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Document and Entity Information (USD $)
 12 Months Ended
Dec. 31, 2012
Mar. 29, 2012
Jun. 30, 2011
Document And Entity Information
Entity Registrant Name
 5Barz International, Inc.
Entity Central Index Key
 0001454124
Document Type
 10-K
Document Period End Date
 Dec. 31, 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 Public Float
 $ 21,739,464
Entity Common Stock, Shares Outstanding
 103,778,283
Document Fiscal Period Focus
 FY
Document Fiscal Year Focus
 2011

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Balance Sheets (USD $)
Dec. 31, 2011
Dec. 31, 2010
Current assets:
Cash
 $ 49,209 $ 0
Prepaid expenses and deposits
 19,159
Total current assets
 68,368 0
Fixed Assets
Equipment, net
 4,185 0
Other assets
Due from Cellynx - Line of credit
 250,152 0
Deposit on investment in Cellynx
 170,000 0
Intangible assets
 1,883,650 1,883,650
Total other assets
 2,303,802 1,883,650
TOTAL ASSETS
 2,376,355 1,883,650
Current liabilities:
Accounts payable and accrued expenses
 236,446 15,220
Advances from shareholder
 0 8,602
Due to Cellynx
 1,196,701 1,439,566
Due to escrow agent
 53,033 0
Note payable
 55,318 0
Total current liabilities
 1,541,498 1,463,388
Related party loans
 120,437 434,997
TOTAL LIABILITIES
 1,661,935 1,898,385
STOCKHOLDERS' EQUITY
Common stock, $.001 par value, 250,000,000 shares authorized; 90,182,785 and 87,569,800 shares issued and outstanding as of December 31, 2011 and 2010, respectively
 90,183 87,570
Capital in excess of par value
 1,458,086 (49,075)
Deficit accumulated during the development stage
 (834,377) (53,230)
Minority interest
 528 0
Total stockholders' deficit
 714,420 (14,735)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
 $ 2,376,355 $ 1,883,650

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Balance Sheets (Parenthetical) (USD $)
Dec. 31, 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
 90,182,785 87,569,800
Common stock,outstanding
 90,182,785 87,569,800

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Statements of Operations (USD $)
 12 Months Ended 37 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
Income Statement [Abstract]
Sales
Cost of Sales
Operating Expenses
Amortization and depreciation
 606 175 1,053
Bank charges and interest
 41,982 285 43,397
Sales and marketing expenses
 226,741 229,741
General and administrative
 534,777 29,357 580,990
Total operating expenses
 804,106 29,817 855,181
(Loss) from operations
 (804,106) (29,817) (855,181)
Other income (expense):
Interest Income
 16,666 16,666
Currency gains/(losses)
 6,803 695 4,648
Loss on disposition of furniture
 (781) (781)
Minority interest share of net loss
 271 271
(Loss) before taxes
 (781,147) (29,122) (834,377)
Provision (credit) for taxes on income
Net (loss)
 $ (781,147) $ (29,122) $ (834,377)
Basic earnings (loss) per common share
 $ (0.0087) $ (0.0004)
Weighted average number of shares outstanding
 90,182,785 72,012,537

