<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   Form 10-QSB
                        [X] QUARTERLY REPORT PURSUANT TO
           SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
                FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1998

                          Commission File No. 2-95626-D

                               SIONIX CORPORATION
                             ----------------------
             (Exact name of registrant as specified in its charter)


                   Utah                             87-0428526
       ----------------------------        ------------------------------
       (State or other jurisdiction        (I.R.S. Employer incorporation
            of organization)                   or Identification No.)


                          7282 Jeronimo Road, Suite 108
        -----------------------------------------------------------------
                    (Address of principal executive offices)

                                 (949) 454-9283
       ------------------------------------------------------------------
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

  Indicate the number of shares outstanding of each of the issuer's classes of
               common equity, as of the latest practicable date:

Title of each Class of Common Stock             Outstanding at December 31, 1998
-----------------------------------             --------------------------------
Common Stock, without par value                          31,756,875


<PAGE>   2


                         PART I - FINANCIAL INFORMATION

Item 1 Financial Statements.

           The financial statements included herein have been prepared by the
Company, without audit. Certain information and footnote disclosure normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted, although the Company
believes that the disclosures are adequate to make the information presented not
misleading. In the opinion of the Company, all adjustments, consisting of only
normal recurring adjustments, necessary to present fairly the financial position
of the Company as of December 31, 1998 and the results of its operations and
changes in its financial position from inception through December 31, 1998 have
been made.

                               SIONIX CORPORATION
                          (A Development Stage Company)
                                 Balance Sheets


ASSETS

<TABLE>
<CAPTION>
                                                     December 31,     September 30,
                                                        1998              1998
                                                    -------------     -------------
                                                    (Unaudited)
<S>                                                 <C>                 <C>     
CURRENT ASSETS

   Cash                                               $372,556          $ 11,230
                                                      --------          --------
      Total Current Assets                             372,556            11,230
                                                      --------          --------

PROPERTY AND EQUIPMENT - NET (Notes 2 and 3)           126,569           102,855
                                                      --------          --------

OTHER ASSETS

   Deposits                                             17,231             6,831
   Intangibles - net (Note 4)                          110,494           112,744
                                                      --------          --------

      Total Other Assets                               127,725           119,575
                                                      --------          --------

      TOTAL ASSETS                                    $626,850          $233,660
                                                      ========          ========
</TABLE>



                                       2
<PAGE>   3


                               SIONIX CORPORATION
                          (A Development Stage Company)
                           Balance Sheets (Continued)


                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
                                                                   December 31,         September 30,
                                                                      1998                  1998
                                                                   -----------          -------------
                                                                   (Unaudited)
<S>                                                                <C>                  <C>        

CURRENT LIABILITIES

   Accounts payable                                                $    85,698           $   134,229
   Accrued expenses                                                    147,663               138,082
   Related party payables - current portion (Note 6)                    50,000                62,304
   Convertible debenture                                                    --                20,000
                                                                   -----------           -----------

      Total Current Liabilities                                        283,361               354,615
                                                                   -----------           -----------

LONG-TERM DEBTS

   Related party payables - less current portion (Note 6)              329,851               368,351
                                                                   -----------           -----------

      Total Long-Term Debts                                            329,851               368,351
                                                                   -----------           -----------

      Total Liabilities                                                613,212               722,966
                                                                   -----------           -----------

COMMITMENTS (Note 10)

STOCKHOLDERS' EQUITY (DEFICIT)

   Common stock $0.001 par value; 100,000,000 shares
    authorized, 31,756,875 and 25,221,875 shares issued
    and outstanding, respectively                                       31,757                25,222
   Additional paid-in capital                                        4,728,246             4,081,281
   Deficit accumulated during the development stage                 (4,746,365)           (4,595,809)
                                                                   -----------           -----------

      Total Stockholders' Equity (Deficit)                              13,638              (489,306)
                                                                   -----------           -----------

      TOTAL LIABILITIES AND STOCKHOLDERS'
       EQUITY (DEFICIT)                                            $   626,850           $   233,660
                                                                   ===========           ===========
</TABLE>


                                       3
<PAGE>   4


                               SIONIX CORPORATION
                          (A Development Stage Company)
                            Statements of Operations
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                                   
                                                                                               From    
                                                           For the                         Inception on
                                                      Three Months Ended                    October 3, 
                                                          December 31,                     1994 Through
                                               --------------------------------            December 31,
                                                   1998                  1997                 1998 
                                               -----------           -----------           -----------
<S>                                            <C>                   <C>                   <C>        

