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Document and Entity Information
 3 Months Ended
Mar. 31, 2012
May 01, 2012
Document And Entity Information
Entity Registrant Name
 5Barz International, Inc.
Entity Central Index Key
 0001454124
Document Type
 10-Q
Document Period End Date
 Mar. 31, 2012
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
 104,661,108
Document Fiscal Period Focus
 Q1
Document Fiscal Year Focus
 2012

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Balance Sheets (USD $)
Mar. 31, 2012
Dec. 31, 2011
CURRENT ASSETS:
Cash
 $ 76,861 $ 49,209
Prepaid expenses and deposits
 19,959 19,159
TOTAL CURRENT ASSETS
 96,820 68,368
FIXED ASSETS:
Equipment, net
 6,108 4,185
OTHER ASSETS:
Due from Cellynx - Line of credit
 250,152
Deposit on investment in Cellynx
 170,000
Intangible assets
 2,228,368 1,883,650
Goodwill
 1,364,038
Total other assets
 3,592,406 2,303,802
TOTAL ASSETS
 3,695,334 2,376,355
Current liabilities:
Accounts payable and accrued expenses
 2,034,753 236,446
Due to Cellynx
 1,196,701
Due to escrow agent
 53,033 53,033
Warrant liability
 3,442
Accrued derivative liabilities
 501,258
Notes payable (net of discount)
 490,661 55,318
Total current liabilities
 3,083,147 1,541,498
Related party loans
 74,373 120,437
TOTAL LIABILITIES
 3,157,520 1,661,935
STOCKHOLDERS' EQUITY
Common stock, $.001 par value, 250,000,000 shares authorized; 104,119,452 and 90,182,785 shares issued and outstanding as of March 31, 2012 and December 31, 2011, respectively
 104,119 90,183
Capital in excess of par value
 4,089,227 1,458,086
Deficit accumulated during the development stage
 (1,856,576) (834,377)
Treasury stock
 (1,800,000)
Minority interest
 1,044 528
Total stockholders' deficit
 537,814 714,420
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
 $ 3,695,334 $ 2,376,355

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Balance Sheets (Parenthetical) (USD $)
Mar. 31, 2012
Dec. 31, 2011
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
 104,119,452 90,182,785
Common stock,outstanding
 104,119,452 90,182,785

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Statements of Operations (USD $)
 3 Months Ended 41 Months Ended
Mar. 31, 2012
Mar. 31, 2011
Mar. 31, 2012
Income Statement [Abstract]
Sales
Cost of Sales
Selling general and administrative expenses:
Amortization and depreciation
 190 46 1,243
Bank charges and interest
 14,622 4,913 58,019
Sales and marketing expenses
 56,688 51,701 286,429
General and administrative expenses
 435,457 99,477 1,016,447
Total operating expenses
 506,957 156,137 1,362,138
(Loss) from operations
 (506,957) (156,137) (1,362,138)
Other income (expense):
Interest Income
 108 16,774
Change in fair value of accrued beneficial conversion liability
 376,569 376,569
Debt discount on derivative liability
 15,250 15,250
Loss on disposition of assets
 (781)
Foreign currency gain (loss)
 (3,432) 1,216
Minority interest share of net loss
 545 816
(Loss)from other expenses
 389,040 (156,137) 409,844
Net (loss)
 $ (117,917) $ (156,137) $ (952,294)
Basic earnings (loss) per common share
 $ (0.0013) $ (0.0018)
Weighted average number of shares outstanding
 91,812,982 88,151,050

