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<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>Note 1 – Organization and basis of reporting</b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">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”.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On 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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On 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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Going concern </u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">These financial statements have been prepared on a going concern
basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Development stage </u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company has been in the development stage since its formation
and has not yet realized any revenues from its planned operations.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>Note 2 - Summary of significant accounting policies</b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Basis of presentation</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Cash</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Cash and cash equivalents include cash in hand and cash in time
deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Use of estimates</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Concentration of credit risk</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Cash includes deposits in accounts maintained at financial institutions.  Certain
financial instruments, which subject the Company to concentration of credit risk, consist of cash. The Company maintains balances
at financial institutions which, from time to time, may exceed Federal Deposit Insurance Corporation insured limits for the banks
located in the United States. As of 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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Equipment</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Equipment is recorded at historical cost and is depreciated using
the straight-line method over their estimated useful lives.  The useful life and depreciation method are reviewed periodically
to ensure that the depreciation method and period are consistent with the anticipated pattern of future economic benefits. Expenditures
for maintenance and repairs are charged to operations as incurred while renewals and betterments are capitalized. Gains and losses
on disposals are included in the results of operations. The useful life of the equipment is being depreciated over three to five
years.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Intangible assets</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Acquired patents, licensing rights and trademarks are capitalized
at their acquisition cost or fair value. The legal costs, patent registration fees, and models and drawings required for filing
patent applications are capitalized if they relate to commercially viable technologies. Commercially viable technologies are those
technologies that are projected to generate future positive cash flows in the near term. Legal costs associated with applications
that are not determined to be commercially viable are expensed as incurred. All research and development costs incurred in developing
the patentable idea are expensed as incurred. Legal fees from the costs incurred in successful defense to the extent of an evident
increase in the value of the patents are capitalized.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Capitalized costs for patents are amortized on a straight-line basis
over the remaining twenty-year legal life of each patent after the costs have been incurred. Once each patent or trademark is issued,
capitalized costs are amortized on a straight-line basis over a period not to exceed 20 years and 10 years, respectively. 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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Impairment or disposal of long-lived assets</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company applies the provisions of Accounting Standards Codification
(“ASC”) Topic 360, “Property, Plant, and Equipment,” which addresses financial accounting and reporting
for the impairment or disposal of long-lived assets. ASC 360 requires impairment losses to be recorded on long-lived assets used
in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets
are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying
amount exceeds the fair value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar
manner, except that fair values are reduced for the cost of disposal. Based on its review, the Company believes that as of December
31, 2011 and December 31, 2010, there was no significant impairment of its long-lived assets.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">  </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Revenue recognition</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company's revenue recognition policies are in compliance with
ASC Topic 605, “Revenue Recognition.”  Revenue is recognized at the date of shipment to customers, and when
the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability
is reasonably assured.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Foreign currency translation</u></b></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0"><b> </b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Transactions in foreign currencies have been translated into US
dollars using the temporal</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">method. Under this method, monetary assets and liabilities are translated
at the year-end exchange</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">rate. Non-monetary assets have been translated at the historical
rate of exchange prevailing at the</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">date of the transaction. Expenses have been translated at the exchange
rate at the time of the</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">transaction. Realized and unrealized foreign exchange gains and
losses are included in operations.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> <b><u>Fair value of financial instruments</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">We have adopted Accounting Standards Codification regarding <i>Disclosure
About Derivative Financial Instruments and Fair Value of Financial Instruments</i>. The carrying amounts of cash, accounts payable,
accrued expenses, and other current liabilities approximate fair value because of the short maturity of these items. These fair
value estimates are subjective in nature and involve uncertainties and matters of significant judgment, and, therefore, cannot
be determined with precision. Changes in assumptions could significantly affect these estimates.  We do not hold or issue
financial instruments for trading purposes, nor do we utilize derivative instruments in the management of foreign exchange, commodity
price or interest rate market risks.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Income taxes</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company accounts for income taxes in accordance with ASC Topic
740, “Income Taxes.” ASC 740 requires a company to use the asset and liability method of accounting for income taxes,
whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for
taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities
and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely
than not that some portion, or all of, the deferred tax assets will not be realized.  Deferred tax assets and liabilities
are adjusted for the effects of changes in tax laws and rates on the date of enactment.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Under ASC 740, a tax position is recognized as a benefit only if
it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination
being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized
on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The adoption
had no effect on the Company’s financial statements.  Penalties and interest incurred related to underpayment of
income tax are classified as income tax expense in the period incurred.  No significant penalties or interest relating
to income taxes have been incurred during the years ended December 31, 2011 and 2010.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Net loss per share</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company reports loss per share in accordance with the ASC Topic
