f10k2012_sionix.htm

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2012

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 002-95626-D

(Exact Name of Registrant as Specified in Its Charter)

Nevada		87-0428526
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

914 Westwood Blvd., Box 801 Los Angeles, California		90024
(Address of Principal Executive Offices)		(Zip Code)

(Issuer’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, Par Value $0.001 Per Share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes o No x

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K (§ 229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of a “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One)

o	Large Accelerated Filer	o	Accelerated Filer

o	Non-accelerated Filer (do not check if smaller reporting company)	x	Smaller Reporting Company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold on the OTC Bulletin Board on March 30, 2012 was $23,946,678.

As of December 14, 2012, the Company had 409,615,875 shares of its common stock, $0.001 par value per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

ANNUAL REPORT ON FORM 10-K

FOR THE PERIOD ENDED SEPTEMBER 30, 2012

TABLE OF CONTENTS

PART I		4

ITEM 1.	BUSINESS	4
ITEM 1A.	RISK FACTORS	13
ITEM 1B.	UNRESOLVED STAFF COMMENTS	19
ITEM 2.	PROPERTIES	19
ITEM 3.	LEGAL PROCEEDINGS	19
ITEM 4.	MINE SAFETY DISCLOSURES	19

PART II		20

ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	20
ITEM 6.	SELECTED FINANCIAL DATA	21
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	22
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	28
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	29
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	30
ITEM 9A.	CONTROLS AND PROCEDURES	30
ITEM 9B.	OTHER INFORMATION	30

PART III		31

ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	31
ITEM 11.	EXECUTIVE COMPENSATION	33
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	36
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	37
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	38

PART IV		39

ITEM 15.	EXHIBITS	39

SIGNATURES		41

Note Regarding Forward Looking Statements

This Annual Report on Form 10-K contains “forward-looking statements”. These forward-looking statements are based on our current expectations, assumptions, estimates and projections about our business and our industry. Words such as “believe,” “anticipate,” “expect,” “intend,” “plan,” “may,” and other similar expressions identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in the section of this Annual Report titled “Risk Factors” as well as the following:

●	The current economic crisis in the United States, which may reduce the funds available to businesses and government entities to purchase our system;

●	whether we will be able to raise capital as and when we need it;

●	whether our water treatment and purification system will generate significant sales;

●	our overall ability to successfully compete in our market and our industry;

●	unanticipated increases in development, production or marketing expenses related to our product and our business activities; and

●	other factors, some of which will be outside our control.

You are cautioned not to place undue reliance on these forward-looking statements, which relate only to events as of the date on which the statements are made. We undertake no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. You should refer to and carefully review the information in future documents we file with the Securities and Exchange Commission.

Overview of Our Business

Sionix designs, develops, markets and sells cost-effective water management and treatment solutions intended for use in the oil and gas, agriculture, industrial, disaster relief, and municipal (both potable and wastewater) markets. The Company’s Mobile Water Treatment System (“MWTS”) contains a Dissolved Air Floatation (“DAF”) system with patented technology that management estimates removes more than 99 percent of the organic, and most inorganic, particles in water. Historically, DAF systems created bubbles that were 50+ microns in size, which were unable to remove all contaminants due to their size. The Sionix MWTS utilizes and refines DAF technology to provide a pre-treatment process using ambient oxygen and minimal chemical flocculent aids that we believe is efficient and cost-effective. The patented Sionix technology makes micro-bubbles which allow a greater percentage of contaminants to be captured, floated to the surface and skimmed off, without harmful chemicals. The Company’s MWTS is mobile and modular such that it can be transported easily to address a wide range of water treatment markets and can meet customers’ needs for new systems or to replace or integrate with existing filtration technologies.

The water treatment recycling and reuse industry is highly fragmented, consisting of many companies involved in various operational capacities, including companies that design fully integrated systems for processing millions of gallons of water for municipal, industrial, and commercial applications. Demand for water treatment and purification has continued to grow due to economic expansion, population growth, scarcity of usable water, concerns about water quality and regulatory requirements.

Many believe the world is facing a global crisis - in both supply and quality. Water is a natural resource that has a limited supply and no true substitute, and yet only a very small percentage of the earth’s water is available for human consumption. Demand for water resources is compounded by a growing and developing world population, Third World urbanization, and increasing water usage in industries such as oil and gas, agriculture and food processing. It has been reported in a television broadcast by CNBC titled “Liquid Assets: The Big Business of Water,” aired originally in 2010, that within 15 years, 48 countries will be without sufficient water to meet basic requirements. We believe the lack of water resources is directly linked to inadequate water management strategies on the part of governments, businesses, consumers and private individuals. We expect global water issues will continue to drive both domestic and international demand for water treatment and recycling.

Domestic Supply Crisis

Per capita usage of water in the United States is among the highest in the world. The supply of fresh water continues to tighten, especially in the Western half of the United States where we face a potential water crisis due to limited supply and increasing demand. Increasing usage of water in industries such as oil and gas exploration and production, agriculture, and food processing continue to threaten the supply of fresh water in the United States. For example, there are over 21 billion barrels of water consumed annually in the U.S. from fracking activity in the oil and gas industry, as each well requires millions of gallons of water for fracking over its life. Most of this water returns to the surface as contaminated “produced water” that could be treated and recycled. In many areas, such as the Bakken or Marcellus shale formations, there is limited access to large scale, industry specific water treatment and recycling facilities which could decrease the need for usage of fresh water in fracking.

Inadequate Regulatory Action

Poor quality of existing water management resources, combined with regulatory inaction, have failed to provide the leadership and guidance to mandate recycling and reuse of water resources in many industries. While there has been a general lack of adequate water management regulation in many industries, we believe that recent regulatory action requiring more responsible water usage management in oil and gas fracking in states such as Pennsylvania is a trend that should drive similar action in other states, such as North Dakota. North Dakota’s oil and gas industry has no readily available, affordable source of water recycling and treatment. The current practice in North Dakota for wastewater created during fracking is to inject produced water back into the ground, a practice that has unknown effects on the environment and has caused community concern and come under regulatory scrutiny in other States. Each horizontal new well requires millions of gallons of fresh water over its life, contributing heavily to the water supply crisis. Any regulatory actions affecting the use of fresh water in fracking or injection of produced water back into the ground could affect the oil and gas industry in North Dakota and increase industry demand for water treatment and recycling services.

In addition to the oil and gas industry, the domestic agricultural industry is generally lacking in sufficient water management regulations. Until a concerted private/public effort is expended, the contaminated acreage will continue to expand. We believe the excess use of water and lack of regulation in the agricultural industry will result in regulatory changes that will likely increase the domestic demand for various water treatment and recycling services..

Growing Need for Affordable Regulatory Compliance

There are over 200,000 public rural water districts in the United States. The majority of these are considered very small, small and medium-sized public water systems, all of which support populations of fewer than 10,000 people. A significant number of these are in violation of the U.S. Safe Drinking Water Act (“SDWA”) at any given time. This problem is expected to worsen as more stringent EPA rules are implemented for small public water systems. Substantial expenditures will be needed in the coming years for repair, rehabilitation, operation, and maintenance of the water and wastewater treatment infrastructure. We believe that water districts using conventional treatment methods will be unable to comply with the SDWA without substantial installations of on-site chemical filter aids and disinfection equipment.

Drinking water, regardless of its source, may contain impurities that can affect the health of consumers. Although municipal agencies and water utilities in the United States are required to provide drinking water that complies with the SDWA, the water supplied to homes and businesses from municipalities and utilities may contain high levels of bacteria, toxins, parasites and human and animal-health pharmaceuticals, as well as high levels of chlorine used to eliminate contaminants. In the industrialized world, water quality is often compromised by pollution, aging municipal water systems, and contaminated wells and surface water. In addition, the specter of terrorism directed at intentional contamination of water supplies has heightened awareness of the importance of reliable and secure water purification. The importance of effective water treatment is also critical from an economic standpoint, as health concerns and impure water can impair consumer confidence in food products. Discharge of impaired waters into the environment can further degrade the earth’s water and violate environmental laws, with the possibility of significant fines and penalties from regulatory agencies.

International Market

International Demand for Safe Drinking Water

The quality of drinking water outside the United States and other industrialized countries is generally much worse, with high levels of contaminants and often only rudimentary purification systems. A recent report from the United Nations estimates that approximately 1.1 billion people worldwide do not have access to fresh drinking water and approximately 2.6 billion do not have adequate sanitation systems. Approximately 3.5 million people die each year from water-related diseases, a majority of them from countries lacking adequate access to safe drinking water and sanitation systems. A lack of infrastructure in many of these areas creates a significant need for an affordable, mobile, customizable mobile water treatment system with adequate capacity.

Foreign Desalination Market Expansion

Equally important to the treatment of contaminated water in foreign markets is the development of desalination as a method of producing potable water. The Caribbean and Middle-Eastern markets already depend on desalination for a large portion of their drinking water. Industry expectations are that this sector of the water treatment industry will experience significant growth during the forthcoming decades as ordinary sources of fresh water (such as lakes, rivers, streams, well water and treated water) continue to be stressed by unregulated industrial, commercial and agricultural uses. We believe that the Sionix MWTS can be used in conjunction with existing desalination equipment to prolong the equipment life, creating cost savings and improving functionality.

The global market for the treatment and purification of drinking water and the treatment, recycling and reuse of wastewater has shown significant growth as world demand for water meeting the standards of various governmental mandates, including SDWA, Food and Agricultural Organization of the United Nations, California's Title 22 Water Quality Standards and a host of other national, international, and industry standards, continues to grow.

Current Water Treatment Solutions

Slow Sand Filtration

Slow sand filtration is used to enhance the clarity and aesthetics of delivered waters. In a typical treatment facility, the first step adds to the raw incoming water a substance which causes tiny, sticky particles (called “floc”) to form. Floc attracts dirt and other particles suspended in the water. This process of coagulation causes heavy particles of dirt and floc to clump together and fall to the bottom. These heavier particles form sediment which is siphoned off, leaving the clearer water, which passes on to filtration. The most common filtration method is known as “slow sand” or sand-anthracite, in which the water flows into large shallow beds and passes down through layers of sand, gravel and charcoal. The final process is disinfection, often using chemicals such as chlorine or ozone.

While “slow sand” filtration is by far the most common treatment method used in the United States, it has serious drawbacks. The filtration beds are large, shallow in-ground concrete structures, often hundreds of feet long to accommodate large volumes of water. The water being filtered must remain in these beds for a comparatively long-time (known as “residence time”) in order for low-density materials to settle out. The sand and charcoal filtering medium rapidly becomes plugged and clogged. The bed must then be taken off-line and back-flushed, which uses large amounts of water - water which becomes contaminated and is therefore wasted. Additional settling ponds are necessary to “de-water” this waste by evaporation so that the dried solids may be disposed of in an environmentally safe (but costly) method.

In addition to the excessive size of treatment facilities and the time consuming process, the average life expectancy of a treatment plant is only about 15-20 years, after which the plant must be extensively renovated. Population growth necessitates enlarging old facilities or building new ones, occupying still more valuable land. This process of updating old facilities or of building new facilities is both expensive and time-consuming.

