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: December 31, 1996; 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 Identification No.)
incorporation or organization)

5405 Morehouse Drive, Suite 250, San Diego, California              92121
------------------------------------------------------          --------------- 
(Address of principal executive offices)                           (Zip Code)

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

                                       N/A
          -------------------------------------------------------------
          (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 December  31, 1996,  there were  23,725,076  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 its  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>

                               SIONIX CORPORATION
                    (Formerly Automatic Control Corporation)
                          (A Development Stage Company)
                                  Balance Sheet

                                     ASSETS

<TABLE>
<CAPTION>

                                        December 31,             September 30,
                                             1996                       1996
                                        ------------             -------------                
                                        (Unaudited)
<S>                                     <C>                      <C>
CURRENT ASSETS

 Cash in banks                          $     25,626             $      36,041
 Inventory (Note 2)                     $     61,885                    40,333
 Prepaid expenses                              2,981                     2,981
                                        -------------            --------------

    Total Current Assets                      90,492                    79,355
                                        --------------           --------------

PROPERTY AND EQUIPMENT - 
   NET(Notes 2 and 3)                        103,509                   107,367
                                        --------------           --------------

OTHER ASSETS

  Intangibles - net (Notes 2 and 4)        1,254,728                 1,210,622
  Deposits                                     6,996                     6,996
                                        --------------           --------------
  Total Other Assets                       1,261,724                 1,217,618

TOTAL ASSETS                            $  1,455,725            $    1,404,340
                                        ===============         ===============

</TABLE>



















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

                                     Page 3

<PAGE>


                               SIONIX CORPORATION
                    (Formerly Automatic Control Corporation)
                          (A Development Stage Company)
                            Balance Sheet (Continued)

                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                        December 31,             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                           173,456                   112,272
                                        ------------             --------------
Total Current Liabilities                    231,303                   170,119

LONG-TERM DEBTS

Lease payable (Note 6)                        13,533                    16,021
Related party payables (Note 7)              168,369                    72,200
Convertible debenture (Note 8)                30,000                    10,000
                                        ------------             --------------

Total Long-Term Debts                        211,902                    98,221
                                        ------------             --------------                    

Total Liabilities                            443,205                   268,340
                                        ------------             --------------

COMMITMENTS AND CONTINGENCIES
(Notes 6 and 12)                                -                          -
                                        ------------             --------------

STOCKHOLDERS' EQUITY

Common stock $.001 par value,
100,000,000 shares authorized,
23,725,076 and 23,599,696 shares
issued and outstanding, respectively          23,725                    23,600
Additional paid-in capital                 5,407,972                 5,282,717
Deficit accumulated during the 
developmental stage                       (2,087,377)               (1,838,517)
Subscription receivable (Note 10)         (2,331,800)               (2,331,800)
                                        --------------           --------------

Total Stockholders' Equity                 1,012,520                 1,136,000
                                        --------------           --------------

TOTAL LIABILITIES AND STOCKHOLDERS' 
EQUITY                                  $  1,455,725             $   1,404,340
                                        ==============           ==============

</TABLE>




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

                                     Page 4

<PAGE>


                               SIONIX CORPORATION
                    (Formerly Automatic Control Corporation)
                          (A Development Stage Company)
                            Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                           From Inception on
                             For the Three Months End        October 3, 1994
                                     December 31           Through December 31,
                              --------------------------   -------------------- 
                                1996           1995                1996
                              --------------------------   --------------------
<S>                           <C>            <C>            <C> 
REVENUE                       $        -     $    -         $         -
                              ------------   -----------   --------------------
                              
EXPENSES

Research and development                        193,938                843,652
Depreciation and Amortization      27,600        25,948                187,556
Administrative and marketing      218,135       208,235              1,024,898
                              -------------  -----------    -------------------

Total Expenses                    245,735       428,121              2,056,106
                              -------------  -----------    -------------------

(LOSS) FROM OPERATIONS           (245,735)     (428,121)            (2,056,106)
                              -------------  -----------    -------------------