REVENUE                                        $        --           $        --           $    15,500

COST OF SALES                                           --                    --                 6,540
                                               -----------           -----------           -----------

GROSS PROFIT                                            --                    --                 8,960
                                               -----------           -----------           -----------

EXPENSES

   Research and development                             --                                     850,353
   Depreciation and amortization                    11,692                23,300               395,787
   Administrative and marketing                    131,491                 6,286             2,260,634
                                               -----------           -----------           -----------

      Total Expenses                               143,183                29,586             3,506,774
                                               -----------           -----------           -----------

LOSS FROM OPERATIONS                              (143,183)              (29,586)           (3,497,814)
                                               -----------           -----------           -----------

OTHER INCOME (EXPENSE)

   Interest income                                   1,713                    --                 1,713
   Write down of obsolete intangibles                   --                    --            (1,040,865)
   Write down of obsolete software                      --                    --               (53,614)
   Settlement costs                                     --                    --               (25,125)
   Interest                                         (9,086)               (8,331)             (130,660)
                                               -----------           -----------           -----------

      Total Other Income (Expense)                  (7,373)               (8,331)           (1,248,551)
                                               -----------           -----------           -----------

NET LOSS BEFORE TAXES                             (150,556)              (37,917)           (4,746,365)

PROVISION FOR INCOME TAXES                              --                    --                    -- 
                                               -----------           -----------           -----------

BASIC NET LOSS                                 $  (150,556)          $   (37,917)          $(4,746,365)
                                               ===========           ===========           ===========

BASIC NET LOSS PER SHARE                       $     (0.00)          $     (0.00)
                                               ===========           ===========

FULLY DILUTED NET LOSS PER SHARE               $     (0.00)          $     (0.00)
                                               ===========           ===========
</TABLE>



                                       4
<PAGE>   5

                               SIONIX CORPORATION
                          (A Development Stage Company)
                  Statements of Stockholders' Equity (Deficit)
           From Inception on October 3, 1994 through December 31, 1998

<TABLE>
<CAPTION>
                                                                                Deficit
                                                                              Accumulated
                                     Common Stock             Additional      During the
                             ---------------------------       Paid-in        Development    Subscription
                               Shares           Amount         Capital           Stage        Receivable 
                             -----------     -----------     -----------      -----------    ------------
<S>                          <C>             <C>             <C>              <C>            <C>    

Balance,
 October 3, 1994                      --     $        --     $        --      $        --      $ --

Shares issued to initial
 stockholders in October
 1994 at $0.01 per share          10,000              10              90               --        --

Net loss from October 3,
 1994 through
 December 31, 1994                    --              --              --           (1,521)       -- 
                             -----------     -----------     -----------      -----------      ----

Balance,
 December 31, 1994                10,000              10              90           (1,521)       --

Issuance of common
 stock for assignment
 of rights recorded at
 predecessor cost at
 $0.00 per share               1,990,000           1,990          (1,990)              --        --

Issuance of common
 stock for services at
 $0.25 per share                 572,473             572         135,046               --        --

Issuance of common
 stock for debt at $0.25
 per share                       188,561             188          47,347               --        --

Issuance of common
 stock for debt at $0.50
 per share                       595,860             596         297,334               --        --

Issuance of common
 stock for debt at $2.00
 per share                        98,194              98         196,290               --        --

Issuance of common
 stock for debt at $4.00
 per share                       156,025             156         623,944               --        -- 
                             -----------     -----------     -----------      -----------      ----

Balance forward                3,611,113     $     3,610     $ 1,298,061      $    (1,521)     $ -- 
                             -----------     -----------     -----------      -----------      ----
</TABLE>



                                       5
<PAGE>   6


                               SIONIX CORPORATION
                          (A Development Stage Company)
            Statements of Stockholders' Equity (Deficit) (Continued)
           From Inception on October 3, 1994 through December 31, 1998

<TABLE>
<CAPTION>
                                                                                    Deficit
                                                                                  Accumulated
                                          Common Stock            Additional      During the
                                 ---------------------------       Paid-in        Development      Subscription
                                    Shares         Amount          Capital           Stage          Receivable  
                                 -----------     -----------     -----------      -----------      -----------
<S>                              <C>             <C>             <C>              <C>              <C>        
Balance forward                    3,611,113     $     3,610     $ 1,298,061      $    (1,521)     $        --