Aside from cost and logistics, another serious drawback is the need for use of costly chemicals to complete filtration and prevent the spread of pathogens. Illnesses such as hepatitis, gastroenteritis and Legionnaire’s Disease, as well as increasingly pervasive chemical contaminants, have become more common. One of the more difficult of these problems is monitoring and providing a barrier against microscopic protozoan parasites such as cryptosporidium (4-7 microns in size) and giardia lamblia oocysts (5-7 microns). These common organisms exist naturally in the digestive systems of livestock and wild animals, and end up in lakes and streams. They have caused severe illness in millions of people in the United States. Conventional “slow sand” water filtration beds, used in most of the nation’s public water districts, will not filter out these organisms.

In general, water districts using sand-anthracite filters cannot meet the EPA Surface Water Treatment rules without a massive increase in on-site chemical filter-aids, additional filtering and the installation of ozone or other disinfection equipment.

Organic filtration is the process of removing organic matter from water. As previously mentioned, the popular conventional filtration systems, such as “slow sand”, cannot effectively filter out smaller organic matter. The presence of high levels of organic matter makes disinfection more difficult and will clog expensive filter media used in these processes, causing long back-flush cycles, increasing the volume of back-flush waste-water. Reverse osmosis and activated coal are two of the most common organic filtration methods.

Reverse osmosis is a filtration method that removes many types of large molecules and ions from solutions by applying pressure to the solution when it is on one side of a selective membrane. The result is that the solute is retained on the pressurized side of the membrane and the pure solvent (water) is allowed to pass to the other side. Reverse osmosis systems are often used in conjunction with other forms of water treatment such as “slow sand” or dissolved air flotation.

Coal based activated carbon originates from coal that has undergone steam activation process to create its activated carbon form. During activation, it creates millions of pores at the surface of the carbon thus increasing the total surface area. Activated carbon pores can be divided into three general sizes, namely, Micro-pores (diameter in the range of less than 2 nm), Meso-pores (diameter in the range of 2 – 25 nm), and Macro-pores (diameter in the range of above 25 nm). Due to its unique distribution of pores diameter, coal based activated carbon is very popular in the gas phase purification industries, potable water purification industries, wastewater purification industries and aquarium/pond water purification industries.

In the case of desalination, organic matter is the primary cause of system failures resulting from fouling of the delicate filtration membranes that are used to filter out organic matter. These costly filtration membranes require frequent replacement and maintenance. The membranes are clogged quickly by organic particles in the water, due to the fact that most initial filtration systems (such as “slow sand” and standard DAF) are not technologically advanced enough to remove an optimal amount of smaller particles. This adds excess strain on filter membranes, causing the need for frequent replacement.

In addition to higher costs associated with organic filtration there have been several serious public health emergencies caused by microbes breaking through the filtration barrier in treatment facilities. When ingested, they can cause diarrhea, flu-like symptoms and dehydration. In 1993, over 400,000 people in Milwaukee, Wisconsin became ill and more than 100 people died during a failure in the drinking water filtration system according to the Department of Health and Human Services – Centers for Disease Control and Prevention (CDC).

Most surface water bodies in the United States, many of which supply drinking water, are contaminated with organisms that are extremely resistant to disinfection, and increasing disinfectant levels in the attempt to kill them creates a new set of problems. Disinfectants such as chlorine can react with organic matter in the water to form new chemicals known as “disinfection byproducts.” These byproducts, of which trihalomethanes (THM) are the most common, are thought to be health-threatening and possibly cancer-causing. The SDWA regulations address minimum acceptable levels of these byproducts, including THMs. Therefore, physical removal of the organisms from the water is vitally important to their control.

Dissolved Air Flotation

Dissolved air flotation, or DAF, has been used in water and wastewater treatment for more than eighty years. The DAF method involves injecting microscopic bubbles of air under pressure into the water being treated. The air molecules bond with organic and inorganic matter in the water, and because of the bubbles’ lightness, the clumps float to the surface, where they are skimmed away. Over the eight decades DAF has been utilized, various improvements have been made in the technology. Until recently, it has not been utilized widely in the United States, and is used primarily for wastewater treatment. DAF is often used in conjunction with complementary forms of treatment such as slow sand and organic filtration.

A disadvantage of standard DAF technology has been that DAF systems performing at their best were only able to create bubbles that were ~50+ microns in size. Therefore, any organic matter smaller than 50 microns was not efficiently removed through the DAF filtering process. The water needed to be then disinfected using chemicals or put through an organic filtration system where the large amount of remaining organic matter could clog filtration membranes.

Our Solution – Sionix MWTS

The Sionix MWTS is a self-contained, mobile, customizable water treatment system or pre-treatment process that uses ordinary air, with minimal chemical flocculent aids. We believe that the MWTS is a cost-effective solution for a wide range of applications, including even the smallest water utilities or commercial applications. Our mobile treatment system technology enables water recycling and purification for oil and gas, agriculture, disaster relief, municipalities and other applications.

The Sionix MWTS employs our patented DAF technology and improves the efficiency of the standard DAF process by removing what management estimates is more than 99% of the organic, and most inorganic, particles in water. Compared to historical DAF standards of 50+ microns, the patented Sionix technology makes micro-bubbles, which allow a much greater percentage of contaminants to be captured, floated to the surface and skimmed off, without reliance on harmful chemicals. We believe that the primary benefits of the Sionix MWTS system include:

Decreased Costs. The Sionix MWTS reduces costs associated with chemical treatments, energy usage, and day-to-day operations. By significantly reducing water turbidity and minimizing pathogens, the MWTS minimizes the need for disinfection chemicals. Used in conjunction with treatment and/or filtration technology, which may be required by specific raw water conditions, it reduces back-flush cycle times, thereby lengthening the life of post-DAF equipment such as reverse osmosis membranes, creating cost savings while reducing risks caused by use of excess chemicals. The Sionix DAF provides a denser concentration of white water bubbles, all while using a fraction of the floor space as compared to a typical DAF system. Additionally, the customer can save on operating costs as our technology allows the user to operate and control the entire MWTS with either a small staff or from a remote site via wired or wireless communications. A comprehensive service and maintenance program is part of all equipment leases.

Customizable Solution. Each MWTS is completely modular and can either be used to replace, or integrate with, existing filtration and treatment technology. We can customize each installation with filtration and reclamation options appropriate for the required treatment needs. Standard configuration includes a control and testing laboratory located in the rear of the DAF container. The addition of a generator module makes the system self-powered and each component of the MWTS is upgradeable. Our standard MWTS produces 280 gallons of post-DAF treated water per minute (about 403,200 gallons per day). If additional reverse osmosis treatment is required to produce potable water, output is generally diminished dependent upon salinity and total dissolved solids (TDS) of the pre-treated water. Multiple MWTS units can be assembled together for increased capacity.

Small, Mobile Footprint. The majority of existing water filtration facilities occupy large tracts of land and are comprised of large, shallow in-ground concrete structures, often hundreds of feet long to accommodate large volumes of water. Our MWTS units occupy a much smaller footprint than other types of water treatment facilities, ranging from 3,000 to 5,000 sq. ft. depending on the type of unit, and are modular, self-contained and portable. The entire MWTS is built into one or more forty-foot ISO standard transportable containers.

Rapid Deployment. Currently, population growth necessitates enlarging old facilities or building new ones, occupying still more valuable land. This process requires lengthy environmental impact studies, long design periods, and complex financing programs to fund costly construction budgets, as lead times usually stretch out for years. The Sionix product offers rapid deployment, with a 48-72 hour install, fully commissioned in four to six weeks. The MWTS is assembled in a steel container that is sealed, thus preventing tampering or incursion by bio-terrorism or airborne contaminants. Should catastrophic damage be incurred, a replacement unit may be installed within a few days rather than many months or years as with in-ground systems.

o	Reduction in Pathogens and Disinfection Products. Our MWTS, by virtue of minimizing dangerous pathogens, also minimizes the necessity of using potentially cancer-causing disinfection products.

Our objective is to be a leading provider of patented water treatment technologies and services that can be used by our customers for water management and treatment solutions in multiple end markets. Our solutions are designed to make it more cost-effective for our customers to deploy tailored and mission-specific water treatment technologies. The principal elements of our strategy are to:

Focus our sales efforts into the oil and gas markets where our technology and solutions can offer a near-term return on investment for our customers. While there are many end market applications for our technology, we believe the treatment of produced water from oil and gas production offers the most compelling near term opportunity.

●

The Williston Basin Opportunity – This energy rich shale formation could provide significant sales opportunities for Sionix for the following reasons:

	(i)	Lack of infrastructure, including such basic requirements as housing, sanitation, transportation;
	(ii)	Limited current treatment alternatives for hydrocarbon contaminated wastes other than disposal wells, into which extremely toxic wastes are injected thousands of feet below the surface;
	(iii)	Limited regulatory environment that is expected to begin adoption of increasing environmental standards; and
	(iv)	Unsustainable demands on fresh water resources to support growing hydraulic fracturing activities and the region’s agricultural heritage.

Our MWTS offers an alternative to producers, allowing them to recycle the toxic flowback water from hydrofracturing operations either at the wellhead or off-site and return the treated water to the drillers for reuse. Recycling provides both economic and environmental benefits, including eliminating the expensive transportation costs and the debilitating maintenance costs on congested roadways through the Williston region.

In addition to the oil and gas applications, the proliferation of oil and gas related man camps in the Williston region to domicile workers, sub-contractors, and oil field service personnel represents another strain on scarce (sometimes non-existent) waste treatment resources. Combined with municipal treatment facilities, treatment of man camp and municipal wastes, these sources represents a meaningful resource of treated water for use in hydrofracturing activities, reducing the continued drawdowns on existing fresh water sources.

We have recently deployed MWTS and complementary testing and treatment equipment to the Williston region to sample, test and remediate flowback water at an injection well site. This pilot project will provide data and an on-site demonstration of the capabilities of the MWTS and complementary treatment technologies in a truly challenging environment. We believe that we can prove our ability to remediate flowback water from the oil and gas activities and offer this water for recycling. We may also have the opportunity to treat municipal wastewater to further reduce the region’s dependence on fresh water. Either of these treatment objectives, once demonstrated successfully and consistently should give us a competitive advantage in the Williston region. Previously our efforts to deploy a treatment system have been hampered by limited capital and a lack of influential relationships in the region. We believe now that we have both the capital and the relationships to successfully run the pilot project in the Williston region and that the demonstration of our technologies and services will be of interest to the E & P companies throughout the area.

