UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT UNDER SECTION 13 0R 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2013

¨ TRANSITION REPORT UNDER SECTION 13 0R 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from:

Commission file number: 002-95626-D

SIONIX CORPORATION

(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.)

2010 N Loop Freeway W, Suite 110 Houston, Texas		77018
(Address of principal executive offices)		(Zip Code)

Issuer’s telephone number (713) 682-6500

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

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

Indicate 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 than the registrant was required to submit and post such files). Yes x No ¨

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 the definitions of “large accelerated filed,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	o

Non-accelerated filer	o	Smaller reporting company	x
(Do not check if a smaller reporting company)

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of June 30, 2013 the number of shares of the registrant’s classes of common stock outstanding was 473,834,579.

Table of Contents

Part I - Financial Information	3

Item 1. Condensed Consolidated Financial Statements (Unaudited)	3

Balance Sheets as of June 30, 2013 (unaudited) and September 30, 2012	3

(Unaudited) Statements of Operations for the three and nine months ended June 30, 2013 and 2012	4

(Unaudited ) Statement of Stockholders Deficit for the nine months ended June 30, 2013	5

(Unaudited) Statements of Cash Flows for the nine months ended June 30, 2013 and 2012	6

Notes to condensed consolidated (unaudited) financial statements	7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3. Quantitative and Qualitative Disclosures About Market Risk	23

Item 4. Controls and Procedures	23

Part II – Other Information	23

Item 1. Legal Proceedings	23

Item 1A. Risk Factors	23

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	24

Item 3. Defaults Upon Senior Securities	24

Item 4. Mine Safety Disclosure	24

Item 5. Other Information	24

Item 6. Exhibits	25

Signatures	26

Part I, Item 1. Financial Information.

Sionix Corporation

Condensed Consolidated Balance Sheets

	As of June 30, 2013				As of September 30, 2012
	(Unaudited)
ASSETS

Current assets:
Cash and cash equivalents		$	100,962			$	1,348,069
Other receivable							27,854
Inventory			790,000				1,311,349
Other current assets			103,550				91,529
Total current assets			994,512				2,778,801
Non-current assets:
Property and equipment, net			49,994				128,119

Total assets		$	1,044,506			$	2,906,920

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable		$	342,896			$	155,547
Accrued Expenses			1,310,972				907,728
Notes payable - related parties			45,000				25,000
Convertible notes, net of debt discount			1,184,136				1,444,737
Secured promissory notes							225,681
Deferred Revenue							10,000
Derivative liability			668,226				396,129
Unregistered shares shortfall			1,913,279				2,180,220
Shares to be issued			1,125,000				165,880
Total current liabilities			6,589,509				5,510,921

Long-Term Debt, net of discount			1,039,207

Total Liabilities			7,628,715				5,510,921

Stockholders' Deficit
Stockholders' Deficit Attributable to Sionix Corporation:
Preferred stock, $0.001 par value, 10,000,000 shares authorized at June 30, 2013 and September 30, 2012
Common stock, $0.001 par value (600,000,000 shares authorized; 473,834,579 shares issued and outstanding at June 30, 2013; 387,968,434 shares issued and outstanding at September 30, 2012)			473,835				387,968
Additional paid-in capital			34,889,826				33,078,094
Accumulated deficit			(41,947,870	)			(37,317,951	)
Total stockholders' deficit attributable to Sionix Corporation			(6,584,209	)			(3,851,889	)
Deficit attributable to noncontrolling interest							1,247,888
Total stockholders' deficit			(6,584,209	)			(2,604,001	)
Total liabilities and stockholders' deficit		$	1,044,506			$	2,906,920

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

Sionix Corporation

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months Ended June 30,						Nine Months Ended June 30,
	2013			2012			2013			2012

Net Revenue	$	22,500					$	50,000
Cost of revenues								4,558
Gross profit		22,500						45,442

Operating expenses
General and administrative		208,457			796,135			1,407,277			2,168,923
Sales and marketing		5,112			62,020			58,924			210,327
Research and development		198,626			285,056			1,336,015			599,929
Depreciation		6,472			8,607			23,848			16,055
Total operating expenses		418,667			1,151,818			2,826,065			2,995,234

Loss from operations		(396,167	)		(1,151,818	)		(2,780,622	)		(2,995,234	)

Other income (expense)
Interest expense and financing costs		(489,671	)		(251,831	)		(1,198,216	)		(714,456	)
Gain (loss) on change in fair value of derivative liability		(241,520	)		36,911			(272,097	)		35,538
Other income (expense)					6,908						6,908
Change in fair value of unregistered shares shortfall		1,783,000						266,941
Loss on asset disposition		(4,326	)					(8,854	)
Loss on Legal settlements		(15,000	)					(15,000	)
Loss on settlement of debt		(342,219	)		(351,608	)		(527,521	)		(548,501	)
Total other income (expense)		690,264			(559,620	)		(1,849,291	)		(1,220,511	)

Income (loss) before income taxes		294,097			(1,711,438	)		(4,629,919	)		(4,215,745	)
Income taxes
Net Income (loss)		294,097			(1,711,438	)		(4,629,919	)		(4,215,745	)
Less: Net income attributable to the noncontrolling interest					122,566						125,153
Net Income (loss) attributable to Sionix Corporation	$	294,097		$	(1,588,872	)	$	(4,629,919	)	$	(4,090,592	)

Amounts attributable to Sionix Corporation:
Basic income (loss) per share	$	0.00		$	(0.01	)	$	(0.01	)	$	(0.01	)
Diluted income (loss) per share	$	0.00		$	(0.01	)	$	(0.01	)	$	(0.01	)

Basic weighted average number of shares of common stock outstanding		440,415,881			339,671,367			419,966,351			322,945,023
Diluted weighted average number of shares of common stock outstanding		499,475,366			339,671,367			419,966,351			322,945,023

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

Sionix Corporation

Consolidated Statements of Stockholders' Deficit

For the Nine Months Ended June 30, 2013

(unaudited)

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

Balances at September 30, 2012		387,968,434	$	387,968	$	33,078,094	$	(37,317,951	)	$	1,247,888		$	(2,604,001	)
WBI Settlement - cash											(569,647	)		(569,647	)
WBI Settlement - notes payable											(450,000	)		(450,000	)
WBI Settlement - loss						228,241					(228,241	)
Conversion of notes payable into common stock		55,642,330		55,643		985,011								1,040,654
Common stock issued for services		6,680,529		6,681		195,721								202,402
Common stock issued for cash		7,800,000		7,800		187,200								195,000
123R Expense						14,671								14,671
Common stock issued for financing costs		15,743,286		15,743		158,207								173,950
Liability for contractual obligation to issue common stock						42,681								42,681
Net loss								(4,629,919	)					(4,629,919	)
Balances at June 30, 2013		473,834,579	$	473,835	$	34,889,826	$	(41,947,870	)	$	-		$	(6,584,209	)

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

Sionix Corporation

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended June 30,
	2013			2012

Cash flows from operating activities
Net loss	$	(4,629,919	)	$	(4,215,745	)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation		23,849			16,055
Amortization of debt discounts		1,359,226			366,985
Share based payments		(53,513	)		203,766
Common stock issued for services		355,175			1,220,341
(Gain) loss on change in fair value of derivative liability		272,097			(35,538	)
Loss on sale of property and equipment		(21,103	)
(Gain) loss on change in fair value of unregistered shares shortfall		(266,941	)
(Gain) Loss on settlement of debt		(10,117	)		548,501
Changes in operating assets and liabilities:
Other Receivables		27,854
Inventory		521,349			(149,627	)
Other current assets		(132,230	)		(322,809	)
Accounts payable		99,767			(59,565	)
Accrued expenses		602,737			380,399
Deferred revenue		(10,000	)
Net cash used by operating activities		(1,861,769	)		(2,047,237	)