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Statements of Cash Flows (USD $)
 3 Months Ended 41 Months Ended
Mar. 31, 2012
Mar. 31, 2011
Mar. 31, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
 $ (117,917) $ (156,137) $ (952,294)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
 190 (873) 659
Minority interest share of net loss
 545 816
Changes in operating assets and liabilities:
Decrease in amount due to related party
 (46,064) (59,814) (46,064)
Increase in accounts payable and accrued liabilities
 1,798,307 112,806 2,034,752
Decrease in amount due to Cellynx
 (1,196,701) (1,196,701)
Increase in warrant liability - Cellynx
 3,442 3,442
Increase in prepaid expenses and deposits
 (800) (19,959)
Change in fair value of beneficial conversion liability
 (501,258) (501,258)
Debt discount on convertible notes
 (69,477) (69,477)
Due to escrow agent
 53,033
Unpaid interest expense
 703 23,536
Net cash from (used in) operating activities
 (129,030) (104,018) (669,515)
CASH FLOWS FROM INVESTING ACTIVITIES:
Deposits on investment in Cellynx
 (60,000) (170,000)
Minority interest
 (516) (1,044)
Notes converted upon acquistion of Cellynx
 73,500 73,500
Investment in Cellynx IP for shares
 (1,800,000) (1,800,000)
Investment in Celllynx IP for debt
 1,500,000 (383,650)
Goodwill - investment of Cellynx Group, Inc.
 (1,364,038) (1,364,038)
Increase in furniture and equipment assets
 (1,733) (6,386)
Net cash used in investing activities
 (1,592,787) (60,000) (3,651,618)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments under the line of credit agreement Cellynx
 (80,156) (200,000) (573,173)
Reallocation of proceeds paid for intangibles to revolving line of credit agreement - Cellynx
 346,048 (112,878) 346,048
Proceeds from issuance of notes payable
 137,500 180,000
Proceeds used to settle notes payable
 (42,500) (42,500)
Deposits paid on Cellyx acquisition
 170,000 170,000
Notes payable
 1,549,987
Conversion of debt on acquistion of Cellynx
 73,500 73,500
Common stock issued for acquisition of Cellynx
 250,000 250,000
Common shares issued for services
 155,000 155,000
Common stock issued for cash
 440,077 650,000 1,997,734
Loans from shareholder
 (8,602)
Amendment to acquisition of 5BARz IP for debt
 (1,500,000) (1,500,000)
Common stock issued for intangible assets - Cellynx
 1,800,000 1,800,000
Net cash provided by financing activities
 1,749,469 337,122 4,397,994
NET INCREASE IN CASH
 27,652 173,104 76,861
CASH, BEGINNING OF PERIOD
 49,209
CASH, END OF PERIOD
 76,861 173,104 76,861
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest
 $ 14,586 $ 1,018

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Organization and Basis of Reporting
 3 Months Ended
Mar. 31, 2012
Notes to Financial Statements
Organization and Basis of Reporting

Note 1 – Organization and basis of reporting

 

5Barz International, Inc. and its’ consolidated subsidiaries is the owner of a proprietary technology for the wireless marketplace, branded as 5BARz™. The Company provides innovative and affordable solutions that improve poor mobile phone and wireless data signals for phones, laptops, and tablets. The Company’s developing product lines, reduce dropped calls, improve reception, and in many cases eliminate dead zones by improving wireless signal within the immediate vicinity of the user.  

 

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. entered into an amendment agreement with Cellynx Group Inc. through which 5BARz acquired a 60% interest in the intellectual property referred to as the 5BARz technology, and acquired a 60% ownership interest in Cellynx Group, Inc. among other amendments (see Note 7).

 

On November 6, 2011, the Company incorporated a subsidiary Company in Zurich, Switzerland called 5BARz AG which is a 99.2% held subsidiary at March 31, 2012. That entity has been licensed the marketing and distribution rights for 5BARz products in Germany, Austria and Switzerland.

 

On March 29, 2012, the Company acquired a 60% interest in the common stock of Cellynx Group, Inc., a Company which holds a 100% interest in Cellynx Inc. Those entities hold the patents, trademarks and license rights comprising the 5BARz technology, and represent a strategic partner of 5BARz International Inc. prior to this acquisition transaction. In conjunction with the asset purchase agreement also completed on March 29, 2012, 5BARz International Inc. issued 9,000,000 shares representing an 8.7% reciprocal holding by Cellynx Group Inc. in the registrant.

 

These financial statements reflect the financial position and results of operations for the Company and its subsidiary Company 5BARz AG, for the fiscal year commencing January 1, 2012 to March 31, 2012 and the financial position and results of operation for Cellynx Group Inc. and its

wholly owned subsidiary Cellynx Inc. for the period from the date of acquisition, March 29, 2012 to March 31, 2012.

 

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 March 31, 2012, 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
 3 Months Ended
Mar. 31, 2012
Notes to Financial Statements
Summary of Significant 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 99.2% owned subsidiary, 5Barz AG., and it’s 60% owned subsidiary Cellynx Group, Inc. and that Company’s 100% owned subsidiary Cellynx, Inc. All intercompany accounts and transactions have been eliminated upon consolidation.

 

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 March 31, 2012 and 2011, 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 March 31, 2012 and 2011, 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.