●	The Bakken Formation has an estimated 3.0 to 4.3 billion barrels of undiscovered, technically recoverable oil based on research conducted by the U.S. Geological Survey (“USGS”) in 2008. This is a 25-fold increase in the amount of oil that can be recovered compared to the agency's 1995 estimate of 151 million barrels of oil. New geologic models applied to the Bakken Formation, advances in drilling and production technologies, and recent oil discoveries have resulted in these substantially larger technically recoverable oil volumes. As hydrofracturing, horizontal drilling, and artificial permeability technologies are required to harvest these vast domestic resources, water will either represent a significant inhibitor to the development of the resources, or if properly implemented water conservation measures are mandated, including recycling toxic hydrofracturing flowback water and harvesting local waste treatment products, water will facilitate the continued development of these resources. We believe that we can play a significant supporting role in the development of these energy rich properties.
●	The Marcellus Shale Opportunity – We have an understanding with REVH2O which is currently engaged in permitting activities in Pennsylvania, to provide a demonstration MWTS for purposes of testing, demonstration, and documentation. REVH2O is affiliated with Mr. Kenneth Calligar, one of our directors and interim Chief Executive Officer. To the extent this MWTS achieves acceptable testing results that have been developed in cooperation with regulatory, scientific and engineering consultants, we believe that a definitive purchase order will be placed for the existing MWTS and at least two more MWTS products for installation at a REVH2O fluids treatment site or sites that will be permitted and developed during 2013.
●	Agreement with Crown Maple Syrup, Inc. – In September 2012 we announced our entry into a lease agreement with Crown Maple Syrup, Inc., a New York based harvester and refiner of maple syrup for the emergent health conscious, ecologically friendly international sweeteners market. The agreement states that we are to supply Crown Maple with filtration equipment at Crown Maple’s facility in Dover Plains, NY. The system was delivered to the facility installed and tested during the fourth quarter, and it is expected to begin operation with the commencement of sap harvesting operations in February 2013.

Expand domestic and international sales force with individuals who possess industry and application specific experience and relationships. We intend to hire a direct sales force with industry expertise and relationships in the end markets we plan to target. Additionally, we intend to engage marketing and sales representatives on an agency basis both in the US and internationally.

Build relationships with engineering, procurement and construction (“EPC”) and other water treatment consulting companies that can serve as an indirect sales channel. EPC and consulting companies provide important strategic advice to our end customers on the engineering, design and construction of water treatment solutions and can have significant influence over a significant portion of the end customer’s budget. We intend to build and deepen our relationships with these companies to accelerate the acquisition of new customers.

Grow revenue through a flexible business model. We have the ability to integrate our technology in new and existing water treatment and management solutions. We have a model that provides flexibility to sell, lease or operate our MWTS and water treatment solutions to meet the needs of our end customers. We may in some instances lease or operate our MWTS for our customers as a fast-to-market strategy, using the customers operational budget to circumvent the capital budget cycle or adapt to environments that need quick implementation such as disaster relief or equipment failure.

Continue to invest in research and development activities and patent portfolio. We intend to continue to invest in research and development activities to develop new technologies and solutions focused on the water treatment market.

Marketing and Sales Plan

We have begun to market our MWTS and solutions to a number of vertical market oriented industry groups, including selected advertising in specialized publications, trade shows, and direct mail. Our efforts to date have been limited due to a lack of available cash, and limited results from our commercial efforts placing MWTS. Currently we utilize in-house marketing in conjunction with outsourced marketing consultants and national and international distributorships and agency relationships, both exclusive and non-exclusive in nature.

Our marketing efforts emphasize that our MWTS are easily expandable and upgradable; for example, adding ozone and microfiltration equipment to a DAF component. Each piece of equipment comes with state-of-the-art telemetry and wet-chemistry monitoring that expands as the MWTS does. We plan to provide lease financing to our MWTS clients, not only making it easy for a customer to utilize the equipment, but also guaranteeing that the customer will always have access to any refinements and improvements made to the MWTS.

In the United States, we plan to target the established base of small to medium water systems, as well as industrial users (such as the oil and gas industry, agriculture and food producers, and pharmaceuticals) and disaster relief agencies with a need for a clean and consistent water supply. Our initial focus in domestic markets will be on oil and gas, as well as the agricultural industry.

Following several successful installations of Sionix MWTS and services domestically we plan to broaden our marketing internationally, principally to local water systems and international relief organizations. The global market for water recycling, reuse and treatment includes a broad array of commercial, industrial, agricultural, municipal and disaster relief applications. According to industry data, it is estimated that 1.1 billion people in the world do not have safe drinking water. There is significant market potential in Asia, Africa, and Latin America, where in each region there is a severe lack of water supply for consumption or daily use, as well as poor quality of existing drinking water.

The following is a brief description of targeted applications and types of customers we intend to market to:

Oil and Gas Industry. The reservoir rocks in any oil and gas formation usually contain water along with hydrocarbons in varying concentrations. When hydrocarbons are extracted from the formation, water is also recovered along with hydrocarbons and is generally defined as “Produced Water.” On average, the ratio of produced water to actual hydrocarbons extracted from the wells of varying maturity is approximately 3:1, but can be as high as 10:1. The volume of water produced presents the greatest waste management challenge for oilfield operators. In addition, most wells utilizing hydrofracturing technology use enormous amounts of fresh water, up to 8 million gallons of water for a single well. After the hydrofracturing procedure is completed, much of the fluid returns to the surface as flowback water, contaminated by fracturing chemicals and subsurface contaminants including toxic organic compounds, heavy metals, and naturally occurring radioactive materials. Local and national government authorities have begun to focus on the issue of flowback water discharge and the use of fresh water resources to drill new wells. Government agencies are adopting laws and regulations to limit the discharge of harmful chemicals associated with produced and flowback water.

Wastewater and Sewage Treatment Facilities. Municipal sewage treatment is the process of removing contaminants from wastewater originating from household, industrial, healthcare and commercial sewage. It includes physical, chemical, and biological processes to remove physical, chemical and biological contaminants to produce a waste stream (treated effluent) and a solid waste or sludge suitable for discharge or reuse back into the environment. This material is often inadvertently contaminated with many toxic organic and inorganic compounds. Many of our country’s current municipal wastewater treatment systems are functionally outdated and subject to increasing regulatory demands to meet even minimal discharge standards.

Disaster Relief Organizations. During natural disasters such as earthquakes, tsunamis, floods, hurricanes, and tornadoes, it is the role of the National Guard and the Federal Emergency Management Agency to assist local authorities with emergency services. Damage to local utilities can disrupt the fresh water supply and cause the failure of wastewater (sewage) treatment plants. The MWTS can help address both of these problems. The system is completely self-contained, can be easily transported from place to place, is efficient, and can be equipped with its own power package.

Agribusiness. Treatment of agricultural wastewater is segregated into three categories: (i) food processing, (ii) animal waste (feed lots) and (iii) crop runoff pollution. Within the food processing industry there are several subsets, including (i) produce, (ii) meat processing, (iii) egg production, and (iv) dairy operations. Crop runoff pollution is the result of planting, cultivating, fertilizing, weed and pest control, and harvesting on the farm. (Runoff is caused by rain and irrigation.) Food processing involves treatment of animal waste pre-slaughter in the case of feeder cattle, hogs, and poultry. It also involves post harvest treatment of produce either for fresh delivery or for preservation by canning and/or freezing operations.

Developing Countries. In addition to the U.S. market, fast spreading urbanization in third-world countries has created a growing demand for public water systems. Most of the fatal waterborne illnesses occur in these third world or developing countries. Industrial and agricultural contamination of water supplies is epidemic because environmental controls are neither adequate nor well enforced.

Testing Plan and Results (2011)

We conducted a battery of tests on our basic MWTS in June 2011. In conducting these tests, Sionix hoped to demonstrate the efficacy of the MWTS in removing contaminants of substantially similar atomic weight and structure as the radioactive isotopes affecting the people of Japan following the nuclear disaster, the treatment of produced water from the oil and gas industry, and water contaminated from agricultural activity. Four different tests, with various contaminants in both freshwater and brackish water, were conducted as follows:

In Test Level 1, Lead, Cesium, and Iodine were added to the influent. Level 1 was designed to show the capacity and efficacy of the MWTS to treat contaminants that are the same as, or substantially similar, in atomic weight and structure as the radioactive isotopes currently found in the contaminated water near Japan’s Fukushima Daiichi nuclear facility.

In Test Level 2, approximately 175 lbs of salt was added to the influent water to reach no greater than 1500 ppm. Level 2 was designed to show the capacity and efficacy of the MWTS to treat influent water with a high concentration of salinity – as found in brackish water.

In Test Level 3, hydrocarbons were added to the brackish concentrate from Test Level 2. Level 3 was designed to show the capacity and efficacy of the MWTS to treat contaminated effluent water typically produced in the oil and gas industry.

In Test Level 4, biological contaminants were added. Level 4 was designed to show the capacity and efficacy of the MWTS in safely removing contaminants commonly generated in healthcare and agricultural applications, markets in which we have intense interest.

The testing results demonstrated that the MWTS as configured could reduce or eliminate each of these contaminants.

Sionix holds 4 issued patents related to water treatment and one additional expected to be issued within the next year. Three additional patent applications were filed on February 17, 2011 related to our process of bubble generation, and another in May 2012 related to another type of water treatment. Patents covering various aspects of the unit which forms a part of our MWTS will remain in force until 2024. We intend to file additional patents in the future.

Patent/App Number	Filing Date	Issue Date	Title	Description	Estimated Expiration
6,921,478	2/27/03	7/26/05	Dissolved Air Flotation System	DAF for Purification of Water	8/6/23
7,033,495	2/27/03	4/25/06	Self Contained DAF System	DAF for Purification of Water	2/16/24
7,767,080	4/24/06	8/3/10	Self Contained DAF System	DAF for Purification of Influent Water (continuation of ‘495 patent)	2/27/23
7,981,287	8/2/10	7/19/11	Self Contained DAF System	DAF without turbulator section (continuation of ‘080 patent)	2/27/23
13/185,690	7/19/11	NA	Self Contained Dissolved Air Flotation System	(continuation of ‘287 patent)	2/27/23
13/029,767	2/17/11	NA	Dissolved Air Flotation Nozzle for Use with Self Contained Dissolved Air Flotation System	Method of Use/Bubble Separation System	NA
13/029,783	2/17/11	NA	Dissolved Air Flotation System with Improved White Water Injection System	White Water Injection System	NA
13/029,970	2/17/11	NA	Dissolved Air Flotation System with Bubble Separation System and Method of Use	DAF Nozzle	NA
61/447,043	5/12/12	NA	Pico Filtration System	Pico Water Treatment System	NA

Research and Development

Research and development expenses for the year ended September 30, 2012 were $886,491 and for the year ended September 30, 2011 were $562,179. Research and development consists of additional modifications to the MWTS based on the varying water conditions experienced by our customers and prospective customers, and adjustments to unit functionality based on testing results. We capitalize development costs in accordance with U.S. GAAP. All other costs, including salaries and wages of employees included in research and development, have been expensed as incurred.

In March 2010 we announced our strategic alliance agreement with Pacific Advanced Civil Engineering, Inc. (PACE), an advanced water engineering firm headquartered in Fountain Valley, California. PACE has over 35 years of experience in all phases of water remediation, large and small, including storm water management, river engineering, floodplain mapping, watershed analysis and planning, GIS water resource applications, water quality assessment, water and wastewater treatment, potable water storage and distribution, and lake systems. Under this agreement, PACE has provided periodic engineering oversight of our MWTS and the units included in them.