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Statements of Cash Flows (USD $)
 12 Months Ended 37 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
 $ (781,147) $ (29,122) $ (834,377)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
 469 469
Minority interest share of net loss
 271 271
Changes in operating assets and liabilities:
Prepaid expenses and deposits
 (19,159) (19,159)
Change in accounts payable and accrued expenses
 221,226 14,970 236,446
Unpaid interest expense
 22,833 0 22,833
Due to escrow agent
 53,033 0 53,033
Net cash used in operating activities
 (502,474) (14,152) (540,484)
CASH FLOWS FROM INVESTING ACTIVITIES:
Deposit - investment in Cellynx
 (170,000) 0 (170,000)
Purchase of intellectual property
 (1,883,650) (1,883,650)
Minority interest
 (528) 0 (528)
Abandonment of other assets
 893 0
Purchase of furniture and equipment assets
 (4,653) 0 (4,653)
Net cash used in investing activities
 (175,181) (1,882,757) (2,058,831)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments under line of credit agreement Cellynx
 (250,152) 0 (250,152)
Payment of amount due to Cellynx - intellectual property acquisition
 (242,865) 1,874,563 (242,865)
Proceeds from note payable
 42,500 0 42,500
Notes payable - Dollardex Assignment agreement
 (324,576) 0 1,549,987
Proceeds from issue of common stock
 1,439,079 13,650 1,477,574
Proceeds from issue of common stock to minority interest - 5BARz AG
 76,625 76,625
Proceeds used in repayment of loans from shareholder
 (8,602) (8,602)
Subscription receivable
 (5,144) 7,422 3,458
Net cash provided by financing activities
 726,865 1,895,635 2,648,525
NET INCREASE IN CASH
 49,209 (1,274) 49,209
CASH, BEGINNING OF PERIOD
 0 1,274
CASH, END OF PERIOD
 49,209 0 49,209
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest
 41,982 285 43,397
Cash paid for income taxes

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Statements Stockholders Equity (USD $)
Common Stock
Excess of Par Value
Subscription Receivable
Development Stage
Noncontrolling Interest
Total
Beginning Balance, Amount at Nov. 16, 2008
Founder Shares Issued, Shares
 7,100,000
Founder Shares Issued, Amount
 $ 7,100 $ 7,100
Issuance of Common Stock , shares
 1,776,100
Issuance of Common Stock , amount
 1,776 15,969 17,745
Stock Subscription Receivable
 (425) (425)
Development state net loss
 (4,888) (4,888)
Ending Balance, Amount at Dec. 31, 2008
 8,876 15,969 (425) (4,888) 19,532
Ending Balance, Shares at Dec. 31, 2008
 8,876,100
Stock Subscription Receivable
 425 425
Development state net loss
 (19,220) (19,220)
Ending Balance, Amount at Dec. 31, 2009
 8,876 15,969 (24,108) 737
Beginning Balance, Shares at Dec. 31, 2009
 8,876,100
Initiated 18:1 stock split, November 2010, Shares
 150,893,700
Initiated 18:1 stock split, November 2010, Amount
 150,894 (150,894)
Shares cancelled, Shares
 (87,800,000)
Shares cancelled, Amount
 (87,800) 87,800
Issuance of Common Stock , shares
 15,600,000
Issuance of Common Stock , amount
 15,600 (1,950) 13,650
Development state net loss
 (29,122) (29,122)
Ending Balance, Amount at Dec. 31, 2010
 87,570 (49,075) (53,230) (14,735)
Ending Balance, Shares at Dec. 31, 2010
 87,569,800
Issuance of Common Stock , shares
 2,182,290
Issuance of Common Stock , amount
 2,182 1,358,258 1,360,440
Shares issued for Services, shares
 75,000
Shares issued for Services, amount
 75 7,425 7,500
Conversion of convertible note, shares
 355,695
Conversion of convertible note, amount
 356 70,782 71,139
Proceeds on share sales - 5BARz AG
 70,696 70,696
Stock Subscription Receivable
 76,625
Development state net loss
 (781,147) (781,147)
Minority Interest
 527 527
Ending Balance, Amount at Dec. 31, 2011
 $ 90,183 $ 1,458,086 $ 0 $ (834,377) $ 527 $ 714,420
Ending Balance, Shares at Dec. 31, 2011
 90,182,785

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Organization and Basis of Reporting
 12 Months Ended
Dec. 31, 2012
Notes to Financial Statements
Organization and Basis of Reporting

Note 1 – Organization and basis of reporting

 

 

The Company was incorporated under the laws of the State of Nevada on November 17, 2008. At that time, the Company held certain technology related to bio-degradable product and operated under the name “Bio-Stuff”.

