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Document and Entity Information
 6 Months Ended
Jun. 30, 2011
Aug. 12, 2011
Document And Entity Information
Entity Registrant Name
 5Barz International, Inc.
Entity Central Index Key
 0001454124
Document Type
 10-Q
Document Period End Date
 Jun. 30, 2011
Amendment Flag
 false
Current Fiscal Year End Date
 --12-31
Is Entity a Well-known Seasoned Issuer?
 No
Is Entity a Voluntary Filer?
 No
Is Entity's Reporting Status Current?
 Yes
Entity Filer Category
 Smaller Reporting Company
Entity Common Stock, Shares Outstanding
 88,905,911
Document Fiscal Period Focus
 Q2
Document Fiscal Year Focus
 2011

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Balance Sheets (USD $)
Jun. 30, 2011
Dec. 31, 2010
Current assets:
Cash
 $ 64,248 $ 0
Due from shareholder
 101,449 (8,602)
Total current assets
 165,697 (8,602)
Fixed Assets
Furniture and equipment, net
 4,332 0
Other assets
Due from Cellynx - Line of credit
 236,619 0
Deposit on investment in Cellynx
 170,000 0
Intellectual property
 1,883,650 1,883,650
Total other assets
 2,290,269 1,883,650
TOTAL ASSETS
 2,460,298 1,875,048
Current liabilities:
Accounts payable and accrued expenses
 141,151 15,220
Due to Cellynx
 1,239,566 1,439,566
Total current liabilities
 1,380,717 1,454,786
Related party loans
 323,522 434,997
TOTAL LIABILITIES
 1,704,239 1,889,783
STOCKHOLDERS' EQUITY
Common stock, $.001 par value, 250,000,000 shares authorized; 88,774,800 and 87,569,800 shares issued and outstanding as of June 30, 2011 and December 31, 2010 respectively
 88,775 87,570
Capital in excess of par value
 1,153,220 (49,075)
Deficit accumulated during the development stage
 (485,936) (53,230)
Total stockholders' deficit
 756,059 (14,735)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
 $ 2,460,298 $ 1,875,048

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Balance Sheets (Parenthetical) (USD $)
Jun. 30, 2011
Dec. 31, 2010
Statement of Financial Position [Abstract]
Common stock, par value
 $ 0.001 $ 0.001
Common stock, authorized
 250,000,000 250,000,000
Common stock, issued
 88,774,800 87,569,800
Common stock,outstanding
 88,774,800 87,569,800

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Statements of Operations (USD $)
 3 Months Ended 6 Months Ended 31 Months Ended
Mar. 31, 2011
Mar. 31, 2010
Jun. 30, 2011
Jun. 30, 2010
Jun. 30, 2011
Income Statement [Abstract]
Sales
 $ 0 $ 0 $ 0 $ 0
Cost of Sales
 0 0 0 0 0
Selling general and administrative expenses:
Amortization and depreciation
 134 58 180 117 627
Bank charges and interest
 5,833 144 10,890 211 12,306
Sales and marketing expenses
 76,272 124,138 127,138
General and administrative
 194,333 2,377 300,617 6,167 346,829
Total operating expenses
 276,572 2,579 435,825 6,495 486,900
(Loss) from operations
 (276,572) (2,579) (435,825) (6,495) (486,900)
Other income (expense):
Interest Income
 2,377 3,119 3,119
Currency gains/(losses)
 (77) (856) (2,155)
(Loss) before taxes
 (274,194) (2,656) (432,706) (856) (485,936)
Net (loss)
 $ (274,194) $ (2,656) $ (432,706) $ (5,639) $ (485,936)
Basic earnings (loss) per common share
 $ (0.0031) $ (0.0003) $ (0.0049) $ (0.0006) $ 0
Weighted average number of shares outstanding
 88,772,382 71,969,800 88,386,568 71,969,800 0

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Statements of Cash Flows (USD $)
 6 Months Ended 31 Months Ended
Jun. 30, 2011
Jun. 30, 2010
Jun. 30, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
 $ (432,706) $ (5,639) $ (485,936)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
 180 117 180
Shareholder loan
 (110,050) 0 (110,050)
Changes in operating assets and liabilities:
Change in other assets
 0 0 0
Change in accounts payable and accrued expenses
 125,930 (250) 141,150
Unpaid interest expense
 6,958 0 6,958
Unpaid interest income
 (3,119) 0 (3,119)
Net cash used in operating activities
 (412,806) (5,772) (450,816)
CASH FLOWS FROM INVESTING ACTIVITIES:
Deposit on investment in Cellynx
 (170,000) 0 (170,000)
Purchase of intellectual property
 0 0 (1,883,650)
Purchase of furniture and equipment assets
 (4,513) 0 (4,513)
Net cash used in investing activities
 (374,513) 0 (2,258,163)
CASH FLOWS FROM FINANCING ACTIVITIES:
Line of credit agreement Cellynx
 (233,500) 0 (233,500)
Notes payable asset acquisition
 (318,433) 0 1,556,130
Proceeds from issuance of common stock
 1,203,500 0 1,241,995
Advances from shareholder
 0 6,182 8,602
Net cash provided by financing activities
 651,567 6,182 2,573,227
NET INCREASE IN CASH
 64,248 410 64,248
CASH, END OF PERIOD
 64,248 1,684 64,248
CASH, BEGINNING OF PERIOD
 0 1,274 0
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest
 $ 10,890 $ 211 $ 12,306

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Organization and Summary of Significant Accounting Policies
 6 Months Ended
Jun. 30, 2011
Notes to Financial Statements
Organization

Note 1 - Organization

 

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.