Pursuant to our arrangement with PACE, PACE is to receive a commission based on the revenue earned from the sale of a MWTS for services provided on a per customer basis, to the extent that services are provided by PACE. Should we require additional services from PACE, the services will be charged either on a per-hour or fixed-price basis.

We anticipate expanding these types of relationships to other firms who have industry or geographic expertise or relationships. We believe this will help us to validate the efficacy of our technology. We also believe that these relationships will provide exposure to a broader range of application opportunities and types of customers.

We estimate that we have hundreds of potential competitors – DAF has been used for over 80 years. However, due to the economic barriers created by the investment necessary to establish a manufacturing facility and employ the personnel necessary to develop and sell equipment, competition in the water treatment and filtration industry may develop erratically. Our MWTS competes with water treatment equipment produced by companies that are more established than we are and have significantly greater resources than we have, such as General Electric Co., Siemens Water Technologies, US Filter, Veolia Environment, and Cuno Incorporated. We also compete with large architectural/engineering firms that design and build water treatment plants and wastewater facilities and with producers of new technologies for water filtration. Competitive factors include system effectiveness, operational cost and practicality of application, pilot study requirements and potential adverse environmental effects. We note that competition in our industry is not based solely on price. Water purification, filtration and recycling solutions tend to be highly customized and designed to the customer’s specifications, and thus a wide range of considerations determine the competitiveness of the products and solutions of participants in our industry. In competing in this marketplace, we must also address the conservative nature of public water agencies and fiscal constraints on the installation of new systems and technologies. Currently we do not represent a significant presence in the water treatment industry.

Process water treatment plants and wastewater plants must comply with clean water standards set by the Environmental Protection Agency under the authority of the Clean Water Act and standards set by states and local communities. In many jurisdictions, including the United States, because process water treatment facilities and wastewater treatment systems require permits from environmental regulatory agencies, delays in permitting could cause delays in construction or usage of the systems by prospective customers.

In 1974, the U.S. Safe Drinking Water Act was passed. It empowered the EPA to set maximum levels of contamination allowable for health-threatening microbes, chemicals, and other substances which could find their way into drinking water systems, and gave the agency the power to delegate enforcement.

By 1986, Congress was dissatisfied with the speed with which the EPA was regulating and enforcing contaminant limits. The SDWA revision that year set rigid timetables for establishing new standards and ordered water systems to monitor their supplies for many substances not yet regulated by EPA standards.

Additionally, it limited polluting activities near public groundwater wells used as drinking water sources - an acknowledgment of the growing threat to underground water supplies. It named 83 contaminants and set out a program for adding 25 more every 3 years, as well as specifying the “best available technology” for treating each contaminant.

The timetable for imposing these regulations was rigid and tended to treat all contaminants as equally dangerous, regardless of relative risk. The cost to water districts for monitoring compliance became a significant burden, especially to small or medium-sized districts. The 1986 law authorized the EPA to cover 75 percent of state administrative costs, but in actuality, only about 35 percent was funded.

Congress updated the SDWA again in 1996, improving on the existing regulations in two significant ways. First, they changed the focus of contaminant regulations to reflect the risk of adverse health effects, the rate of occurrence of the contaminant in public water systems, and the estimated reduction in health risk resulting from regulation. Along with this, a thorough cost-benefit analysis must be performed by the EPA, with public health protection the primary basis for determining the level at which drinking water standards are set. Second, states were given greater flexibility to implement the standards while arriving at the same level of public health protection. In addition, a revolving loan fund was established to help districts build necessary improvements to their systems.

In the oil and gas industry, the adoption of unconventional drilling techniques and the opening of vast resources trapped in “tight” formations such as the Marcellus Shale gas region and the Bakken Shale oil region have led to an historic boom in domestic energy production. Unconventional techniques such as horizontal drilling and hydrofracturing (“fracking”) rely upon enormous quantities of water in their pursuit of energy resources. The majority of these fluids eventually flow back to the surface and need treatment and recycling or disposal. Generally, this flowback and production water is governed by state regulations. Each state is different in its approach to the issue and each region within the states has its own environmental challenges.

While we are sensitive to matters of excessive or unreasonable regulatory oversight, the lack of consistent treatment standards, development of micron and sub-micron measurement technologies, and jurisdictional irregularities have also compounded regulatory complexities. We believe that on the whole, growth of reasoned and responsible regulatory standards tend to enhance the need for many forms of water treatment and fluids management – this enhancing opportunities for Sionix.

Manufacturing and Raw Materials

We sub-contract the manufacture of some of the components of our MWTS through a series of location-based service providers who manufacture and assemble in accordance with our specifications and design requirements. We determined that it was not cost-effective or necessary for quality management to maintain our own manufacturing operation, and have no plans to reconsider that decision. Our sub-contracting arrangements are anticipated to cover various international geographic regions, with a single contract manufacturer for the North American continent. The materials used in the production of the Sionix products are easily obtainable from a variety of suppliers.

We have seven full-time employees as of the date of this Annual Report on Form 10K, none of whom are covered by any collective bargaining agreement. We consider the relationships with our employees to be good.

ITEM 1A. RISK FACTORS

You should carefully consider the risks described below, together with all other information included in this prospectus including our financial statements and related notes, before making an investment decision. The statements contained in this report that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. In that case, the trading price of our common stock could decline, and investors in our securities may lose all or part of their investment.

We have reported limited revenues. We cannot assure you that we will earn enough revenues to sustain our operations.

We have been in business for more than ten years, did not report any revenues this year or last year, and only in our 2010 fiscal year have we reported revenues from operations. We were in the development stage since inception through December 2009 when we recognized revenue from the sale of our first unit. Except for the revenue we received from the pilot system, and deposits for a commercial sale that were recognized as other income on our statements of operations, all of our working capital has been generated by sales of securities and loans.

We have a history of operating losses, which may continue. We cannot assure you that we will ever be profitable.

We have a history of losses and may continue to incur operating and net losses for the foreseeable future. Although we had net income of $3,291,470 for the year ended September 30, 2010 and $5,024,198 for the year ended September 30, 2009 (due to derivative accounting), for the year ended September 30, 2011 we had no net income, our net loss was $6,300,426 and our accumulated deficit was $31,899,493. For the year ended September 30, 2012 our net loss was $5,762,619, and our accumulated deficit was $37,560,000. We have not achieved profitability on a quarterly or on an annual basis from normal operations. We may not be able to generate revenues or reach a level of revenue to achieve profitability.

We do not have sufficient cash to support our operations and we will need to find capital to operate. If we are unable to raise capital as we need it, we may have to curtail, or even cease, our operations.

We do not have enough cash to support our operations. Our capital requirements have been and will continue to be significant. In order to fund shortages of capital, we have borrowed money from our major stockholders and sold our securities. Our major stockholders are not under any obligation to continue purchasing equity securities or to provide loans to us. We will need to raise additional capital to continue our operations. If we raise additional funds by issuing equity securities, our stockholders may experience dilution. Debt financing, if available, may involve restrictive covenants or additional security interests in our assets. If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish some rights to our technologies or products, or grant licenses on terms that are not favorable to us. If we are unsuccessful in finding financing, we may be required to severely curtail, or even to cease, our operations.

As of September 30, 2012, we had approximately $3.0 million in debt scheduled to be paid during 2013. We did not have the funds to repay this debt, which could subject us to legal action. Any such actions would adversely affect our business and financial condition.

As of September 30, 2012, we had approximately $3,050,000 of debt securities that we issued and aged accounts payable that were scheduled to be repaid during 2012. This amount includes a total of $315,000 in principal amount of promissory notes that were past due as of that date. Holders of $300,000 in principal amount of these notes have a first priority security interest in certain of our assets. Although we consider our relationships with our lenders to be good, and while we have not received a demand for payment from any lender, we do not currently have the funds to repay this debt and we cannot assure you that we will be able to raise the funds or to renegotiate the terms of the loans. If demand for payment is made and if our investors refuse to renegotiate the terms of the loans, our secured lenders could foreclose on their security interests or we may be subjected to lawsuits which would further strain our finances and disrupt our business. Any actions of this nature would adversely affect our business and financial condition and may even result in an inability to continue our operations.

Our auditors have indicated that our inability to generate sufficient revenue raises substantial doubt as to our ability to continue as a going concern.

Our audited financial statements for the period ended September 30, 2012 were prepared on a going concern basis. Our auditors have indicated that our inability to generate revenue raises substantial doubt as to our ability to continue as a going concern. Through September 30, 2012, we incurred cumulative losses of $37,560,000, including a net loss for the year ended September 30, 2012 of $5,762,619. Our ability to maintain our status as an operating company is entirely dependent upon obtaining adequate cash to finance our overhead, research and development activities, and acquisition of production equipment. We do not know if we will achieve a level of revenues adequate to support our costs and expenses. In order to meet our basic financial obligations, including rent, salaries, debt service and operations, we plan to seek additional equity or debt financing. Because of our history and current debt levels, there is considerable uncertainty as to whether we will be able to obtain financing on terms acceptable to us. Our ability to meet our cash requirements for the next twelve months depends on our ability to obtain financing. There is no assurance that we will be able to implement our business plan or continue our operations.

Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 may result in actions filed against us by regulatory agencies or in a reduction in the price of our common stock.

We are required to maintain effective internal control over financial reporting under the Sarbanes-Oxley Act of 2002 and related regulations. Any material weakness in our internal control over financial reporting that needs to be addressed, or disclosure of a material weakness in management’s assessment of internal control over financial reporting, may reduce the price of our common shares because investors may lose confidence in our financial reporting. Our failure to maintain effective internal control over financial reporting could also lead to actions being filed against us by regulatory agencies.

In connection with the restatement of our consolidated financial statements for the years ended September 30, 2007 and 2008 and each subsequent quarter through the quarter ended June 30, 2009, we identified weaknesses in internal control over financial reporting that were material weaknesses as defined by standards established by the Public Company Accounting Oversight Board. The deficiencies related to our lack of a sufficient number of internal personnel possessing the appropriate knowledge, experience and training in applying US generally accepted accounting principles, in reporting financial information in accordance with the requirements of the SEC, our lack of an audit committee to oversee our accounting and financial reporting processes, our lack of written documentation of our internal control policies and procedures, our lack of sufficient segregation of duties within accounting functions and our lack of review and supervision procedures for financial reporting functions. We cannot assure you that our efforts to remediate our internal control over financial reporting relating to the identified material weaknesses will establish the effectiveness of our internal control over financial reporting or that we will not be subject to material weaknesses in the future.

We may be unable to compete successfully in our industry. If we cannot compete successfully, the value of your investment may decline.

Many of our competitors, such as General Electric Co., Veolia Environment, and Siemens Water Technologies, are large, diversified manufacturing companies with significant expertise in the water quality business and contacts with water utilities and industrial water consumers. These competitors have significantly greater name recognition and financial and other resources. We may not be able to compete successfully against them. We do not represent a significant presence in the water treatment industry.

Our industry is subject to government regulation, which may increase our costs of doing business. Such regulations could have a material adverse impact on our results of operations.

Treatment of domestic drinking water and wastewater is regulated by a number of federal, state and local agencies, including the U.S. Environmental Protection Agency. The changing regulatory environment, including changes in water quality standards, could adversely affect our business by requiring us to re-engineer our products or invest in new technologies. This could have a material adverse effect on our results of operations by increasing our costs of doing business.

