SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q

     (Mark One)

     [ X ]  QUARTERLY  REPORT  UNDER  SECTION  13 OR 15 (d)  OF  THE  SECURITIES
EXCHANGE ACT OF 1934

     For Quarter Ended: June 30, 1997; or

     [ ]  TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(D) OF THE  SECURITIES
EXCHANGE ACT OF 1934

     For the transition period _________ to __________

     Commission File Number: 2-95626-D


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


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


5355 Mira Sorrento Place, Suite 100, San Diego, California             92121
----------------------------------------------------------         ------------
(Address of principal executive offices)                             (Zip Code)


                                 (619) 622-0200
               --------------------------------------------------
              (Registrant's telephone number, including area code)

          5405 Morehouse Drive, Suite 200, San Diego, California 92121
          ------------------------------------------------------------
          (Former name or former address, if changed since last report)

     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 for  such  shorter  period  that a
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ] No [ ]

     On June 30, 1997 there were 23,650,338  shares of the  registrant's  Common
Stock, $.001 par value, outstanding and subscribed.



<PAGE>


                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

     The financial statements included herein have been prepared by the Company,
without  audit  pursuant  to the rules and  regulations  of the  Securities  and
Exchange  Commission.  Certain  information  and  footnote  disclosure  normally
included in financial  statements prepared in accordance with generally accepted
accounting  principles have been condensed or omitted pursuant to such rules and
regulations,  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, 1996 and the results of its operations and changes in
its financial  position from inception through December 31, 1996 have been made.
The results of operations for such interim period is not necessarily  indicative
of the results to be expected for the entire year.

                          Index to Financial Statements
                                                                         Page
Balance Sheets ..........................................................  3
Statement of Operations .................................................  5
Statement of Stockholders' Equity .......................................  6
Statement of Cash Flows .................................................  9
Notes to Financial Statements for Period ................................  11
Independent Auditor's Report ............................................  17

     All other  schedules are not submitted  because they are not  applicable or
not required or because the information is included in the financial  statements
or notes thereto.







     [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
      
                               Page 2
<PAGE>

                               SIONIX CORPORATION
                          (A Development Stage Company)
                                 Balance Sheets

                                                    
                                     ASSETS
                                     ------
<TABLE>
<CAPTION>

                                          June 30,               September 30,
                                             1996                     1996
                                        ------------             --------------                
                                        (Unaudited)
<S>                                     <C>                      <C>
CURRENT ASSETS

Cash in banks                           $     14,161             $       36,041
Accounts Receivable                           35,000                         -
Inventory (Note 2)                            52,602                     40,333
Prepaid expenses                               2,981                      2,981
                                        ---------------------------------------
     
          Total Current Assets               104,744                     79,355
                                        ---------------------------------------

PROPERTY AND EQUIPMENT - NET 
(Notes 2 and 3)                               92,874                    107,367
                                        ---------------------------------------

OTHER ASSETS

Intangibles - net (Notes 2 and 4)          1,214,246                  1,210,622
Deposits                                       6,996                      6,996
                                        ---------------------------------------

          Total Other Assets               1,221,242                  1,217,618
                                        ---------------------------------------

TOTAL ASSETS                            $  1,418,860             $    1,404,340
                                        =======================================

</TABLE>

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

                                     Page 3
<PAGE>


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

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------
<TABLE>
<CAPTION>

                                          June 30,               September 30,
                                             1996                     1996
                                        ------------             --------------                
                                        (Unaudited)
<S>                                     <C>                      <C>
CURRENT LIABILITIES

Loan payable (Note 5)                   $     50,000             $       50,000
Lease payable, current portion (Note 6)        7,847                      7,847
Accrued  expenses                            191,559                    112,272
                                        ---------------------------------------

          Total Current Liabilities          249,406                    170,119
                                        ---------------------------------------

LONG-TERM DEBTS

Lease payable (Note 6)                         8,963                     16,021
Related party payables (Note 7)              248,109                     72,200
Convertible debenture (Note 8)                30,000                     10,000
                                        ---------------------------------------

