER INFORMATION**




**ITEM 1.**
            **LEGAL
              PROCEEDINGS**None**ITEM 2.**
            **UNREGISTERED SALES OF EQUITY
              SECURITIES AND USE OF PROCEEDS**




On
      December 19, 2007 we granted an option to Richard H. Papalian for the purchase
      of 8,539,312 shares of our common stock. The exercise price is $0.25 and the
      term of the option is five years. The right to purchase 2,561,794 shares of
      common stock vested on the date of grant. The right to purchase the remaining
      5,977,518 shares is subject to certain performance vesting conditions. The
      option was issued to Mr. Papalian in reliance on Section 4(2) of the Securities
      Act of 1933, as amended, inasmuch
      as the option was issued without any form of general solicitation or general
      advertising and the acquirer was an accredited investor and had access to
      information that registration of the security would have provided.





On
      December 19, 2007 we granted an option to Mark Maron for the purchase of
      8,539,312 shares of our ommon stock. The exercise price is $0.25 and the term
      of
      the option is five years. The right to purchase 2,561,794 shares of common
      stock
      vested on the date of grant. The right to purchase the remaining 5,977,518
      shares is subject to certain performance vesting conditions. The option was
      issued to Mr. Maron in reliance on Section 4(2) of the Securities Act of 1933,
      as amended, inasmuch
      as the option was issued without any form of general solicitation or general
      advertising and the acquirer was an accredited investor and had access to
      information that registration of the security would have provided.




**ITEM 3.**
            **DEFAULTS UPON SENIOR
              SECURITIES**





Under
      the
      terms of a Registration Rights Agreement executed in connection with an offering
      that closed on July 18, 2007, we were required to file a registration statement
      under the Securities Act of 1933 in order to register the resale of the shares
      of common stock issuable upon conversion of certain units it sold consisting
      of
      Subordinated Convertible Debentures and Warrants. The units had a value of
      $1,025,000. If we did not file a registration statement with respect to the
      these securities within 45 days following the closing of the offering, or if
      the
      registration statement was not declared effective by the Securities and Exchange
      Commission within 90 days of the closing, then we are required to pay to each
      purchaser damages equal to 1.5% of the purchase price paid by the purchaser
      for
      the Subordinated Convertible Debentures for each 30 days that transpires after
      these deadlines. The amount of the aggregate damages payable by us is limited
      to
      15% of the purchase price. We had until August 31, 2007 to file the registration
      statement. We filed the registration statement on November 14, 2007, incurring
      a
      penalty for 78 days which amounted to $38,437.50. The registration statement
      has
      not been declared effective as of the date of this report, therefore we have
      incurred an additional penalty for 85 days totaling $42,025 ****




**ITEM 4.**
            **SUBMISSION OF MATTERS TO A
              VOTE OF
              SECURITY HOLDERS**None.**ITEM 5.**
            **OTHER
              INFORMATION**None.




**ITEM 6.**
            **EXHIBITS**3.1
            Articles
                of Incorporation, as amended and restated (1)3.2
            Bylaws, as amended (1)10.1
            Employment Agreement dated December 19, 2007
                between the
                registrantand Richard H. Papalian
                (2)10.2
            Notice of Grant of Stock Option and Stock Option
                Agreement dated19, 2007 between the registrant
                and Richard H. Papalian (2)10.3
            Indemnification Agreement dated December 19,
                2007
                between theregistrant and Richard H. Papalian
                (2)10.4
            Consulting Agreement dated December 19, 2007
                between the
                registrantand Mark Maron (2)10.5
            Notice of Grant of Stock Option and
              Stock
              Option Agreement datedDecember
              19, 2007 between the registrant and Mark Maron (2)31.1
            Certification Pursuant to Rule 13a-14(a)
              and
              15d-14(a) (4)*31.2
            Certification Pursuant to Rule 13a-14(a)
              and
              15d-14(a) (4)*32
            Certification Pursuant to Section 1350 of Title
                18 of
                the United StatesCode*


_____________________________________


(1)
      Incorporated by reference from the Current Report on Form 8-K filed with the
      Securities and Exchange Commission on July 15, 2003.


(2)
      Incorporated by reference from the Current Report on Form 8-K filed with the
      Securities and Exchange Commission on December 20, 2007.


*Filed
      herewith.




23




**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.





Date:
      February 20, 2008




SIONIX
              CORPORATIONBy:
            /s/ Richard
              H. PapalianRichard
              H. Papalian, Chief Executive Officer




By:
            /s/
              Robert E. McCrayRobert E McCray, Chief Financial Officer
              and Principal Accounting Officer




24