We may be subject to product liability claims for which we do not have adequate insurance coverage. If we were required to pay a substantial product liability claim, our business and financial condition would be materially adversely affected.

We, like any other manufacturer of products that are designed to treat food or water, face an inherent risk of exposure to product liability claims in the event that the use of our products results in injury. Such claims may include, among others, that our products fail to remove harmful contaminants or bacteria, or that our products introduce other contaminants into the water. While we maintain product liability insurance, there can be no assurance that such insurance will continue to be available at a reasonable cost, or, if available, will be adequate to cover liabilities. In the event that we do not have adequate insurance, product liability claims relating to defective products could have a material adverse effect on our business and financial condition.

Our water treatment system and the related technology are unproven in commercial operation and may not achieve widespread market acceptance among our prospective customers. If we are unable to sell our water treatment systems, our business and prospects will suffer and our results of operations will be adversely affected.

Although we have installed a water treatment system in two pilot locations, operated a unit in a customer location, and have a unit which we expect to begin operating in January 2013 at a customer location, our products have not yet been proven in a commercial context over any significant period of time. We have developed our proprietary technology and processes for water treatment based on dissolved air flotation technology, which competes with other forms of water treatment technologies that currently are in operation globally. Our water treatment system and the technology on which it is based may not achieve widespread market acceptance. Our success will depend on our ability to market our system and services to businesses and water providers on terms and conditions acceptable to us and to establish and maintain successful relationships with various water providers and state regulatory agencies.

We believe that market acceptance of our system will depend on many factors including:

●	the perceived advantages of our system over competing water treatment solutions;

●	the safety and efficacy of our system;

●	the availability of alternative water treatment solutions;

●	the pricing and cost effectiveness of our system;

●	our ability to access businesses and water providers that may use our system;

●	our ability to develop effective sales and marketing efforts;

●	publicity concerning our system and technology or competitive solutions;

●	timeliness in assembling and installing our system on customer sites;

●	regulatory climate in the US and changes to federal, state, and local requirements;

●	our ability to respond to changes in regulations; and

●	our ability to provide effective service and maintenance of our systems to our customers’ satisfaction.

If our system or our technology fails to achieve or maintain market acceptance or if new technologies are introduced by others that are more favorably received than our technology, are more cost effective or otherwise render our technology obsolete, we may not be able to sell our systems. If we are unable to sell our systems, our business and prospects would suffer and the results of our operations would be adversely affected.

We depend on a limited number of manufacturers and suppliers to produce various critical components for our MWTS. The loss of any of our manufacturing or supply relationships could delay production and sales of our products. This would have an adverse affect on our business and results of operations.

We rely entirely on third parties to produce and assemble units that form a part of our MWTS. If any of our existing manufacturers or suppliers were unable or unwilling to meet our demand for products, if the products they produce and assemble do not meet quality and other specifications or if we switch manufacturers or suppliers for any reason, production and sales of our product could be delayed and our business and results of operations would be adversely affected.

We must meet evolving customer requirements for water treatment and invest in the development of our water treatment technologies. If we fail to do this, our business and operating results will be adversely affected.

If we are unable to develop or enhance our systems and services to satisfy evolving customer demands, our business, operating results, financial condition and prospects will be harmed significantly.

Failure to protect our intellectual property rights could impair our competitive position. If we are unable to protect our intellectual property rights, our business could be materially adversely affected.

Our water treatment systems utilize a variety of proprietary rights that are important to our competitive position and success. Because the intellectual property associated with our technology is evolving and rapidly changing, our current intellectual property protections may not be adequate. We rely on a combination of patents, trademarks, trade secrets and contractual restrictions to protect the intellectual property we use in our business. In addition, we generally enter into confidentiality agreements or have confidentiality provisions in agreements with our employees, consultants, strategic partners and customers and control access to, and distribution of, our technology, documentation and other proprietary information.

Because legal standards relating to the validity, enforceability and scope of protection of patent and intellectual property rights in new technologies are uncertain and still evolving, the future viability or value of our intellectual property rights is uncertain. Furthermore, our competitors independently may develop similar technologies that limit the value of our intellectual property or design around patents issued to us. If competitors or third parties are able to use our intellectual property or are able to successfully challenge, circumvent, invalidate or render unenforceable our intellectual property, we likely would lose any competitive advantage we might develop. We may not be successful in securing or maintaining proprietary or patent protection for the technology used in our system or services, and protection that is secured may be challenged and possibly lost.

An assertion by a third party that we are infringing its intellectual property could subject us to costly and time-consuming litigation or expensive licenses and our business might be harmed.

The water management and treatment industry is characterized by the existence of a large number of patents and other intellectual property rights and our competitors might assert that we are infringing their intellectual property rights. We might not prevail in any intellectual property infringement litigation given the complex technical issues and inherent uncertainties in such litigation. Defending such claims, regardless of their merit, could be time-consuming and distracting to management, result in costly litigation or settlement, cause development delays, or require us to enter into royalty or licensing agreements. If our products violate any third-party proprietary rights, we could be required to withdraw those products from the market, re-develop those products or seek to obtain licenses from third parties, which might not be available on reasonable terms or at all. Any efforts to re-develop our products, obtain licenses from third parties on favorable terms or license a substitute technology might not be successful and, in any case, might substantially increase our costs and harm our business, financial condition and operating results.

Demand for water treatment systems could be adversely affected by a downturn in government spending related to water treatment, or in the cyclical residential or non-residential building markets.

Our business will be partially dependent upon spending on water treatment systems by utilities, municipalities and other organizations that supply water which, in turn, is often dependent upon residential construction, population growth, continued contamination of water sources and regulatory responses to this contamination. As a result, demand for our water treatment systems could be impacted adversely by general budgetary constraints on governmental or regulated customers, including government spending cuts, the inability of government entities to issue debt to finance any necessary water treatment projects, difficulty of customers in obtaining necessary permits or changes in regulatory limits associated with the contaminants we seek to address with our water treatment system. A slowdown of growth in residential and non-residential building would reduce demand for drinking water and for water treatment systems. The residential and non-residential building markets are generally cyclical, and, historically, down cycles have typically lasted a number of years. Any significant decline in the governmental spending on water treatment systems or residential or non-residential building markets could weaken demand for water treatment systems.

Because our long-term success depends, in part, on our ability to sell our products to customers located outside of the United States, our business will be susceptible to risks associated with international operations.

We plan to market and sell our products to customers located outside of the United States. Conducting international operations would subject us to risks that we might not otherwise encounter from operating in the United States, including:

	●	fluctuations in currency exchange rates;
	●	unexpected changes in foreign regulatory requirements;
	●	longer accounts receivable payment cycles and difficulties in collecting accounts receivable;
	●	difficulties in managing and staffing international operations;
	●	potentially adverse tax consequences, including the complexities of foreign value added tax systems and restrictions on the repatriation of earnings;
	●	localization of our products;
	●	the burdens of complying with a wide variety of foreign laws and different legal standards;
	●	increased financial accounting and reporting burdens and complexities;
	●	political, social and economic instability abroad, terrorist attacks and security concerns in general; and
	●	reduced or varied protection for intellectual property rights in some countries.

The occurrence of any one of these risks could negatively affect our international business and, consequently, our results of operations generally. Additionally, operating in international markets also requires significant management attention and financial resources. We might choose or need to structure certain of our international operations as joint ventures, in which case we might have limited control over the joint venture, need to share a substantial portion of any gains that arise from the joint venture with our joint venture partners or have significant potential obligations to fund the joint venture. We cannot be certain that the investment and additional resources required in establishing, acquiring or integrating operations in other countries will produce desired levels of revenues or profitability.

SEC rules governing the trading of “penny stocks” may limit the trading and liquidity of our common stock which may affect the trading price of our common stock.

Our common stock is considered to be a “penny stock” under federal securities laws. Penny stocks are subject to SEC rules and regulations which impose limitations upon the manner in which such shares may be publicly traded. These regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the associated risks. Under these regulations, certain brokers who recommend such securities to persons other than established customers or certain accredited investors must make a special written suitability determination regarding such a purchaser and receive such purchaser’s written agreement to a transaction prior to sale. These regulations have the effect of limiting the trading activity of our common stock and reducing the liquidity of an investment in our common stock, which may affect the trading price of our common stock.

We do not anticipate that we will pay dividends on our common stock any time in the near future.

We have not paid any cash dividends on our common stock since our inception and do not anticipate paying any cash dividends in the foreseeable future. We plan to retain our earnings, if any, to provide funds for the expansion of our business. Our board of directors will determine future dividend policy based upon conditions at that time, including our earnings and financial condition, capital requirements and other relevant factors.

The rights of the holders of our common stock may be impaired by the potential issuance of dilutive securities, namely preferred stock, convertible debt, and additional common stock.

Our board of directors has the right, without stockholder approval, to issue other dilutive securities with voting, dividend, conversion, liquidation or other rights which could adversely affect the voting power and equity interest of the holders of our common stock. These additional securities could be issued with the right to more than one vote per share, and/or could be utilized as a method of discouraging, delaying or preventing a change of control. The possible impact on takeover attempts could adversely affect the price of the common stock.

Under relevant corporate law, the board of directors may approve the issuance of our common stock in connection with certain types transactions, such as the payment of liabilities, the payment of compensation or the acquisition of assets, without obtaining stockholder approval. As a result, additional securities may be issued in the event of such transactions, resulting in dilution to the holdings of all pre-transaction stockholders, even though one or more of the Company’s stockholders may disagree with the Company’s decision to issue the common stock.

If we fail to file periodic reports on a timely basis, our common stock may cease to be quoted on the OTCBB.

Section 6530(e)(1) of the FINRA Manual states, “Notwithstanding the foregoing paragraphs, a member shall not be permitted to quote a security if: (A) while quoted on the OTCBB, the issuer of the security has failed to file a complete required annual or quarterly report by the due date for such report (including, if applicable, any extensions permitted by SEC Rule 12b-25) three times in the prior two-year period . . . .” If we fail to file our annual or quarterly reports on a timely basis, the OTCBB will no longer allow our common stock to be quoted.

Our common shares are thinly traded and you may be unable to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares.

We cannot predict the extent to which an active public market for our common stock will develop or be sustained. We cannot assure you that we will be able to meet the requirements for continued quotation on the OTC Bulletin Board.

Our common shares have historically been sporadically or “thinly-traded” on the OTC Bulletin Board, meaning that the number of persons interested in purchasing our common shares at or near bid prices at any given time may be relatively small or non-existent. This situation is attributable to a number of factors, including the fact that we are a small company which is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. It is possible that a broader or more active public trading market for our common stock will not develop or be sustained, or that current trading levels will be sustained.

The market price for our common stock is particularly volatile given our status as a relatively small company with a small and thinly traded “float” and lack of significant revenues that could lead to wide fluctuations in our share price. The price at which you purchase our common stock may not be indicative of the price that will prevail in the trading market. You may be unable to sell your common stock at or above your purchase price if at all, which may result in substantial losses to you.