          Total Long-Term Debts              287,072                     98,221
                                        ---------------------------------------

          Total Liabilities                  536,478                    268,340
                                        ---------------------------------------

COMMITMENTS AND CONTINGENCIES
  (Notes 6 and 11)                                -                          -                                                     
                                        ---------------------------------------                             

STOCKHOLDERS' EQUITY

Common stock $0.001 par value,
100,000,000 shares authorized,
23,650,338 and 23,599,696 shares
issued and outstanding, respectively          23,650                     23,600
Additional paid-in capital                 4,966,747                  5,282,717
Deficit accumulated during the 
 developmental stage                      (2,451,215)                (1,838,517)
Subscription receivable (Note 10)         (1,656,800)                (2,331,800)
                                        ---------------------------------------

          Total Stockholders' Equity         882,382                  1,136,000
                                        ---------------------------------------

TOTAL LIABILITIES AND 
   STOCKHOLDERS' EQUITY                 $  1,418,860             $    1,404,340
                                        =======================================

</TABLE>


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

                                     Page 4

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

<TABLE>
<CAPTION>
                                                                        From     
                                                                   Inception on
                                                                     October 3, 
                        For the Nine Months  For the Three Months  1994 Through
                           Ended, June 30,      Ended June 30,        June 30, 
                        --------------------------------------------------------
                        1997         1996      1997         1996       1997
                        --------------------------------------------------------
<S>                     <C>          <C>        <C>        <C>       <C>
REVENUE                 $  50,000    $  -      $  -         $   -    $   50,000
             
COST OF SALES              14,863       -         -             -        14,863
                        --------------------------------------------------------

GROSS PROFIT               35,137       -         -             -        35,137
                        -------------------------------------------------------  

EXPENSES

Research and Development       -     394,639      -             -       843,652
                                                                                 
Depreciation and
 Amortization              82,830     60,938   27,630       15,495      242,785
  Administrative and
  Marketing               555,239    605,213  126,387      265,470    1,362,003
                        -------------------------------------------------------

     Total Expenses       638,069  1,060,790  154,017      280,965    2,448,440
                        -------------------------------------------------------

LOSS FROM OPERATIONS     (602,932)(1,060,790)(154,017)    (280,965)  (2,413,303)
                        -------------------------------------------------------

OTHER INCOME EXPENSE)

Interest                   (9,766)   (15,588)  (3,300)      (1,981)     (37,912)
                        -------------------------------------------------------

Total other Income
 (Expense)                 (9,766)   (15,588)  (3,300)      (1,981)     (37,912)
                        -------------------------------------------------------

NET LOSS             $(612,698) $(1,076,378) $(157,317)  $(282,946) $(2,451,215)
                     ==========================================================

LOSS PER SHARE          $   (0.03)   $ (0.13) $ (0.01)    $  (0.01)
                     ===============================================

</TABLE>


    The accompanying notes are an integral part of these financial statements

                                     Page 5

<PAGE>
                               SIONIX CORPORATION
                          (A Development Stage Company)
                       Statements of Stockholders' Equity
           From Inception on October 3, 1994 through June 30, 1997
                                   (Unaudited)

<TABLE>
<CAPTION>
                                           
                                         Additional
                      Common Stock        Paid-In     Accumulated  Subscription
                   Shares      Amount     Capital       Deficit      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>


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

                                     Page 6

<PAGE>

                               SIONIX CORPORATION
                          (A Development Stage Company)
                 Statements of Stockholders' Equity (Continued)
           From Inception on October 3, 1994 through June 30, 1997
                                   (Unaudited)

<TABLE>
<CAPTION>

                                        Additional
                       Common Stock       Paid-In     Accumulated  Subscription
                   Shares      Amount     Capital       Deficit      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     647,887            -       (676,000)

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 service 
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>

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

                                     Page 7

<PAGE>

                             SIONIX CORPORATION
                          (A Development Stage Company)
                 Statements of Stockholders' Equity (Continued)
           From Inception on October 3, 1994 through June 30, 1997
                                   (Unaudited)