Cash flows from investing activities:
Proceeds from sale of property and equipment, net		81,127
Purchase of property and equipment		(5,748	)		(124,434	)

Net cash provided (used) by investing activities		75,379			(124,434	)
Cash flows from financing activities:
Borrowings, net		944,000			975,000
Common stock issued for cash		195,000			400,200
Noncontrolling interests in subsidiary issued for cash		(569,647	)		1,600,000
Note payments for cash		(30,070	)
Net cash (used) provided by financing activities		539,283			2,975,200

Net increase (decrease) in cash and cash equivalents		(1,247,107	)		803,529
Cash and cash equivalents, beginning of period		1,348,069			685
Cash and cash equivalents, end of period	$	100,962		$	804,214

SUPPLEMENTARY CASH FLOW INFORMATION:
Income taxes paid	$			$	599
SUPPLEMENTARY DISCLOSURE OF NONCASH FINANCING ACTIVITIES:
Debt issued for WBI	$	450,000		$
Notes & accrued interest converted	$	1,485,526		$
Shares to be issued	$	1,125,000		$

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

Sionix Corporation

Notes to Condensed Consolidated Unaudited Financial Statements

Note 1 – Organization and Description of Business

Sionix Corporation (the "Company") was incorporated in Utah in 1996. The Company completed its reincorporation as a Nevada corporation effective July 1, 2003. Sionix designs, develops, markets and sells cost-effective water management and treatment solutions intended for use in the oil and gas, agriculture, food processing, industrial, disaster relief, and municipal (both potable and wastewater) markets The Company’s water treatment systems include filtration, pretreatment, pH control, clarification, ultra violet, reverse osmosis and feature the patented Sionix Dissolved Air Flotation (“DAF”) technology. The proprietary DAF system incorporates unique design elements including a distribution of fine, small diameter air bubbles that remove most solid particles, hydrocarbons and dissolved gases from the influent. The micro-bubbles capture contaminants and float them to the surface of the DAF tank where they are skimmed off.

In February 2012, the Company entered into a Water Treatment Agreement with McFall Incorporated, a construction and logistics firm operating in the Williston Basin. Under the agreement, we agreed to deploy one of our Mobile Water Treatment Systems to locations in the Williston Basin to decontaminate water emitted from drilling operations. The agreement had an initial term of 5 years. Following our execution of the Water Treatment Agreement, we formed Williston Basin I, LLC, a Nevada limited liability company ("WBI"), and in March 2012 we sold 4,000 membership units to 19 accredited investors, raising a total of $1,350,000. As the holder of 60% of the membership of WBI, we were entitled to 60% of its net profit and distributable assets. WBI intended use the proceeds from the offering principally for the acquisition of the assets required for the performance of the Water Treatment Agreement.

Upon further review and consideration, we determined that our efforts to treat drilling mud did not allow us to take full advantage of our proprietary DAF system. Accordingly, we have proposed to McFall Incorporated that we amend our existing agreement related to the treatment of drilling mud, and instead direct our efforts in the treatment of fracking water prior to disposal into underground wells. We have entered into an agreement with an operator of several disposal wells in the Williston Basin, have delivered treatment equipment to their site in anticipation of treating frack production water that is currently being delivered to their site, but is too contaminated for disposal into their wells without treatment. As well, we are developing certain testing and treatment protocols so that our testing activities are properly and accurately aligned with those required and customary in the oil and gas industry. It is our intention that this project will demonstrate our capabilities in the Williston Basin region.

Related to this change of business focus, on November 26, 2012 we completed the repurchase of all outstanding membership interests in WBI. In return for their membership interests and the release of WBI from any future claims, we offered the members the option of receiving a pro-rata share of the remaining capital invested into WBI, or they could assign their rights to their remaining capital to Sionix in return for a convertible note issued by Sionix equal to 100% of their original investment. The pro-rata share calculation did not include Sionix's interest in WBI. WBI thus become a wholly owned subsidiary of the Company.

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies

In the opinion of management, the accompanying condensed consolidated balance sheets and related condensed consolidated statements of operations, changes in stockholders deficit and cash flows include all adjustments, consisting only of normal recurring items, necessary for their fair presentation in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with information included in the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2012 filed with the U.S. Securities and Exchange Commission (the “Commission”) on December 31, 2012.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include collectability of accounts receivable, accounts payable, sales returns, and recoverability of long-term assets.

Consolidation

The financial statements include the accounts of the Company and its subsidiary, Williston Basin I, LLC (“WBI”), who was a 60% owned subsidiary of the Company as of September 30, 2012 and wholly owned subsidiary as of June 30, 2013. All significant intercompany accounts and balances have been eliminated in consolidation. Participation of other unit holders in the net assets and net earnings of consolidated subsidiaries is included in the captions ‘equity attributable to noncontrolling interest’ and ‘net loss attributable to the noncontrolling interest’ in the accompanying condensed consolidated balance sheet and condensed consolidated statement of operations, respectively.

Fair Value of Financial Instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under Financial Accounting Standards Board (FASB) guidance regarding disclosures about fair value of financial instruments, approximate the carrying amounts presented in the accompanying condensed consolidated balance sheets.

Computation of Earnings (Loss) Per Share

A basic earnings (loss) per share is calculated by dividing the earnings (loss) by the weighted average number of common shares outstanding during the period. A diluted earnings (loss) per share is calculated by dividing the earnings (loss) by the weighted average number of common shares and potentially dilutive securities outstanding during the period. Potentially dilutive common shares consist of incremental common shares issuable upon exercise of stock options, warrants and shares issuable upon the conversion of convertible notes. The dilutive effect of the convertible notes and warrants is calculated under the if-converted method. The dilutive effect of outstanding shares is reflected in diluted earnings per share by application of the treasury stock method. This method includes consideration of the amounts to be paid by the employees, the amount of excess tax benefits that would be recognized in equity if the instruments were exercised and the amount of unrecognized stock-based compensation related to future services. Warrants and convertible notes with exercise prices that exceed the average market price of the Company’s common stock during the periods will be excluded because the inclusion of these securities would be anti-dilutive to the diluted earnings per share. No potential dilutive common shares are included in the computation of any diluted per share amount when a loss is reported. Accordingly, we did not include 206,021,985 of potentially dilutive warrants and convertible debt instruments at June 30, 2012.

Potentially dilutive shares for the nine months ended,		June 30, 2012
Potentially dilutive convertible instruments			59,059,485

Recently Issued Accounting Pronouncements

In December 2011, the FASB issued disclosure guidance related to the offsetting of assets and liabilities. The guidance requires an entity to disclose information about offsetting and related arrangements for recognized financial and derivative instruments to enable users of its financial statements to understand the effect of those arrangements on its financial position. The amended guidance is effective for us on a retrospective basis commencing in the first quarter of 2014. We are currently evaluating the impact of this new guidance on our consolidated financial statements.

In September 2011, the FASB issued ASU No. 2011-08, “Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment.” ASU No. 2011-08 provides companies an option to perform a qualitative assessment to determine whether further goodwill impairment testing is necessary. If, as a result of the qualitative assessment, it is determined that it is more likely than not that a reporting unit’s fair value is less than its carrying amount, the two-step quantitative impairment test is required. Otherwise, no further testing is required. ASU No. 2011-08 will be effective for the Company for goodwill impairment tests performed in the fiscal year ending September 30, 2013, with early adoption permitted. The adoption of this guidance is expected to have no impact on the Company’s consolidated financial condition and results of operations.