OTHER INCOME (EXPENSE)

Interest                           (3,125)      (12,533)               (31,271)
                              -------------  -----------    -------------------

Total Other Income (Expense)       (3,125)      (12,533)               (31,271)
                              -------------  -----------    ------------------              
                                           
NET LOSS                      $  (248,860)   $ (440,654)    $       (2,087,377)
                              =============  ===========    ===================

LOSS PER SHARE                $     (0.01)   $    (0.10)
                              =============  ===========    ===================

</TABLE>
















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

                                     Page 5

<PAGE>


                               SIONIX CORPORATION
                    (Formerly Automatic Control Corporation)
                          (A Development Stage Company)
                       Statements of Stockholders' Equity
           From Inception on October 3, 1994 through December 31, 1996
                                   (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
                    (Formerly Automatic Control Corporation)
                          (A Development Stage Company)
                 Statements of Stockholders' Equity (Continued)
           From Inception on October 3, 1994 through December 31, 1996
                                   (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
                    (Formerly Automatic Control Corporation)
                          (A Development Stage Company)
                 Statements of Stockholders' Equity (Continued)
           From Inception on October 3, 1994 through December 31, 1996
                                   (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          -           -

Net loss for the three
months ended December 
31, 1996               -            -          -         (248,860)        -
                  ------------ ----------  ----------  ------------  ---------
                             

Balance
December 31, 
1996             $23,725,076   $23,725     $5,407,972  $(2,087,377) $(2,331,800)
                 ============  ==========  =========== ============ ===========

</TABLE>

















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

                                     Page 8


<PAGE>


                               SIONIX CORPORATION
                    (Formerly Automatic Control Corporation)
                          (A Development Stage Company)
                            Statements of Cash Flows
                                   (Unaudited)
                                                                               
<TABLE>
<CAPTION>

                                                                 From
                                                                 Inception on
                                                                 October 3 ,
                              For the Three Months Ended         1994 Through
                                    December 30,                 September 30,
                                  1996              1995             1996
                              -------------     ------------     -------------
<S>                           <C>               <C>              <C>  
                                                           
CASH FLOWS FROM
OPERATING ACTIVITIES


 Net loss                     $   (248,860)     $  (440,654)     $   (2,087,377)

Adjustment to Reconcile Net Loss
 To Net Cash Used by Operating
 Activities
  Depreciation and amortization     27,600           25,948            187,556
  Common stock issued for services   -              135,618            159,925
Change in Assets and Liabilities
 (Increase) decrease in inventory  (21,552)             -              (61,885)
 (Increase) decrease in
  other current assets               -              (70,991)            (2,981)
  Increase (decrease)
  In accrued expenses               61,184           14,491            134,057
                              -------------     -------------    --------------
                                                
Net Cash Used by Operating 
Activities                        (181,628)        (335,588)        (1,670,705)
                              -------------     -------------    --------------
CASH FLOWS FROM
 INVESTING ACTIVITIES
 Payment of deposits                  -                 -               (6,996)
 Purchase of intangibles           (66,207)          (9,154)          (140,624)
 Purchase of fixed assets           (1,642)          (9,056)           (76,724)
                              -------------     --------------   --------------
Net Cash Used by
 Investing Activities              (67,849)         (18,210)          (224,344)
                              --------------    --------------   --------------

CASH FLOWS FROM
FINANCING ACTIVITIES

Repayment of notes payable and
 contracts payable                  (2,487)             -              (10,652)
Proceeds from sale of stock        125,380          452,945          1,676,458
Proceeds from notes payable and
 convertible debenture             116,169              -              254,869
                              ---------------    -------------   --------------
                                                                    
Net Cash Provided by
 Financing Activities         $    239,062       $  452,945      $    1,920,675
                              ---------------    -------------   --------------

