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2011-09-30
0001454124
2011-09-30
0001454124
2010-12-31
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2008-11-18
2011-09-30
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2011-07-01
2011-09-30
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2010-07-01
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0001454124
2009-12-31
0001454124
2011-11-14
iso4217:USD
xbrli:shares
iso4217:USD
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5Barz International, Inc.
0001454124
10-Q
2011-09-30
false
--12-31
No
No
Yes
Smaller Reporting Company
Q3
2011
0.001
0.001
250000000
250000000
88905911
87569800
88905911
87569800
<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 nine months ended September 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 September 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="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">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"><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 September 30, 2011 and September 30, 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 September
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 nine months ended September 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 September 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">September 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">4,653</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">5,572</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">(416</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%">$</td>
<td style="border-bottom: black 1.5pt double; vertical-align: bottom; line-height: 115%; text-align: right">5,156</td>
<td nowrap="nowrap" style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt double; vertical-align: bottom; line-height: 115%">$</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; 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 carryforward has been recognized, as it is not deemed likely to be realized.</p>
<p style="margin: 0pt"></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>
<table cellspacing="0" cellpadding="0" style="width: 100%; margin-left: 5.4pt; border-collapse: collapse">
<tr>
<td style="width: 53%; vertical-align: top; font: 11pt Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="width: 11%; vertical-align: top; font: 11pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-autospace: none"> </td>
<td style="width: 13%; vertical-align: bottom; font: bold 11pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">2011</td>
<td style="width: 6%; font: 11pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-autospace: none; text-align: center"> </td>
<td style="width: 17%; vertical-align: bottom; font: bold 11pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">2010</td></tr>
<tr style="vertical-align: bottom">
<td style="font: 11pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-autospace: none">Refundable Federal income tax attributable to:</td>
<td style="font: 11pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-autospace: none; text-align: right"> </td>
<td style="font: 11pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-autospace: none; text-align: right"> </td>
<td style="font: 11pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-autospace: none; text-align: right"> </td>
<td style="font: 11pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-autospace: none; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font: 11pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-autospace: none">Current operations</td>
<td style="font: 11pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-autospace: none; text-align: right">$</td>
<td style="font: 11pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-autospace: none; text-align: right">(568,409)</td>
<td style="font: 11pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-autospace: none; text-align: right"> </td>
<td style="font: 11pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-autospace: none; text-align: right">(10,371)</td></tr>
<tr style="vertical-align: bottom">
<td style="font: 11pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-autospace: none">Less, Nondeductible expenses</td>
<td style="font: 11pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-autospace: none; text-align: right"> </td>
<td style="font: 11pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-autospace: none; text-align: right">-0-</td>
<td style="font: 11pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-autospace: none; text-align: right"> </td>
<td style="font: 11pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-autospace: none; text-align: right">-0-</td></tr>
<tr style="vertical-align: bottom">
<td style="font: 11pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-autospace: none">-Less, Change in valuation allowance</td>
<td style="font: 11pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-autospace: none; text-align: right"> </td>
<td style="font: 11pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-autospace: none; text-align: right">568,409</td>
<td style="font: 11pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-autospace: none; text-align: right"> </td>
<td style="font: 11pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-autospace: none; text-align: right">10,371</td></tr>
<tr style="vertical-align: bottom">
<td style="font: 11pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-autospace: none">Net refundable amount</td>
<td style="font: 11pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-autospace: none; text-align: right"> </td>
<td style="font: 11pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-autospace: none; text-align: right">-</td>
<td style="font: 11pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-autospace: none; text-align: right"> </td>
<td style="font: 11pt Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-autospace: none; text-align: right">-</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 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>
<table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse">
<tr>
<td style="width: 56%; vertical-align: top; font: 11pt Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="width: 9%; vertical-align: top; font: 11pt Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="width: 12%; font: bold 11pt Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">2011</td>
<td style="width: 7%; font: 11pt Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td>
<td style="width: 10%; font: bold 11pt Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">2010</td>
<td style="width: 6%; vertical-align: top; font: bold 11pt Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt"> </td></tr>
<tr style="vertical-align: top">
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt">Deferred tax asset attributable to:</td>
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; padding-right: 5.4pt; padding-left: 5.4pt"> </td></tr>
<tr>
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">Net operating loss carryover current year</td>
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$</td>
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">198,043</td>
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$</td>
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">3,629</td>
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">Net</td></tr>
<tr>
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">Operating loss carryforward – Beginning of year</td>
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">9,901</td>
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">2,883</td>
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt"> </td></tr>
<tr>
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">Less, Valuation allowance</td>
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">( 208,304)</td>
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">(6,512)</td>
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt"> </td></tr>
<tr>
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt"> Net deferred tax asset</td>
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">-</td>
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">-</td>
<td style="font: 11pt Calibri, Halvetica, Sans-Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt"> </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 0 13.15pt">At September 30, 2011, an unused net operating loss carryover
approximating $208,304 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 13.15pt; text-indent: 0in; 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="margin: 0pt"></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="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On July 18, 2011 the Company issued 100,000 shares of common stock
at a price of $0.45 per share for aggregate proceeds of $45,000.</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 July 24, 2011 the Company issued 31,111 shares of common stock
at a price of $0.45 per share for aggregate proceeds of $14,000.</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 October 20, 2011 the Company completed a private placements
of 37,500 common shares to accredited investors for aggregate proceeds of $7,500. The Company issued the securities pursuant
to a Regulation “S” exemption from registration.</p>
<p style="margin: 0pt"> </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: 12pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 11pt">Pursuant to the terms of the asset
purchase agreement, as amended 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; I</font>n addition to the $299,349 paid to September 30, 2011<font style="font-size: 11pt">
that the payment of the unpaid balance of $1,200,6</font>51, <font style="font-size: 11pt">is due on or before March 31, 2012.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">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.</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 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.</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 9 - 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 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.  </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 September 30, 2010 the Company had a note payable in the amount
of $62,506 (2010 - $370,000), due to Dollardex Group Corp. a related party which is controlled by the President and Director of
the Company. The note payable accrues interest at a rate of 5% per annum, and during the quarter, interest in the amount of $1,151
was charged pursuant to the terms of this note. Aggregate interest due under the note at September 30, 2011 is $8,109. In addition
the Company had an amount due to that related party comprised of payments made by the related party on behalf of the Company aggregating
$79,804 (2010 - $64,997).</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 10 - Commitments: </b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </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 $2.5 million dollars.