260, “Earnings Per Share.” , which requires presentation of basic and diluted EPS on the face of the income statement
for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS computation.  In the accompanying financial statements,
basic earnings per share of common stock is computed by dividing net income by the weighted average number of shares of common
stock outstanding during the period.  We do not have a complex capital structure requiring the computation of diluted
earnings per share.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> <b><u>Recent accounting pronouncements</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">In December 2010, the 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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">In 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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">In 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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>Note 3 – Equipment</b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Equipment consisted of the following at December 31, 2011 and December
31, 2010:</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center">December 31,</td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2" style="text-align: center">December 31,</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2011</td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2010</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 70%">Computer equipment</td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: right">$</td>
<td style="width: 12%; text-align: right">4,653</td>
<td nowrap="nowrap" style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: right">$</td>
<td style="width: 12%; text-align: right">0</td>
<td nowrap="nowrap" style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td>Accumulated depreciation</td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(468</td>
<td nowrap="nowrap" style="text-align: right">)</td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">0</td>
<td nowrap="nowrap" style="font-size: 12pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td>Equipment, net</td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">$</td>
<td style="border-bottom: black 1pt solid; text-align: right">4,185</td>
<td nowrap="nowrap" style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">$</td>
<td style="border-bottom: black 1pt solid; text-align: right">0</td>
<td nowrap="nowrap"> </td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>Note 4 – Intangible Assets</b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On 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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">During the year ended December 31, 2011 no amortization has
been recorded on the intangible assets.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Note 5 - Federal income tax: </b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company has 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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">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:</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">December 31,</td>
<td nowrap="nowrap" style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">December 31,</td>
<td nowrap="nowrap" style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">2011</td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">2010</td>
<td nowrap="nowrap" style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 72%">Statutory federal income tax rate</td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 11%; text-align: right">(34%</td>
<td nowrap="nowrap" style="width: 1%; text-align: right">)</td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 11%; text-align: right">(34%</td>
<td nowrap="nowrap" style="width: 1%">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Valuation allowance</td>
<td> </td>
<td style="border-bottom: black 1pt solid; text-align: right"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">34%</td>
<td nowrap="nowrap" style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">   34 %</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>Effective income tax rate</td>
<td> </td>
<td style="border-bottom: windowtext 2.25pt double; text-align: right"> </td>
<td style="border-bottom: windowtext 2.25pt double; text-align: right">-</td>
<td nowrap="nowrap" style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: windowtext 2.25pt double; text-align: right"> </td>
<td style="border-bottom: windowtext 2.25pt double; text-align: right">-</td>
<td nowrap="nowrap"> </td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The significant components of deferred tax assets and liabilities
are as follows:</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">December 31,</td>
<td nowrap="nowrap" style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">December 31,</td>
<td nowrap="nowrap" style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">2011</td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">2010</td>
<td nowrap="nowrap" style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td>Deferred tax assets:</td>
<td> </td>
<td colspan="2" style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td colspan="2" style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 72%">Net operating loss carry-forwards</td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: right">$</td>
<td style="width: 11%; text-align: right">222,282</td>
<td nowrap="nowrap" style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: right">$</td>
<td style="width: 11%; text-align: right">10,179</td>
<td nowrap="nowrap" style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Valuation allowance</td>
<td> </td>
<td style="border-bottom: black 1pt solid; text-align: right"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(222,282</td>
<td nowrap="nowrap" style="text-align: right">)</td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(10,179</td>
<td nowrap="nowrap">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>Net deferred tax assets</td>
<td> </td>
<td style="border-bottom: windowtext 2.25pt double; text-align: right">$</td>
<td style="border-bottom: windowtext 2.25pt double; text-align: right">-</td>
<td nowrap="nowrap" style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: windowtext 2.25pt double; text-align: right">$</td>
<td style="border-bottom: windowtext 2.25pt double; text-align: right">-</td>
<td nowrap="nowrap"> </td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt"><b>Note 6 - Cumulative sales of stock: </b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt">Since its inception, we have issued shares of common stock
as follows:</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt; text-align: justify">On November 17, 2008, our Directors
authorized the issuance of 7,100,000 founder shares at par value of $0.001. These shares are restricted under rule 144 of the Securities
Exchange Commission.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt; text-align: justify">On various days in December 2008,
our Directors authorized the issuance of 1,776,100 shares of common stock at a price of $0.01 per share as fully paid and non-assessable
to the subscriber. These shares are not restricted and are free trading.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt; text-align: justify">On November 15, 2010, our Directors
initiated a forward stock split of 18:1 and increased the authorized shares from 100,000,000 to 250,000,000</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt; text-align: justify">On December 30, 2010, the Directors
approved the cancellation of 87,800,000 shares of common stock.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On December 31, 2010, the Directors issued 15,600,000 shares in
conjunction with the acquisition of certain assets, more fully described in Note 7</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On January 10, 2011 the Company issued 300,000 shares of common
stock at a price of $1.00 per share for aggregate proceeds of $300,000.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On January 15, 2011 the Company issued 200,000 shares of common
stock at a price of $1.00 per share for aggregate proceeds of $200,000.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On March 9, 2011 the Company issued 150,000 shares of common stock
at a price of $1.00 per share for aggregate proceeds of $150,000.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On April 4, 2011 the Company issued 350,000 shares of common stock