 

Accounting for Derivatives

The Company evaluates its convertible instruments, options, warrants or other contracts to determine if those contracts or components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging”. The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liability at the fair value of the instrument on the reclassification date. 

 

 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 quarters ended March 31, 2012 and 2011.

 

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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Funiture and Equipment
 3 Months Ended
Mar. 31, 2012
Notes to Financial Statements
Funiture and Equipment

Note 3 – Furniture & equipment

 

Equipment consisted of the following as at March 31, 2012 and 2011:

 

 

    March 31, 2012   December 31, 2011
Furniture and equipment   $   9,879   $           -
Computer equipment        4,653        4,653
       14,532        4,653
Accumulated depreciation        8,424           468
Furniture & equipment net   $   6,108   $    4,185

 

During the three months ended March 31, 2012 the Company incurred depreciation expense of $190,(2011 - $46 ).

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Intangible Assets
 3 Months Ended
Mar. 31, 2012
Notes to Financial Statements
Intangible Assets

Note 4 – Intangible Assets

 

Intangible assets are comprised of patents, trademarks and license rights which are recorded at cost, comprised of legal fees and acquisition costs. 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. License rights are amortized over the period of the respective license agreement.

 

      March 31, 2012     December 31, 2011
Patents   $ 1,996,785   $ 1,685,867
Trademarks      234,277     197,783
License rights      4,214     -
    $ 2,235,276   $ 1,883,650
Accumulated amortization      6,908      -
Intangibles, net   $ 2,228,368   $ 1,883,650

 

 

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Cumulative Sales of Stock
 3 Months Ended
Mar. 31, 2012
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, held by the Director and CEO of the Company.

On December 31, 2010, the Directors issued 15,600,000 shares in conjunction with the acquisition of the agreements to acquire an interest in the 5BARz intellectual property, and hold the exclusive global sales and marketing rights for the 5BARz products.

 

During the period January to March 2011 the Company issued 650,000 shares of common stock at a price of $1.00 per share for aggregate proceeds of $650,000.

 

During the period from April 1, 2011 to June 30, 2011 the Company issued 575,500 shares at prices ranging from $0.70 per share to $ 1.00 per share for aggregate proceeds of $553,500.

 

During the period from July 1, 2011 to September 30, 2011 the Company issued 134,610 shares at prices ranging from $0.20 per share to $ 1.00. per share for aggregate proceeds of $46,500.

 

During the period from October 1, 2011 to December 31, 2011, the Company issued 1,080,180 shares at prices ranging from $0.10 per share to $0.15 per share for aggregate proceeds of $128,018.

 

 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, 2011 in the principal amount of Fifty Thousand Euros (€50,000), along with accrued interest thereon.

  

During the period, December 1, 2011 to March 31, 2012, 5BARz AG sold 78,000 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 234,000 CHF (US – $250,380). The proceeds received have been credited to additional paid in capital in these consolidated financial statements.

 

During the period January 1, 2012 to March 31, 2012 the Company issued 2,136,667 shares at prices ranging from $0.10 to $0.15 per share for proceeds of $ 251,500. These private placements are exempt from registration pursuant to Regulation S under the securities act of 1934.

 

During the period from January 1, 2012 to March 31, 2012 the Company settled $155,000 of debt to consultants of the Company by the issuance of shares at a price of $0.10 per share, and issued in aggregate 1,550,000 shares.

 

On March 29, 2012 the Company issued 9,000,000 shares to Cellynx Group, Inc. at the market price of $0.20 per share for payment in full of a 60% interest in the patents and trademarks which comprise the 5BARz technology.

 

On March 29, 2012 the Company issued 1,250,000 shares of common stock to two founders of Cellynx Group, Inc., along with $170,000 in cash for 63,412,638 shares of the capital stock of Cellynx Group, Inc.

 

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Asset Acquisiton Agreement
 3 Months Ended
Mar. 31, 2012
Notes to Financial Statements
Asset Acquisiton Agreement

Note 6 - Asset acquisition agreement:

 

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

(i)An “Amended and Restated Master Global Marketing and Distribution Agreement.”
(ii)An “Asset Purchase Agreement”
(iii)A “Revolving line of credit agreement and security agreement”.

These agreements with Cellynx Group, Inc. provide for the exclusive global marketing and distribution of the 5BARz line of products and related accessories and a 50% ownership interest in the 5BARz intellectual property. In addition, a revolving line of credit facility has been made available to Cellynx.