</TABLE>

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

                                     Page 9
      
<PAGE>

                               SIONIX CORPORATION
                    (Formerly Automatic Control Corporation)
                          (A Development Stage Company)
                      Statements of Cash Flows (Continued)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                 From
                                                                 Inception on
                                                                 October 3 ,
                              For the Three Months Ended         1994 Through
                                    December 30,                 September 30,
                                  1996              1995             1996
                              -------------     ------------     -------------
<S>                           <C>               <C>              <C>  
INCREASE (DECREASE) IN CASH   $    (10,415)     $     99,147     $      25,626

CASH AT BEGINNING OF PERIOD         36,041           130,260               -
                              --------------    -------------    --------------
                                                                               
CASH AT END OF PERIOD         $     25,626      $    229,407     $      25,626
                              ==============    =============    ==============

CASH PAID FOR:
  Interest                    $      3,125      $        -       $       9,259
  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
                    (Formerly Automatic Control Corporation)
                          (A Development Stage Company)
                        Notes to the Financial Statements
                               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  September 30,
1996 have been principally  devoted to research and development,  organizational
activities,  and raising capital.  As of September 30, 1996, the Company has not
yet had any  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.  Accordingly, the accompanying statements of operations
and cash flows are for the nine months then ended.

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
                    (Formerly Automatic Control Corporation)
                          (A Development Stage Company)
                  Notes to the Financial Statements(Continued)
                     December 31,1996 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:

<TABLE>
<CAPTION>


                    December 31, 1996             September 30, 1996
                    -----------------             ---------------------
<S>                 <C>                           <C>  
Work-in-progress    $          54,635             $              33,083
Finished goods                  7,250                             7,250
                    ------------------            ----------------------
Total               $          61,885             $              40,333 
                    ==================            ======================

</TABLE>

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 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
carryovers of approximately $2,080,000 will expire by the year 2011.

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
                    (Formerly Automatic Control Corporation)
                          (A Development Stage Company)
                  Notes to the Financial Statements(Continued)
                     December 31,1996 and September 30, 1996

NOTE 3 -    PROPERTY AND EQUIPMENT

Property and equipment at December 31, 1996 and September 30, 1996  consisted of
the following:

<TABLE>
<CAPTION>

                                        December 31,        September 30,
                                          1996                  1996
                                        ------------        -------------
<S>                                     <C>                 <C>  
Computers and test equipment            $    127,245        $     125,603
Furniture and fixtures                         3,832                3,832
                                        ------------        -------------

             Total                           131,077              129,435

Less accumulated depreciation                (27,568)             (22,068)
                                        -------------       --------------

Property and Equipment - Net            $    103,509        $     107,367
                                        =============       ==============

</TABLE>

NOTE 4 - INTANGIBLE ASSETS

Intangible  assets at December 31, 1996 and September 30, 1996  consisted of the
following:

<TABLE>
<CAPTION>

                                        December 31,        September 30,
                                          1996                  1996
                                        ------------        -------------
<S>                                     <C>                 <C>  
Patents issued and pending              $    168,738        $     102,531
Intellectual property                        745,667              745,667
Marketing and development costs              500,312              500,312
Less accumulated amortization                159,989             (137,888)
                                        -------------       --------------

Intangible Assets - Net                 $  1,254,728        $   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
                    (Formerly Automatic Control Corporation)
                          (A Development Stage Company)
                  Notes to the Financial Statements (Continued)
                     December 31,1996 and September 30, 1996


NOTE 6 - LEASE COMMITMENTS

The Company has entered into an operating lease for its office space.  Under the
terms of the lease, the Company is obligated to pay the following for the fiscal
years ended September 30,

<TABLE>
<CAPTION>
          
          Year                     Amount              
          --------                 ---------
          <S>                      <C>
          1997                     $ 83,460
          1998                     $ 83,460
          1999                     $ 20,865
                                   ---------
          Total                    $187,785
                                   ==========

</TABLE>

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                    $ 21,380
          Less: current portion     ( 7,847)
                                   -----------