Issuance of common
 stock  for cash at $4.00
 per share                           138,040             138         552,022               --               --

Issuance of common
 stock for subscription
 note receivable at
 $4.00 per share                     414,200             414       1,652,658               --       (1,656,800)

Issuance of common
 stock for future production
 costs at $6.00 per share            112,500             113         674,887               --         (675,000)

Issuance of common
 stock for cash at $6.00
 per share                            94,517              95         567,005               --               --

Net loss for the year
 ended December 31,  1995                 --              --              --         (914,279)              -- 
                                 -----------     -----------     -----------      -----------      -----------

Balance,
 December 31, 1995                 4,370,370           4,370       4,744,633         (915,800)      (2,331,800)

Issuance of common
 stock in reorganization          18,632,612          18,633         (58,033)              --               --

Issuance of common
 stock for cash at $1.00
 per share                           572,407             573         571,834               --               --

Issuance of common
 stock for services at
 $1.00 per share                      24,307              24          24,283               --               --

Net loss for the nine
 months ended
 September 30, 1996                       --              --              --         (922,717)              -- 
                                 -----------     -----------     -----------      -----------      -----------

Balance,
 September 30, 1996               23,599,696     $    23,600     $ 5,282,717      $(1,838,517)     $(2,331,800)
                                 -----------     -----------     -----------      -----------      -----------
</TABLE>


                                       6
<PAGE>   7


                               SIONIX CORPORATION
                          (A Development Stage Company)
            Statements of Stockholders' Equity (Deficit) (Continued)
           From Inception on October 3, 1994 through December 31, 1998

<TABLE>
<CAPTION>
                                                                                   Deficit
                                                                                  Accumulated
                                        Common Stock              Additional      During the
                               ----------------------------        Paid-in        Development      Subscription
                                  Shares           Amount          Capital           Stage          Receivable   
                               -----------      -----------      -----------      -----------      ------------
<S>                            <C>              <C>              <C>              <C>              <C>         
Balance,
 September 30, 1996             23,599,696      $    23,600      $ 5,282,717      $(1,838,517)     $(2,331,800)

Issuance of common
  stock for cash at $1.00
  per share                         80,880               81           80,799               --               --

Issuance of common
  stock for cash at $0.69
  per share                         14,545               15            9,985               --               --

Issuance of common
  stock for cash at $0.67
  per share                         60,000               60           39,940               --               --

Issuance of common
  stock for cash at $0.56
  per share                          4,444                4            2,496               --               --

Issuance of common
  stock for cash at $0.50
  per share                        368,000              368          183,632               --               --

Issuance of common
  stock for cash at $0.31
  per share                          8,064                8            2,492               --               --

Issuance of common
  stock for cash at $0.25
  per share                        186,800              187           46,513               --               --

Issuance of common
  stock for services at
  $0.20 per share                  274,299              274           54,586               --               --

Cancellation of shares
  issued for agreement
  for future production
  costs and other shares          (542,138)            (542)        (674,458)              --          675,000

Net loss for the year
  ended September 30, 1997              --               --               --         (858,916)              -- 
                               -----------      -----------      -----------      -----------      -----------

Balance,
  September 30, 1997            24,054,590      $    24,055      $ 5,028,702      $(2,697,433)     $(1,656,800)
                               -----------      -----------      -----------      -----------      -----------
</TABLE>


                                       7

<PAGE>   8



                               SIONIX CORPORATION
                          (A Development Stage Company)
            Statements of Stockholders' Equity (Deficit) (Continued)
           From Inception on October 3, 1994 through December 31, 1998

<TABLE>
<CAPTION>
                                                                                    Deficit
                                                                                   Accumulated
                                         Common Stock             Additional       During the
                                ----------------------------        Paid-in        Development      Subscription
                                  Shares           Amount           Capital           Stage          Receivable
                                -----------      -----------      -----------      -----------      -----------
<S>                              <C>             <C>              <C>              <C>              <C>         

Balance,
  September 30, 1997             24,054,590      $    24,055      $ 5,028,702      $(2,697,433)     $(1,656,800)

Common stock issued for
 cash at $0.10 per share          2,810,000            2,810          278,190               --               --