On March 29, 2012, the Company and Cellynx Group Inc. entered into an agreement which provided several amendments to the agreement referred to above. As a result of those amendments, the following arrangements between the Companies were established;

 i.            5BARz International, Inc. acquired a 60% interest in the patents and trademarks held by Cellynx Group Inc., referred to as the “5BARz™” technology. That interest in the technology was acquired for proceeds comprised of 9,000,000 shares of the common stock of the Company, valued at the date of acquisition at $0.20 per share or $1,800,000 USD. The acquisition agreement also clarified that the ownership interest in the intellectual property does represent that proportionate interest in income earned from the intellectual property.
 ii.            The Company agreed to make available to Cellynx Group, Inc a revolving line of credit facility in the amount of $2.2 million dollars of which $636,606 has been advanced as of March 31, 2012. This revolving line of credit facility expires on October 5, 2013. Under the terms of the line of credit facility, the Company has the right to convert amounts due under the facility into common stock of Cellynx, at a conversion rate which is the lesser of a fixed conversion rate of $0.00015 per share or a variable rate which is calculated at 25% of the average lowest three closing bid prices of the Cellynx Group, Inc. common stock for a period which is ten (10) days prior to the date of conversion. This conversion rate was established previously by other parties that have funded Cellynx, and is being matched by 5BARz. At March 31, 2012, the Company converted $78,500 of the amount due under the revolving line of credit facility for 350,000,000 shares of the capital stock of Cellynx Group, Inc. As a result, Cellynx became a consolidated subsidiary of 5Barz International Inc., on March 29, 2012.
 iii.            Pursuant to the Master Global Marketing and Distribution agreement between 5Barz International Inc and Cellyx Group, Inc., 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. The asset acquisition agreement amendment referred to herein specified that the royalties would be paid in relation to the ownership of the intellectual property. In addition as a result of the recent acquisition of a 60% interest in Cellynx Group, Inc. by the registrant, this royalty item is an intercompany transaction which in the future will be eliminated upon consolidation in financial reporting of the consolidated financial results of 5BARz International Inc. and Subsidiaries.

 

 

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Options Warrants and Convertible Securities
 3 Months Ended
Mar. 31, 2012
Notes to Financial Statements
Options Warrants and Convertible Securities

Note 7 – Options Warrants and Convertible Securities:

Promissory note 

 

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, along with accrued interest and a prepayment amount was settled by payment of $65,361.52, and the note was cancelled.

 

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.

 

On May 8, 2012 the $100,000 was not repaid. The Company has recorded a beneficial conversion valuation liability of $ 4,931 based upon the conversion valuation at the date of inception of the convertible debenture. In addition, the Company has recorded a debt discount of

$15,250 of which $ 2,382 has been amortized to interest income based upon the fair market value of debt at inception of the convertible debenture.

 

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, 2012.

Cellynx Group, Inc. – Convertible Promissory Notes 

 

The Company’s subsidiary, Cellynx Group, Inc. has three convertible promissory notes outstanding at March 31, 2012 as follows;

 

 

Issue Date

 

 

   Principal Amount Date of Maturity  

Accrued

Interest

  

Beneficial

Conversion

Factor

  

Principle due

March 31, 2012

Mar 10, 2011 $ 42,500 Dec. 7, 2011 $ 3,059 $ 114,990 $ 13,400
May 18, 2011 $ 32,500 Nov. 18, 2011    2,258   282,837 $ 32,500
Jan 8, 2012 $ 15,000 July 8, 2012    266   122,469 $ 15,000

 

The notes incur interest at a rate of 8% per annum.

 

On January 6, 2012 the terms of the note have been amended such that subsequent to the maturity date if not paid, holder may convert principal and unpaid interest on the note into shares of the Company’s common stock, with the number of shares issuable determined to be the lesser of the variable conversion factor or a fixed conversion factor of $0.00015 per share. The variable conversion factor is calculated by dividing the amount to be converted by the conversion price which is equal to 25% 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. Holder is prohibited under the from converting amounts if principal and interest that would result in holder receiving shares, which when combined with shares of the Company’s common stock held, would result in investor holding more than 4.99% of the Company’s then- outstanding common stock. 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 Notes, while there remains any unpaid amounts owing, Cellynx Group, Inc. may not incur additional debt without investors approval except for (i) debt that was owed or committed as of the date of the agreement and of which the Company had informed investor; (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.