In June 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income.” ASU No. 2011-05 eliminates the option to present components of other comprehensive income as part of the statement of shareholders’ equity. All non-owner changes in shareholders’ equity instead must be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. Also, reclassification adjustments for items that are reclassified from other comprehensive income to net income must be presented on the face of the financial statements. ASU No. 2011-05 was effective for the Company for the quarter ended December 31, 2012. The adoption of this guidance had no impact on the Company’s financial condition and results of operations.

In May 2011, the FASB issued ASU No. 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” ASU No. 2011-04 clarifies and changes the application of various fair value measurement principles and disclosure requirements, and was effective for the Company in the second quarter of fiscal 2012 (January 1, 2012). The adoption of this guidance had no impact on the Company’s consolidated financial condition and results of operations.

Note 3 – Correction of Errors

During quarter ended June 30, 2013, management of the Company identified and corrected certain errors in recording of debt discount, unregistered shares shortfall and additional paid-in capital in its previously filed financial statements for the year ended September 30, 2012 and in recording debt discount, derivative liability, unregistered shares shortfall, interest expense, and gain (loss) on change in fair value of derivative liability in its previous financial statements for the quarters ended December 31, 2012 and March 31, 2013. Specifically, debt discount should have been recorded when detachable warrants issued with convertible notes and accreted into interest expense over the term of the note. Additionally, the total potential shares upon exercise of warrants outstanding exceeded the total common stock authorized and unissued during the year ended September 30, 2012, hence the Company would need to reclassify the fair value of these equity instruments to liability and the change of the fair value of these liability would need to be reported as earnings (loss) subsequently. Moreover, the conversion feature of certain convertible notes was incorrectly included in calculation of derivative liabilities of the derivative conversion feature. The Company assessed the impact of the corrections of the errors on previously reported numbers and concluded that such correction is material to the previous financial statements. Moreover, in reaching this conclusion, management of the Company considered both the quantitative and qualitative characteristics of the adjustment.

The following table presents the nature and extent of such corrections to the previous interim quarterly financial statements:

	As of September 30, 2012
	As Originally
Balance sheets:	Reported			Adjustment			As Restated

Convertible notes, net of debt discount		1,895,378			(450,641	)		1,444,737
Derivative liability		638,178			(242,049	)		396,129
Unregistered shares shortfall		-			2,180,220			2,180,220
Additional Paid In Capital		34,807,672			(1,729,578	)		33,078,094
Accumulated Deficits		(37,560,000	)		242,049			(37,317,951	)

	As of December 31, 2012
	As Originally Reported			Adjustment			As Restated

Convertible notes, net of debt discount		1,983,358			(300,428	)		1,996,957
Derivative liability		420,028			(89,801	)		330,227
Unregistered shares shortfall		-			1,104,867			1,104,867
Additional Paid In Capital		35,681,588			(1,405,295	)		34,276,293
Accumulated Deficits		(38,617,909	)		1,014,942			(37,602,967	)

	As of March 31, 2013
	As Originally Reported			Adjustment			As Restated

Convertible notes, net of debt discount		2,005,146			(150,214	)		2,312,959
Derivative liability		4,478,105			(4,051,399	)		426,706
Unregistered shares shortfall		-			3,696,279			3,696,279
Additional Paid In Capital		36,089,172			(3,846,493	)		32,242,679
Accumulated Deficits		(44,479,875	)		2,234,914			(42,244,961	)

	For the year ended September 30, 2012
	As Originally
Statements of operations	Reported			Adjustment			As Restated

Gain (loss) on change in FV of derivative liability		233,186			242,049			475,235
Net income (loss)		(5,792,619	)		242,049			(5,520,570	)
Basic income (loss) per share		(0.02	)		0.00			(0.02	)

	For the three months ended December 31, 2012
	As Originally Reported			Adjustment			As Restated

Interest expense		(296,410	)		(146,181	)		(442,591	)
Gain (loss) on change in FV of derivative liability		78,191			(12,289	)		65,902
Change in FV of unregistered shares shortfall		-			1,075,353			1,075,353
Gain (loss) on settlement of debts		4,031			(143,992	)		(139,961	)
Net income (loss)		(1,057,909	)		772,893			(285,016	)
Basic income (loss) per share		(0.00	)		(0.00	)		(0.00	)

	For the six months ended March 31, 2013									For the three months ended March 31, 2013
	As Originally									As Originally
	Reported			Adjustment			As Restated			Reported			Adjustment			As Restated

Interest expense		(500,890	)		(300,428	)		(708,540	)		(204,480	)		(61,469	)		(265,949	)
Gain (loss) on change in FV of derivative liability		(4,107,185	)		4,076,608			(30,577	)		(4,185,376	)		4,088,897			(96,479	)
Change in FV of unregistered shares shortfall		-			(1,516,058	)		(1,516,058	)		-			(2,591,411	)		(2,591,411	)
Gain (loss) on settlement of debts		(174,734	)		(10,568	)		(185,302	)		170,703			(216,045	)		(45,342	)
Net income (loss)		(6,916,876	)		1,992,864			(4,924,012	)		(5,858,967	)		1,219,972			(4,638,995	)
Basic income (loss) per share		(0.02	)		0.01			(0.001	)		(0.01	)		0.01			0.00

Note 4 – Property and Equipment

Property and equipment consisted of the following at:

	June 30, 2013			September 30, 2012

Machinery and equipment	$	90,780		$	166,159
Less accumulated depreciation		(40,786	)		(38,040	)
Property and equipment, net	$	49,994		$	128,119

Depreciation expense for the three months ended June 30, 2013 and 2012 was $6,472 and $8,607, respectively. For the nine months ended June 30, 2013 and 2012, depreciation expense was $23,848 and $16,055, respectively.

Note 5 – Accrued Expenses

Accrued expenses consisted of the following at:

	June 30, 2013		September 30, 2012

Accrued salaries	$	710,768	$	306,055
Interest payable		524,121		364,567
Other accrued expenses		76,083		237,106

Total accrued expenses	$	1,310,972	$	907,728

During the nine months ended June 30, 2013, $15,693 of accrued interest was included in the conversion of notes payable into common stock described in Note 6.

Note 6 – Notes Payable – Related Parties

The Company has received advances in the form of unsecured promissory notes from stockholders. The original date of these advances was November 2009, March 2011, October 2011 and March 2013. These notes bear interest at rates up to 10% and are due on demand. As of June 30, 2013 and September 30, 2012, such notes payable amounted to $45,000 and $25,000, respectively. Accrued interest on the notes amounted to $22,218 and $17,717 at June 30, 2013 and September 30, 2012, respectively, and is included in accrued expenses. Interest expense on these notes for the three months ended June 30, 2013 and 2012 amounted to $1,138 and $632, respectively and for the nine months ended June 30, 2013 and 2012 amounted to $2,501 and $2,194, respectively. No demand for payment has been made as of June 30, 2013.

Note 7 – Convertible Notes

At June 30, 2013 and September 30, 2012, convertible notes payable amounted to $1,184,136 and $1,319,737, respectively, net of discounts of $124,226 and $383,659 respectively. The notes bear interest at 6% - 12% per annum, and are convertible into common stock of the Company at $0.02 - $0.15 per share (as well as variable conversion rates as described below). The notes are due at various dates through March 2014 and are unsecured.