<TABLE>
<CAPTION>

                                        Additional
                       Common Stock       Paid-In     Accumulated  Subscription
                   Shares      Amount     Capital       Deficit      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           125,380         125     125,255            -             -

Issuance of 
common stock
for cash at 
$0.50 per share     467,400         467     233,233            -             -

Cancellation of 
shares issued for
agreement for 
future production
costs and other 
shares             (542,138)       (542)   (647,488)           -        675,000

Net loss for 
six months ended 
June 30,  1997            -           -           -      (612,698)           -
                   ------------------------------------------------------------

Balance, 
June 30, 1997    26,650,338    $ 23,650  $4,966,747   $(2,451,215)  $(1,656,800)
                 --------------------------------------------------------------
</TABLE>


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

                                     Page 8


<PAGE>

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

<TABLE>
<CAPTION>
                                                                        From  
                                                                   Inception on
                                                                     October 3, 
                        For the Nine Months  For the Three Months  1994 Through
                           Ended, June 30,      Ended June 30,        June 30, 
                        --------------------------------------------------------
                        1997         1996      1997         1996       1997
                    ------------------------------------------------------------
<S>                 <C>         <C>          <C>        <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES

Net Loss            $(612,698)  $(1,076,378) $(157,317) $(282,946)  $(2,451,215)

Adjustments to 
Reconcile Net Loss
to Net Cash Used
By Operating Activities:
Depreciation and
amortization           82,830        60,938     27,630     15,495       242,785
Common stock issued
for services                -       135,618         -          -        159,925
Change in Assets and
Liabilities
(Increase) decrease 
in accounts receivable(35,000)           -          -          -        (35,000)
(Increase) decrease 
 in inventory         (12,269)           -          -          -        (52,602)
(Increase) decrease 
 in other current 
 assets                     -        (4,596)        -          -         (2,981)
Increase (decrease)
in accrued expenses     79,287       11,455    (36,187)   (31,165)      152,160
                     ----------------------------------------------------------

Net Cash Used by
Operating  Activities (497,850)    (872,963)   (93,500)  (298,616)   (1,986,928)
                     ----------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES

Payment of deposits                                 -          -         (6,996)
Purchase of Intangibles (69,954)     (9,154)        -          -       (144,371)
Purchase of fixed assets (2,007)    (20,879)        -      (1,831)      (77,089)
                      ---------------------------------------------------------

Net Cash Used By
Investing activities    (71,961)    (30,033)        -      (1,831)     (228,456)
                      ---------------------------------------------------------

</TABLE>

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

     
                               Page 9
<PAGE>
                               SIONIX CORPORATION
                          (A Development Stage Company)
                      Statements of Cash Flows (continued)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                        From  
                                                                   Inception on
                                                                     October 3, 
                        For the Nine Months  For the Three Months  1994 Through
                           Ended, June 30,      Ended June 30,        June 30, 
                        --------------------------------------------------------
                        1997         1996      1997         1996       1997
                    ------------------------------------------------------------
<S>                 <C>         <C>          <C>        <C>         <C>
CASH FLOWS FROM FINANCING ACTIVITIES

Repayment of notes 
payable and contracts 
payable                (7,058)      (20,900)    (2,575)   (14,400)      (15,222)
Proceeds from sale of
 Common stock         359,080       822,352     41,700    242,907     1,910,158

Proceeds from notes 
payable and convertible 
debenture             195,909        83,100     46,257     83,100       334,609
                    -----------------------------------------------------------

Net Cash Provided by
Financing Activities $547,931      $884,552    $85,382   $311,607    $2,229545
                    ===========================================================

INCREASE (DECREASE)
IN CASH              $(21,880)     $(18,444)   $(8,118)  $ 11,160    $   14,161

CASH AT BEGINNING
OF PERIOD              36,041       130,260     22,279    100,656            -
                    -----------------------------------------------------------