 

The Company has the right to pre-pay the debt up to six months from the date of issue. During the first 120 days following the issue date of the Note may be settled by paying 150% of the then-outstanding principal amount and any accrued and unpaid interest, penalties, or other amounts owing.

 

The Company determined that the notes contain a beneficial conversion feature because the conversion rate is less than the share price . In addition, the Company records a debt discount related to the beneficial conversion factor which is amortized over the term of the loan.

 

Cellynx Group Inc. - Options and Warrants

  

At March 31, 2012 Cellynx Group Inc. has the following Options and Warrants outstanding;

 

The number and weighted average exercise prices of all options exercisable as of March 31, 2012, are as follows:

 

Options Exercisable  

Range of

Exercise Price

    

 

Number Outstanding as of

September 30, 2011

    

Weighted Average

Exercise Price

    

Weighted Average

Remaining Contractual

Life (Years)

  
                     
$ 0.014 - 0.05       3,415,170       0.018       3.93  
$ 0.06 - 0.100       4,007,338       0.074       0.96  
$ 0.110 - 0.150       8,566,279       0.126       2.86  
$ 0.160 - 0.200       1,792,667       0.177       2.68  
$ 0.210 - 0.260       1,260,040       0.217       2.43  
          19,041,494                  

 

 

Warrants

 

The following table summarizes the warrant activity:

   

Number of

Warrants

    

Weighted Average

Exercise Price

    

Average Remaining

Contractual Life

    

Aggregate

Intrinsic Value

  
Outstanding at December 31, 2011     36,114,757     $ 0.12              
Granted     —       —              
Exercised     —       —              
Expired     —       —              
Outstanding at March 31, 2012     36,114,757     $ 0.27       1.18     $ 0  
Exercisable at March 31, 2012     36,114,757     $ 0.27       1.18     $ 0  

 

 

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Related Party Transaction
 3 Months Ended
Mar. 31, 2012
Notes to Financial Statements
Related Party Transaction

Note 8 - 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 quarter ended March 31, 2012 the Company paid $40,633 of principle and interest on that note. At March 31, 2012 the Company had a remaining balance on that note payable in the amount of Nil (December 31, 2011 - $30,618 ). The note payable accrues interest at a rate of 5% per annum, and during the three months ended March 31, 2012, interest in the amount of $115 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 $ 74,373 (December 31, 2011 - $79,803). That amount due is non interest bearing and has no specific terms of repayment.

 

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

Note 9 - 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. During the quarter ended March 31, 2012, sales of those securities aggregated 57,000 shares sold for proceeds of $171,000 CHF ($182,970 USD)

 

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

Note 10 - 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 that date the Company had paid $170,000 as a deposit made under that agreement. On March 29, 2012 the Company entered into a securities exchange agreement and settlement agreement with each of the 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. and mutual releases were signed between the parties releasing each from any further obligation.

 

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Business Combination
 3 Months Ended
Mar. 31, 2012
Notes to Financial Statements
Business Combination

 

Note 11 - Business combination

 

On March 29, 2012, the Company acquired a 60% interest in Cellynx Group, Inc. a Company based in California, which was the owner of the 5BARz intellectual property and is in the business of the development and commercialization of that technology. The objective of the acquisition is to integrate the global commercialization of the 5BARz technology and products, into a combined business and operating strategy. The purchase price, which was settled in cash, shares, and the settlement of convertible debt was $875,000, as follows;

 

i.   Cash consideration paid    $ $ 170,000  
ii.   1,250,000 common shares of the registrant issued at a market price of $0.20 per share     250,000  
iii.   Redemption of convertible debt for 350 million shares of Cellynx Group Inc. common stock     455,000 (a)
             
    Fair market value of consideration paid   $ $ 875,000  

 

(a)The valuation of the debt instrument with an embedded conversion feature is calculated at the face value of the debt instrument of $73,500 plus the intrinsic value attributable to the conversion of the debt instrument at a 75% discount to market, based upon the lowest 3 closing bid prices of the common stock for a period of 30 days prior to the date of conversions. That intrinsic valuation is calculated to be $ 381,500.