Unsecured Convertible Notes:

Through June 30, 2013, the Company issued $700,000 of convertible debentures (of which $0 is outstanding at June 30, 2013) that are convertible into common stock of the Company at variable conversion rates that provide a fixed rate of return to the note-holder. Under the terms of the notes, however, the Company could be required to issue additional shares of common stock in the event of default. The Company applied the provisions of ASC Topic 815, “Derivatives and Hedging” and determined that the conversion option should be bifurcated from the notes and valued separately. This conversion option has been recorded as a derivative liability, is being amortized over the terms of the related notes, and is carried at fair value in the accompanying condensed consolidated balance sheet.

During the nine months ended June 30, 2013, holders of convertible debentures elected to convert $170,000 of their debt plus accrued interest into 19,544,356 shares of common stock.

6% Convertible Redeemable Note:

On November 23, 2011 Sionix issued a 6% Convertible Redeemable Note in the principal amount $100,000 maturing on November 23, 2012. In addition, the Company received a commitment in the form of a promissory note from the lender pursuant to which the lender provided the Company with funding of up to an additional $300,000 beginning on June 1, 2012, at which time $100,000 became available, on each of June 1, 2012, July 1, 2012 and August 1, 2012 (the "Additional Financing"). All funds were advanced as agreed for a total of $400,000. Sionix paid fees of $45,000 in connection with the funding of these loans. The conversion price for each share of common stock will be equal to 70% of the lowest closing bid price of the common stock for a period of five trading days, but no lower than $0.001 per share.

On September 21, 2012 Sionix issued a 6% Convertible Redeemable Note in the principal amount $100,000. The note matures on September 21, 2013. The Company has an optional right of redemption prior to maturity upon a five-day notice and payment of a 50% premium on the unpaid principal amount of the loan. The Company paid fees of $6,000 in connection with the funding of this loan. In addition, the Company received a commitment in the form of a promissory note pursuant to which it will provide the Company with funding of an additional $300,000, $100,000 of which will become available on each of July 1, 2013, August 15, 2013 and October 1, 2013. The conversion price for each share of common stock will be equal to 70% of the lowest closing bid price of the common stock for a period of five trading days, but no lower than $0.001 per share.

As of June 30, 2013 there was $83,268 outstanding on these Notes.

10% Convertible Debentures:

On September 29, 2012 the Company entered into a securities purchase agreement dated September 25, 2012 with several accredited investors (“Holders”) for the purchase and sale of $1,025,000 of its convertible notes (“Notes”) and warrants. The Notes bear interest at the rate of 10% per annum beginning as of September 25, 2012, and mature on June 25, 2013. On the closing date, the Company paid and the Holders received nine months of pre-paid interest on the original principal amount of the Notes (based on the agreed nine-month term of the Notes).

The Notes are convertible at any time at the option of the Holders into the Company’s common stock at a conversion price based on 80% of the average of the three lowest closing prices for the common stock during the ten consecutive trading days immediately preceding the conversion request, however the conversion price may not exceed $0.04, and may not be lower than $0.02 per share. The Notes may be redeemed by the Company at any time prior to maturity with ten days’ prior notice to the Holders, and payment of a premium of 25% on the unpaid principal amount of the Notes. In addition the Notes and related securities purchase agreement contain representations, warranties and covenants that are customary for financings of this type.

The Company issued warrants to the Holders for the purchase of up to 23,125,000 shares of Company common stock, pro rata in proportion to the amount invested, which can be exercised for a period of five years from the closing date, with a fixed exercise price of $0.08 per share.

The Company agreed to register the common stock into which the Notes may be converted, any shares of common stock that may be issued as payment of principal or interest, and the common stock underlying the warrants, as well as any shares of common stock that may be issued as a result of any stock split, dividend or other distribution. The Company agreed to file an initial registration statement within 30 days of the date of the registration rights agreement. If the Company fails to file a registration statement within this 30 day period, or to have it declared effective within 90 days after the date of the registration rights agreement, or to maintain its effectiveness (in addition to other events described in the full text of the registration rights agreement), the Company will be obligated to pay the investors liquidated damages equal to 2% of the principal amount of the Notes per month until the event is cured, for up to one year, and 1% per month thereafter if the event continues uncured

The offering was made with the services of a placement agent. At the closing of the sale and issuance of the Notes, the Company paid a cash fee to the placement agent in the amount of $87,535 or 8.54% of the gross proceeds of the offering.

The Company gave notice of early redemption to the Holders on June 24, 2013. The Notes were redeemed for a premium of 25%, in accordance with the provisions of the Notes. As of June 30, 2013, the stock certificates have not been issued. Hence, these amounts are reflected as common stock to be issued in the accompanying balance sheet. Subsequent to June 30, 2013, these stock certificates were issued.

January Convertible Notes:

On January 25, 2013 the Company entered into securities purchase agreements (the “January SPAs”) with accredited investors (the “January Holders”) for the purchase and sale of $140,000 of convertible notes (the “January 2013 Notes”) convertible into shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”) at a conversion price equal to 80% of the average of the three (3) lowest closing prices for the Common Stock during the ten (10) consecutive trading days immediately preceding the conversion request, however the conversion price may not exceed $0.04 and may not be lower than $0.02 per share. The January 2013 Notes bear interest at the rate of 10% per annum and mature on September 30, 2014. The January 2013 Notes are convertible at any time at the option of the January Holders (subject to an increase in the Company’s authorized Common Stock, or a reverse split of its existing outstanding Common Stock with no change to its authorized Common Stock). The Company may redeem the January 2013 Notes at any time prior to maturity with twenty (20) days’ prior notice to the January Holders and payment of a premium of 20% on the unpaid principal amount.

In addition, the January 2013 Notes and January SPAs provide the January Holders with registration rights for the shares of Common Stock underlying the January 2013 Notes. If the Company fails to file a registration statement with the SEC covering such shares within thirty (30) days from the date of the January Notes, the Company shall pay to the January Holders an amount in cash, as partial liquidated damages, equal to 2% of the aggregate purchase price paid by the January Holders pursuant to the January SPAs until the first anniversary of the issue date and 1% of the same per month thereafter, not to exceed 10% of the principal amount in the aggregate.

March Convertible Notes:

On March 13, 2013 the Company entered into securities purchase agreements (the “March SPAs”) with five (5) accredited investors (the “March Holders”) for the purchase and sale of $60,000 of convertible notes (the “March 2013 Notes”) convertible into shares of the Company’s Common Stock at a fixed conversion price of $0.02 per share. The March 2013 Notes bear interest at the rate of 10% per annum and mature on September 30, 2014. The March 2013 Notes are convertible at any time at the option of the March Holders (subject to an increase in the Company’s authorized Common Stock, or a reverse split of its existing outstanding Common Stock with no change to its authorized Common Stock). The Company may redeem the March 2013 Notes at any time prior to maturity with twenty (20) days’ prior notice to the March Holders and payment of a premium of 20% on the unpaid principal amount.

Additional 10% Convertible Promissory Note:

On April 11, 2013 and June 27, 2013 the Company received additional funding of $100,000 in principal amount of 10% Convertible Promissory Notes which have not yet been converted into shares of our common stock. The notes are convertible at any time at the option of the holders into shares of our common stock at a conversion price based on 80% of the average of the three lowest closing prices for the common stock during the ten consecutive trading days immediately preceding the conversion request, however the conversion price may not exceed $0.04, and may not be lower than $0.02 per share. Based on the outstanding principal amount of these notes and assuming that interest accrued through December 31, 2014, the due date, the notes would be convertible into approximately 15,000,000 shares of our common stock at a conversion price of $0.02 a share. The CPN also provides for up to an additional $150,000 to be provided to the Company at the lender’s sole discretion.

