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5Barz International, Inc.
0001454124
10-Q
2011-06-30
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--12-31
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<p style="margin: 0pt"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>Note 1 - Organization</b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The unaudited financial statements have been prepared by 5BARz International
Inc., formerly known as Bio - Stuff (hereinafter referred to as “5BARz” or the “Company”), pursuant to
the rules and regulations of the Securities and Exchange Commission. The information furnished herein reflects all adjustments
(consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present
the operating results for the respective periods. Certain information and footnote disclosures normally present in annual financial
statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted
pursuant to such rules and regulations. These financial statements should be read in conjunction with the audited financial statements
and footnotes included in the Company’s Annual Report on Form 10-K. The results for the six months ended June 30, 2011, are
not necessarily indicative of the results to be expected for the full year ending December 31, 2011.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Organization and Line of Business</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company was originally incorporated under the laws of the State
of Nevada on November 17, 2008.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company holds a 50% interest in certain intellectual property
underlying the 5BARz products, a highly engineered microcell technology often referred to as “cellular network extenders.”
In addition, the Company has entered into a global sales and distribution agreement which provides for the global sales and marketing
of products produced under the 5BARz brand.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Prior thereto, the Company was a designated “shell Company”
holding certain technology related to bio-degradable product</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Going Concern </u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">These financial statements have been prepared on a going concern
basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">At June 30, 2011, the Company was engaged in a business and had
suffered losses from development stage activities to date. In addition, the Company has minimal operating funds. Although management
is currently developing its sales and marketing program for the sales of 5BARz product, the Company has made no revenue to date.  The
Company is seeking additional sources of equity or debt financing, and there is no assurance these activities will be successful.
These factors raise substantial doubt about the ability of the Company to continue as a going concern. The financial statements
do not include any adjustments that might result from the outcome of this uncertainty.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Development Stage </u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company has been in the development stage since its formation
and has not yet realized any revenues from its planned operations.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>Recent Developments</b></p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Note 4 - Federal income tax: </b></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0.5in 13.15pt 0; text-align: justify">We follow Accounting Standards
Codification regarding <i>Accounting for Income Taxes</i>. Deferred income taxes reflect the net effect of (a) temporary difference
between carrying amounts of assets and liabilities for financial purposes and the amounts used for income tax reporting purposes,
and (b) net operating loss carryforwards. No net provision for refundable Federal income tax has been made in the accompanying
statement of loss because no recoverable taxes were paid previously. Similarly, no deferred tax asset attributable to the net operating
loss carry-forward has been recognized, as it is not deemed likely to be realized.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt">The provision for refundable Federal income tax consists
of the following:</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt"></p>
<table cellpadding="0" cellspacing="0" style="width: 100%">
<tr style="vertical-align: bottom; text-align: center">
<th> </th>
<th> 2010 </th>
<th>2010  </th></tr>
<tr style="vertical-align: top; text-align: left">
<td style="width: 61%"> Refundable Federal income tax attributable to:</td>
<td style="width: 20%"> </td>
<td style="width: 19%"></td></tr>
<tr style="vertical-align: top; text-align: left">
<td> Current operations</td>
<td style="text-align: right; vertical-align: bottom"> $(485,936)</td>
<td style="text-align: right; vertical-align: middle"> (29,747)</td></tr>
<tr style="vertical-align: top; text-align: left">
<td> Less, Nondeductible expenses</td>
<td style="text-align: right; vertical-align: middle">  -0-</td>
<td style="text-align: right; vertical-align: middle">  -0-</td></tr>
<tr style="vertical-align: top; text-align: left">
<td> -Less, Change in valuation allowance</td>
<td style="text-align: right; vertical-align: middle">  485,936</td>
<td style="text-align: right; vertical-align: middle"> 29,747</td></tr>
<tr style="vertical-align: top; text-align: left">
<td> Net refundable amount 	</td>
<td style="text-align: right; vertical-align: middle">  -</td>
<td style="text-align: right; vertical-align: middle">  -</td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 3.5in; text-indent: 0.5in"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt">The cumulative tax effect at the expected rate of 35%
of significant items comprising our net deferred tax amount is as follows:</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<table cellpadding="0" cellspacing="0" style="width: 100%">