          Long-term portion        $ 13,533
                                   ===========

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                     $   7,103
                         1998                         9,470
                         1999                         7,892
                         2000                            -
                         2001 and thereafter             -
                                                  -----------
          Total future minimum lease payments        24,465

          Less, amount representing interest         (3,085)
                                                  -----------
 
          Present value of future minimum
          lease payments                          $   21,380
                                                  ===========

</TABLE>

                                    Page 14

<PAGE>

                               SIONIX CORPORATION
                    (Formerly Automatic Control Corporation)
                          (A Development Stage Company)
                  Notes to the Financial Statements (Continued)
                    December 31, 1996 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 December 31, 1996,  $168,369 was due by the Company as a result
of these  promissory  notes.  The notes bear  interest at 10% and 13% and mature
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  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
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 addition to the above mentioned  notes, the Company entered into an agreement
for future  production costs.  Under this agreement,  the Company issued 112,500
shares at $6.00 per share for production costs valued at $675,000.

                                    Page 15
<PAGE>

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 unlikely.
Therefore,   no  accrual  has  been  recorded  in  the  accompanying   financial
statements.

NOTE 13 - COMMON STOCK PURCHASE WARRANTS

The Company's  Board of Directors has  authorized  and approved  638,445  common
stock purchase warrants as of September 30, 1996 as follows:

<TABLE>
<CAPTION>
Number              Exercise Price                 Expiration
of Warrants         Per Share                        Date(s)
-----------         ---------------         -----------------------------
<S>                 <C>                     <C>                 
570,100             $       1.00            May 15, 1998 - Sept. 30, 1998
104,445             $      10.00                          January 4, 1998
  7,813             $       5.50                             May 15, 1998

</TABLE>

NOTE 14 - 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.  Sales of the software  product  began in October,  1996 and
hardware  sales are  scheduled  to begin in  January,  1997.  Additionally,  the
Company  is in the  process  of  filing a  registration  statement  for a public
offering  with  the  Securities  and  Exchange  Commission.  In the  opinion  of
management,  sales of the Company's  products,  together with the proceeds of an
offering,  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
(Formerly Automatic Control 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 December 31, 1996,  and the
related  statements of operations,  stockholders'  equity and cash flows for the
three months then ended,  and for the three  months ended  December 31, 1995 and
from inception on October 3, 1994 through  December 31, 1996 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
February 8, 1997











              [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                    Page 17

<PAGE>


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

Liquidity and Capital Resources

During  the  quarter  ended  December  31,  1996,  the  Company  had to  correct
incapabilities  between the Company's  automation  software and certain computer
systems.  This delayed the release of the retail  version  until  January  1997.
Although  this  put  a  strain  on  the  Company's  cash  reserves,   additional
investments  by the officers and  shareholder's  allowed the Company to continue
operations.  Management is continuing  discussions  with a number of individuals
and  groups   considering  an  investment  in  the  Company  and  is  continuing
discussions with possible underwriters for a secondary offering.

Results of Operations

For the 1st quarter ended  December 31, 1996, the Company is reporting a loss of
$249,000 or $0.01 per share. During the quarter the Company shipped in excess of
1,000  preview  copies  of it's  automation  software  to  members  of the water
treatment industry nationwide.  Sales of the Company's automation software began
in January 1997.

The Company  maintains  an  Internet  home page at  http://www.sionix.com  where
additional  up to date  information  about the Company can be found from time to
time.

                          PART II - OTHER INFORMATION.

Item 1. Legal Proceedings.

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 unlikely

With the  exception  of the above  referenced  matter,  there are no other 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

                                    Page 18
<PAGE>

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 19


<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: February 13, 1997                          /s/   Jack F. Moorehead
                                                  ------------------------
                                                  By:  Jack F. Moorehead
                                                  Its:  President



Dated: February 13, 1997                          /s/ Michael A. Taylor
                                                  -----------------------------
                                                  By:  Michael A. Taylor
                                                  Its:  Chief Executive Officer





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