 

The amounts recognized for each class of the acquiree’s assets and liabilities recognized at the acquisition date, March 29, 2012 are as follows;

 

Description   Net book value of Cellynx Group, Inc. consolidated assets and liabilities   Adjustments (i)   Valuation attributed to assets acquired
Current assets $ 3,260     $ 3,260
Patents, trademarks, and license   44,718       44,718
Investment in 5BARz   1,800,000       1,800,000
Furniture and equipment   2,113       2,113
Accounts payable and accruals   1,735,112       1,735,112
Notes payable (net of discount)   368,411       368,411
Beneficial conversion liability   5,856,633 $ (5,621,027)   235,606
LOC payable – 5BARz (net)   514,745   ( 514,745)   0
Net book value of assets acquired $ (6,624,810)   (6,135,772)   (489,038)
Goodwill           1,364,038
Purchase price         $ 875,000

 

(i)In determining the NBV of assets acquired, the Company wrote off the convertible debt owed to the acquirer and the beneficial conversion liability attributed to that debt.

 

The individual results of operation for Cellynx Group Inc. for the quarter ended March 31, 2012 are available at the web site www.sec.gov, as that entity is a reporting public company, trading on the OTCBB in the US under trading symbol “CYNX”.

 

The business combination and simultaneous acquisition of the intellectual property effects the ongoing royalty expense to the registrant, which prior to these items represented a contractual cost of 50% of the net income earned by the Company. As a result of the asset purchase agreement as amended, the registrant will be eligible to receive 60% of that royalty income back from Cellynx. In addition, through the acquisition of a 60% interest in Cellynx, a further equity participation in the residual royalty income is available to the consolidated entity.

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Subsequent Events
 3 Months Ended
Mar. 31, 2012
Notes to Financial Statements
Subsequent Events

Note 12 - Subsequent events

 

Sales of Common Stock

 

On various days in April 2012 the Company issued in aggregate 331,667 shares in the capital stock of the Company in settlement of $ 55,247 of debts, at prices ranging from $0.12 to $0.15 per share.

 

On April 18, 2012 the Company sold 100,000 shares in the common stock of the Company at a price of $0.15 per share in a private placement for aggregate proceeds of $15,000. The shares issued were sold pursuant to a Regulation “S” exemption from registration pursuant to the Exchange Act of 1934.

 

On May 4, 2012 the Company sold 66,667 shares in the common stock of the Company at a price of $0.12 per share in a private placement, for aggregate proceeds of $8,000.. The shares issued were sold pursuant to a Regulation “S” exemption from registration pursuant to the Exchange Act of 1934.

 

Commitment to Issue Stock and Options

 

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 the 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. This stock option arrangement is in process for approval by the Board of Directors of the Company.

 

 

Restriction on the Re-Sale of 5BARz International Inc shares held by Cellynx;

 

On March 29, 2012 5Barz International Inc. issued 9,000,000 shares of common stock to Cellynx Group, Inc. for the acquisition of a 60% interest in the 5BARz technology owned by Cellynx. Pursuant to an amending agreement entered into May 15, 2012, those shares have been restricted from trading by mutual agreement between the parties. Pursuant to the provisions of that agreement the shares are generally restricted from trading without mutual agreement between the parties. Further that should the shares be traded, that at no time shall the shares be traded in denominations of greater than 5% of the balance of the shares held by Cellynx in any one month.

 

 

Investment in Cellynx Group, Inc.

 

On April 13, 2012 the Company converted a further $7,700 of debt under the revolving line of credit agreement for 51,333,333 shares of the capital stock of Cellynx, re-establishing the 60% equity interest held in that consolidated subsidiary with 464,745,971 shares held.

 

On May 15, 2012 the Company converted a further $ 58,500 of debt under the revolving line of credit agreement for 390,000,000 shares of the capital stock of Cellynx, re-establishing the 60% equity interest held in that consolidated subsidiary with 854,745,971 shares held.

 

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Summary of Significant Accounting Policies (Policies)
 3 Months Ended
Mar. 31, 2012
Notes to Financial Statements
Basis of presentation

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 99.2% owned subsidiary, 5Barz AG., and it’s 60% owned subsidiary Cellynx Group, Inc. and that Company’s 100% owned subsidiary Cellynx, Inc. All intercompany accounts and transactions have been eliminated upon consolidation.
Cash

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

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

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 March 31, 2012 and 2011, 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

 

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

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 of disposal of long-live assets

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 March 31, 2012 and 2011, there was no significant impairment of its long-lived assets.
Revenue recognition

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

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

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.
Accounting for Derivatives

Accounting for Derivatives

The Company evaluates its convertible instruments, options, warrants or other contracts to determine if those contracts or components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging”. The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liability at the fair value of the instrument on the reclassification date. 
Income taxes

 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 quarters ended March 31, 2012 and 2011.
Net loss per share

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

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.