The payment schedule as amended is as follows;</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 70%; margin-left: 17.65pt; border-collapse: collapse">
<tr>
<td style="width: 1%; vertical-align: bottom; font: 10pt/115% Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">i.</td>
<td style="width: 78%; vertical-align: top; font: 10pt/115% Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt">Paid to date</td>
<td style="width: 11%; vertical-align: bottom; font: 10pt/115% Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$</td>
<td style="width: 10%; vertical-align: bottom; font: 10pt/115% Times New Roman, Times, Serif; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">433,500</td></tr>
<tr>
<td style="font: 10pt/115% Times New Roman, Times, Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">ii.</td>
<td style="font: 10pt/115% Times New Roman, Times, Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">Interest accrued to September 30, 2011</td>
<td style="font: 10pt/115% Times New Roman, Times, Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="font: 10pt/115% Times New Roman, Times, Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">7,538</td></tr>
<tr>
<td style="font: 10pt/115% Times New Roman, Times, Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="font: 10pt/115% Times New Roman, Times, Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">Repaid by allocation to asset purchase agreement</td>
<td style="font: 10pt/115% Times New Roman, Times, Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="font: 10pt/115% Times New Roman, Times, Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">(200,000)</td></tr>
<tr>
<td style="font: 10pt/115% Times New Roman, Times, Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="font: 10pt/115% Times New Roman, Times, Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">Net Amount due under LOC Agreement</td>
<td style="font: 10pt/115% Times New Roman, Times, Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="font: 10pt/115% Times New Roman, Times, Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">241,038</td></tr>
<tr>
<td style="font: 10pt/115% Times New Roman, Times, Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">iii.</td>
<td style="font: 10pt/115% Times New Roman, Times, Serif; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">Commitment to fund on or before December 1, 2011</td>
<td style="font: 10pt/115% Times New Roman, Times, Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$</td>
<td style="font: 10pt/115% Times New Roman, Times, Serif; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">2,066,500</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The revolving line of credit agreement provides that interest accrued
under the terms of the agreement is to be paid annually commencing on October 1, 2011. That interest calculated at an interest
rate of 6% is $7,538 and was not paid on October 1, 2011 or to date. Accordingly the Revolving Line of Credit is in default. As
a result, the full amount of the line of credit becomes due currently and future interest on the unpaid balance is calculated at
a rate of 15% per annum. Further as a result of the event of default, the Company has the right, to suspend or terminate any obligation
that it may have to make any further advances under the line of credit agreement.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Security Agreement</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company holds, pursuant to the security agreement referred to
herein, a security interest in all assets of Cellynx Group Inc.(“borrower”), to secure the obligations of borrower
under the revolving line of credit agreement. That security agreement was registered with the State of Nevada on June 15, 2011.</p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>NOTE 11 - 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.
for total proceeds of $634,126. To date the Company has paid $170,000 as a deposit to secure this 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>NOTE 12 - Subsequent events</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>Formation of Subsidiary Company, 5BARz AG</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 October 6, 2011, the Registrant, 5Barz International Inc., a
Nevada corporation, (“5BARz”), organized under the laws of Switzerland, in the Canton of Zurich, a subsidiary called
5BAR AG. In so doing the registrant acquired 5,100,000 shares, of the issued and outstanding stock of the newly incorporated Company.