Common stock issued for
 services valued at $0.10
 per share                          895,455              895           88,651               --               --

Option to purchase
 2,200,000 shares of
 common stock at $0.001
 per share                               --               --          220,000               --               --

Cancellation of common
stock and options                (2,538,170)          (2,538)      (1,534,262)              --        1,656,800

Net loss for the year ended
 September 30, 1998                      --               --               --       (1,898,376)              -- 
                                -----------      -----------      -----------      -----------      -----------

Balance,
 September 30, 1998              25,221,875           25,222        4,081,281       (4,595,809)              --

Common stock issued for
 cash at $0.10 per share
 (unaudited)                      6,535,000            6,535          646,965               --               --

Net loss for the three
 months ended
 December 31, 1998
 (unaudited)                             --               --               --         (150,556)              -- 
                                -----------      -----------      -----------      -----------      -----------

Balance,
 December 31, 1998
 (unaudited)                     31,756,875      $    31,757      $ 4,728,246      $(4,746,365)     $        -- 
                                ===========      ===========      ===========      ===========      ===========
</TABLE>



                                       8
<PAGE>   9

                               SIONIX CORPORATION
                          (A Development Stage Company)
                            Statements of Cash Flows
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                             
                                                                               From
                                                     For the                 Inception on
                                                 Three Months Ended          October 3,
                                                     December 31,            1994 Through
                                           ----------------------------      December 31,
                                               1998             1997             1998 
                                           -----------      -----------      -----------
<S>                                        <C>              <C>              <C>        

CASH FLOWS FROM
 OPERATING ACTIVITIES

   Net loss                                $  (150,556)     $   (37,917)     $(4,746,365)
   Adjustments to reconcile net loss
     to net cash used by operating
     activities:
      Depreciation and amortization             11,692           23,300          395,786
      Common stock issued for services                                           644,331
      Write-down of obsolete assets                 --               --        1,040,865
   Change in assets and liabilities:
      (Increase) decrease in deposits          (10,400)              --          (17,231)
      Increase in accounts payable and
       accrued expenses                        (38,951)         (19,549)         251,529
                                           -----------      -----------      -----------

         Net Cash Used by
          Operating Activities                (188,215)         (34,166)      (2,431,085)
                                           -----------      -----------      -----------

CASH FLOWS FROM
  INVESTING ACTIVITIES

  Purchase of intangibles                           --          (10,000)        (150,188)
  Purchase of fixed assets                     (33,155)              --         (158,892)
                                           -----------      -----------      -----------

         Net Cash Used by
          Investing Activities                 (33,155)         (10,000)        (309,080)
                                           -----------      -----------      -----------

CASH FLOWS FROM
  FINANCING ACTIVITIES

  Repayment of notes payable and
   contracts payable                           (70,804)           2,611         (100,711)
  Proceeds from sale of stock                  653,500               --        2,852,158
  Proceeds from notes payable and
   convertible debenture                            --           56,374          361,274
                                           -----------      -----------      -----------

         Net Cash Provided by
          Financing Activities             $   582,696      $    58,985      $ 3,112,721
                                           -----------      -----------      -----------
</TABLE>



                                       9
<PAGE>   10


                               SIONIX CORPORATION
                          (A Development Stage Company)
                      Statements of Cash Flows (Continued)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                   
                                                                                       From
                                                               For the              Inception on
                                                          Three Months Ended         October 3,
                                                              December 31,          1994 Through
                                                      -------------------------     December 31,
                                                         1998           1997           1998 
                                                      ----------     ----------    -------------
<S>                                                   <C>            <C>            <C>       

INCREASE (DECREASE) IN CASH                           $  361,326     $   14,819     $  372,556

CASH AT BEGINNING OF PERIOD                               11,230            271             -- 
                                                      ----------     ----------     ----------

CASH AT END OF PERIOD                                 $  372,556     $   15,090     $  372,556
                                                      ==========     ==========     ==========

SUPPLEMENTAL DISCLOSURES OF
 NON-CASH INVESTING AND
 FINANCING ACTIVITIES:

  Addition to debt for acquisition of intangibles     $       --     $       --     $1,302,914
  Common stock issued for services                    $       --     $       --     $  644,331
  Equipment acquired under lease payable              $       --     $       --     $   25,533


CASH PAID FOR:

  Interest                                            $    9,086     $       --     $   15,220
  Income taxes                                        $       --     $       --     $       --

</TABLE>



                                       10
<PAGE>   11



                               SIONIX CORPORATION
                          (A Development Stage Company)
                        Notes to the Financial Statements
                    December 31, 1998 and September 30, 1998


NOTE 1 -        COMPANY ORGANIZATION AND BUSINESS ACTIVITY

                Sionix Corporation (the "Company") was incorporated in Nevada on
                October 3, 1994. The Company was formed to design, develop, and
                market an automatic water filtration system primarily for small
                water districts.