at a price of $1.00 per share for aggregate proceeds of $350,000.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On April 7, 2011 the Company issued 200,000 shares of common stock
at a price of $1.00 per share for aggregate proceeds of $200,000.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On June 3, 2011 the Company issued 5,000 shares of common stock
at a price of $0.70 per share for aggregate proceeds of $3,500.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On July 18, 2011 the Company issued 25,000 shares of common stock
at a price of $1.00 per share for aggregate proceeds of $25,000.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On July 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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">  </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On July 24, 2011 the Company issued 40,000 shares of common stock
at a price of $0.20 per share for aggregate proceeds of $7,500.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On 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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On 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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On 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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On 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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On 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 <font style="color: black">Fifty Thousand Euros (€50,000), which </font>bears interest at a rate of 8.5%.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On 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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">In December 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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 6pt"><b>Note 7 - Asset acquisition agreement:</b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 6pt"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt; text-align: justify">On December 31, 2010, the Company
entered into three agreements as follows;</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0 0 13.15pt; text-align: justify"><font style="font-size: 11pt">(i)</font><font style="font-size: 7pt">                
</font><font style="font-size: 11pt">An “Amended and Restated Master Global Marketing and Distribution Agreement.”</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0 0 13.15pt; text-align: justify"><font style="font-size: 11pt">(ii)</font><font style="font-size: 7pt">              
</font><font style="font-size: 11pt">An asset purchase agreement</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0 0 13.15pt; text-align: justify"><font style="font-size: 11pt">(iii)</font><font style="font-size: 7pt">            
</font><font style="font-size: 11pt">A line of credit agreement </font>and<font style="font-size: 11pt"> security agreement</font></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt; text-align: justify">The agreements relate principally
to the development of the marketing and distribution of the 5BARz line of products and related accessories and a 50% ownership
interest in the 5BARz intellectual property.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt; text-align: justify">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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">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)</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt"><b>Note 8 – Convertible promissory notes:</b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On 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)</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 13.15pt"><b>Note 9 - Related party transactions:</b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On December 30, 2010 the Company acquired by way of an assignment
agreement all right title and interest in a set of agreements from a Company of which the 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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">In 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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 10 - Commitments: </b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">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.  </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>NOTE 11 - Formation of subsidiary company, 5BARz AG</b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On October 6, 2011, the 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.<b> </b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On October 19, 2011, the registrant, 5BARz International Inc. entered
into a Marketing and Distribution agreement with 5BARz AG, through which 5BARz AG holds the exclusive rights for the marketing
and distribution of products produced under the 5BARz<b> </b>brand for markets in Switzerland, Austria and Germany. That agreement
does not have a royalty payment 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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>NOTE 12 - Stock acquisition agreement, Cellynx Group, Inc.</b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On January 7, 2011 the Company entered into a stock purchase agreement
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.</p>
<p style="font: 11pt Calibri, Helvetica, Sans-Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 13 - Subsequent events</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Addendum agreement between 5Barz International, Inc. and Cellynx
Group, Inc.</u></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">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”.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">  </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The 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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">In 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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The 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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"><b><u>Securities Purchase Agreements</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Convertible debenture agreement</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On 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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">In the event that the 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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: justify">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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: justify"><b>Equity Investment Agreement</b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 12pt">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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0 0 12pt"><b><u>Acquisition of 60% of Cellynx Group, Inc.</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On March 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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Promissory note settlement </u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Calibri, Helvetica, Sans-Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Sales of Common Stock</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On <font style="color: #333333">various days in February 2012</font>
the Company issued 700,000 shares of common stock at a price of $0.10 per share for aggregate proceeds of $70,000.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On <font style="color: #333333">various days in March 2012</font>
the Company issued 636,164 shares of common stock at a price of $0.12 per share for aggregate proceeds of $76,340.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">  </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">On <font style="color: #333333">various days in March 2012</font>
the Company issued 503,333 shares of common stock at a price of $0.15 per share for aggregate proceeds of $75,500.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">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).</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Convertible promissory note</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">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.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><u>Commitment to Issue Shares</u></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">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.</p>
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