The market for our common shares is characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. The volatility in our share price is attributable to a number of factors. First, as noted above, our common shares are sporadically and/or thinly traded. As a consequence of this lack of liquidity, the trading of relatively small quantities of shares by our stockholders may disproportionately influence the price of those shares in either direction. The price for our shares could, for example, decline precipitously in the event that a large number of our common shares are sold on the market without commensurate demand, as compared to a seasoned issuer which could better absorb those sales without adverse impact on its share price. Secondly, we are a speculative or “risky” investment due to our lack of significant revenues or profits to date and uncertainty of future market acceptance for our current and potential products. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the stock of a seasoned issuer.

The following factors may add to the volatility in the price of our common shares: actual or anticipated variations in our quarterly or annual operating results, adverse outcomes, additions or departures of our key personnel, as well as other items discussed under this “Risk Factors” section and elsewhere in this report. Many of these factors are beyond our control and may decrease the market price of our common shares, regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market price for our common shares will be at any time, including as to whether our common shares will sustain their current market prices, or as to what effect that the sale of shares or the availability of common shares for sale at any time will have on the prevailing market price.

Volatility in our common stock price may subject us to a heightened risk of securities litigation. Litigation may divert management’s attention from our day-to-day operations and use resources, such as cash. As a result, our business and prospects could be adversely affected.

The future market for our common stock may be characterized by significant price volatility when compared to seasoned issuers, and we expect our share price will be more volatile than a seasoned issuer for the indefinite future. As of the present date, we have a large number of freely tradable shares, which may exacerbate volatility and result in exaggerated price changes in the common stock. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may, in the future, be the target of similar litigation. Litigation could result in substantial costs and liabilities and could divert management’s attention and resources from our operations.

Future sales of shares of our common stock may decrease the price for such shares.

Actual sales, or the prospect of sales by the selling security holders or by our other stockholders, may have a negative effect on the market price of the shares of our common stock. We may also register certain shares of our common stock that are subject to outstanding convertible securities, or reserved for issuance under a stock option plan, if any. Once such shares are registered, they can be freely sold in the public market upon exercise of the options. At any given time, if any of our stockholders either individually or in the aggregate cause a large number of securities to be sold in the public market, or if the market perceives that these holders intend to sell a large number of securities, such sales or anticipated sales could result in a substantial reduction in the trading price of shares of our common stock and could also impede our ability to raise future capital.

The elimination of monetary liability against our directors, officers and employees under state law and the existence of indemnification rights to our directors, officers and employees may result in substantial expenditures by us and may discourage lawsuits against our directors, officers and employees.

Our Articles of Incorporation contain specific provisions that eliminate or limit the liability of directors for monetary damages to us and our stockholders, and we are prepared to give such indemnification to our directors and officers to the extent permissible under state law. We may also maintain or enter into, from time to time, contractual agreements that obligate us to indemnify our officers, such as employment agreements, and similar contractual agreements with our directors. The foregoing indemnification obligations could result in us incurring substantial expenditures to cover the cost of settlement or damage awards against directors and officers, in the event of actions against our officers and directors, which we may be unable to recoup. These provisions and resultant costs may also discourage the filing of derivative litigation by our stockholders against our directors and officers even though such actions, if successful, might otherwise benefit the Company and its stockholders.

ITEM 1B. UNRESOLVED STAFF COMMENTS

As a smaller reporting company we are not required to provide this information.

We do not own any physical properties that are material to our business. We rent a facility located at Lake Stevens, Washington which is used to assemble and test our water treatment systems. The facility consists of approximately 12,180 square feet of industrial space and is adequate for this purpose. We rent this facility on a month-to-month basis for $11,598 per month.

ITEM 3. LEGAL PROCEEDINGS

Except as noted below, we are not a party to any pending legal proceedings.

On October 24, 2012 our former Chairman and Chief Executive Officer, James. R. Currier, filed in the Superior Court of the State of Arizona in and for the County of Maricopa a legal action against us entitled “James R. Currier v. Sionix Corporation, a Nevada corporation." Mr. Currier's complaint contained claims alleging Breach of Contract, Breach of Implied Covenant of Good Faith and Fair Dealing, Wage Claim, Negligent Misrepresentation and Fraud. The allegations in the complaint relate to his resignation from his position as Chief Executive Officer, and from the board as its Chairman and as a member. The parties are in the process of working to resolve Mr. Currier's claims, which will likely result in the dismissal of the lawsuit in the near future.

ITEM 4. MINE SAFETY DISCLOSURES

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

In 1996 our common stock was approved for quotation on the OTC Bulletin Board under the symbol “SINX”. As of December 20, 2012 we had 430,266,407 shares of common stock issued and outstanding and approximately 867 stockholders of record. This does not include an indeterminate number of stockholders whose shares are held by brokers in street name.

The table below sets forth the range of high and low bid quotes of our common stock for each quarter for the last two fiscal years as reported by the OTC Bulletin Board. The bid prices represent inter-dealer quotations, without adjustments for retail mark-ups, markdowns or commissions and may not necessarily represent actual transactions.

	High		Low
Fiscal year ended September 30, 2012
First Quarter	$	0.07	$	0.04
Second Quarter		0.08		0.04
Third Quarter		0.13		0.06
Fourth Quarter		0.07		0.03

Fiscal year ended September 30, 2011
First Quarter	$	0.07	$	0.04
Second Quarter		0.06		0.04
Third Quarter		0.19		0.04
Fourth Quarter		0.14		0.06

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans

Equity Compensation Plan Approved by Stockholders

None		-		-		-

Equity Compensation Plan Not Approved by Stockholders

2001 Executive Officers Stock Option Plan		7,034,140	$	0.15		542,540

	Payments due by Period
	Less than		One to		Three to		More Than
	One Year		Three Years		Five Years		Five Years		Total
Notes payable, related parties	$	25,000	$	-	$	-	$	-	$	25,000
Convertible notes		2,444,384		-		-		-		2,444,384
Total	$	2,469,384	$	-	$	-	$	-	$	2,469,384

Report of Independent Registered Public Accounting Firm	F-2

Consolidated Balance Sheets as of September 30, 2012 and 2011	F-3

Consolidated Statements of Operations for the years ended September 30, 2012 and 2011	F-4

Consolidated Statements of Stockholders’ Deficit for the years ended September 30, 2012 and 2011	F-5

Consolidated Statements of Cash Flows for the years ended September 30, 2012 and 2011	F-6

Notes to Financial Statements	F-7

	2012			2011

ASSETS

Current assets:
Cash and cash equivalents	$	1,348,069		$	685
Other receivable		27,854			12,173
Inventory		1,311,349			1,306,326
Other current assets		91,529			26,676
Total current assets		2,778,801			1,345,860
Non-current assets:
Property and equipment, net		128,119			29,519

Total assets	$	2,906,920		$	1,375,379

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	155,547		$	520,322
Accrued expenses		907,728			1,006,814
Notes payable - related parties		25,000			25,000
Convertible notes, net of debt discount		1,895,378			934,567
Secured promissory notes		225,681			-
Deferred revenue		10,000			-
Derivative liability		638,178			320,516
Shares to be issued		165,880			-
Total current liabilities		4,023,392			2,807,219
Stockholders' Deficit
Stockholders' Deficit Attributable to Sionix Corporation:
Preferred stock, $0.001 par value, 10,000,000 shares authorized at September 30, 2012 and 2011		-			-
Common stock, $0.001 par value (600,000,000 shares authorized; 387,968,434 shares issued and outstanding at September 30, 2012; 299,331,673 shares issued and outstanding at September 30, 2011)		387,968			299,332
Additional paid-in capital		34,807,672			30,168,321
Accumulated deficit		(37,560,000	)		(31,899,493	)
Total stockholders' deficit attributable to Sionix Corporation		(2,364,360	)		(1,431,840	)
Equity attributable to noncontrolling interest		1,247,888			-
Total stockholders' deficit		(1,116,472	)		(1,431,840	)

Total liabilities and stockholders' deficit	$	2,906,920		$	1,375,379

	2012			2011

Operating expenses
General and administrative	$	2,778,275		$	3,177,296
Sales and marketing		271,835			449,588
Research and development		886,491			562,179
Depreciation		25,833			12,207
Total operating expenses		3,962,434			4,201,270

Loss from operations		(3,962,434	)		(4,201,270	)

Other income (expense)
Interest expense and financing costs		(1,374,383	)		(499,398	)
Gain (loss) on change in fair value of derivative liability		233,186			(120,849	)
Other (expense) income		(169,048	)		470,128
Legal settlements		-			(236,821	)
Loss on settlement of debt		(489,140	)		(1,711,416	)
Total other income (expense)		(1,799,385	)		(2,098,356	)

Loss before income taxes		(5,761,819	)		(6,299,626	)
Income taxes		(800	)		(800	)
Net loss		(5,762,619	)		(6,300,426	)
Less: Net loss attributable to the noncontrolling interest		102,112			-
Net loss attributable to Sionix Corporation	$	(5,660,507	)	$	(6,300,426	)

Amounts attributable to Sionix Corporation:
Basic loss per share	$	(0.02	)	$	(0.02	)
Diluted loss per share	$	(0.02	)	$	(0.02	)

Basic weighted average number of shares of common stock outstanding		334,042,294			256,816,636
Diluted weighted average number of shares of common stock outstanding		334,042,294			256,816,636

	Common Stock				Additional						Non-		Total
	Number				Paid-in			Accumulated			Controlling		Stockholders'
	of Shares		Amount		Capital			Deficit			Interest		Deficit

Balances at September 30, 2010		217,154,741	$	217,155	$	22,885,234		$	(25,599,067	)	$	-	$	(2,496,678	)
Conversion of notes payable into common stock		23,696,276		23,696		2,437,177			-			-		2,460,873
Common stock issued for services		20,040,322		20,040		1,890,963			-			-		1,911,003
Common stock issued for cash		32,473,667		32,474		1,788,566			-			-		1,821,040
Warrants issued for cash		-		-		75,000			-			-		75,000
Cashless warrant exercises		166,667		167		(167	)		-			-		-
Common stock issued settlement of accounts payable		5,800,000		5,800		284,200			-			-		290,000
Share based payments		-		-		807,348			-			-		807,348
Net loss		-		-		-			(6,300,426	)		-		(6,300,426	)

Balances at September 30, 2011		299,331,673		299,332		30,168,321			(31,899,493	)		-		(1,431,840	)
Conversion of notes payable into common stock		36,935,195		36,935		686,947			-			-		723,882
Common stock issued for services		34,067,872		34,066		1,673,510			-			-		1,707,576
Common stock issued for cash		6,670,001		6,671		393,529			-			-		400,200
Cashless warrant exercises		474,984		475		(475	)		-			-		-
Common stock issued in settlement of accounts payable		9,988,709		9,989		453,291			-			-		463,280
Common stock issued for financing costs		500,000		500		-			-			-		500
Warrants issued with convertible debt		-		-		550,472			-			-		550,472
Fair value of beneficial conversion features		-		-		550,472			-			-		550,472
Warrants issued to induce debt conversion		-		-		63,391			-			-		63,391
Share based payments		-		-		268,214			-			-		268,214
Non-controlling interest		-		-		-			102,112			1,247,888		1,350,000
Net loss		-		-		-			(5,762,619	)		-		(5,762,619	)