                The Company is in the development stage and its efforts through
                December 31, 1998 have been principally devoted to research and
                development, organizational activities, and raising capital. As
                of December 31, 1998, the Company has had $15,500 of revenues.
                The ultimate recovery of investments and costs is dependent on
                future profitable operations, which presently cannot be
                determined.

NOTE 2 -        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

                a.  Accounting Method

                The Company's financial statements are prepared using the
                accrual method of accounting. The Company has elected a
                September 30 year end.

                b.  Cash Equivalents

                The Company considers all highly liquid investments with a
                maturity of three months or less when purchased to be cash
                equivalents.

                c.  Property and Equipment

                Property and equipment are recorded at cost. Major additions and
                improvements are capitalized. Minor replacements, maintenance
                and repairs that do not increase the useful life of the assets
                are expensed as incurred. Depreciation of property and equipment
                is determined using the straight-line method over the expected
                useful lives of the assets as follows:

<TABLE>
<CAPTION>
                       Description                            Useful Lives
                       -----------                            ------------
<S>                                                           <C>

                Computers and test equipment                    5 years
                Furniture and fixtures                          5 years
</TABLE>

                d.  Research and Development

                Research and development costs are expensed as incurred.



                                       11
<PAGE>   12


                               SIONIX CORPORATION
                          (A Development Stage Company)
                        Notes to the Financial Statements
                    December 31, 1998 and September 30, 1998


NOTE 2 -        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

                e.  Basic Loss Per Share

                The computation of basic loss per share of common stock is based
                on the weighted average number of shares outstanding at the date
                of the financial statements. Stock warrants and stock options
                have been included in the fully diluted loss per share.

                f.  Provision for Income Taxes

                No provision for federal income taxes have been recorded due to
                net operating losses. The Company accounts for income taxes
                pursuant to FASB Statement No. 109. The Internal Revenue Code
                contains provisions which may limit the loss carryforwards
                available should certain events occur, including significant
                changes in stockholder ownership interests. Accordingly, the tax
                benefit of the loss carryovers is offset by a valuation
                allowance of the same amount. The loss carryforwards of
                approximately $4,250,000 will expire by the year 2013.

                g.  Estimates

                The preparation of financial statements in conformity with
                generally accepted accounting principles requires management to
                make estimates and assumptions that affect the reported amounts
                of assets and liabilities and disclosure of contingent assets
                and liabilities at the date of the financial statements and the
                reported amounts of revenues and expenses during the reporting
                period. Actual results could differ from those estimates.

NOTE 3 -        PROPERTY AND EQUIPMENT

                Property and equipment at December 31, 1998 consisted of the
                following:

<TABLE>
<S>                                                      <C>       
                  Computers and test equipment           $  172,471
                  Furniture and fixtures                     40,774
                                                         ----------
                       Total                                213,245

                  Less accumulated depreciation             (86,676)
                                                         ----------

                  Property and Equipment - Net           $  126,569
                                                         ==========
</TABLE>

                Depreciation expense for the three months ended December 31,
                1998 and the year ended September 30, 1998 was $9,442 and
                $31,565, respectively.


                                       12
<PAGE>   13


                               SIONIX CORPORATION
                          (A Development Stage Company)
                        Notes to the Financial Statements
                    December 31, 1998 and September 30, 1998


NOTE 4 -        INTANGIBLE ASSETS

                Intangible assets at December 31, 1998 consisted of the 
                following:

<TABLE>
<S>                                                   <C>        
                Patents issued and pending            $   135,033
                Less accumulated amortization             (24,539)
                                                      -----------

                Intangible Assets - Net               $   110,494
                                                      ===========
</TABLE>

                Amortization expense for the three months ended December 31,
                1998 and for the year ended September 30, 1998 was $2,250 and
                $99,154, respectively.