Note 8 – 12% Secured Promissory Note

On November 8, 2011 Sionix issued a 12% Secured Promissory Note in the principal amount of $300,000 maturing on July 31, 2012. The Company had an optional right of redemption prior to maturity. Sionix was to redeem the note on the maturity date at a redemption premium of 7.5%. Sionix granted to the investor a continuing, first priority security interest in certain property of Sionix to secure the prompt payment, performance, and discharge in full of all of the Company’s obligations under the Secured Promissory Note, Securities Purchase Agreement, and Pledge Agreement.

In connection with this borrowing, Sionix issued 2,358,491 shares of common stock as Incentive Shares, and 16,981,132 shares of common stock as Pledged Shares. At the Company’s option, the Incentive Shares may be redeemed for cash in the amount of $125,000; otherwise they are retained by the lender. The value of the Incentive Shares has been classified as a liability and is being amortized as interest expense over the term of the borrowing. The Pledged Shares were issued as security under the Pledge Agreement.

The Company issued shares to pay the outstanding balance. After conversions, the amount outstanding as of June 30, 2013 amounted to $0.

Note 9 – Long Term Debt

10% Convertible Debt (WBI):

On November 26, 2012 Sionix completed the repurchase of all outstanding membership interests in WBI. In return for their membership interests and the release of WBI from any future claims, the Company offered the members the option of receiving a pro-rata share of the remaining capital invested into WBI, or they could assign their rights to their remaining capital to Sionix in return for a convertible note issued by Sionix equal to 100% of their original investment. The pro-rata share calculation did not include Sionix's interest in WBI. The cash available for distribution totaled $854,046 or 63.3% of the original investment of $1,350,000. The Company returned $569,649 of the original capital invested, representing an original investment of $900,000.

The Company issued convertible notes in the amount of $450,000 and received $284,397 of the remaining capital. In addition, the Company received $250,000 of new capital in return for the issuance of an additional note of $394,000, and recognized a debt discount of $144,000 in connection with this new note.

In January and March of 2013, the Company issued additional convertible notes in the amount of $200,000.

The convertible notes issued mature on September 30, 2014, bear an annual interest rate of 10% payable in cash or in kind at our election, and are convertible at the election of the holder into common shares of Sionix at a rate of $0.04.

As part of this offering, the Company paid a placement agent a fee of $45,000 for services rendered in connection with this transaction.

10% Convertible Promissory Note

On April 19, 2013, pursuant to the terms and conditions of that certain securities purchase agreement, the Company issued: i) a convertible promissory note (the “LT Note”) in the principal amount of $155,000 (the “Principal Amount”), including a 10% original issue discount, maturing on August 19, 2014 (the “Maturity Date”) and ii) a five (5) year warrant (the “Warrant”) to purchase that number of shares of the Company’s Common Stock equal to $62,000, convertible at a conversion price as set forth in the LT Note and exercisable at $0.06 per share, as adjusted pursuant to the terms and conditions of the Warrant. The Company paid fees of $5,000 incurred by the lender in connection with the funding of this loan. The Company has the optional right to prepay any portion of the Principal Amount upon providing five (5) days’ notice of such prepayment, provided that the Company must pay the lender 135% of the amount of the Principal Amount it elects to prepay. Interest on the LT Note shall accrue at 8% per annum, provided that upon an Event of Default (as defined in the LT Note) the interest rate shall increase to 18%.

The conversion price for each share of Common Stock issuable pursuant to the LT Note and the Warrant will be $0.03 (the “Conversion Price”), subject to adjustments as set forth in the LT Note and the Warrant; provided, however, that, beginning on a date that is 180 days after the date of issuance of the LT Note, the Company shall pay, on a monthly basis, the greater of (i) $15,500, plus the sum of any accrued and unpaid interest as of the applicable installment date and accrued, and unpaid late charges, if any, under the LT Note as of the applicable installment date, and any other amounts accruing or owing to the lender and (ii) the then outstanding balance of the LT Note divided by the number of installment dates remaining prior to the Maturity Date (each, an “Installment Amount’). Notwithstanding any other provision of the LT Note, if any Installment Amount is greater than the then outstanding balance of the LT Note, such Installment Amount shall be reduced to equal such then outstanding balance. The applicable Installment Amount may be paid in cash or in shares of the Company’s Common Stock (a “Company Conversion”). In the event of a Company Conversion the number of shares of Common Stock due to the lender will be based on a conversion price that is equal to the lower of i) the Conversion Price and ii) 70% of the three (3) lowest closing volume-weighted average prices (“VWAPs”) of the Company’s Common Stock for a period of twenty (20) trading days, provided, however, that if the arithmetic average of the three (3) lowest VWAPs of the shares of Common Stock during any twenty (20) consecutive trading day period is less than $0.01, then the conversion described above will be based on 65% of the VWAPs.

Note 10 – Derivative Financial Instruments

The components of embedded derivative liability as reflected in the condensed consolidated balance sheets as of June 30, 2013 and September 30, 2012 are as follows:

	June 30, 2013				September 30, 2012
	Indexed to Shares		Fair Value		Indexed to shares		Fair Value

Derivative liability		35,715,905	$	668,226		4,534,632	$	396,129

The following table summarizes the effects on our gain (loss) associated with changes in the fair values of our derivative financial instruments by type of financing for the nine months ended June 30, 2013 and 2012:

	Nine Months Ended June 30, 2013		Nine Months Ended June 30, 2012

Derivative liability	$	272,097	$	35,538

The following table summarizes the effects on our gain (loss) associated with changes in the fair values of our derivative financial instruments by type of financing for the three months ended June 30, 2013 and 2012:

	Three Months		Three Months
	Ended June 30,		Ended June
	2013		30, 2012

Derivative liability	$	241,520	$	36,911

Note 11 – Fair Value Consideration

GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. As presented in the tables below, this hierarchy consists of three broad levels:

Level 1 valuations: Quoted prices in active markets for identical assets and liabilities.

Level 2 valuations: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs or significant value drivers are observable. Level 3 valuations: Significant inputs to valuation model are unobservable.

We follow the provisions of ASC 820, Fair Value Measurements and Disclosures, with respect to our financial instruments. As required by ASC 820, assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement. Our derivative financial instruments which are required to be measured at fair value on a recurring basis under of ASC 815 are all measured at fair value using Level 3 inputs. Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following table presents information about the Company’s liabilities measured at fair value as of June 30, 2013 and September 30, 2012:

June 30, 2013	Level 1	Level 2	Level 3		Total
Liabilities:
Derivative liability - BCF	$	$	$	668,226	$	668,226
Unregistered shares shortfall - Warrants			$	1,913,279	$	1,913,279
	$	$	$	2,581,505	$	2,581,505

September 30, 2012	Level 1	Level 2	Level 3		Total
Liabilities:
Derivative liability - BCF	$	$	$	396,129	$	396,129
Unregistered shares shortfall - Warrants			$	2,180,220	$	2,180,220
	$	$	$	2,576,349	$	2,576,349

Both the derivative liability and unregistered shares shortfall were valued using a black scholes valuation model. The black scholes valuation technique was utilized because it embodies all of the requisite assumptions (including the underlying price, exercise price, term, volatility, and risk-free interest-rate) that are necessary to fair value these instruments. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques are highly volatile and sensitive to changes in the trading market price of our common stock. Because derivative financial instruments are initially and subsequently carried at fair values, our income will reflect the volatility in these estimate and assumption changes.