 

On December 29, 2010 the Company changed its name to 5BARz International, Inc. and on December 30, 2010, the Company acquired a set of agreements through which the Company acquired from Cellynx Group, Inc. certain intellectual property underlying the 5BARz products, a highly engineered microcell technology referred to as a “cellular network infrastructure device”. The 5BARz device captures cell signal and provides a smart amplification and resend of that cell signal giving the user improved cellular reception in their home, office or while mobile. Pursuant to the agreements referred to above, the Company was engaged as the exclusive agent for the global sales and marketing of the 5BARz products. On March 29, 2012, 5Barz International, Inc. acquired a 60% controlling interest in Cellynx Group, Inc.

 

On November 6, 2011, the Company incorporated a subsidiary Company in Zurich, Switzerland called 5BARz AG which is a 99.5% held subsidiary at December 31, 2011. That entity has been licensed the marketing and distribution rights for 5BARz products in Germany, Austria and Switzerland. These financial statements reflect the financial position and results of operations for the Company and its subsidiary 5BARz Ag, from inception to date.

 

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 December 31, 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 Accounting Policies
 12 Months Ended
Dec. 31, 2012
Notes to Financial Statements
Summary of Accounting Policies

Note 2 - Summary of significant accounting policies

 

Basis of presentation

 

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The accompanying consolidated financial statements include the accounts of 5Barz International Inc., and its 99.5% owned subsidiary, 5Barz AG. All intercompany accounts and transactions have been eliminated upon consolidation. 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 December 31, 2011 and 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. All research and development costs incurred in developing the patentable idea are expensed as incurred. 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 December 31, 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.

 

Foreign currency translation

 

Transactions in foreign currencies have been translated into US dollars using the temporal

method. Under this method, monetary assets and liabilities are translated at the year-end exchange

rate. Non-monetary assets have been translated at the historical rate of exchange prevailing at the

date of the transaction. Expenses have been translated at the exchange rate at the time of the

transaction. Realized and unrealized foreign exchange gains and losses are included in operations.

 

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 years ended December 31, 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 FASB issued updated guidance on when and how to perform certain steps of the periodic goodwill impairment test for public entities that may have reporting units with zero or negative carrying amounts. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2010, with early adoption prohibited.  The adoption of this standard update did not impact the Company’s consolidated financial statements.

 

In May 2011, the FASB issued guidance to amend certain measurement and disclosure requirements related to fair value measurements to improve consistency with international reporting standards. This guidance is effective prospectively for public entities for interim and annual reporting periods beginning after December 15, 2011, with early adoption by public entities prohibited. The Company is currently evaluating this guidance, but does not expect its adoption will have a material effect on its consolidated financial statements.

 

In June 2011, the FASB issued new guidance on the presentation of comprehensive income that will require a company to present components of net income and other comprehensive income in one continuous statement or in two separate, but consecutive statements. There are no changes to the components that are recognized in net income or other comprehensive income under current GAAP. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011, with early adoption permitted.  The Company is currently evaluating this guidance, but does not expect its adoption will have a material effect on its consolidated financial statements.

 

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Equipment
 12 Months Ended
Dec. 31, 2012
Notes to Financial Statements
Equipment

Note 3 – Equipment

 

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

 

    December 31,     December 31,  
    2011     2010  
Computer equipment   $ 4,653     $ 0  
Accumulated depreciation     (468 )     0  
Equipment, net   $ 4,185     $ 0  

 

 

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Intangible Assets
 12 Months Ended
Dec. 31, 2012
Notes to Financial Statements
Intangible Assets

Note 4 – Intangible Assets

 

On December 30, 2010 the Company acquired a 50% interest in the patents and trademarks which comprise the 5Barz technology owned and developed by Cellynx Group, Inc. These intangible assets were acquired for aggregate proceeds of $1,883,650 comprised of a note payable in the amount of $1,500,000 to Cellynx Group, Inc., a note payable due to Dollardex Group Corp in the amount of $370,000 and 15,600,000 shares issued at a valuation of $13,650.

 

During the year ended December 31, 2011 no amortization has been recorded on the intangible assets.