NOTE 5 -        LOAN PAYABLE

                Pursuant to an acquisition agreement, the Company assumed
                various promissory notes originally signed in 1992 and 1993
                totaling $50,000. The notes bear interest at 8% and were
                originally due in 1994. Management of the Company currently
                cannot locate the holder of the notes and consequently has not
                been able to settle the liability. The amount is being included
                as a current liability in the accompanying financial statements
                until management can locate the note holder and settle the debt.
                The liability is included in the related party payables.

NOTE 6 -        RELATED PARTY PAYABLES

                The Company has received advances in the form of promissory
                notes from various shareholders and other related parties in
                order to pay minimal ongoing operating expenses. As of December
                31, 1998, $379,851 was due by the Company as a result of these
                promissory notes of which $50,000 is considered to be current.
                The notes bear interest at rates of 7% to 13.5%. All of the
                notes are due on demand and are unsecured.

NOTE 7 -        STOCKHOLDERS' EQUITY

                During the year ended December 31, 1995, 414,200 shares of
                common stock were issued in return for notes receivable in the
                amount of $1,656,800. These notes were secured by the shares
                issued and were non-recourse. They had a stated interest rate of
                6% and had maturity dates ranging from March 1, 1998 to
                September 7, 1998. During the year ended September 30, 1998, the
                shares originally issued in conjunction with the receivable were
                cancelled along with the corresponding subscription receivable.



                                       13
<PAGE>   14


                               SIONIX CORPORATION
                          (A Development Stage Company)
                        Notes to the Financial Statements
                    December 31, 1998 and September 30, 1998


NOTE 8 -        COMMON STOCK PURCHASE WARRANTS

                  The Company's Board of Directors has authorized and approved
                  851,400 common stock purchase warrants as of December 31, 1998
                  as follows:

<TABLE>
<CAPTION>
                    Number              Exercise Price           Expiration
                  of Warrants             Per Share                 Date
<S>                                     <C>                     <C> 

                    851,400             $    0.50               June 30, 1999
</TABLE>

NOTE 9 -        GOING CONCERN

                The Company's financial statements are prepared using generally
                accepted accounting principles applicable to a going concern
                which contemplates the realization of assets and liquidation of
                liabilities in the normal course of business. However, the
                Company does not have significant cash or other material assets,
                nor does it have an established source of revenues sufficient to
                cover its operating costs and to allow it to continue as a going
                concern. It is the intent of the Company to generate revenue
                through the sales of its software and hardware products. In the
                opinion of management, sales of the Company's products, together
                with the proceeds of an offering of its common stock, will be
                sufficient for it to continue as a going concern.

NOTE 10 -       COMMITMENTS

                Employment Agreement

                On January 1, 1998, the Company entered into an employment
                contract with an officer and director. The employment contract
                calls for payments of $7,083 per month to the officer through
                September 30, 2003. As a signing bonus, the officer was given
                the option to purchase 2,200,000 shares of the Company's common
                stock at $0.001 per share. Accordingly, compensation expense of
                $220,000 has been recorded.

                Item 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations

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



                                       14
<PAGE>   15

        regulation imposed under federal, state or local laws.

       The Company's operating results may vary significantly due to a variety
       of factors including changing customers profiles, the availability and
       cost of raw materials, the introduction of new products by the Company or
       its competitors, the timing of the Company's advertising and promotional
       campaigns, pricing pressures, general economic and industry conditions
       that affect customer demand, and other factors.


                 Results of Operations (Three Months Ended December 31, 1998
       Compared to Three Months Ended September 30, 1998) In March of 1998, the
       Company experienced a change in management, and a new Board of Directors
       was elected at the Annual Shareholders' Meeting in August 1998. As a
       result, the focus of the Company's efforts has changed to concentrate on
       development, manufacturing and distribution of the Company's hardware
       products. The immediate focus is on the DAF (Dissolved Air Flotation)
       Tower, Automatic Back-Flush Filtration System, 0-Zone Mixing Chamber and
       other related products, some of which have their own separate markets.
       The Company suspended work on the Sionix, SCADA System and SCADA Manager
       Software program.