CASH AT END OF 
PERIOD               $14,161       $111,816    $14,161   $111,816    $   14,161
                    ===========================================================

CASH PAID FOR:
 Interest            $ 9,766       $  3,055    $ 3,300   $  1,981    $  15,900
 Income taxes        $    -        $     -     $    -    $     -     $      -
  

SUPPLEMENTAL DISCLOSURES 
OF NON-CASH
INVESTING AND 
FINANCING ACTIVITIES:

Increase in subscription notes
receivable and future 
production
costs receivable     $    -         $    -      $    -   $     -    $(2,331,800)
                          
Addition to debt 
for acquisition
of intangibles       $    -         $    -      $    -   $     -    $ 1,302,914

Common stock issued 
for services         $    -         $    -      $    -   $135,618   $   159,925

Equipment acquired 
under lease payable  $    -         $    -      $    -   $     -    $    25,533

</TABLE>

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

                                    Page 10
<PAGE>

                               SIONIX CORPORATION
                          (A Development Stage Company)
                        Notes to the Financial Statements
                      June 30, 1997 and September 30, 1996

NOTE 1- COMPANY ORGANIZATION AND BUSINESS ACTIVITY

Sionix Corporation  (formerly Automatic Control 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 March 31, 1997
have been  principally  devoted  to  research  and  development,  organizational
activities,  and  raising  capital.  As of March 31,  1997,  the Company has had
limited 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 to change its year end to  September  30,
subject to IRS approval.

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:

          Description                                    Useful Lives
         ---------------------------------------------------------------     
         Computers and test equipment                         5 years
         Furniture and fixtures                               5 years

d. Intangible Assets

Intangible assets are recorded at cost. Amortization of the costs are determined
using the straight-line method over the expected useful life of 15 years.

       
                                     Page 11

<PAGE>

                               SIONIX CORPORATION
                          (A Development Stage Company)
                  Notes to the Financial Statements(Continued)
                      June 30, 1997 and September 30, 1996

NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     e. Inventory

Work-in-process  and  finished  goods are stated at the lower of average cost or
market. Inventories at September 30, 1996 consisted of the following:

                                         June 30,              September 30,
                                          1997                     1996
                                     -----------------------------------------
           Work-in-progress           $       -                $     33,083
           Finished goods                   52,602                    7,250
                                     ------------------------------------------
               Total                  $     52,602
                                     ==========================================
                                      $     40,333          

     f. Research and Development

Research and development costs are expensed as incurred.

     g. Net Loss Per Share

The  computation  of net loss per share of common stock is based on the weighted
average number of shares outstanding at the date of the financial statements.

     h. Provision for Income Taxes

No provision for 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  carry
forwards 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
carryovers of approximately $2,450,000 will expire by the year 2012.

     i. 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.

                                    Page 12

<PAGE>


                               SIONIX CORPORATION
                          (A Development Stage Company)
                  Notes to the Financial Statements(Continued)
                      June 30, 1997 and September 30, 1996

NOTE 3- PROPERTY AND EQUIPMENT

Property and equipment at June 30, 1997 and September 30, 1996  consisted of the
following:

<TABLE>
<CAPTION>


                                        June 30,                September 30,
                                         1997                      1996
                                   --------------------------------------------
     <S>                           <C>                          <C> 
     Computers and test equipment   $   127,610                 $     125,603
     Furniture and fixtures               3,832                         3,832
                                   --------------------------------------------

          Total                         131,442                       129,435

     Less accumulated depreciation      (38,568)                      (22,068)
                                   --------------------------------------------

     Property and Equipment - Net   $    92,874                 $      170,637
                                   ============================================

</TABLE>


NOTE 4- INTANGIBLE ASSETS

Intangible  assets at June 30,  1997 and  September  30, 1996  consisted  of the
following:

<TABLE>
<CAPTION>

                                        June 30,                September 30,
                                         1997                      1996
                                   --------------------------------------------
          <S>                      <C>                           <C>

         Patents issued and pending $   106,524                  $      102,531
         Intellectual property          745,793                         745,667
         Marketing and development 
          costs                         566,147                         500,312
         Less accumulated amortization (204,218)                       (137,888)
                                   --------------------------------------------

         Intangible Assets - Net    $ 1,214,246                  $    1,210,622
                                   ============================================


</TABLE>

NOTE 5- LOAN PAYABLE

Pursuant  to the  acquisition  agreement  as  explained  in Note 9, 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.