<tr style="vertical-align: bottom; text-align: center">
<th> </th>
<th>2011 </th>
<th>2010 </th></tr>
<tr style="vertical-align: top; text-align: left">
<td style="width: 62%"> Deferred tax asset attributable to: </td>
<td style="width: 20%"> </td>
<td style="width: 18%"> </td></tr>
<tr style="vertical-align: top; text-align: left">
<td> Net operating loss carryover	</td>
<td style="text-align: right; vertical-align: bottom"> $170,077</td>
<td style="text-align: right; vertical-align: bottom"> $10,411</td></tr>
<tr style="vertical-align: top; text-align: left">
<td> Less, Valuation allowance </td>
<td style="text-align: right; vertical-align: bottom"> ($170,077)</td>
<td style="text-align: right; vertical-align: bottom"> ($10,411)</td></tr>
<tr style="vertical-align: top; text-align: left">
<td> Net deferred tax asset</td>
<td style="text-align: right; vertical-align: bottom">  -</td>
<td style="text-align: right; vertical-align: bottom"> -</td></tr>
<tr style="vertical-align: top; text-align: left">
<td> </td>
<td> </td>
<td> </td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>	</b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt">At June 30, 2011, an unused net operating loss carryover
approximating $170,077 is available to offset future taxable income; those losses start to expire in 2028.</p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 6pt; text-indent: 0pt; text-align: left"><b>Note 5 - Cumulative sales of stock:
</b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt">Since its inception, we have issued shares of common stock
as follows:</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt; text-align: justify">On November 17, 2008, our Directors
authorized the issuance of 7,100,000 founder shares at par value of $0.001. These shares are restricted under rule 144 of the Securities
Exchange Commission.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt; text-align: justify">On various days in December 2008,
our Directors authorized the issuance of 1,776,100 shares of common stock at a price of $0.01 per share as fully paid and non-assessable
to the subscriber. These shares are not restricted and are free trading.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt; text-align: justify">On November 15, 2010, our Directors
initiated a forward stock split of 18:1 and increased the authorized shares from 100,000,000 to 250,000,000	</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt; text-align: justify">On December 30, 2010, the Directors
approved the cancellation of 87,800,000 shares of common stock.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On December 31, 2010, the Directors issued 15,600,000 shares in
conjunction with the acquisition of certain assets, more fully described in Note 6</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On January 10, 2011 the Company issued 300,000 shares of common
stock at a price of $1.00 per share for aggregate proceeds of $300,000.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On January 15, 2011 the Company issued 200,000 shares of common
stock at a price of $1.00 per share for aggregate proceeds of $200,000.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On March 9, 2011 the Company issued 150,000 shares of common stock
at a price of $1.00 per share for aggregate proceeds of $150,000.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On April 4, 2011 the Company issued 350,000 shares of common stock
at a price of $1.00 per share for aggregate proceeds of $350,000.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On April 7, 2011 the Company issued 200,000 shares of common stock
at a price of $1.00 per share for aggregate proceeds of $200,000.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On June 3, 2011 the Company issued 5,000 shares of common stock
at a price of $0.70 per share for aggregate proceeds of $3,500.</p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>Note 2 - Summary of Significant Accounting Policies</b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Basis of Presentation</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The accompanying financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America. Changes in classification of 2010 amounts have
been made to conform to current presentations.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Cash</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Cash and cash equivalents include cash in hand and cash in time
deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Use of Estimates</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosures 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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Concentration of Credit Risk</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Cash includes deposits in accounts maintained at financial institutions.  Certain
financial instruments, which subject the Company to concentration of credit risk, consist of cash. The Company maintains balances
at financial institutions which, from time to time, may exceed Federal Deposit Insurance Corporation insured limits for the banks
located in the United States. As of June 30, 2011 and December 31, 2010, the Company did not have any deposits in excess of federally-insured
limits.  To date, the Company has not experienced any losses in such accounts.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Equipment</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Equipment is recorded at historical cost and is depreciated using
the straight-line method over their estimated useful lives.  The useful life and depreciation method are reviewed periodically
to ensure that the depreciation method and period are consistent with the anticipated pattern of future economic benefits. Expenditures
for maintenance and repairs are charged to operations as incurred while renewals and betterments are capitalized. Gains and losses
on disposals are included in the results of operations. The useful life of the equipment is being depreciated over three to five
