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Document and Entity Information
 9 Months Ended
Sep. 30, 2011
Nov. 14, 2011
Document And Entity Information
Entity Registrant Name
 5Barz International, Inc.
Entity Central Index Key
 0001454124
Document Type
 10-Q
Document Period End Date
 Sep. 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
 88,943,411
Document Fiscal Period Focus
 Q3
Document Fiscal Year Focus
 2011

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Balance Sheets (USD $)
Sep. 30, 2011
Dec. 31, 2010
Current assets:
Cash
 $ 1,349 $ 0
Due from shareholder
 (8,602)
Total current assets
 1,349 (8,602)
Fixed Assets
Furniture and equipment, net
 5,156
Other assets
Due from Cellynx - Line of credit
 241,038
Deposit on investment in Cellynx
 170,000
Intellectual property
 1,883,650 1,883,650
Total other assets
 2,294,688 1,883,650
TOTAL ASSETS
 2,301,194 1,875,048
Current liabilities:
Accounts payable and accrued expenses
 160,718 15,220
Due to Cellynx
 1,200,651 1,439,566
Convertible debenture
 67,513
Note payable convertible
 42,537
Total current liabilities
 1,471,419 1,454,786
Related party loans
 150,419 434,997
TOTAL LIABILITIES
 1,621,838 1,889,783
STOCKHOLDERS' EQUITY
Common stock, $.001 par value, 250,000,000 shares authorized; 88,905,911 and 87,569,800 shares issued and outstanding as of September 30, 2011 and December 31 2010, respectively
 88,906 87,570
Capital in excess of par value
 1,212,089 (49,075)
Deficit accumulated during the development stage
 (621,639) (53,230)
Total stockholders' deficit
 679,356 (14,735)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
 $ 2,301,194 $ 1,875,048

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Balance Sheets (Parenthetical) (USD $)
Sep. 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
 88,905,911 87,569,800
Common stock,outstanding
 88,905,911 87,569,800

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Statements of Operations (USD $)
 3 Months Ended 9 Months Ended 34 Months Ended
Sep. 30, 2011
Sep. 30, 2010
Sep. 30, 2011
Sep. 30, 2010
Sep. 30, 2011
Income Statement [Abstract]
Sales
Cost of Sales
Selling general and administrative expenses:
Amortization and depreciation
 236 58 416 175 863
Bank charges and interest
 3,899 75 14,776 285 16,191
Sales and marketing expenses
 39,284 162,982 165,982
General and administrative
 102,208 4,439 402,824 10,606 449,037
Total operating expenses
 145,627 4,572 580,998 11,066 632,073
(Loss) from operations
 (145,627) (4,572) (580,998) (11,066) (632,073)
Other income (expense):
Interest Income
 4,419 7,538 7,538
Currency gains/(losses)
 5,052 (160) 5,051 695 2,896
(Loss) before taxes
 (136,156) (4,732) (568,409) (10,371) (621,639)
Provision (credit) for taxes on income
Net (loss)
 $ (136,156) $ (4,732) $ (568,409) $ (10,371) $ (621,639)
Basic earnings (loss) per common share
 $ (0.0015) $ (0.0001) $ (0.0064) $ (0.0001)
Weighted average number of shares outstanding
 88,878,906 71,969,800 88,556,147 71,969,800

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Statements of Cash Flows (USD $)
 9 Months Ended 34 Months Ended
Sep. 30, 2011
Sep. 30, 2010
Sep. 30, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
 $ (568,409) $ (10,371) $ (621,639)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
 416 175 863
Shareholder loan
 (8,602) 0 (8,602)
Changes in operating assets and liabilities:
Change in accounts payable and accrued expenses
 145,497 1,500 160,272
Unpaid interest expense
 8,147 0 8,147
Unpaid interest income
 (7,538) 0 (7,538)
Net cash used in operating activities
 (430,489) (8,696) (468,499)
CASH FLOWS FROM INVESTING ACTIVITIES:
Deposit on investment in Cellynx
 (170,000) 0 (170,000)
Purchase of intellectual property
 (238,915) 0 (2,122,565)
Notes payable - asset acquisition
 (292,688) 0 1,581,875
Purchase of furniture and equipment assets
 (5,572) 0 (5,572)
Net cash used in investing activities
 (707,175) 0 716,262
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment under line of credit agreement Cellynx
 (233,500) 0 (233,500)
Proceeds from convertible debenture
 67,513 0 67,513
Proceeds from note payable convertible
 42,500 0 42,500
Proceeds from issuance of common stock
 1,262,500 0 1,300,995
Advances from shareholder
 0 7,887 8,602
Net cash provided by financing activities
 1,139,013 7,887 1,186,110
NET INCREASE IN CASH
 1,349 (809) 1,349
CASH, BEGINNING OF PERIOD
 0 1,274 0
CASH, END OF PERIOD
 1,349 465 1,349
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest
 14,776 285 16,191
Cash paid for income taxes