 

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Federal Income Taxes
 12 Months Ended
Dec. 31, 2012
Notes to Financial Statements
Federal Income Taxes

Note 5 - Federal income tax:

 

 

The Company has provided no current income taxes due to the losses incurred from November 17, 2008 (date of inception), through December 31, 2011. Net operating losses of approximately $708,000 at December 31, 2011, are available for carryover. The net operating losses will expire from 2028 through 2031. The Company has provided a 100% valuation allowance for the deferred tax benefit resulting from the net operating loss carryover due to our limited operating history. In addressing the ability to realize the benefit of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are deductible. When we demonstrate a history of profitable operation, we will reduce our valuation allowance at that time.

 

 

A reconciliation of the statutory Federal income tax rate and the effective income tax rate for the years ended December 31, 2011 and 2010 follows:

 

    December 31,     December 31,  
    2011     2010  
Statutory federal income tax rate     (34% )     (34% )
                 
                 
                 
                 
Valuation allowance     34%          34 %  
Effective income tax rate     -       -  

 

The significant components of deferred tax assets and liabilities are as follows:

 

    December 31,     December 31,  
    2011     2010  
Deferred tax assets:            
Net operating loss carry-forwards   $ 222,282     $ 10,179  
Valuation allowance     (222,282 )     (10,179 )
Net deferred tax assets   $ -     $ -  

 

 

 

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Cumulative Sales of Stock
 12 Months Ended
Dec. 31, 2012
Notes to Financial Statements
Cumulative Sales of Stock

Note 6 - 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 7

 

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 25,000 shares of common stock at a price of $1.00 per share for aggregate proceeds of $25,000.

 

On July 21, 2011 the Company issued 69,610 shares of common stock at a price of $0.20 per share for aggregate proceeds of $14,000.

 

On July 24, 2011 the Company issued 40,000 shares of common stock at a price of $0.20 per share for aggregate proceeds of $7,500.

 

On November 8, 2011 the Company issued 200,000 shares of common stock at a price of $0.15 per share for aggregate proceeds of $30,000.

 

On November 8, 2011 the Company issued 200,000 shares of common stock at a price of $0.15 per share for aggregate proceeds of $30,000.

 

On December 7, 2011 the Company issued 75,000 shares of common stock at a price of $0.10 per share for services provided in the amount of $7,500.

 

On December 15, 2011 the Company issued 455,180 shares of common stock at a price of $0.10 per share for aggregate proceeds of $45,518.

 

On December 1, 2011 the Company issued 355,695 shares of common stock at a price of $0.20 per share for conversion of a Convertible Debenture Agreement, dated August 15,2011for a principal amount of Fifty Thousand Euros (€50,000), which bears interest at a rate of 8.5%.

 

On December 19, 2011 the Company issued 150,000 shares of common stock at a price of $0.10 per share for aggregate proceeds of $15,000.

 

In December 2011, 5BARz AG sold 22,000 common shares with a par value of 0.01 per share, at a price of CHF 3.00 ($3.26 US) per share, for aggregate proceeds of CHF 66,000 (US – $70,700). The proceeds received have been credited to additional paid in capital in these consolidated financial statements.

 

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Asset Acquisiton Agreement
 12 Months Ended
Dec. 31, 2012
Notes to Financial Statements
Asset Acquisiton Agreement

Note 7 - Asset acquisition agreement:

 

On December 31, 2010, the Company entered into three agreements as follows;

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

(ii)               An asset purchase agreement

(iii)             A line of credit agreement and security agreement

The agreements relate principally to the development of the marketing and distribution of the 5BARz line of products and related accessories and a 50% ownership interest in the 5BARz intellectual property.

The agreements were assigned from Dollardex Group Corp, to the Company 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 interest at a rate of 5% 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 to the Cellynx Group, Inc. for a ½ interest in the 5BARz intellectual property for aggregate payments of $1,500,000. Subsequent to December 31, 2011 that agreement was further amended such that 5Barz International acquired a 60% interest in that intellectual property by the issuance on March 29, 2012 of 9,000,0000 shares of the registrant.