Balances at September 30, 2012		387,968,434	$	387,968	$	34,807,672		$	(37,560,000	)	$	1,247,888	$	(1,116,472	)

	2012			2011

Cash flows from operating activities
Net loss	$	(5,762,619	)	$	(6,300,426	)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation		25,834			12,207
Amortization of debt discounts		548,192			157,586
Share based payments		268,214			807,348
Common stock issued for services		1,707,576			1,911,003
(Gain) loss on change in fair value of derivative liability		(233,186	)		120,849
Loss on settlement of debt		489,140			1,711,416
Changes in operating assets and liabilities:
Inventory		(5,023	)		(727,166	)
Other current assets		(267,686	)		(38,059	)
Accounts payable		417,618			82,775
Accrued expenses		233,558			374,655
Deferred revenue		10,000			(300,000	)
Net cash used by operating activities		(2,568,382	)		(2,187,812	)

Cash flows from investing activities:
Purchase of property and equipment		(124,434	)		(3,127	)

Cash flows from financing activities:
Borrowings		2,190,000			272,500
Common stock issued for cash		400,200			1,821,040
Warrants issued for cash		-			75,000
Noncontrolling interests in subsidiary issued for cash		1,450,000			-
Net cash provided by financing activities		4,040,200			2,168,540

Net increase in cash and cash equivalents		1,347,384			(22,399	)
Cash and cash equivalents, beginning of period		685			23,084
Cash and cash equivalents, end of period	$	1,348,069		$	685

SUPPLEMENTARY CASH FLOW INFORMATION:
Income taxes paid	$	1,095		$	3,673
Interest paid	$	-		$	-
Non-cash investing and financing activities:
Common stock issued for accounts payable and accrued compensation	$	463,279		$

	2012			2011

Machinery and equipment	$	166,159		$	41,726
Less accumulated depreciation		(38,040	)		(12,207	)

Property and equipment, net	$	128,119		$	29,519

	2012		2011

Accrued salaries	$	306,055	$	564,458
Interest payable		364,567		236,229
Claims payable		-		15,334
Other accrued expenses		237,106		190,793

Total accrued expenses	$	907,728	$	1,006,814

	2012			2011

Loss on conversion of debt	$	(136,989	)	$	(1,161,457	)
Other		(352,151	)		(549,959	)

Loss on settlement of debt	$	(489,140	)	$	(1,711,416	)

	2012			2011
Current:
Federal	$	-		$	-
State		800			800
Deferred benefit		(2,200,000	)		(2,300,000	)

Change in valuation allowance		2,200,000			2,300,000

Income tax expense	$	800		$	800

	2012			2011
Deferred tax assets (liabilities):
Net operating loss carryforwards	$	14,750,000		$	12,550,000
Deferred tax assets, net		14,750,000			12,550,000
Valuation allowance		(14,750,000	)		(12,550,000	)

Net deferred tax assets	$	-		$	-

	Number of Options		Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Life
Outstanding at October 1, 2011		38,866,316		0.12	$	-		3.01
Granted		4,850,000		0.14
Expired		-		-
Forfeited		-		-
Exercised		-		-
Outstanding at September 30, 2012		43,296,946	$	0.12	$	-		2.26
Exercisable at September 30, 2012		43,716,316	$	0.12	$	-		2.27

Exercise Price		Options Outstanding		Contractual Life		Weighted Average Remaining Options Exercisable		Weighted Average Remaining Contractual Life
$	0.06		7,415,000		2.93		7,362,479		2.93
$	0.07		2,000,000		3.25		2,000,000		3.25
$	0.09		2,000,000		3.25		2,000,000		3.25
$	0.10		9,416,850		1.82		9,416,850		1.82
$	0.12		8,450,940		1.53		8,450,940		1.53
$	0.14		500,000		2.76		133,151		2.76
$	0.15		10,000,000		2.76		10,000,000		2.76
$	0.17		1,000,000		3.67		1,000,000		3.67
$	0.25		2,933,526		0.21		2,933,526		0.21
			43,716,316		2.27		43,296,946		2.26

	Number of Warrants			Weighted Average Exercise Price		Aggregate Intrinsic Value
Outstanding at October 1, 2011		94,266,670		$	0.15	$	75,000
Granted		30,834,999			0.14
Expired		(1,602,272	)		-
Forfeited		(9,039,312	)		0.25
Exercised		-			-
Outstanding as of September 30, 2012		114,460,085		$	0.12	$	-
Exercisable as of September 30, 2012		114,460,085		$	0.12	$	-

						Weighted
						Average
						Remaining		Weighted Average Exercise Price
Exercise		Warrants		Warrants		Contractual		Weighted Average Exercise Price
Price		Outstanding		Exercisable		Life		Outstanding		Exercisable
$	0.06		7,500,000		7,500,000		3.63	$	0.06	$	0.06
$	0.07		22,833,333		22,833,333		1.54	$	0.07	$	0.07
$	0.08		24,800,000		24,800,000		4.98	$	0.08	$	0.08
$	0.10		6,726,578		6,726,578		3.36	$	0.10	$	0.10
$	0.12		6,226,000		6,226,000		1.19	$	0.12	$	0.12
$	0.14		5,000,000		5,000,000		3.06	$	0.14	$	0.14
$	0.15		2,107,667		2,107,667		2.08	$	0.15	$	0.15
$	0.17		27,993,325		27,993,325		3.16	$	0.17	$	0.17
$	0.18		850,000		850,000		0.29	$	0.18	$	0.18
$	0.25		6,730,000		6,730,000		0.81	$	0.25	$	0.25
$	0.30		3,693,182		3,693,182		0.49	$	0.30	$	0.30

			114,460,085		114,460,085

Name	Age	Position	Director Since
James W. Alexander	73	Interim Chairman of the Board of Directors	March 2009
David R. Wells	50	President, Chief Financial Officer and Director	December 2009
Kenneth Calligar	55	Director and Interim Chief Executive Officer	July 2012
Bernard Brogan	59	Director	July 2012
Dr. Henry Sullivan	72	Director	October 2012

Name and Title	Form	Transactions

James R. Currier, former Chief Executive Officer and director	3 and 4	Mr. Currier was appointed as a director in December 2009 but failed to timely file a Form 3. He also failed to timely file 2 Forms 4 covering 8 transactions during the 2012 fiscal year.

James W. Alexander, interim Chairman of the Board of Directors	4	Mr. Alexander failed to timely file Form 4s disclosing 7 transactions in which he engaged between August 26, 2010 and September 21, 2010. Mr. Alexander filed a Form 4 disclosing all of these transactions on September 30, 2010.

David R. Wells, President, Chief Financial Officer and director	3 and 4	Mr. Wells was appointed as a director in December 2009 but failed to timely file a Form 3. He also failed to timely file 3 Forms 4 covering 9 transactions during the 2012 fiscal year.

								Warrant/		Non-Equity		Non-Qualified
Name/						Stock		Option		Incentive Plan		Deferred
Principal Position	Year	Salary ($)		Bonus ($)		Awards ($)		Awards (1) ($)		Compensation ($)		Compensation ($)		Other (2) ($)		Total ($)

James R. Currier	2012		167,444		--		187,500		101,934		--		--		10,584		467,462

Former Chief Executive Officer	2011		131,333		80,000		--		321,220		--		--		8,000		540,553

David R. Wells	2012		192,765		--		112,500		131,289		--		--		12,000		448,554

President and Chief Financial Officer	2011		131,333		80,000		--		321,220		--		--		8,000		540,553

(1)	This column represents the aggregate grant-date fair value of the awards computed in accordance with FASB ASC Topic 718. These amounts represent the accounting value for these awards and do not necessarily correspond to the actual value that may be realized by the named executive officer. The assumptions used in the calculation of these amounts for the fiscal year ended September 30, 2012 include the following: risk free rate of return of 0.44 – 2.24%; volatility of 152 – 190% dividend yield of 0%; and expected term of 5 years. The assumptions used in the calculation of these amounts for the fiscal year ended September 30, 2012 are described in the Notes to our financial statements for the fiscal year ended September 30, 2012.

(2)	Other compensation is for automobile allowance.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

Option Awards

	Number of Securities Underlying Unexercised Options				Equity Incentive Plan Awards: Number of Securities Underlying Unexercised/ Unearned Options		Option Exercise Price ($)		Option Expiration Date
Name	Exercisable (a)		Unexercisable
David R. Wells (1)		400,000		0		0		0.06	12/15/2014
James R. Currier (1)		400,000		0		0		0.06	12/15/2014
David R. Wells (2)		400,000		0		0		0.06	12/31/2014
James R. Currier (2)		400,000		0		0		0.06	12/31/2014
David R. Wells (3)		400,000		0		0		0.06	4/1/2015
James R. Currier (3)		400,000		0		0		0.06	4/1/2015
David R. Wells (4)		400,000		0		0		0.06	7/1/2015
James R. Currier (4)		400,000		0		0		0.06	7/1/2015
David R. Wells (5)		400,000		0		0		0.06	10/1/2015
James R. Currier (5)		400,000		0		0		0.06	10/1/2015
James R. Currier (6)		1,000,000		0		0		0.07	12/31/2016
David R. Wells (6)		1,000,000		0		0		0.07	12/31/2016
James R. Currier (6)		1,000,000		0		0		0.09	12/31/2016
David R. Wells (6)		1,000,000		0		0		0.09	12/31/2016
James R. Currier (6)		1,000,000		0		0		0.12	12/31/2016
David R. Wells (6)		1,000,000		0		0		0.12	12/31/2016
James R. Currier (6)		1,000,000		0		0		0.15	12/31/2016
David R. Wells (6)		1,000,000		0		0		0.15	12/31/2016
James R. Currier (6)		500,000		0		0		0.10	12/31/2016
David R. Wells (6)		500,000		0		0		0.10	12/31/2016
James R. Currier (7)		500,000		0		0		0.10	3/31/2016
David R. Wells (7)		500,000		0		0		0.10	3/31/2016
James R. Currier (8)		500,000		0		0		0.10	6/30/2016
David R. Wells (8)		500,000		0		0		0.10	6/30/2016
James R. Currier (9)		500,000		0		0		0.15	9/30/2016
David R. Wells (9)		500,000		0		0		0.15	9/30/2016
James R. Currier (10)		500,000		0		0		0.15	12/31/2016
David R. Wells (10)		500,000		0		0		0.15	12/31/2016
James R. Currier (11)		500,000		0		0		0.15	3/31/2017
David R. Wells (11)		500,000		0		0		0.15	3/31/2017
James R. Currier (12)		500,000		0		0		0.15	6/30/2017
David R. Wells (12)		500,000		0		0		0.15	6/30/2017

DIRECTOR COMPENSATION
Name (a)	Fees Earned or Paid in Cash ($) (b)		Stock Awards ($) (c) (1)		Option Awards ($) (d)			Non-Equity Incentive Plan Compensation ($) (e)		Nonqualified Deferred Compensation Earnings ($) (f)		All Other Compensation ($) (g)		Total ($) (h)
James R. Currier		--		--		(2	)		--		--		--		--
David R. Wells		--		--		(2	)		--		--		--		--
James W. Alexander				30,000		--			--		--		--		30,000
Johan Perslow (3)				30,000		--			--		--		--		30,000
Frank Power (4)				30,000		--			--		--		--		30,000
Kenneth Calligar				5,000		--			--		--		--		5,000
Bernard Brogan				5,000											5,000

(1)	Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718.