 

Organization and Line of Business

 

The Company was originally incorporated under the laws of the State of Nevada on November 17, 2008.

 

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.

 

Prior thereto, the Company was a designated “shell Company” holding certain technology related to bio-degradable product

 

Going Concern

 

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.

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.

 

Development Stage

 

The Company has been in the development stage since its formation and has not yet realized any revenues from its planned operations.

 

 

Recent Developments

 

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Summary of Significant Accounting Policies
 6 Months Ended
Jun. 30, 2011
Notes to Financial Statements
Summary of Significant Accounting Policies

Note 2 - Summary of Significant Accounting Policies

 

Basis of Presentation

 

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.

 

 

Cash

 

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.

 

Use of Estimates

 

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.

 

Concentration of Credit Risk

 

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.

 

Equipment

 

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.

 

Intangible Assets

 

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.

 

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.

 

Impairment or Disposal of Long-lived Assets

 

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.

 

 

Revenue Recognition

 

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.

 

Fair Value of Financial Instruments

 

We have adopted Accounting Standards Codification regarding Disclosure About Derivative Financial Instruments and Fair Value of Financial Instruments. 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.

 

Income Taxes

 

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.

 

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.

 

Net Loss Per Share

 

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.

 

Recent Accounting Pronouncements

 

In December 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Issued Update (“ASU”) No. 2010-28—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. 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.

 

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Equipment
 6 Months Ended
Jun. 30, 2011
Notes to Financial Statements
Equipment

Note 3 – Equipment

 

Equipment consisted of the following at June 30, 2011 and December 31, 2010:

 

    June 30,          December 31,  
    2011     2010  
Office furniture and equipment   $ 919     $ 0  
Computer equipment     3,593       0  
      4,513       0  
Accumulated depreciation     (180 )     0  
Equipment, net   $ 4,332     $ 0  

 

 

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Federal Income Tax
 6 Months Ended
Jun. 30, 2011
Notes to Financial Statements
Federal Income Tax

Note 4 - Federal income tax:

 

We follow Accounting Standards Codification regarding Accounting for Income Taxes. 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.

 

The provision for refundable Federal income tax consists of the following:

 

   2010 2010  
 Refundable Federal income tax attributable to:  
 Current operations  $(485,936)  (29,747)
 Less, Nondeductible expenses   -0-   -0-
 -Less, Change in valuation allowance   485,936  29,747
 Net refundable amount   -   -

 

 

The cumulative tax effect at the expected rate of 35% of significant items comprising our net deferred tax amount is as follows:

 

  2011  2010 
 Deferred tax asset attributable to:    
 Net operating loss carryover  $170,077  $10,411
 Less, Valuation allowance  ($170,077)  ($10,411)
 Net deferred tax asset   -  -
     

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.

 

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Cumulative Sales of Stock
 6 Months Ended
Jun. 30, 2011
Notes to Financial Statements
Cumulative Sales of Stock

Note 5 - Cumulative sales of stock:

Since its inception, we have issued shares of common stock as follows:

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.

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.

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

On December 30, 2010, the Directors approved the cancellation of 87,800,000 shares of common stock.

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

 

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

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Asset acquisition Agreement
 6 Months Ended
Jun. 30, 2011
Notes to Financial Statements
Asset acquisition Agreement

Note 6 - Asset acquisition Agreement:

On December 31, 2010, the Company acquired the assignment of four agreements providing the right title and interest in;

(i)                 An “Amended and Restated Master Global Marketing and Distribution Agreement.”

(ii)               An asset purchase agreement

(iii)             A line of credit agreement

(iv)             A security agreement

The agreements relate principally to the development of the sales and marketing of the 5BARz line of products and related accessories.

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.

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;

 

(a)     $260,434 which has been paid to date.

(b)     $1,239,566 due on or before September 30, 2011

 

 

    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.

 

    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.

 

 

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;

 

        

 i.     Paid to date   $ 436,619
   Repaid by allocation to asset purchase agreement  (200,000)
   Net Amount due – June 30, 2011  $ 236,619
   ii.   On or before August 31,2011  $ 256,881
iii.    On or before October, 31,2011  $ 500,000
 iv.     On or before December 1,2011  $1,306,500

      

               

            

               

 

 

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Related Party Transactions
 6 Months Ended
Jun. 30, 2011
Notes to Financial Statements
Related Party Transactions

Note 7 - Related Party Transactions:

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.

 

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.

 

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.

 

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.

 

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Commitments
 6 Months Ended
Jun. 30, 2011
Notes to Financial Statements
Commitments

NOTE 8 - Commitments:

 

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.

 

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Stock purchase agreement of Cellynx
 6 Months Ended
Jun. 30, 2011
Notes to Financial Statements
Stock purchase agreement of Cellynx

NOTE 9 - Stock purchase agreement of Cellynx

 

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.

 

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Private Placement
 6 Months Ended
Jun. 30, 2011
Notes to Financial Statements
Private Placement

NOTE 10 - Private Placements

 

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.

 

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.

 

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.

The Company issued the securities pursuant to a Regulation “S” exemption from registration.

 

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.

 

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.

 

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.

 

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Subsequent events
 6 Months Ended
Jun. 30, 2011
Notes to Financial Statements
Subsequent events

NOTE 11 - Subsequent events

 

On July 6, 20111 the Company received a purchase 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.

On various days in July 2011 the Company issued 131,111 shares of common stock at a price of $0.45 per share for aggregate proceeds of $59,000.