 

Pursuant to the Master Global Marketing and Distribution agreement assigned the registrant was obligated to pay to Cellynx Group, Inc a royalty fee amounting to 50% of the Company’s Net Earnings. That fee would 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. Subsequent to year end, the asset acquisition agreement specified that the royalties would be paid in relation to the ownership of the intellectual property. Accordingly as Cellynx Group, Inc. owns 40% of that intellectual property, Cellynx would be entitled to 40% of the 50% royalty fee.

 

Subsequent to the year end, on March 29, 2012, the Company acquired a 60% interest in the common stock of Cellynx Group Inc. such that Cellynx will be a consolidated subsidiary of the registrant. (See subsequent events note)

 

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Convertible Promissary Note
 12 Months Ended
Dec. 31, 2012
Notes to Financial Statements
Convertible Promissary Note

Note 8 – Convertible promissory notes:

On August 24, 2011 the Company issued a convertible debenture to an investor for 50,000 Euros, converted at that date to $71,965 USD. The debenture had a term of 90 days and an interest rate of 8.5%. On December 13, 2011, the holder elected to convert the outstanding principle and interest into common shares at a price of $0.20 per share, converting $67,294 into 336,472 shares. In addition, the Company issued an additional 19,223 shares as a bonus for conversion.

 

On September 20, 2011, 5BARz International Inc., (“the Company”), completed a transaction pursuant to a 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. In the event that the note is not repaid 180 days from the date of issue, the note is convertible into common stock. On March 20, 2012 the note was paid and cancelled (see subsequent events note)

 

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Related Party Transaction
 12 Months Ended
Dec. 31, 2012
Notes to Financial Statements
Related Party Transaction

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 President and Director is also the President and 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.  During the year ended December 31, 2011 the Company paid $339,382 of principle and interest on that note. At December 31, 2011 the Company had a remaining balance on that note payable in the amount of $30,618 (2010 - $370,000). The note payable accrues interest at a rate of 5% per annum, and during the year ended December 31, 2011, interest in the amount of $10,015 was charged pursuant to the terms of this note.

 

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). That amount due is non interest bearing and has no specific terms of repayment.

 

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Commitments
 12 Months Ended
Dec. 31, 2012
Notes to Financial Statements
Commitments

NOTE 10 - Commitments:

 

On December 30, 2010 the Company entered into a commitment to provide to Cellynx Group, Inc., the co-owner of the Company’s intellectual property a revolving line of credit in the amount of $2.5 million dollars. That revolving line of credit accrues interest at a rate of 6% per annum.

 

During the year ended December 31, 2011 the registrant paid to Cellynx Group, Inc. $233,500 and accrued interest in the amount of $16,651, pursuant to the terms of that revolving line of credit agreement. At December 31, 2011 the commitment to fund Cellynx Group Inc. aggregated $2,249,849.

 

Subsequent to the year end, on March 29, 2012 the Company entered into an addendum agreement with Cellynx Group, Inc. related to the revolving line of credit agreement. That addendum agreement reallocated $346,049 paid by the Company to Cellynx Group, Inc. under the asset purchase agreement, to the revolving line of credit resulting in a combined funding to the date of the addendum agreement of $596,200. In addition, the addendum agreement provided to 5BARz, the right to convert amounts advanced under the line of credit agreement to common shares in Cellynx, on a conversion basis which is equal to that offered by Cellynx to certain other creditors. That conversion basis is calculated as 25% of the volume weighted average bid price of the common stock for a period of 10 days prior to the conversion notice. On March 29, 2012 the addendum agreement further specified the commitment to fund Cellynx Group, Inc. to be $2.2 million dollars prior to maturity of the revolving line of credit agreement on October 5, 2013.  