years.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Intangible Assets</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Acquired patents, licensing rights and trademarks are capitalized
at their acquisition cost or fair value. The legal costs, patent registration fees, and models and drawings required for filing
patent applications are capitalized if they relate to commercially viable technologies. Commercially viable technologies are those
technologies that are projected to generate future positive cash flows in the near term. Legal costs associated with applications
that are not determined to be commercially viable are expensed as incurred. All research and development costs incurred in developing
the patentable idea are expensed as incurred. Legal fees from the costs incurred in successful defense to the extent of an evident
increase in the value of the patents are capitalized.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Capitalized costs for patents are amortized on a straight-line basis
over the remaining twenty-year legal life of each patent after the costs have been incurred. Once each patent or trademark is issued,
capitalized costs are amortized on a straight-line basis over a period not to exceed 20 years and 10 years, respectively. The licensing
right is amortized on a straight-line basis over a period of 10 years.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Impairment or Disposal of Long-lived Assets</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company applies the provisions of Accounting Standards Codification
(“ASC”) Topic 360, “Property, Plant, and Equipment,” which addresses financial accounting and reporting
for the impairment or disposal of long-lived assets. ASC 360 requires impairment losses to be recorded on long-lived assets used
in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets
are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying
amount exceeds the fair value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar
manner, except that fair values are reduced for the cost of disposal. Based on its review, the Company believes that as of June
30, 2011 and December 31, 2010, there was no significant impairment of its long-lived assets.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Revenue Recognition</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company's revenue recognition policies are in compliance with
ASC Topic 605, “Revenue Recognition.”  Revenue is recognized at the date of shipment to customers, and when
the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability
is reasonably assured.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Fair Value of Financial Instruments</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">We have adopted Accounting Standards Codification regarding <i>Disclosure
About Derivative Financial Instruments and Fair Value of Financial Instruments</i>. The carrying amounts of cash, accounts payable,
accrued expenses, and other current liabilities approximate fair value because of the short maturity of these items. These fair
value estimates are subjective in nature and involve uncertainties and matters of significant judgment, and, therefore, cannot
be determined with precision. Changes in assumptions could significantly affect these estimates.  We do not hold or issue
financial instruments for trading purposes, nor do we utilize derivative instruments in the management of foreign exchange, commodity
price or interest rate market risks.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Income Taxes</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company accounts for income taxes in accordance with ASC Topic
740, “Income Taxes.” ASC 740 requires a company to use the asset and liability method of accounting for income taxes,
whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for
taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities
and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely
than not that some portion, or all of, the deferred tax assets will not be realized.  Deferred tax assets and liabilities
are adjusted for the effects of changes in tax laws and rates on the date of enactment.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Under ASC 740, a tax position is recognized as a benefit only if
it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination
being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized
on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The adoption
had no effect on the Company’s financial statements.  Penalties and interest incurred related to underpayment of
income tax are classified as income tax expense in the period incurred.  No significant penalties or interest relating
to income taxes have been incurred during the three and six months ended June 30, 2011 and 2010.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Net Loss Per Share</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company reports loss per share in accordance with the ASC Topic
260, “Earnings Per Share.” , which requires presentation of basic and diluted EPS on the face of the income statement
for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS computation.  In the accompanying financial statements,
basic earnings per share of common stock is computed by dividing net income by the weighted average number of shares of common
stock outstanding during the period.  We do not have a complex capital structure requiring the computation of diluted
earnings per share.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Recent Accounting Pronouncements</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">In December 2010, the Financial Accounting Standards Board (“FASB”)
issued Accounting Issued Update (“ASU”) No. 2010-28—<i>Intangibles—Goodwill and Other (Topic 350):
When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts</i>. The amendments
in this Update modify Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those
reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill
impairment exists. In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider
whether there are any adverse qualitative factors indicating that an impairment may exist. The qualitative factors are consistent
with the existing guidance, which requires that goodwill of a reporting unit be tested for impairment between annual tests if an
event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying
amount. For public entities, the amendments in this Update are effective for fiscal years, and interim periods within those years,
beginning after December 15, 2010. The adoption of this ASU is not expected to have a material impact on the Company’s
financial statements.</p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>Note 3 – Equipment</b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Equipment consisted of the following at June 30, 2011 and December
31, 2010:</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%; text-align: center">June 30,</td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%; text-align: center">     December 31,</td>
<td nowrap="nowrap" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">2011</td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">2010</td>
<td nowrap="nowrap" style="line-height: 115%"> </td></tr>
<tr style="background-color: #EEEEEE">
<td style="width: 68%; vertical-align: bottom; line-height: 115%">Office furniture and equipment</td>
<td style="width: 1%; vertical-align: bottom; line-height: 115%"> </td>
<td style="width: 1%; vertical-align: bottom; line-height: 115%">$</td>
<td style="width: 13%; vertical-align: bottom; line-height: 115%; text-align: right">919</td>
<td nowrap="nowrap" style="width: 1%; vertical-align: bottom; line-height: 115%"> </td>
<td style="width: 1%; vertical-align: bottom; line-height: 115%"> </td>
<td style="width: 1%; vertical-align: bottom; line-height: 115%">$</td>
<td style="width: 13%; vertical-align: top; line-height: 115%; text-align: center">0</td>
<td nowrap="nowrap" style="width: 1%; vertical-align: bottom; line-height: 115%"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom; line-height: 115%">Computer equipment</td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; line-height: 115%; text-align: right">3,593</td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; vertical-align: top; line-height: 115%; text-align: center">0</td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%"> </td></tr>
<tr style="background-color: #EEEEEE">
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%; text-align: right">4,513</td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: top; line-height: 115%; text-align: center">0</td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom; line-height: 115%">Accumulated depreciation</td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; line-height: 115%; text-align: right">(180</td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%">)</td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; vertical-align: top; line-height: 115%; text-align: center">0</td>
<td nowrap="nowrap" style="vertical-align: bottom; padding-bottom: 0.85pt"> </td></tr>
<tr style="background-color: #EEEEEE">
<td style="vertical-align: bottom; line-height: 115%">Equipment, net</td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt double; vertical-align: bottom; line-height: 115%">$</td>
<td style="border-bottom: black 1.5pt double; vertical-align: bottom; line-height: 115%; text-align: right">4,332</td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt double; vertical-align: bottom; line-height: 115%">$</td>
<td style="border-bottom: black 1.5pt double; vertical-align: top; line-height: 115%; text-align: center">0</td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%"> </td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt"><b>Note 6 - Asset acquisition Agreement:</b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt; text-align: justify">On December 31, 2010, the Company
acquired the assignment of four agreements providing the right title and interest in;</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0 0 13.15pt; text-align: justify; text-indent: 0in"><font style="font-size: 11pt">(i)</font><font style="font: 7pt Times New Roman, Times, Serif">                
</font><font style="font-size: 11pt">An “Amended and Restated Master Global Marketing and Distribution Agreement.”
</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0 0 13.15pt; text-align: justify; text-indent: 0in"><font style="font-size: 11pt">(ii)</font><font style="font: 7pt Times New Roman, Times, Serif">              
</font><font style="font-size: 11pt">An asset purchase agreement</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0 0 13.15pt; text-align: justify; text-indent: 0in"><font style="font-size: 11pt">(iii)</font><font style="font: 7pt Times New Roman, Times, Serif">            
</font><font style="font-size: 11pt">A line of credit agreement</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0 0 13.15pt; text-align: justify; text-indent: 0in"><font style="font-size: 11pt">(iv)</font><font style="font: 7pt Times New Roman, Times, Serif">            
</font><font style="font-size: 11pt">A security agreement</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt; text-align: justify">The agreements relate principally
to the development of the sales and marketing of the 5BARz line of products and related accessories.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt; text-align: justify">The purchase of this assignment agreement
was made for proceeds of $383,650, which is comprised of a note payable in the amount of $370,000 and the issuance of 15,600,000
shares of common stock. The note payable bears no interest and has no specific terms of repayment.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Pursuant to the terms of the asset purchase agreement, the Company
is obligated to a series of payments for a ½ interest in the 5BARz intellectual property for aggregate payments of $1,500,000.