                                    Page 13
<PAGE>


                               SIONIX CORPORATION
                          (A Development Stage Company)
                  Notes to the Financial Statements (Continued)
                      June 30, 1997 and September 30, 1996

NOTE 6- LEASE COMMITMENTS

The Company leases equipment with a lease term through July of 1999. Obligations
under  this  capital  lease have been  recorded  in the  accompanying  financial
statements  at  the  present  value  of  future  minimum  lease  payments.   The
capitalized cost of $25,533 less accumulated  depreciation of $2,553 is included
in property and equipment in the accompanying financial statements.

Obligations under this capital lease consist of the following:

     Total                              $        16,810
     Less: current portion                      ( 7,847)
                                        ----------------

     Long-term portion                  $         8,963
                                        +++++===========

The future  minimum lease  payments under this capital lease and the net present
value of the future minimum lease payments are as follows:

<TABLE>
<CAPTION>

                                   Year Ending
                                   September 30,             Amount
                                   -------------            --------
                                   <S>                      <C>
                                        1997                $  2,160
                                        1998                   9,470
                                        1999                   7,892
                                        2000                      -
                                        2001 and thereafter       -

     Total future minimum lease payments                      19,522

     Less, amount representing interest                       (2,712)

     Present value of future minimum
          lease payments                                    $ 16,810
                                                            ==========

</TABLE>


                                    Page 14
<PAGE>


                               SIONIX CORPORATION
                          (A Development Stage Company)
                  Notes to the Financial Statements (Continued)
                      June 30, 1997 and September 30, 1996

NOTE 7- 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 March 31, 1997, $248,109 was due from the Company as a result of
these  promissory  notes.  The notes bear interest at 10% and 13% and originally
matured during November and December, 1996. The related parties and shareholders
currently  intend to extend the promissory  notes at least another year and thus
the corresponding liability has been classified as long-term in the accompanying
financial statements.

NOTE 8- CONVERTIBLE DEBENTURE

In  September  1996  to  December  1996,  the  Company  raised  $30,000  in  10%
redeemable,  convertible  debentures.  Interest  accrues at a rate of 10% and is
payable on a quarterly  basis.  The principle and unpaid interest are due during
September 1998. The principal  amount is convertible at the option of the holder
at any time prior to maturity  into shares of the  Company's  common  stock at a
rate of $1.00 per common share.

NOTE 9- ACQUISITION AGREEMENT AND PLAN OF REVERSE MERGER

On  December  1, 1995,  Automatic  Control  Corporation  (ACC)  entered  into an
Acquisition   Agreement  and  Plan  of  Reverse  Merger  with  Coronado  Capital
Corporation (Coronado). The shareholders of ACC and Coronado approved the merger
on  December  21,  1995 and  December  28,  1995,  respectively.  The merger was
effective on January 5, 1996.  Under the terms of the merger  agreement  between
the two companies,  the stock of Coronado was  reverse-split  on a 1-for-4 basis
effective  as of  January  16,  1996,  and each  pre-merger  shareholder  of ACC
received 4.819 new shares of the surviving corporation.

As a  result  of  the  merger,  the  pre-merger  shareholders  of  ACC  made  up
approximately  95% of the total  issued  and  outstanding  shares  of  Coronado,
following the effective date of the merger.

Under the terms of the merger  agreement,  the name of  Coronado  was changed to
Automatic Control  Corporation.  On January 23, 1996, the shareholders  approved
the change of the Company's name to Sionix Corporation.