Significant assumptions in valuing the beneficial conversion feature (“BCF”) and unregistered shares shortfalls - warrants were as follows as of June 30, 2013:

	BCF			Warrants
Exercise price		0.012			0.11
Risk free rate of return		0.150	%		0.72	%
Volatility		335	%		171	%
Dividend yield		0			0	%
Expected term		1			5

Significant assumptions in valuing the beneficial conversion feature (“BCF”) and unregistered shares shortfalls - warrants were as follows as of September 30, 2012:

	ECF			Warrants
Exercise price		0.040			0.14
Risk free rate of return		0.210	%		0.72	%
Volatility		179	%		171	%
Dividend yield		0			0	%
Expected term		1			5

The following table sets forth a reconciliation of changes in the fair value of financial liabilities classified as Level 3 in the fair value hierarchy:

Balance as of September 30, 2012:	$	2,576,349
Gain (loss) on derivative liabilities		(5,156	)
Balance as of June 30, 2013:	$	2,581,505

Note 12 – Income Taxes

For the nine months ended June 30, 2013 and 2012, the accompanying Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets as of June 30, 2013 and September 30, 2012, contain no provision for income taxes and no liability for income taxes as the Company has accumulated net operating loss carry forwards in excess of any income generated by the Company.

Note 13 – Stockholders’ Equity

Common Stock

The Company has 600,000,000 authorized shares of common stock, par value $0.001 per share. As of June 30, 2013, the Company had 473,834,579 shares issued and outstanding. As of September 30, 2012, the Company had 387,968,434 shares of common stock issued and outstanding.

During the nine months ended June 30, 2013, the Company issued 6,680,529 shares of common stock for services to officers, directors and consultants (valued at $202,402) based on closing market prices. The Company also issued 55,642,330 shares of common stock for conversion of debt in the amount of $1,040,649 (including interest), 7,800,000 shares of common stock for cash and issued 15,743,286 shares of common stock for financing costs.

Warrants

Employee Warrants

A summary of the Company’s activity for employee warrants:

						Aggregate		Weighted Average
	Number of			Weighted Average		Intrinsic		Remaining
	Warrants			Exercise Price		Value		Contractual Life
Outstanding at October 1, 2012		43,716,316		$	0.12	$	-		3.01
Granted		500,000			0.15		-		4.75
Expired		(3,933,526	)		0.21		-		-
Forfeited		(500,000	)		-		-		-
Exercised		-			-		-		-
Outstanding at June 30, 2013		39,782,790			0.11		-		1.73
Exercisable at June 30, 2013		39,782,790		$	0.11	$	-		1.73

Outstanding and exercisable as of June 30, 2013:

Exercise Price		Warrants Outstanding		Contractual Life		Weighted Average Remaining Options Exercisable		Weighted Average Remaining Contractual Life
$	0.06		7,415,000		2.19		7,415,000		2.19
$	0.07		2,000,000		2.50		2,000,000		2.50
$	0.09		2,000,000		2.50		2,000,000		2.50
$	0.10		8,416,850		1.27		8,416,850		1.27
$	0.12		8,450,940		0.78		8,450,940		0.78
$	0.14		500,000		2.92		500,000		2.92
$	0.15		11,000,000		2.19		11,000,000		2.19
			39,782,790		1.73		39,782,790		1.73

During the nine months ended June 30, 2013, the Company granted a total of 500,000 options and warrants to certain officers and employees. The options and warrants vested immediately upon grant and have a term of five years. The weighted average grant-date fair value of these options and warrants was $14,671.

Stock Warrants

A summary of the Company’s warrant activity with non-employees:

	Number of			Weighted Average
	Warrants			Exercise Price
Outstanding at October 1, 2012	$	114,460,085			0.12
Granted		3,725,000			0.02
Expired		(6,045,037	)		0.22
Forfeited		-			-
Exercised		-			-
Outstanding as of June 30, 2013	$	112,140,048			0.11

Exercisable as of June 30, 2013	$	112,140,048			0.11

Warrants outstanding and exercisable as of June 30, 2013:

Exercise		Warrants		Warrants		Weighted Average Remaining Contractual		Weighted Average Exercise Price
Price		Outstanding		Exercisable		Life		Outstanding		Exercisable
$	0.02		3,100,000		3,100,000		4.81	$	0.02	$	0.02
$	0.06		11,262,500		11,262,500		2.92	$	0.06	$	0.06
$	0.07		22,833,333		22,833,333		0.79	$	0.07	$	0.07
$	0.08		25,425,000		25,425,000		3.87	$	0.08	$	0.08
$	0.10		5,754,722		5,754,722		3.06	$	0.10	$	0.10
$	0.12		6,226,000		6,226,000		0.44	$	0.12	$	0.12
$	0.14		5,000,000		5,000,000		2.31	$	0.14	$	0.14
$	0.15		2,107,667		2,107,667		1.58	$	0.15	$	0.15
$	0.17		24,230,825		24,230,825		2.61	$	0.17	$	0.17
$	0.25		3,700,000		3,700,000		0.82	$	0.25	$	0.25
$	0.30		2,500,000		2,500,000		0.08	$	0.30	$	0.30
			112,140,048		112,140,048		2.37

Warrants expiring within twelve months of June 30, 2013 total 25,531,856.

Note 14 – Going Concern

The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of its liabilities in the normal course of business. Through June 30, 2013, the Company has incurred cumulative losses of $41,947,870, including a net loss for the nine months ended June 30, 2013 of $4,629,919. As the Company has limited cash flow from operations, its ability to maintain normal operations is entirely dependent upon obtaining adequate cash to finance its overhead, research and development activities, and acquisition of production equipment. It is unknown when, if ever, the Company will achieve a level of revenues adequate to support its costs and expenses. In order for the Company to meet its basic financial obligations, including salaries, debt service and normal operating expenses, it plans to sell additional units of its water treatment systems, and to seek additional equity or debt financing. Because of the Company’s history and current debt levels, there is considerable doubt that the Company will be able to obtain financing. The Company’s ability to meet its cash requirements for the next twelve months depends on its ability to obtain such financing. Even if financing is obtained, any such financing will likely involve additional fees and debt service requirements which may significantly reduce the amount of cash we will have for our operations. Accordingly, there is no assurance that the Company will be able to implement its plans.

As mentioned in Notes 6, 7, 8 and 9, the Company has related party notes, convertible notes, and subordinated debentures that have matured. The Company is continuing its efforts to obtain customers for its products expand its sales efforts worldwide and expand the industries it targets for possible customers. The Company also has future plans for additional products, and revisions to its current products. In support of this the Company plans to hire additional personnel who have the industry experience and the training so that they can be immediately effective in the building of the Company. The Company has dedicated significant resources to apply its technology to the treatment of both production and flow back water from oil and gas fracking operations. Field and laboratory tests were conducted in the Bakken Shale area of North Dakota and the Company will continue to develop commercial opportunities to treat both production and flow back water for reuse in fracking as a strategic market objective. The Company is also continuing to seek additional investment capital in the form of debt or equity to continue operations, and is considering certain changes to its capital structure to become more attractive to potential investors and business partners.

Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The information in this quarterly report on Form 10-Q contains forward-looking statements. These forward-looking statements involve risks and uncertainties, including statements regarding our capital needs, business strategy and expectations. Any statements contained in this report that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue”, the negative of such terms or other comparable terminology. Actual events or results may differ materially from those events or results included in the forward-looking statements. In evaluating these statements, you should consider various factors, including the risks outlined from time to time in the reports we file with the Securities and Exchange Commission. Some, but not all, of these risks include, among other things:

●

our inability to obtain the financing we need to continue our operations;

●

changes in regulatory requirements that adversely affect our business;

●

loss of our key personnel; and

●

risks over which we have no control, such as the general global downturn in the economy which may adversely affect spending by private and government agencies.

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

Overview and Plan of Operation

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 the supply and quality of available water. Water is a natural resource that has a limited supply and no true substitute with only a 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 by 2025, 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 believe that the demand for cost-effective water treatment technology and services will continue to grow.