Payable as follows;</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.25in"><font style="font-size: 10pt">(a)</font><font style="font-size: 7pt">    
</font><font style="font-size: 10pt">$260,434 which has been paid to date.</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.25in"><font style="font-size: 10pt">(b)</font><font style="font-size: 7pt">    
</font><font style="font-size: 10pt">$1,239,566 due on or before September 30, 2011</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<table align="center" cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 48px; line-height: 115%"> </td>
<td style="width: 48px; line-height: 115%"> </td>
<td style="line-height: 115%">As consideration for the licenses granted by CELLYNX, the Company shall pay to CELLYNX a fee (the “Marketing and Distribution Fee”) amounting to 50% of the Company’s Net Earnings. The Marketing and Distribution Fee will be paid on a quarterly basis, payable in cash or immediately available funds and shall be due and payable not later than 45 days following the end of each calendar quarter of the year.</td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<table align="center" cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 48px; line-height: 115%"> </td>
<td style="width: 48px; line-height: 115%"> </td>
<td style="line-height: 115%">In the event that the Buyer fails to pay any Marketing and Distribution Fee when due, simple interest shall accrue on such unpaid Marketing and Distribution Fee at a rate of six percent (6%) (the “Default Interest”), and shall continue to accrue until such unpaid Marketing and Distribution Fee, plus any accrued interest, is paid in full to the Seller.</td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">On December 30, 2010 the Company entered into a commitment to provide
to the co-owner of the Company’s intellectual property a revolving line of credit in the amount of $2.5 million dollars.
The payment schedule as amended is as follows;</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in"><font style="font-size: 7pt">        </font></p>
<table cellpadding="0" cellspacing="0" style="width: 65%">
<tr style="vertical-align: top; text-align: left">
<td style="width: 4%; text-align: right; vertical-align: top"><font style="font-size: 9pt"> i.   </font></td>
<td style="width: 77%"><font style="font-size: 9pt"> Paid to date</font></td>
<td style="width: 19%"><font style="font-size: 9pt">  $ 436,619</font></td></tr>
<tr style="vertical-align: top; text-align: left">
<td><font style="font-size: 9pt"> </font></td>
<td><font style="font-size: 9pt"> Repaid by allocation to asset purchase agreement</font></td>
<td><font style="font-size: 9pt"> (200,000)</font></td></tr>
<tr style="vertical-align: top; text-align: left">
<td><font style="font-size: 9pt"> </font></td>
<td><font style="font-size: 9pt"> Net Amount due – June 30, 2011</font></td>
<td><font style="font-size: 9pt"> $ 236,619	</font></td></tr>
<tr style="vertical-align: top; text-align: left">
<td><font style="font-size: 9pt">   ii. </font></td>
<td><font style="font-size: 9pt"> On or before August 31,2011</font></td>
<td><font style="font-size: 9pt"> $ 256,881</font></td></tr>
<tr style="vertical-align: top; text-align: left">
<td style="text-align: right; vertical-align: top">iii. </td>
<td><font style="font-size: 9pt">  On or before October, 31,2011	</font></td>
<td><font style="font-size: 9pt"> $ 500,000</font></td></tr>
<tr style="vertical-align: top; text-align: left">
<td style="text-align: right; vertical-align: top"><font style="font-size: 9pt"> iv.  </font></td>
<td><font style="font-size: 9pt">  On or before December 1,2011</font></td>
<td><font style="font-size: 9pt"> $1,306,500</font></td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in"><font style="font-size: 7pt">       
	</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in">	 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in">	</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in"><font style="font-size: 7pt">               
		</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in"><font style="font-size: 7pt">            	</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in"><font style="font-size: 7pt">     
</font><font style="font-size: 10pt">         		</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt"><b>Note 7 - Related Party Transactions:</b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On December 30, 2010 the Company acquired by way of an assignment
agreement all right title and interest in a set of agreements, referred to in Note 6 above, from a Company of which the Director
is also the Director of the reporting Company. The proceeds to be paid for that assignment agreement is comprised of a note payable
in the amount of $370,000, and the issuance of 15,600,000 shares of common stock.  The note payable bears no interest
and has no specific terms of repayment.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">At June 30, 2011 the Company had a note payable due to a related
party in the amount of $236,897 (2010 - $370,000). The note payable accrues interest at a rate of 5% per annum, and during the
quarter, interest in the amount of $3,063 was charged pursuant to the terms of this note.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">At June 30, 2011 the Company had an additional amount due to related
party of $79,667, (2010 - $84,997). The amount due to related party is non-interest bearing and has no specific terms of repayment.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On June 30, 2011 the Company had an amount due from a shareholder
of the Company in the amount of $101,449 (2010 – ($8,602)).  The loan is non interest bearing and has no fixed
terms of repayment.</p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 8 - Commitments: </b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On December 30, 2010 the Company entered into a commitment to provide
to the co-owner of the Company’s intellectual property a revolving line of credit in the amount of $2.5 million dollars.