NOTE 10- STOCKHOLDERS' EQUITY

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

In March 1997, the Company revoked an agreement for future  production costs due
to the heavy backlog of the contracting  company.  Under the original agreement,
the Company  issued  542,138  shares for  productions  costs valued at $675,000.
Under the revocation agreement, the shares originally issued have been cancelled
and the accompanying financial statements reflect the cancellation.

                                    Page 15

<PAGE>
                               SIONIX CORPORATION
                          (A Development Stage Company)
                  Notes to the Financial Statements (Continued)
                      June 30, 1997 and September 30, 1996


NOTE 11- COMMITMENTS AND CONTINGENCIES

The Company is a defendant in a lawsuit in San Diego County Superior Court filed
by an  ex-employee.  The  ex-employee  alleges  that the  Company  breached  his
employment  contract and personally defamed him. The Company has filed its cross
claims and intends to vigorously defend the lawsuit. The ultimate outcome of the
case is uncertain  but  management  believes an  unfavorable  outcome is remote.
Therefore,   no  accrual  has  been  recorded  in  the  accompanying   financial
statements.

NOTE 12- COMMON STOCK PURCHASE WARRANTS

The Company's  Board of Directors has authorized and approved  1,443,328  common
stock purchase warrants as of March 31, 1997 as follows:

<TABLE>
<CAPTION>

               Number            Exercise Price                        
               of Warrants        Per Share      Expiration Date(s)
               ----------------------------------------------------------------
<S>            <C>               <C>             <C>  
               570,100           $       1.00    May 15, 1998 - Sept. 30, 1998
               104,445           $      10.00    January 4, 1998
                   783           $     550.00    May 15, 1998
               851,400           $       0.50    January 2, 1998 - June 30, 1999

</TABLE>

                                   
NOTE 13- 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.  The  Company  is in the  process of  completing  a $500,000
private  placement  of its  common  stocks  to fill  requests  for its  hardware
products.  In the  opinion  of  management,  sales  of the  Company's  products,
together with the proceeds of the private placement,  will be sufficient to fund
the Company's operating expenses and capital  requirements for at least the next
twelve months. However, the outcome of these events is currently uncertain.


                                     Page 16

<PAGE>
                          INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
Sionix Corporation
(A Development Stage Company)
San Diego, California

     The accompanying  balance sheet of Sionix Corporation  (formerly  Automatic
Control  Corporation) (a development  stage company) as of June 30, 1997 and the
related  statements of operations,  stockholders'  equity and cash flows for the
three months then ended June 30, 1997 and 1996 and for the six months ended June
301, 1997 and 1996 and from  inception on October 3, 1994 through June 30, 1997,
were not audited by us and,  accordingly,  we do not express an opinion on them.
The  accompanying  balance sheet of Sionix  Corporation as of September 30, 1996
was audited by us and we  expressed an  unqualified  opinion on it in our report
dated October 17, 1996.

/s/      JONES, JENSEN & COMPANY

Jones, Jensen & Company
August 11, 1997










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                                    Page 17

<PAGE>

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

LIQUIDITY AND CAPITAL RESOURCES

     During the quarter the Company  continued  to re-focus  its energies on the
marketing of its patented water  treatment  components and filtration  products.
This was necessary because the original marketing surveys conducted prior to the
release of the Company's automation software indicated a high degree of need for
the software product by water industry  professionals,  yet, upon the release of
the software  product many water  facilities  that  originally  committed to the
Company's  software  declined on their commitments  citing budget  restrictions.
However, every water utility or commercial enterprise that has requested a pilot
test model of the Company's DAF treatment  system have asked the Company include
the software  package in full.  Some of the  components  of the full package are
being prepared to be marketed separately.  Since software sales did not meet any
of management's  projections,  additional investment by officers,  directors and
stockholders  was  required  to  enable  the  company  to  continue  operations.
Currently the Company is being  represented by two investment  groups to provide
funding  to  initiate  manufacturing  of  the  water  treatment  components  and
filtration products.

RESULTS OF OPERATIONS

     For the quarter  the  Company is  reporting a loss of $157,300 or less than
$0.01 per share. This represents a 23.8% reduction in the loss over the previous
quarter and a 55.5%  reduction in the loss over the same quarter of the previous
year.