We plan to continue marketing our existing patented Sionix Dissolved Air Flotation (“DAF”) system to potential domestic and international customers. We believe that we are now able to aggressively market our systems to a variety of private companies and governmental entities in several vertical markets including oil and gas, agriculture, manufacturing, health care and public water utilities. We are engaging in selective sales and promotional activities in connection with the operation of the unit, including media exposure. If the unit continues to operate successfully, we believe we can receive orders for operating units.

We plan to market Sionix technology incorporating the patented Sionix DAF system to markets including; oil and gas drilling and production, agriculture, manufacturing, food processing, municipalities and public utilities. We are also continuing to extend the Sionix technologies, add to the Company’s intellectual property and develop alliances and working relationships with independent laboratories, equipment manufacturers, technology providers and potential customers and partner in our markets of interest.

Recent Developments

The Company designed and manufactured a DAF system for a leading maple syrup producer in New York State. The unit was leased to Madava Sugar Maple LLC and was operated between January and March 2013. Sionix provided on-site training, installation, technical and research support during the sap-to-syrup production season. The unit performed successfully, improving operating economics and product quality. Sionix is engaged in discussions with the customer regarding upgrades to and sale of the unit, as well as announcing the results of the successful operation. We anticipate that published results of this successful DAF performance will lead to further opportunities in this market.

The Company completed an initial demonstration of its proprietary water treatment technology in the Williston Basin of North Dakota in January 2013. The processing facility located in Dickinson, North Dakota, successfully treated production and flow back water from drilling and fracking operations in the Bakken Shale. The first round of testing was done with the participation of Clear Water Services, an independent, experienced and innovative water treating company and laboratory analysis was performed by two independent third party testing laboratories in North Dakota and California. Test results show significant reduction in turbidity and total suspended solids as well as reductions in metals, hydrocarbons and bicarbonate.

In April 2013, Sionix began a second round of field testing after modifying equipment and its testing protocol based on information and analysis gleaned from earlier test results. The treatment process consisted of initial residence time, pH control and chemical pre-treatment, clarification, filtration and the patented Sionix DAF system. The objective of the test was to demonstrate the ability to treat commercial volumes of production and flow back water and generate treated brine that could be recycled for use in fracking. Preliminary data from the second round of testing indicate the successful treatment of production and flow back waters that were destined for disposal wells. Our process yielded clear, treated brine with a density of more than 9.6 pounds per gallon at a near neutral pH.

The Company plans to complete the analysis of test results and aggressively market the Sionix frack water recycling technology in the Bakken and other shale areas as a cost-effective way to treat flow back and production water and return it to the driller for reuse in fracking.

Results of Operations

Three Months Ended June 30, 2013, Compared to Three Months Ended June 30, 2012

Revenues for the three months ended June 30, 2013 and 2012 were $22,500 and $0, respectively.

The Company’s total operating expenses were $418,667 during the three months ended June 30, 2013, a decrease of $733,151 or 64%, as compared to $1,151,818 for the three months ended June 30, 2012. General and administrative expenses were $208,457 during the three months ended June 30, 2013, a decrease of $587,678 or 74%, as compared to $796,135 for the three months ended June 30, 2012. Sales and marketing expenses were $5,112 for the three months ended June 30, 2013, a decrease of $56,908 or 92%, as compared to $62,020 for the three months ended June 30, 2012. The decrease in sales and marketing expense was related to a reduction of personnel and vendors for sales support and the related payroll taxes and benefits, as well as decreased travel and related expenses. Research and development expenses were $198,626 during the three months ended June 30, 2013, a decrease of $86,430 or 30%, as compared to $285,056 for the three months ended June 30, 2012. This increase is directly attributable to the write off and the write down of inventory due to obsolescence, lack of the ability to realize the carrying value of the inventory and the change in the product mix required by the change in business focus and the costs associated with ongoing tests in the Williston Basin.

The Company also incurred interest costs related to various notes in the amount of $489,671 during the three months ended June 30, 2013, an increase of $237,840 or 94% as compared to $251,831 for the three months ended June 30, 2012. Normal operations were limited by the lack of available cash. The Company incurred a loss on the change in the fair value of the derivative liability of $241,520 during the three months ended June 30, 2013, a decrease of $278,431 as compared to a gain of $36,911 for the three months ended June 30, 2012.

Nine Months Ended June 30, 2013 Compared to Nine Months Ended June 30, 2012

Revenues for the nine months ended June 30, 2013 and 2012 were $50,000 and $0, respectively.

The Company’s total operating expenses were $2,825,988 during the nine months ended June 30, 2013, a decrease of $169,246 or 6%, as compared to $2,995,234 for the nine months ended June 30, 2012. General and administrative expenses were $1,407,201 during the nine months ended June 30, 2013, a decrease of $761,722 or 35%, as compared to $2,168,923 for the nine months ended June 30, 2012. Sales and marketing expenses were $58,924 for the nine months ended June 30, 2013, a decrease of $151,403 or 72%, as compared to $210,327 for the nine months ended June 30, 2012. The decrease in sales and marketing expense was related to a loss of personnel and vendors for sales support, as well as decreased travel and related expenses. Research and development expenses were $1,336,015 during the nine months ended June 30, 2013, an increase of $736,086 or 123%, as compared to $599,929 for the nine months ended June 30, 2012. This increase is directly attributable to the write off and the write down of inventory due to obsolescence, lack of the ability to realize the carrying value of the inventory and the change in the product mix required by the change in business focus and the costs associated with ongoing tests in the Williston Basin.

The Company also incurred interest costs related to various notes in the amount of $1,198,216 during the nine months ended June 30, 2013, an increase of $483,760 or 68%, as compared to $714,456 for the nine months ended June 30, 2012. Normal operations were limited by the lack of available cash. The Company also incurred a loss on the change in the fair value of the derivative liability of $272,097 during the nine months ended June 30, 2013, a decrease of $307,635 as compared to a gain of $35,538 for the nine months ended June 30, 2012.

Liquidity and Capital Resources

The Company had cash of $100,962 and $1,348,069 at June 30, 2013 and September 30, 2012, respectively. Historically the Company’s source of cash for operations has been the sale of its equity and debt securities. During the period ended June 30, 2013 the Company obtained $255,000 from the sale of notes. If it does not receive additional orders or if these orders do not satisfy its capital needs, the Company expects to sell its securities or obtain loans to meet its capital requirements. The Company has no additional orders for the sale of water treatment systems or for the deployment of its DAF system, except as noted above. There can be no assurance that sales of the Company’s securities, additional contracts for the sale of water treatment services, or of its water treatment systems, if such sales occur, will provide sufficient capital for its operations or that the Company will not encounter unforeseen difficulties that may deplete its capital resources more rapidly than anticipated. As of June 30, 2013, approximately $2,897,326 in principal and interest of certain promissory notes issued by the Company were due or will be coming due on or before September 30, 2014, which is the latest maturity date of its existing notes. The Company anticipates that it can continue normal operations for approximately one month unless additional financing is obtained.

Operating Activities

During the nine months ended June 30, 2013, the Company used $1,861,769 of cash in operating activities, primarily to fund its net loss. Non-cash adjustments included $287,401 for common stock issued for services, $5,156 for a loss on the change in fair value of derivative liability and unregistered shares shortfall and $1,359,226 for the amortization of debt discounts. Cash provided by operating activities included $403,247 in accrued expenses. Cash used in operating activities included $132,230 in other current assets.