(2)		Mr. Currier and Mr. Wells each received options to purchase common stock in conjunction with their employment agreements. The option grants have been reported in the Summary Compensation Table above. Mr. Currier resigned as a director on August 20, 2012 and Mr. Wells is not eligible for compensation as a director at this time.

(3)		Mr. Perslow resigned as a director in September 2012.

(4)		Mr. Power resigned as a director in October 2012.

Name and Address (1) Officers and Directors	Number of Shares of Common Stock Beneficially Owned			Percentage of Common Stock

Kenneth Calligar, Interim Chief Executive Officer and Director		85,786,556	(2)		20.9	%
James W. Alexander, Interim Chairman of the Board		5,492,274	(5)		1.3	%
David R. Wells, President, Chief Financial Officer and Director		17,736,973	(3)(4)		4.3	%
Bernard Brogan, Director		555,555	(5)		0.1	%
James Currier, Former Chief Executive Officer and Director	18,638,004		(3)(4)	4.6
All Officers and Directors as a Group (4 total)		109,571,358			26.7	%
5% Stockholders
Bonanza Creek Partners, LP		82,695,056	(6)		20.2	%

(1)	The address for each of our officers and directors is 914 Westwood Blvd., Box 801, Los Angeles, California 90024.

(2)	Consists of 2,600,000 shares of common stock owned by Mr. Calligar, 377,000 shares of common stock owned by Mr. Calligar's individual retirement account, 114,500 shares of common stock owned by Convertible Capital, an entity in which Mr. Calligar is the managing partner, 31,970,056 shares of common stock owned by Bonanza Creek Partners, LP, a 10% secured convertible promissory note in the principal amount of $700,000 which may be converted into 35,000,000 shares of common stock and a warrant for the purchase of 15,725,000 shares of common stock. Investments made by Bonanza Creek Partners, LP are managed by Bonanza Creek Management Company. Mr. Calligar is the general manager of Bonanza Creek Management Company and has voting and investment control over the securities owned by Bonanza Creek Partners, LP. with the exception of 3,970,056 shares of common stock owned by Bonanza Creek Partners, LP, over which he shares voting and investment power with E. David Kailbourne.

(3)	Consists of an option grant as a result of employment contract dated December 16, 2009 and superseded by an agreement effective January 1, 2011.

(4)	Consists of common shares purchased either in the open market, or directly from the Company.

(5)	Consists of common shares issued as a result of board compensation.

(6)	See the information in footnote (2) above.

	2012		2011
Fee Category:
Audit fees	$	62,500	$	97,500
Tax fees		-		-
All other fees		-		-
	$	62,500	$	97,500

No.		Description

2.1		Agreement and Plan of Merger dated July 1, 2003 (1)
3.1		Articles of Incorporation (1)
3.1.1		Articles of Amendment to Articles of Incorporation*
3.2		Bylaws (1)
10.1		Form of Convertible Debenture, dated as of June 18, 2007, issued by the registrant to certain investors. (2)
10.3		Form of Warrant, dated as of June 18, 2007, issued by the registrant to certain investors. (2)
10.4		Notice of Grant of Stock Option to David Ross (3)
10.5		Stock Option Agreement between the registrant and David Ross (3)
10.6		Notice of Grant of Stock Option to Rodney Anderson (3)
10.7		Stock Option Agreement between the registrant and Rodney Anderson (3)
10.8		Form of Securities Purchase Agreement for 12% Convertible Debentures (4)
10.9		Sionix Corporation 12% Convertible Debenture due July 29, 2008 (4)
10.10		Form of Common Stock Purchase Warrant dated July 29, 2008 (4)
10.11		Form of Unit Offering Securities Purchase Agreement (5)
10.12		Form of Common Stock Purchase Warrant (5)
10.13		Amended and Restated Promissory Notes with Calico Capital Management LLC, BRAX Capital LLC and Gene Salkind (6)
10.14		Second Amended and Restated Convertible Promissory Notes dated March 17, 2008 with Calico Capital Management LLC, BRAX Capital LLC and Gene Salkind (7)
10.15		Form of Subordinated 10% Debenture (8)
10.16		Form of Common Stock Purchase Warrant (8)
10.17		Consulting Agreement dated February 21, 2008 between the registrant and John H. Foster, Ph.D. (9)
10.18		Notice of Grant of Stock Option to John H. Foster (9)
10.19		Stock Option Agreement between the registrant and Dr. John H. Foster (9)
10.20		Notice of Grant of Stock Option (9)
10.21		Stock Option Agreement between the registrant and Dr. W. Richard Laton (9)
10.22		Waiver and Amendment #2 to Debenture dated August 23, 2011 between the registrant and Bernard Brogan (16)
10.23		Employment Agreement dated December 16, 2009 between the registrant and David R. Wells (10)
10.24		Form of Subordinated 10% Debenture (10)
10.25		Form of Common Stock Purchase Warrant (10)
10.26		Form of Securities Purchase Agreement entered into on December 13, 2010 (11)
10.27		Form of Warrant Agreement entered into on December 13, 2010 (11)
10.28		Employment Agreement effective January 1, 2011 between the registrant and David R. Wells (11)
10.29		Form of Securities Purchase Agreement entered into on April 6, 2011 (12)
10.30		Form of Warrant Agreement entered into on April 6, 2011 (12)
10.31		Supply Agreement dated May 3, 2010 with PERC Water Corporation (16)
10.32		Securities Purchase Agreement dated October 31, 2011 between the registrant and TCA Global Credit Master Fund, LP (13)
10.33		Senior Secured Redeemable Debenture issued on October 31, 2011 in favor of TCA Global Credit Master Fund, LP (13)
10.34		Security Agreement dated October 31, 2011 in favor of TCA Global Credit Master Fund, LP (13)
10.35		Pledge and Escrow Agreement dated October 31, 2011 among the registrant, TCA Global Credit Master Fund, LP and David Kahan, P.A. (13)
10.36		Form of Securities Purchase Agreement dated November 9, 2011 (13)
10.37		Form of Warrant to Purchase Common Stock dated November 9, 2011 (13)
10.37		Water Treatment Agreement dated February 21, 2012 between the registrant and McFall, Incorporated (14)
10.38		Securities Purchase Agreement dated March 2, 2012 between the registrant and REVH2O LLC (15)
10.39		Warrant for the purchase of common stock dated March 2, 2012 and issued to REVH2O LLC (15)
10.40		Form of Securities Purchase Agreement dated April 2012 for 8% Convertible Debenture and Warrant Financing*
10.41		Form of 8% Convertible Debenture*
10.42		Registration Rights Agreement in connection with 8% Convertible Debenture and Warrant Financing*
10.43		Form of Warrant in connection with 8% Convertible Debenture and Warrant Financing*
10.44		6% Convertible Redeemable Note dated September 21, 2012 issued to GEL Properties*

10.45	Form of Securities Purchase Agreement for 10% Convertible Promissory Notes*
10.46	Form of 10% Convertible Promissory Notes*
10.47	Form of Warrant issued together with 10% Convertible Promissory Notes*
10.48	Termination Agreement dated October 8, 2012 between the registrant and Ascendiant Capital Markets, LLC*
10.49	Securities Purchase Agreement dated March 12, 2012 between Williston Basin I, LLC and certain investors*
10.50		Offer of Position for Board of Directors to Kenneth Calligar dated July 31, 2012 *
10.51		Offer of Position for Board of Directors to Bernard Brogan dated July 31, 2012 *
10.52		Offer of Position for Board of Directors to Dr. Henry Sullivan dated October 23, 2012 *
31.1		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *
31.2		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *
32.1		Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *
32.2		Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *
101.1		The following materials from the registrant's Annual Report on Form 10-K for the year ended September 30, 2012, formatted in XBRL: (i) the Balance Sheets; (ii) the Statements of Operations; (iii) the Statements of Stockholders' Equity (Deficit); the Statements of Cash Flows; and (iv) Notes to the Financial Statements

(1)	Incorporated by reference to registrant’s Current Report on Form 8-K, file no. 002-95626-D, filed with the Commission on July 15, 2003.
(3)	Incorporated by reference to the registrant’s Current Report on Form 8-K, file no. 002-95626-D, filed with the Commission on October 23, 2008.
(4)	Incorporated by reference to the registrant’s Current Report on Form 8-K, file no. 002-95626-D, filed with the Commission on July 30, 2008.
(5)	Incorporated by reference to the registrant’s Current Report on Form 8-K, file no. 002-95626-D, filed with the Commission on May 29, 2008.
(6)	Incorporated by reference to the registrant’s Current Report on Form 8-K, file no. 002-95626-D, filed with the Commission on January 28, 2008.
(7)	Incorporated by reference to the registrant’s Current Report on Form 8-K, file no. 002-95626-D, filed with the Commission on March 24, 2008.
(8)	Incorporated by reference to the registrant’s Current Report on Form 8-K, file no. 002-95626-D, filed with the Commission on March 3, 2008.
(9)	Incorporated by reference to the registrant’s Current Report on Form 8-K, file no. 002-95626-D, filed with the Commission on February 25, 2008.
(10)	Incorporated by reference to the registrant’s Annual Report on Form 10-K, file no. 002-95626-D, filed with the Commission on January 13, 2010.
(11)	Incorporated by reference to the registrant's Registration Statement on Form S-1 filed with the Commission on March 10, 2011.
(12)	Incorporated by reference to the registrant’s Current Report on Form 8-K, file no. 002-95626-D, filed with the Commission on April 8, 2011.
(13)	Incorporated by reference to the registrant’s Current Report on Form 8-K, file no. 002-95626-D, filed with the Commission on November 16, 2011.
(14)	Incorporated by reference to the registrant's Current Report on Form 8-K, file no. 002-95626-D, filed with the Commission on March 6, 2012.
(15)	Incorporated by reference to the registrant's Current Report on Form 8-K, file no. 002-95626-D, filed with the Commission on March 6, 2012.

	SIONIX CORPORATION

Date: December 31, 2012	By:	/s/ Kenneth Calligar
		Interim Chief Executive Officer (Principal Executive Officer)

	By:	/s/ David R. Wells
		David R. Wells
		President and Chief Financial Officer (Principal Financial and Accounting Officer)

Signature	Title	Date

/s/ Kenneth Calligar	Interim Chief Executive Officer and Director	December 31, 2012
Kenneth Calligar

/s/ David R. Wells	President, Chief Financial Officer and Director	December 31, 2012
David R. Wells

/s/ James W. Alexander	Director	December 31, 2012
James W. Alexander

/s/ Bernard Brogan	Director	December 31, 2012
Bernard Brogan

/s/ Henry Sullivan	Director	December 31, 2012
Henry Sullivan