Aggregate proceeds paid for the shares were CHF 51,000 representing the fully paid price of CHF 0.01 per share. 5BARz AG simultaneously
issued 4,900,000 fully paid shares, registered in the name of 5Barz AG at a price of CHF 0.01 per share for aggregate proceeds
of CHF 49,000. These treasury shares are being held for resale, more fully described herein. The net proceeds received on re-sale
will be paid into 5Barz AG as additional paid in capital.</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 newly formed subsidiary has appointed two directors, one of
which, Mr. Daniel Bland is the President, CEO and a Director of the registrant. The other Director is Mr. Peter Burkhardt of Oberengstringen,
Zurich, Switzerland.</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>Engagement of BDC Investment AG:</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 October 15, 2011, 5Barz AG, entered into an agreement with BDC
Investment AG., an independent investment Company in Oberengstringen, Zurich, Switzerland to act as agent for the Company for the
sale of the 4,900,000 shares referred to above, on a best efforts basis. In addition to acting as agent for the 5BARz AG, BDC Investment
AG will provide consulting services and will be responsible for corporate communications, for 5BARz AG in the European marketplace.</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>Global Marketing and Distribution Agreement </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">On October 19, 2011, the registrant, 5BARz International Inc. entered
into a Marketing and Distribution agreement with 5BARz AG, through which 5Barz AG holds the exclusive rights for the marketing
and distribution of Products produced under the 5BARz<b> </b>Brand for markets in Switzerland, Austria and Germany. That agreement
does not have a royalty payment required as 5BARz Ag is a consolidated subsidiary of 5BARz International Inc.</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 Calibri, Halvetica, Sans-Serif; margin: 0 0 10pt"><font style="font: 11pt Times New Roman, Times, Serif">All
of the above referenced subsequent events represents a description of the interrelated transactions as negotiated and understood
by the directors, of 5BARz AG and 5BARz International Inc. Most but not all documentation has been received on these transactions
from Europe, but are in process and expected in due course.</font></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"> </p>
<p style="margin: 0pt"> </p>
1349
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88943411
<p style="margin: 0pt"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt"><b>Note 7 – Convertible Debenture</b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On August 15, 2011, the Company entered into a Convertible Debenture
Agreement for a principal amount of <font style="color: black">Fifty Thousand Euros (€50,000)</font>.  That debenture
bears interest at a rate of 8.5%, and is due on November 15, 2011.   Holder may convert principal and unpaid interest
on the debenture into shares of the Company’s common stock, at a price per share of twenty cents USD ($0.20)</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 the right to pre-pay the Debenture without prepayment
penalty of any kind.</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 8 – Convertible Promissory Note:</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 11pt Times New Roman, Times, Serif">On September
20, 2011, 5BARz International Inc., (“the Company”), completed a transaction pursuant to a Convertible Promissory Note
agreement (the Note), through which the Company borrowed $42,500.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: right"><font style="font: 11pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 11pt Times New Roman, Times, Serif">The Note
bears interest at a rate of 8%, and is due on June 22, 2012, (the “Due Date”).  The Company may settle that
note within the first 90 days following the issue date by paying to the Lender 140% of the principle amount of the note plus
accrued interest. The Company may settle the note during the period which is 91 days from the issue date of the note to 180 days
from the issue date of the note by payment of 150% of the principle amount of the note plus accrued interest. The lender may not
convert the note during this first 180 day period subsequent to the date of issue.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 11pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 11pt Times New Roman, Times, Serif">Subsequent
to March 20, 2012 the lender may convert the principal and unpaid interest on the note into shares of the Company’s common
stock, with the number of shares issuable determined by dividing the amount to be converted by the conversion price (the “Conversion
Price”) which is equal to 55% of the average of the three lowest trading prices of the Company’s common stock over the
ten trading days prior to the date of the conversion.  Lender is prohibited under the Note from converting amounts if
principal and interest that would result in Lender receiving shares, which when combined with shares of the Company’s common
stock held by Lender, would result in Lender holding more than 4.99% of the Company’s then-outstanding common stock.  No
registration rights were granted in connection with the purchase of the Note, and the shares of common stock, if any, issued upon
conversion, will be restricted securities as defined pursuant to the terms of Rule 144.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 11pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 11pt Times New Roman, Times, Serif">Pursuant
to the terms of the Note, while there remains any unpaid amounts owing on the Note, the Company may not incur additional debt
without Lender’s approval except for (i) debt that was owed or committed as of the date of the Note and of which the Company
had informed Lender; (ii) indebtedness to trade creditors or financial institutions in the ordinary course of business; (c) debt
which in the aggregate does not exceed $250,000; or (d) debt the proceeds of which are used to repay the Note.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 11pt Times New Roman, Times, Serif">  </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 11pt Times New Roman, Times, Serif">Pursuant
to the Note, the Company agreed to grant to Lender a right of first refusal for any subsequent transactions occurring during the
twelve month period following the Closing Date, which was defined as September 20, 2011. The right of first refusal does not apply
to any transactions in excess of $250,000.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 11pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 11pt Times New Roman, Times, Serif">In the above
transaction, the Note was issued to an accredited investor pursuant to the exemption from registration provided by Section 4(2)
of the Securities Act of 1933, as amended, and rules promulgated pursuant thereto.</font></p>
<p style="margin: 0pt"><font style="font: 11pt Times New Roman, Times, Serif"> </font></p>
-292688
1581875
0