The balance due under that agreement bears interest at a rate of 6% per annum and is repayable on October 5, 2012. At June 30,
2011, the Company had advanced $433,500 under the agreement, of which $200,000 had been repaid by conversion to a deposit under
the asset purchase agreement. At June 30, 2010 the balance due under the line of credit agreement is $236,619. The Line of Credit
agreement is secured by a general assignment of the net assets of Cellynx Group, Inc. Interest in the amount of $2,337 has been
charged during the quarter pursuant to the terms of this note.</p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>NOTE 9 - Stock purchase agreement of Cellynx</b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On January 7, 2011 the Company entered into a stock purchase agreement
from two shareholders of Cellynx Group, Inc. to acquire in aggregate 63,412,638 shares of the capital stock of Cellynx Group, Inc.
. That acquisition represents a 34% equity interest in Cellynx Group, Inc. and is made for total proceeds of $634,126. To date
the Company has paid $170,000 as a deposit to secure this agreement. The payment terms expired and the parties have renegotiated
terms and the terms are being drafted into a revised agreement.</p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 11 - Subsequent events</b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin-right: 0; margin-bottom: 8.3pt; margin-left: 0"><font style="color: #333333">On
July 6, 20111 the Company received a </font>purchase<font style="color: #333333"> order for delivery of 16,000 units of the 5BARz™
Road Warrior, which represents the planned production for the balance of 2011. The revenue generated from this sale will be US$
3.2 million. </font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On <font style="color: #333333">various days in July 2011</font>
the Company issued 131,111 shares of common stock at a price of $0.45 per share for aggregate proceeds of $59,000.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="margin: 0pt"> </p>
6958
0
6958
-3119
0
-3119
0
0
0
0
0
0
0
0
0
88905911
<p style="margin: 0pt"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>NOTE 10 - Private Placements</b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On January 10, 2011 the Company completed a private placement of
300,000 shares of common stock at a price of $1.00 per share for aggregate proceeds of $300,000.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On January 15, 2011 the Company completed a private placement of
200,000 shares of common stock at a price of $1.00 per share for aggregate proceeds of $200,000.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On March 9, 2011 the Company completed a private placement of 150,000
shares of common stock at a price of $1.00 per share for aggregate proceeds of $150,000.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company issued the securities pursuant to a Regulation “S”
exemption from registration.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On April 4, 2011 the Company completed a private placement of 350,000
shares of common stock at a price of $1.00 per share for aggregate proceeds of $350,000. The Company issued the securities pursuant
to a Regulation “S” exemption from registration.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On April 7, 2011 the Company completed a private placement of 200,000
common shares to an accredited investor for aggregate proceeds of $200,000.The Company issued the securities pursuant to a Regulation
“S” exemption from registration.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On June 3, 2011 the Company completed a private placement of 5,000
common shares to an accredited investor for aggregate proceeds of $3,500.The Company issued the securities pursuant to a Regulation
“S” exemption from registration.</p>
<p style="margin: 0pt"> </p>