 

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Formation of subsidiary company, 5BARz AG
 12 Months Ended
Dec. 31, 2012
Notes to Financial Statements
Formation of subsidiary company, 5BARz AG

NOTE 11 - Formation of subsidiary company, 5BARz AG

 

On October 6, 2011, the Company commenced the organization of a subsidiary Company under the laws of Switzerland, in the Canton of Zurich, called 5BARz AG. 5BARz AG issued 10,000,000 common shares of which 5,100,000 are held by the Company and 4,900,000 are held in escrow for resale, by an independent escrow agent under the control of the Company. 5BARz AG issued the shares with a stated or par value of CHF 0.01 per share for proceeds of CHF 100,000 (US - $108,752). The net proceeds received on re-sale above the stated or par value of the shares, is paid into 5Barz AG as additional paid in capital.

 

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 requirement, and remains effective as long as 5BARz Ag is controlled by the Company. 5BARz Ag is a consolidated subsidiary of the Company in these financial statements.

 

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Stock acquisition agreement, Cellynx Group, Inc.
 12 Months Ended
Dec. 31, 2012
Notes to Financial Statements
Stock acquisition agreement, Cellynx Group, Inc.

 

NOTE 12 - Stock acquisition agreement, Cellynx Group, Inc.

 

On January 7, 2011 the Company entered into a stock purchase agreement with two founding 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. At December 31, 2011 the Company had paid $170,000 as a deposit made under that agreement.

 

Subsequent to the year end, on March 29, 2012 the Company entered into a securities exchange agreement and settlement agreement with each of these two founding shareholders of Cellynx Group, Inc. whereby in addition to the $170,000 paid, the Company issued 1,250,000 shares of common stock of the issuer in exchange for the 63,412,638 shares of Cellynx Group, Inc.

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Subsequent Events
 12 Months Ended
Dec. 31, 2012
Notes to Financial Statements
Subsequent Events

NOTE 13 - Subsequent events

 

Addendum agreement between 5Barz International, Inc. and Cellynx Group, Inc.

 

On March 29, 2012, the Company entered into an Addendum Agreement with Cellynx Group, Inc. related to a set of agreements dated October 5, 2010 and assigned to the registrant on December 30, 2010. These Agreements are comprised of an “Asset Purchase Agreement”, an “Amended and Restated Master Global Marketing and Distribution Agreement” and a “Revolving Line of Credit Agreement”.

 

Pursuant to that addendum agreement, the company increased the registrant’s percentage ownership of the Intellectual Property comprising the 5BARz technology from a 50% interest to a 60% interest. In addition, the Registrant agreed to the issuance of 9,000,000 common shares in the capital of 5BARz International Inc. at a deemed value of $0.20 per share, aggregating $1,800,000 as payment in full for the intellectual property acquired, and has also therein clarified that the ownership interest does represent that proportionate interest in income earned from that intellectual property.

 

The terms of that “Revolving Line of Credit Agreement” have been further revised to be convertible into common stock on a basis consistent with other debt agreements recently entered into by Cellynx Group, Inc. In addition, the aggregate commitment of the Revolving Line of Credit Agreement has been amended to be $2.2 Million Dollars and the period of that agreement has been extended to a maturity date of October 5, 2013.

 

In furtherance to the acquisition of the intellectual property under the “Asset Purchase Agreement” the Registrant has also assumed all responsibilities for the future, protection and prosecution of rights under the patents and patent applications as provided there-under.

 

The addendum agreement has further clarified and made current the summary of intellectual property which is sold under the terms of the “Asset Purchase Agreement” as provided in the schedule of intellectual property provided therein. Further the addendum agreement has deleted the right of first refusal for Cellynx Group, Inc to reacquire that intellectual property.

 

Finally, the addendum agreement has restated the date of initial interest to be paid by the borrower under the terms of the Revolving Line of Credit from October 1, 2011 to October 1, 2012.

 

Securities Purchase Agreements

Convertible debenture agreement

 

On February 3, 2012 the Company entered into a Convertible Debenture Agreement with an investor for aggregate proceeds of $500,000 of which $100,000 is paid in cash and a promissory note in the principal amount of $400,000 is due to the Company by no later than August 3, 2013. The debenture bears interest at a rate of 4.75%, and is due on February 3, 2016, (the “Maturity Date”). The promissory note from the investor for $400,000 bears interest at a rate of 5%. The agreement is subject to an early pre-payment provision whereby the Company may prepay the $100,000 by May 8, 2012 and the agreements may be cancelled in their entirety.