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Organization
 9 Months Ended
Sep. 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 nine months ended September 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 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.

 

Development Stage

 

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

 

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Summary of Significant Accounting Policies
 9 Months Ended
Sep. 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 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.

 

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 September 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 nine months ended September 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
 9 Months Ended
Sep. 30, 2011
Notes to Financial Statements
Equipment

Note 3 – Equipment

 

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

 

    September 30,          December 31,  
    2011     2010  
Office furniture and equipment   $ 919     $ 0  
Computer equipment     4,653       0  
      5,572       0  
Accumulated depreciation     (416 )     0  
Equipment, net   $ 5,156     $ 0  

 

 

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Federal Income Tax
 9 Months Ended
Sep. 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 carryforward has been recognized, as it is not deemed likely to be realized.

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

    2011   2010
Refundable Federal income tax attributable to:        
Current operations $ (568,409)   (10,371)
Less, Nondeductible expenses   -0-   -0-
-Less, Change in valuation allowance   568,409   10,371
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 current year $ 198,043 $ 3,629 Net
Operating loss carryforward – Beginning of year   9,901   2,883  
Less, Valuation allowance   ( 208,304)   (6,512)  
 Net deferred tax asset   -   -  

 

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.

 

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Cumulative Sales of Stock
 9 Months Ended
Sep. 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.

 

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.

 

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.

 

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.

 

 

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Asset acquisition Agreement
 9 Months Ended
Sep. 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, 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; In addition to the $299,349 paid to September 30, 2011 that the payment of the unpaid balance of $1,200,651, is due on or before March 31, 2012.

 

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.

 

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Convertible Debenture
 9 Months Ended
Sep. 30, 2011
Notes to Financial Statements
Convertible Debenture

Note 7 – Convertible Debenture

On August 15, 2011, the Company entered into a Convertible Debenture Agreement for a principal amount of Fifty Thousand Euros (€50,000).  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)

 

The Company has the right to pre-pay the Debenture without prepayment penalty of any kind.

 

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Convertible Promissory Note
 9 Months Ended
Sep. 30, 2011
Notes to Financial Statements
Convertible Promissory Note

Note 8 – Convertible Promissory Note:

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.

 

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.

 

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.

 

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.

  

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.

 

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.

 

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Related Party Transactions
 9 Months Ended
Sep. 30, 2011
Notes to Financial Statements
Related Party Transactions

Note 9 - 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 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.  

 

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).

 

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Commitments
 9 Months Ended
Sep. 30, 2011
Notes to Financial Statements
Commitments

NOTE 10 - 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 payment schedule as amended is as follows;

 

i. Paid to date $ 433,500
ii. Interest accrued to September 30, 2011   7,538
  Repaid by allocation to asset purchase agreement   (200,000)
  Net Amount due under LOC Agreement   241,038
iii. Commitment to fund on or before December 1, 2011 $ 2,066,500

 

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.

 

 

 

 

 

Security Agreement

 

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.

 

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Stock purchase agreement of Cellynx
 9 Months Ended
Sep. 30, 2011
Notes to Financial Statements
Stock purchase agreement of Cellynx

NOTE 11 - 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. for total proceeds of $634,126. To date the Company has paid $170,000 as a deposit to secure this agreement.

 

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Subsequent events
 9 Months Ended
Sep. 30, 2011
Notes to Financial Statements
Subsequent events

NOTE 12 - Subsequent events

 

Formation of Subsidiary Company, 5BARz AG

 

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.

 

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.

 

Engagement of BDC Investment AG:

 

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.

 

Global Marketing and Distribution Agreement

 

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 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.

 

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.