     In  order  to  market  it's  water  treatment   components  and  filtration
equipment,  the Company has made many  presentations to municipal and commercial
water  treatment  facilities  that  has  resulted  in  numerous  requests  for a
short-term  pilot  study  of  the  Company's  equipment  on-site.  Additionally,
negotiations  of  OEM  agreements  with  several  international   companies  are
continuing.  These  negotiations  have taken longer than originally  expected as
more  information  about the serious  condition  of water  quality in the United
States and  elsewhere is published  and  assessments  of the  economics of water
treatment  continue.  Management is confident that these OEM agreements  will be
consummated  in the near future.  The Company  maintains an internet  website at
www.sionix.com.

CAUTIONARY STATEMENT:

Statements  included in this  Management's  Discussion and Analysis of Financial
Condition and Results of  Operations,  and in future filings by the Company with
the Securities and Exchange  Commission,  in the Company's press releases and in
oral statements made with the approval of an authorized  executive officer which
are not  historical  or  current  facts are  "forward-looking  statements"  made
pursuant to the safe harbor  provisions  of the  Private  Securities  Litigation
Reform Act of 1995 and are subject to certain risks and uncertainties that could
cause actual results to differ  materially  from  historical  earnings and those
presently anticipated or projected. The Company wishes to caution readers not to
place undue reliance on any such forward-looking statements, which speak only as

                                    Page 18

<PAGE>

of the date made. The following  important factors,  among others, in some cases
have  affected and in the future could affect the Company's  actual  results and
could cause the Company's actual financial performance to differ materially from
that expressed in any forward-looking  statement:  (i) the extremely competitive
and volatile conditions that currently exist in the water filtration marketplace
are  expected to  continue,  placing  further  pressure  on pricing  which could
adversely  impact sales and erode  profit  margins;  (ii) many of the  Company's
major  competitors in each of its channels of  distribution  have  significantly
greater financial  resources than the Company;  and (iii) the inability to carry
out  marketing  and sales plans would have a  materially  adverse  impact on the
Company's projections.  The foregoing list should not be construed as exhaustive
and  the  Company   disclaims  any   obligation   subsequently   to  revise  any
forward-looking  statements to reflect events or circumstances after the date of
such  statements or to reflect the occurrence of  anticipated  or  unanticipated
events.











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                                    Page 19



<PAGE>

                          PART II - OTHER INFORMATION.

Item 1. Legal Proceedings.

     At the end of the period coverage by this report the Company is a defendant
in a lawsuit in San Diego County  Superior  Court filed by an  ex-employee.  The
ex-employee  alleged  that the Company  breached  his  employment  contract  and
personally  defamed  him.  The  Company had filed its cross claim and intends to
vigorously  defend the lawsuit.  At the time of the filing of this  report,  the
parties had settled the lawsuit.

     With the  exception  of the  above  referenced  matter,  there are no legal
proceedings  against the  Company  and the Company is unaware of any  unasserted
claim or assessment which will have a material effect on the financial  position
or future operations of the Company.

Item 2. Changes in Securities.

     Not required.

Item 3. Defaults Upon Senior Securities.

     Not required.

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

     Not Required

Item 5. Other Information.

     Not required.

Item 6. Exhibits and Reports on Form 8-K.

     (a) There are no exhibits filed with this Form 10-Q.

     (b) There were no other reports on Form 8-K filed during the quarter of the
period covered.


                                    Page 20

<PAGE>

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) 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.


                                                  SIONIX CORPORATION
                                                  A Utah Corporation


Dated: August 14, 1997                            /s/   Jack F. Moorehead
                                                  -----------------------------
                                                  By:  Jack F. Moorehead
                                                  Its:  President



Dated: August 14, 1997                            /s/ Michael A. Taylor
                                                  -----------------------------
                                                  By:  Michael A. Taylor
                                                  Its: Chief Executive Officer




                                    Page 21