Investing Activities

During the nine months ended June 30, 2013, the Company received net proceeds from the sale of property and equipment totaling $81,127, as compared to acquisitions of $5,748 and $124,434 during the nine months ended June 30, 2013 and June 30, 2012 respectively.

Financing Activities

Financing activities by the Company provided net cash of $539,283 and $2,975,000 during the nine months ended June 30, 2013 and June 30, 2012, respectively.

As of June 30, 2013, the Company had an accumulated deficit of $41,947,870. Management anticipates that future operating results will continue to be subject to many of the problems, expenses, delays and risks inherent in the establishment of a developmental business enterprise, many of which the Company cannot control.

Material Trends, Events or Uncertainties

The Company is not certain how the current economic downturn may affect its business. Because of the global recession, government agencies and private industry may not have the funds to purchase its water treatment systems. It may also be more difficult for the Company to raise capital in the current economic environment. Other than as discussed herein, the Company does not know of any material trends, events or uncertainties that may impact its operations in the future.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of its liabilities in the normal course of business. Through June 30, 2013, the Company has incurred cumulative losses of $41,947,870 including a net income for the three months ended June 30, 2013 of $294,097. As the Company has no cash flow from operations, its ability to maintain normal operations is entirely dependent upon obtaining adequate cash to finance its overhead, research and development activities, and acquisition of production equipment. It is unknown when, if ever, the Company will achieve a level of revenues adequate to support its costs and expenses. In order for the Company to meet its basic financial obligations, including rent, salaries, debt service and operations, it plans to seek additional equity or debt financing. Because of the Company’s history and current debt levels, there is considerable doubt that the Company will be able to obtain financing. The Company’s ability to meet its cash requirements for the next twelve months depends on its ability to obtain such financing. Even if financing is obtained, any such financing will likely involve additional fees and debt service requirements that may significantly reduce the amount of cash it will have for operations. Accordingly, there is no assurance that the Company will be able to implement its plans.

The Company expects to continue to incur substantial operating losses for the foreseeable future, and it cannot predict the extent of the future losses or when it may become profitable, if ever. The Company expects to incur increasing sales and marketing, research and development and general and administrative expenses. Also, the Company has a substantial amount of short-term debt, which will need to be repaid or refinanced, unless it is converted into equity. As a result, if the Company begins to generate revenues from operations, those revenues will need to be significant in order to cover current and anticipated expenses. These factors raise substantial doubt about the Company's ability to continue as a going concern unless it is able to obtain substantial additional financing in the short term and generate revenues over the long term. If the Company is unable to obtain financing, it would likely discontinue its operations.

Critical Accounting Policies

The discussion and analysis of its financial condition and results of operations is based upon the Company’s unaudited condensed financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires it to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an on-going basis, the Company evaluates its critical accounting policies and estimates. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The Company’s critical accounting policies and estimates are discussed in its Annual Report on Form 10-K for the fiscal year ended September 30, 2012.

Part I, Item 3. Quantitative and Qualitative Disclosures about Market Risk.

As a smaller reporting company, the Company is not required to provide this disclosure.

Part I, Item 4. Controls and Procedures.

(a) Disclosure Controls and Procedures

Regulations under the Securities Exchange Act of 1934 require public companies to maintain “disclosure controls and procedures,” which are defined to mean a company’s controls and other procedures that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

We conducted an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of June 30, 2013, our disclosure controls and procedures were effective. As previously reported in a Form 8-K filing dated August 12, 2013, the Company disclosed that a material weakness in internal controls over financial reporting existed as of March 31, 2013. The Company has implemented certain changes in its internal controls and believes that this weakness will be fully remediated. The Company will amend any disclosures pertaining to its evaluation of such controls and procedures as appropriate in connection with filing an amendment to the 2013 Annual Report.

(b) Changes in internal control over financial reporting

During the three months ended June 30, 2013, the Company has not made any changes to internal control over financial reporting that have materially affected, or are reasonably likely to affect, its internal control over financial reporting.

Part II, Item 1. Legal Proceedings.

On April 2, 2013, Dean Delis brought suit against the Company, several current and former directors and executives, and Ascendiant Securities, LLC in the U.S. District Court for the Northern District of California. The suit alleges various causes of action, including violations of federal and state securities laws, in connection with Mr. Delis’s 2012 purchase of a $100,000 convertible debenture issued by the Company. The Company denies the allegations and believes the suit lacks merit. On April 29, 2013, the Company moved to dismiss the complaint. The Company’s motion to dismiss is currently pending. The Company does not believe the ultimate resolution of this matter will have a material adverse effect on its financial position.

On May 28, 2013, Dorothy Francis Sanford as Trustee of the Dorothy Francis Sanford Trust and Budd Sanford brought suit against the Company, several current and former directors and executives, and Ascendiant Securities, LLC in the Superior Court of the state of California, in Orange County. The suit alleges various causes of action, including violations of federal and state securities laws, in connection with Sanford’s 2012 purchase of a $100,000 convertible debenture issued by the Company. The Company denies the allegations and believes the suit lacks merit. The Company does not believe the ultimate resolution of this matter will have a material adverse effect on its financial position.

Part II, Item 1A. Risk Factors.

We incorporate herein by reference the information included in Item 1A. of the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on December 31, 2012.

Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

		During the three months ended June 30, 2013, we:

	●	Issued 15,421,969 shares of common stock for conversion of debt in the amount of $327,812 (including interest).
	●	Issued 7,800,000 shares of common stock for cash in the amount of $195,000. The Company used, or will use, the net proceeds for general working capital purposes. We relied on Section 3(a)(9) of the Securities Act as providing an exemption from registering the issuance of these shares of common stock inasmuch as the conversion was made with our existing security holders exclusively and no commission or other remuneration was paid or given directly or indirectly for soliciting the exchange. The issuance of shares of common stock for cash were exempt from registration under section 4(2) of the Securities Act of 1933 because they were issued in a privately negotiated transaction with persons with whom we had prior material business relations and were restricted from resale or other applicable exemptions from registration.

Part II, Item 3. Defaults Upon Senior Securities

None.

Part II, Item 4. Mine Safety Disclosure.

Not required.

Part II, Item 5. Other Information.

(a) None.

(b) There were no changes to the procedures by which security holders may recommend nominees to our board of directors.

Part II, Item 6. Exhibits.

Exhibit No.		Description of Exhibit

3.1		Articles of Incorporation (1)

3.1.1		Amendment to Articles of Incorporation (2)

3.2		Bylaws (1)

31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

31.2		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

32.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

32.2		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

101.INS		XBRL INSTANCE DOCUMENT

101.SCH		XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT

101.CAL		XBRL TAXONOMY CALCULATION LINKBASE DOCUMENT

101.DEF		XBRL TAXONOMY DEFINITION LINKBASE DOCUMENT

101.LAB		XBRL TAXONOMY LABEL LINKBASE DOCUMENT

101.PRE		XBRL TAXONOMY PRESENTATION LINKBASE DOCUMENT

* Filed herewith.

(1)	Incorporated by reference from our Current Report on Form 8-K filed with the Securities and Exchange Commission on July 15, 2003 as file number 002-95626-D.

(2)	Incorporated by reference from Annex 1 to our definitive proxy statement filed with the Securities and Exchange Commission on February 7, 2010 as file number 002-95626-D.

SIGNATURES

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

Date: August 27, 2013

	SIONIX CORPORATION

	/s/ Henry W. Sullivan
	Henry W. Sullivan
	Chief Executive Officer (Principal Executive Officer)

	/s/ Joseph W. Autem
	Joseph W. Autem
	Chief Financial Officer, Secretary/Treasurer, and Principal Financial and Accounting Officer

SIONIX CORP 10-Q