 

In the event that the convertible debenture is not prepaid, the investor may convert the principle and unpaid interest due under the agreement 180 days from the date of the agreement at a price which is 110% of the lesser of $1.00, or 80% of the average of the three lowest trading prices of the Company’s common stock over the twenty one trading days prior to the date of the conversion. Such conversions are subject to a restriction such that holder may not own greater than 4.99% of the issued and outstanding capital stock of the Company.

 

If, on the date the holder delivers a conversion notice, the applicable conversion price is below $0.06, the Company may prepay that portion of the Debenture that Holder elected to convert in an amount equal to one hundred twenty percent (120%) of the amount to be converted.

 

Equity Investment Agreement

On February 3, 2011, in conjunction with the convertible debenture agreement referred to above the Company granted to the investor the right to purchase of up to $5,000,000 of the Company's common stock, beginning on August 3, 2012. Such investment is limited to the 4.99% limitation on ownership in the reporting Company referred to above. In addition, the investor is required to purchase a minimum of $50,000 per month beginning two hundred ten (210) days from the Issue Date or September 3, 2011.

 

Acquisition of 60% of Cellynx Group, Inc.

On January 7, 2011 the Company entered into a securities purchase agreement to acquire 63,412,638 shares of the common stock of Cellynx Group, Inc. (Cellynx) from two founding shareholders of Cellynx. At that time the Company made a $170,000 deposit for that stock. On March 29, 2012, the Company completed that acquisition of the 63,412,638 shares of Cellynx in exchange for the issuance of 1,250,000 shares of capital stock in the Company, in addition to the $170,000 paid, pursuant to a share exchange and settlement agreement with the two founding shareholders of Cellynx Group, Inc.

 

On March 29, 2012 the Company converted $73,500 due from Cellynx, pursuant to the revolving line of credit agreement for the issuance of 350,000,000 shares of Cellynx. That acquisition in addition to the completion of the acquisition referred to above comprises a 60% acquisition of control of Cellynx Group, Inc.

 

Promissory note settlement

 

On March 20, 2012, the Company paid $65,362 in full and final settlement of the promissory note dated September 20, 2011 referred to in note 8 above.

 

 

Sales of Common Stock

 

On February 1, 2012 the Company issued 1,550,000 shares of common stock at a price of $0.10 per share for services provided in the amount of $155,000 to consultants of the Company.

 

On various days in February 2012 the Company issued 700,000 shares of common stock at a price of $0.10 per share for aggregate proceeds of $70,000.

 

On various days in March 2012 the Company issued 636,164 shares of common stock at a price of $0.12 per share for aggregate proceeds of $76,340.

 

On various days in March 2012 the Company issued 503,333 shares of common stock at a price of $0.15 per share for aggregate proceeds of $75,500.

 

During the period January to March 30, 2012, 5BARz AG issued 40,000 shares of common stock at a price of CHF 3.00 (US $3.31) for aggregate proceeds of CHF 120,000 (US $132,000).

 

 

Convertible promissory note

 

On March 8, 2012, the Company, completed a transaction pursuant to a Promissory Note agreement (the Note), through which the Company borrowed $37,500. The Note bears interest at a rate of 8%, and is due 180 days from the date of issue on September 4, 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.

 

 

In the event that the note is not repaid 180 days from the date of issue, the note is convertible into common stock. The investor may convert 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 which is equal to 55% of the average of the three lowest closing bid prices of the Company’s common stock over the ten trading days prior to the date of the conversion.  The investor is prohibited from converting amounts if such conversions results in investor 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 March 2012 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.

 

Commitment to Issue Shares

 

During February and March 2012 the Company appointed certain senior industry executives to the Company’s advisory board to assist with the development of the Company, and the integration of its technology and products into the global marketplace. Pursuant to those appointments that company has committed 2,150,000 shares to be issued pursuant to a 2012 employee, consultant and director stock option plan, or for services rendered, subject to Director approval.