                 The Company is continuing with engineering focus on hardware
       and water filtration equipment. The first phase of testing was completed
       in November 1998.The second phase of testing is currently underway and is
       revealing useful data. Management expects to implement minor engineering
       adjustments in tooling prior to the execution of contracts for production
       tooling. Management is in negotiations with suppliers for tooling and
       production of various support products that have their own markets.
 .
                   For the quarter ended December 31, 1998, the Company reported
       a loss of $150,556, or $-0- per share. This compares with a loss of
       $37,917, or -0- per share for the quarter ending September 30, 1998. This
       increased loss is principally due to higher administrative and marketing
       expenses.

       Liquidity and Capital Resources. On December 31, 1998, the Company had
cash on hand of $372,556. The principal source of liquidity has been sales of
securities. Management anticipates that additional capital will be required to
finance the Company's operations. The Company believes that expected cash flow
plus the anticipated proceeds from sales of securities will be sufficient to
finance the Company's operations at currently anticipated levels for a period of
at least twelve months. However, there can be no assurance that the Company will
not encounter unforeseen difficulties that may deplete its capital resources
more rapidly than anticipated.

Year 2000 Issues.The "year 2000" issue concerns the potential exposure related
to the possible automatic generation of business and financial misinformation
resulting from the application of computer programs which have been written
using two digits, rather than four, to define the applicable year of business
transactions. When the year 2000 begins, programs with such date-related logic
will not be able to distinguish between the years 1900 and 2000, potentially
causing software and hardware to fail, generating erroneous calculations or
presenting information in an unusable format.

       The Company is dependent on multiple computer servers and the third-party
computer programs running on them to provide data in support of its accounting
and engineering functions. The Company's plan for year 2000 compliance includes
the following phases: (i) conducting a comprehensive inventory of the Company's
internal systems, including information technology systems and non-information
technology 


                                       15
<PAGE>   16

systems and the systems acquired or to be acquired by the Company from third
parties, (ii) assessing and prioritizing any required changes, upgrades, or
enhancements, (iii) resolving any problems by repairing or, if appropriate,
replacing the non-compliant systems, (iv) testing all remediated systems for
Year 2000 compliance and (v) developing contingency plans that may be employed
in the event that any system used by the Company is unexpectedly affected by a
previously unanticipated problem relating to the Year 2000.

        In recognition of the potential year 2000 problem, the Company has begun
a program to replace any of its existing communications, engineering and
accounting software that is not year 2000 compliant with new software that is
warranted by its vendors as being year 2000 compliant. It is anticipated that
the costs of such replacement will not be material.

       The Company has relationships with various third parties on whom it
relies to provide goods and services necessary for the manufacture and
distribution of its products. These include suppliers and vendors. As part of
its determination of year 2000 readiness, the Company has identified material
relationships with third party vendors and is in the process of assessing the
status of their compliance through the use of informal inquiries and review of
hardware and software documentation.

       The components to be purchased by the Company in connection with the
manufacture of its products are generally available through numerous independent
sources. Due to the broad diversification of these sources, the risk associated
with potential business interruptions as a result of year 2000 non-compliance by
one or more sources is not considered significant. It is anticipated that the
steps the Company has taken and is continuing to take to deal with the year 2000
problem will reduce the risk of significant business interruptions, but there is
no assurance that this outcome will be achieved. Failure to detect and correct
all internal instances of non-compliance or the inability of third parties to
achieve timely compliance could result in the interruption of normal business
operations which could, depending on its duration, have a material adverse
effect on the Company.



PART II - OTHER INFORMATION

Item 1. Legal Proceedings

       The Company has is not a party to any material legal proceeding.

Item 2. Changes in Securities and Use of Proceeds

       Inapplicable.

Item 3 - Defaults upon Senior Securities.

       Inapplicable.

Item 4 - Submission of Matters to a Vote of Security Holders



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<PAGE>   17


       Inapplicable.

Item 5 - Other Information

       Inapplicable.


Item 6.  Exhibits and Reports on Form 8-K

Exhibit 27. Financial Data Schedule

                                   Signatures

       In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

   Date: February  16, 1999

Sionix Corporation

       By: /s/ James J. Houtz
           ---------------------------------------------
              James J. Houtz, President

       By: /s/ Robert E. McCray
           ---------------------------------------------
             Robert E. McCray, Chief Financial Officer



                                       17
<PAGE>   18

                                 EXHIBIT INDEX


<TABLE>
<CAPTION>
EXHIBIT
NUMBER              DESCRIPTION
------              -----------
<S>                 <C>
27                  Financial Data Schedule
</TABLE>